Decision On Reserve Price System Is Main Issue At Dominion Wool Conference

Otago Daily Times, Issue 27311, 10 February 1950, Page 7

Decision On Reserve Price System Is Main Issue At Dominion Wool Conference

NZPA—Special Correspondent

Rec. 7.10 p.m. LONDON, Feb. 9Though important recommendations affecting the future marketing of Dominion wool are expected to emerge from the British and Dominions Governments’ discussions now proceeding in London, it is not anticipated that any clear-cut decisions will be made at this stage. It is stated that the delegates will almost certainly have to report to their respective Governments.

The Yorkshire Post says that the most contentious point is likely to be whether there is any further need for a structure of reserve prices for Dominion wool at auction such as the Joint Oganisation has operated. Dominion woolgrowers and, so far as is known, their governments favour continuing an organisation similar to the existing Joint Organisation and for the continued operation of the reserve price system for all Dominion wool at auction. The British wool industry has declared against the perpetuation of Ihe reserve price system, but the attitude of the United Kingdom Government has not been indicated. The British wool trade contends that there is no economic justification for reserve prices when there is no longer a wool surplus which might be regarded as holding a potential threat to any price level. The trade has, however, intimated its willingness to

co-operate with the Dominions in any scheme to secure greater co-ordination in Dominion wool marketing. As the Dominions provide about three-quarters of the world’s exportable wool, one of the most difficult problems surrounding the formation of a continuing organisation would be that of financing it. In certain circumstances such an organisation would need to be in a position to buy and hold for an indefinate period substantial quantities of wool which had failed to attract open market bids up to the reserve level, and finance for such an undertaking would need to be measured in millions.

On this point, New Zealand has given a lead by offering to use the profit she has made in the surnlus disposal scheme to finance her share of any permanent organisation which might be expected to make a special effort to finance an undertaking which would put the price floor to what is the largest export in the case of Australia and the second largest in the case of South Africa-

The Yorkshire Post also says that in any continuing organisation the commercial interest of the United Kingdom is as a buyer rather than a seller of wool and this would seem to place her in a different position for sharing the finance of the undertaking unless the matter is considered—as it might well be—from the standpoint of Commonwealth economic co-operation.