OUTLOOK FOR WOOL

New Zealand Herald, Volume LXX, Issue 21470, 19 April 1933, Page 10

OUTLOOK FOR WOOL

Seeing that nearly one-half of the world's raw wool and over two-thirds of the volume entering world trade is produced within the British Empire, a close study of the general situation in regard to this commodity falls naturally within the scope of the Empire Marketing Board's functions. It is recorded that although low prices have prevailed for five years, production has not declined to any appreciable extent though that of Russia and America has-fallen, and a movement in the same direction is anticipated in New Zealand and Uruguay because their flock figures have shown a reduction. So far as the Dominion's flocks are concerned, the reduction has not been large enough to have any bearing upon the world's wool supply. The decline since 1930, the peak year, has been only 7 per cent, and the sheep figures are still higher than at any time during the boom period. There is little doubt that notwithstanding low prices steady expansion would have continued if dairy prices had not kept up much longer than those of wool and wheat. Part of the dairy expansion was due to these factors. That the common reactions between price and supply are slow to appear in the wool industry has often been the subject of comment. During the previous slump of 1924-26 the world's output greatly increased. One reason of course is that lower prices stimulate the farmer to increase production. Another is that farmers may carry on for some years with returns just sufficient to cover prime cost. However, there is a limit to the producer's power to stand the siege, and as is the case in New Zealand, relief measures become imperative. The hope that never dies derives from the knowledge that although wool is particularly sensitive to price fluctuations owing mainly to its relative "inelasticity of supply and its marked elasticity of demand," it quickly responds to any improvement in the general economic situation. When that improvement takes place the change for the better will probably be .much more rapid in the wool market than in any other, for there is no evidence of heavy accumulation of surplus stocks and no real substitute for wool has been discovered. Indeed, new fields for its utilisation arc being actively explored, and some have already been discovered in the electrical and other industries.