STABILIZING OF WOOL PRICES

Southland Times, Issue 23826, 25 May 1939, Page 5

STABILIZING OF WOOL PRICES

MANY DIFFICULTIES IN WAY DISADVANTAGES OF POOL SYSTEM (United Press Association) WELLINGTON, May 24. The difficulties in the way of Atabilizing wool prices were referred to by the chairman of the New Zealand Wool Publicity Committee (Mr H. M. Christie) in an interview this evening. The suggestion that stabilization might be accomplished, at least on an Empire basis, by the establishment of a special pool, like the exchange equalization fund in England, was made in Auckland last week by the Dominion president of the New Zealand Farmers’ Union (Mr W. W. Mulholland). Mr Christie said the question of stabilization of wool prices had been considered after the Great War by the Australian wool producers. Sir John Higgins, who had been chairman of the British and Australian Wool Realization Association, had advocated that the very substantial funds held by the association should be retained and a board established to control the funds and purchase wool when prices fell below a certain point. Stocks of wool would then be slowly liquidated when prices rose. The matter was brought up again at a recent conference. in New South Wales, but so far no action had been taken. Mr Mullholland had said that action on similar lines had been taken to control other world commodities, and wheat, sugar and coffee were in this category. “The position is entirely different with the wool market, as wool is probably the most sensitive of any primary product,” said- Mr Christie. “Commodities such as wheat and sugar require very little processing to prepare them for the retail market, but with wool very extensive processing is necessary. Wool is used for the manufacture of such a'wide range of articles that the handling of stocks by a board or council would be very difficult, to say the least. HEAVY COMPETITION “It should also be remembered that whereas wheat and sugar have no substitutes competing with them wool is faced with heavy competition from cotton, rayon and wool fibres and Zellwoollee. It has been very noticeable in recent years that the sale of fibres rapidly expands as wool prices rise. This is very marked in the case of finer Merino and Cape wools, for artificial fibres are nearly all fine, generally ranging from the 75 count upwards.” Mr Christie said the question of making some recommendation which would tend to stabilize wool prices was given very full consideration by the executive committee of the Australian, South African and New Zealand wool councils and byfhe secretariat and advisory committee when they met in London last year. However, it was felt that no satisfactory solution could be found at that time.

“In the United States the futures market is very extensively used with cotton, and this method is now widely used by individual wool growers in Australia,” said Mr Christie. “To use successfully the futures market it is necessary for the producer to make a very careful study of statistics and prospects generally." The main weakness in the futures market has been that persons who are not directly interested in the trade have gambled on the market, in a similar way to that on the Stock Exchange. But nevertheless many producers who have used this method extensively have praised it.” Mr Christie said no effort should be spared at‘least to iron out some of the greater undulations in wool prices.