Direct Selling Gave Better Price

Press, Volume CVI, Issue 31119, 23 July 1966, Page 8

Direct Selling Gave Better Price

Some of the views on the marketing of wool expressed by Mr D. L. Ambler, manager of Ackroyd Brothers (N.Z.), Ltd., at a field day held by Dalgety and New Zealand Loan, Ltd., and reported on these pages last week, were challenged this week by Mr T. C. Allen, general manager of the New Zealand Cooperative Wool Marketing Association, Ltd.

Mr Allen said that Mr Ambler had said that there might be occasions when it might pay the grower to sell occasional lots of wool through organisations, including his own, but it was Mr Ambler’s view • that overall the highest return would probably be obtained by selling regularly through the New Zealand auctions. “I do not think that Mr Ambler is in a position to make comparisons,” said Mr Allen. “It is only people, such as ourselves, who have experience in selling for growers through auction and through an alternative method, such as directly to overseas manufacturers throughout the world, who are in a position to make comparisons. When statements like those of Mr Ambler are made they should be able to to be substantiated.” Mr Allen said that an interesting experiment had been carried out when in the most recent season a number of Taranaki growers had decided to sell part of their clips through auction at Wanganui and partly through his organisation on a direct selling basis. The wools sold at auction and directly to manufacturers overseas had been identical and a careful note had been taken of the results. Altogether 658 bales had been involved and 433 bales in 46 lots had been sold at auction and 225 bales had been sold on a direct basis. The outcome had been that direct selling had given a better price than auction 39 times, the same price had been recorded twice and on five occasions the auction price had been better. On average over the whole offering direct selling had given 1.9 d a lb better than auction, and growers who sold through his organisation had also enjoyed a saving in freight of no less than a id a lb. Nearly all the wools sold on a direct basis were sold scoured so that 31 d a lb was added to the overseas price giving a premium of £7 a bale in extra overseas funds as compared with sale at auction and shipping in the grease. Generally speaking Mr Allen said he would agree with Mr Ambler’s advice to growers that they should sell

their wool in the grease. His organisation only sold wool scoured if they had the scoured product sold in advance. It was then known what the price to the grower would be in the grease. Mr Allen said that thej’ took objection to a statement of Mr Ambler’s that whoever sold a grower’s wool was primarily interested in making a profit for themselves, with the grower’s interests being only a very secondary consideration. If Mr Ambler knew anything about a co-operative marketing organisation, and particularly a true co-opera-tive, he would know that they were in business for only one purpose, and that was to provide a marketing service for the benefit of the growers who supported them. Actually profit in this case was only a secondary consideration and in any true cooperative the profit was all returned to the grower. Choice Of Methods Mr Ambler had also said that he thought the New Zealand grower was in an enviable position in that he had complete freedom of choice in the method of selling his wool.

“I would say that the grower who is obliged to sell through a broker has very little choice, and if the wool is being sold binned he has no control,” said Mr Allen. Referring to Mr Ambler’s statement that a buyer expected to obtain wool from private sources at a lower price than at an auction, Mr Allen said that the buyer would buy where he could buy cheapest under any circumstances, and accordingly the fact that the bulk of wool was sold at auction was no endorsement of the auction system. Mr Allen said that in talking of the auction system it was frequently said it gave the best all-round deal, but he felt that they should have a look at what that deal had been. Over the last nine I years the average price had! been less than 42d a lb for the New Zealand clip, and that included the boom year: of 1963-64. If that year was omitted from the figures it

would be found that the average was not much over 40d a lb. If the average was taken for some of the North Island centres it would be found that it had been less than 40d a lb, which was a pretty meagre price, and in his view it was well short of what he estimated the intrinsic value of wool to be in relation to synthetics.