WOOL-SELLING METHODS.

Otago Witness, Issue 3830, 9 August 1927, Page 13

WOOL-SELLING METHODS.

SEPARATING THE ISLANDS.

SHORT SHRIFT FROM BUYERS. The time appears to have arrived, now that fully 97 per cent, of our clips are offered and sold in New Zealand, to consider the matter of local sales as their position has changed from that occupied by them when they were subsidiary to London, and when it was a question for serious consideration whether growers could do better by speculating on the out turn of London sales months ahead. In those day’s the quality submitted in New Zealand amounted to from 30 per cent, to 60 per cent, of the total; hence the wool-sell-ing - arrangements then in vogue were adequate. The position to-day seems to show that new ideas and changed methods are necessary if colonial sales with their advantages t 0 growers (control of selling, early realisation, simplification of finance, etc.) are to be maintained and improved..’’

The above statement formed the preamble to a long report submited by the Otago provincial executive to the Dominion conference of the New Zealand Farmers’ Union in Wellington. The subject was raised by the southern delegates in an endeavour to secure the separation of the North and South Islands in the matter of wool sales. The report, which was brought down on Friday, contained in minutest detail many reasons why the roster of the sales should be revised in such a manner as to constitute each island a separate country as far as wool selling is concerned The report was not adopted, being referred to “various branches for consideration”—a course which may result in an indefinite pigeonholing before any action is taken. However, whether the “various branches” agree to its adoption or not, wool growers can expect little assistance from either buyers or brokers in the establishment of a system which the Otago executive appears to think will eliminate all selling troubles. Our representative interviewed several well-known figures in the wool business in Dunedin, and among other things gleaned the impression that growers will experience a good deal of opposition from the buyers. Local brokers, representing the sellers, were inclined to adopt a Gallio-like attitude “caring for none of these things.”

Most of them were emphatically of <the opinion that there were too many selling centres now, but, although, they might have their personal views as to the general excellence of existing arrangements they preferred to “let sleeping dogs lie.”

The head of a well-known buying agency expressed the views of the buyers ) cry clearly and emphatically, embodying in his statement the attitude of the buyere generally. He spoke very strongly on the question, and described the idea as useless in no uncertain terms, supporting his contention by means of detailed answers to the several reasons put forward by the movers for their action. . em Ph a tically of the opinion,” he said, “that th e scheme suggested bv these men will not have the effect which they anticipate. The money' already sunk in elaborate stores is not likelv to' be added to as under the present system of sale limitations (which is working admirably) brokers throughout New Zealand are able to handle the Dominion’s entire clip with reasonable convenience. Thus brokers are . n ot Jikely to welcome anv change which will demand the sinking of further capital for extensive stores in the centres which it is proposed to include in the roster, if the islands are separated. Continuing, he said, the farmers were endeavouring to effect an economy in the matter of wool-selling charges. That was all to the good, but by advocating this idea they were merely defeating their own object. It must surely’ be false economy to usher in a system which would demand the additional cost of extra sales, more buyers, and heavier staffs. After all,, these costs were borne bv the grower indirectly, and any increase in this direction must affect the prices received “A point which appears to be overlooked is that the institution of two rosters will demand that the buy'ers’ machinery, even now an expensive business, should be duplicated. Each overseas firm will be compelled to nd out two buyers, with the necessary staffs, and this in itself will result in an enormous increase in the cost of selling. Buyers must base their values on those -uling for tops in Bradford, and for this reason the extra cost must be liquidated in New Zealand. And by whom if not bv . the grower?”

Moreover, continued the expert, overseas firms would think twice before sending two buyers to attend a roster of sales which concerned a clip of 500,000 bales. Thev would scarcely consider it worth while to go to the expense of sending two buyers, with their staffs, 16,000 miles to secure the small percentage of that total which they might require. But if they did adopt this course the cost would be borne by’ the sheen farmer. Referring to the suggestion that sales should be held in Oamaru and Gisborne, our informant stated that here again the Farmers’ Union was countenancing heavy expenditure, which would result from the erection of new stores. Under the present system buyers wore kept steadily at work for the four or five months occupied at the various centres. The union suggested the breathing space could be allowed under the two-roster scheme. Buyers did not want that. They preferred to be -ept...going steadily rather than have time hang on their hands, as it certainly would under the suggested arrangement.

The question of financing purchases held no terrors for buyers, and it need not worry the grower. Even were a tworoster system in operation the financing of purchases would still be carried out on the letter-of-credit basis which formed the foundation of all business at present. Credits were established covering a whole season’s purchases, and one seldom heard of the slightest difficulty' in this respect. Buyers paid in full for all wool within 1-1 days of a sale, and any' hitch that occurred was generally the result of some delay in the negotiations between broker and grower.

Dealing with the prices paid to the farmer, the speaker said th j union’s scheme would not have the effect of increasing values. Rather world it cause a decrease, by reason of the fact that such a lot of additional expense would be incurred. He failed to see how the Farmers’ Union could substantiate the statement that one grower received too little and another too much. Even in London prices were erratic, and nothing would alter the position, least of all the suggested selling arrangements. ' It did not matter what methods were adopted, they could never overcome the disparity that existed between lots.

In regard to the complaint that some growers found their wool shu out of a particular sale, our informant stated that this unavoidable trouble would recur even under the farmers’ new scheme, as it was proposed to limit the sales, as they were at present. The suggestion that the large intervals between sales might be shortened was not provided for in the new proposals, as the union’s scheme would make the period from three weeks to a month. The present arrangements were not much different.

This, then, was the opinion oi the head of a firm in Dunedin whose activities in the wool-buying business extend over the whole of the Dominion. In effect the buyers’ reply to the farmers’ proposal is that they are fashioning a rod for their own backs, and incidentally are achievingno appreciable advantage. Brokers and buyers alike appear to be agreed on the point that there are now too many selling centres in New Zealand. One man, speaking on this subject, predicted that in a comparatively short time Invercargill would be struck off the roster. Growers in Southland were not unanimous on the subject of Invercargill as a selling place, as was demonstrated by the large clips which were sent to the Dunedin sales every season. The opening up of up-to-date stores in Oamaru would be inadvisable for the same reason.

One broker pointed out an important aspect of the case which, he said, had apparently escaped the notice of those eager to see the change. They had seemingly forgotten that the buyers were autocrats in their way, and could dictate their own terms—a privilege which could not be denied and which would be exercised without fear or favour if the farmers sought to force their hands.