FIXED PRICES FOR WOOL

Taranaki Daily News, 31 January 1930, Page 2

FIXED PRICES FOR WOOL

AN IMPRACTICABLE IDEA. AUSTRALIAN JOURNAL’S VIEW. With the wool position far from satisfactory to . the grower, proposals are being put forward from various sources with the object of placing the market on a sounder basis. One proposal which Jias been mooted has favoured the fixation of prices, and varying opinions have been- expressed as to its practicability. Dealing with this matter editorially, the Australian Pastoral Review has some interesting comment to make. Today many demands are being made for some scheme for the sale of wool aiming to fix prices on a higher basis than that obtaining this season (it is stated). The fact is forgotten that from 1916 until June, 1920, the British Government was the god-mother which supplied the millions of money which quickly paid growers a standard and profitable rate for wool. Particularly in the. latter stages of the scheme that wool stood unused in stores, in. Australia and elsejvhere for an indefinite period. If it be- assumed that the Australian >elip is worth £50,000,000 at least, a capital of ione-half, and probably two-thirds of that amount, would be needed to finance safely an arrangeiiiient similar to the 1916-1920 scheme Even more .might be required. The possibility of having a large portion of one year’s wool on hand unsold when the succeeding season’s wool is ready for sale must be borne in hind. A large and, therefore, expensive central establishment would be needed to handle combined accounts in- addition to the present selling organisations. The central body of Bawra was ’.not conducted for nothing. And were that necessary capital found and additional expense carried, would the grower be better off? It is most doubtful. Were greater rationing of - supplies undertaken than has been practised in Australia this season, eventually a huge accumulation of wool must be seen which would hang like ia clour over the industry in similar fashion to' the 19211 and 1922' experience. The risk of antagonising customers cannot be overlooked. It is only natural that, an effort to create ah artificial scale of prices will bring some retaliation. '

About three-fifths of the world’s wool is grown outside Australia. Certainly the Commonwealth is the largest individual producer, but good workable wool can be and is grown elsewhere. The growth in the production -of the staple in the United States offers an example of what can be accomplished by a country anxious to make itself more independent in securing supplies. Would we care to see the world’s buyers first of all purchase as much wool as possible in Africa, in Europe and in South America, and come last of all to this country to secure the balance of their requirements ? In modern political and industrial life any combination of those concerned has eventually crossed' swords with those against whom they combined. It is unwise to assume that the wool trade is immune from such a development. Low as wool prices are this season the sheepman is not taking “crumbs from the rich man’s table.” He possibly is taking what he considers crumbs, but there is a tendency to overlook the fact that the men who are buying wool have had a surfeit of unprofitable years. They have bought continuously since 1924, and when marketing the tops and yarns they produced have, in most instances-, found prices on a lower basis than they anticipated when they bought the raw material. If operations continued on that basis they would eventually suffer financial ruin. It may not be eagerly accepted, but the fact stands, that if the low cost of this season’s wool enables the world’s manufacturers to make fair profits, it will prove of material advantage to the future welfare of growers. Mill owners are badly in need of a monetary tonic to put them in rea-; sonable financial health. The wool industry is not living only, for to-day, and good returns this year Would give manufacturers the heart and ■ the monetary backing to purchase freely’ the clips ahead.

For three successive years topmakers on the Continent have found themselves at the end of a wool-purchasing season with heavy stocks of their.-product on hand, which have only been liquidated at substantial loss. , That is a calamitous circumstance not only .for themselves, but also for the men from whom they buy raw material. The quicker financial recovery is made the better for all concerned. .

If the reason why woollen goods arc dear while wool is cheap could be definitely discovered, and a solution found for it,.that remedy would provc effective. But all the price-fixing schemes in creation will not produce it. It is the trade’s greatest problem. Cheap woollens would send consumption of wool ahead by leaps and bounds. As stated before, the manufacturer has not enjoyed even reasonable profits, and the balance-sheets of retail establishments, at least in Australia, do not show extreme earnings. The reason for dear woollens is obscure.