Must Wool Continue to Decline in Worth?Friday, Mar 2, 2001
In all the media interest in the renewed prosperity of farming it seems that the wool industry has been
thrown into the corner like a growing child's raggedy-Anne. Once loved and cherished as a great
industry - now discarded and ignored.
Other than fine wools, coarser wools appeared to have been condemned as hopeless market cases by the
McKinsey team. This seems to trigger a rush of conflicting position taking by buyers and traders
and confused reaction by producers.
Buyers and traders understandably want to maintain the instability and protect their territories under
the auction system. The auction is an ideal environment for any trader working on a margin. Who
cares about pricing levels as long as the floor is cleared and the commissions gathered.
To outside observers wool traders are not a reliable group for producers to seek advice from and their
prejudice has shown through in their sabre rattling on behalf of the end users can only be viewed
as self interest blackmail.
The situation that wool producers find themselves in today is very similar to dairy producers of the
1920's. A few Tooley Street traders circled the dairy coops with take it or leave it offers that
were remarkably similar at the commencement of each season. The directors of 100's of farmer coops
becauseof limited resources, inevitably accepted the low offers - often with genuine tears of distress.
Only with the advent of compulsory purchase component of the Dairy Industry Authority Act was the cartel
of "old world" traders broken. A painful and to many unprincipled act perpetrated on behalf of
producers by the then government. A socialist act for dairy farmers who were minor producers far
from the mainstream of the then other enormously influential pastoral producers of NZ - meat and wool.
It is ironic that the farmer-controlled cooperative industry has maintained a steady ascendancy against
the continuing relative decline of meat and wool.
Accepting that there are some aspects of a wholly producer controlled industry that has a potential
for disaster, unless carefully managed, the compulsory model has much to recommend it in the instance
of wool producers today.
To pool resources and manage a mix of processed and raw wool sales must have merit when confronted with
the alternative of more of the same. More of an unnecessary decline into oblivion.