WELLINGTON NEWS

Hokitika Guardian, 18 January 1930, Page 6

WELLINGTON NEWS

HINDRANCE OF STOCKS

(Special Correspondent.)

WELLINGTON, Jan. 16

Some sheep men in Australia and New Zealand are advocating schemes to control the sale of wool with the object of forcing up prices. This is alright in theory but it must be remembered that we should have to shoulder the monetary burden. Both in Australia and New Zealand, no wool was carried over into this season, but it was carried over in large quantities abroad in the shape of tops and yarns, and that accumulation has contributed to the depressed state of the market. It is surely futile to endeavour to throw over the law of supply and demand and make the world pay relatively more for wool than can be obtained from the tops and yarns obtained from it. There is no shortage of wool to-day, on the contrary the production has expanded during the past few years and the consumption per capita has contracted. -Wool is unlike cotton, wheat and other products for its production cannot be reduced at will. It continues to grow on the sheep’s back and accumulates rapidly if its sale is unduly restricted. Surely the experience of 1921 is not wholly forgotten. Then Bawra held heavy stocks which combine with the clips growing at that time depressed the market and compelled growers to accept low returns for their clips. The world is now growing 30 per cent and Australia 47 per cent more wool than in 1921-22. The financing of any scheme of control would be stupendous. New Zealand tried a control scheme in connection with butter and had to abandon it in a hurry because the accumulations of butter in cool store were becoming a menace and defeating the object for which control was established.

A further illustration of the futility of control is seen in the wheat pool of Canada. When the Canadian crop of 1929, which was of high quality but a little more than half the yield of 1928, came upon the market, prices were falling as the result of heavy supplies of Argentine wheat being available, and the Canadians declined to sell at the prices which were offered in Liverpool; they felt confident that the situation of the world supplies and the . higher protein content of their wheat justified higher prices, and the shortage of the last crop made possible a policy of holding it until Europe was pre-pared-to pay a better price. But Europe resolutely declined to pay the Canadian price, and the result was an almost complete hold-up of the grain trade of Canada. The terminal and country everywhere are jammed to the doors with wheat, millions of dollars of credit are tied iq> and the transportation interests, rail and water, are in a state of despair over their diminished rewfnues. Whatever the ultimate outcome may be, it is said that the grain blockade has already caused a great deal of financial and economic inconvenience. It has depressed Canadian exchange abroad, and no satisfactory reply has been given, to the allegation in certain British papers that Canada is for the time being not on the proper gold basis that is supposed" to support her financial structure. Canada is in a somewhat chastened mood, and that can be said of all producing countries at the present time. 1 Holding up wool supplies in the manner suggested by some would be more a hindrance than a help, and some leading pastoralists can see no good in it. Mr F. H. Trout, President of the Graziers’ Association, in New South Wales, is of opinion that an intensive campaign embracing scientific research and publicity would greatly assist the wool industry. This is also the opinion of overseas wool men land scientists. Scientific research should give such results as would enable sheep farmers to reduce costs of production besides enabling the industry to place on the market a still better article—both raw and manufactured.

Scientific research should also load to the discovery of new uses for wool. Publicity is needed to increase the demand. The world consumption of wool which has been decreasing can be improved and new sources of demand cultivated. So far China is not an appreciable consumer of wool, but there is scope there for increased fade. China grows large quantities of the coarser types of the staple, the latest figures available show her as pasturing 35,000,000, producing 60.000,0001 b of wool. . She has a few 'mills established, /but- their output is not of great consequence. China however imports considerable quantities of woollen fabrics from Great Britain and the Continent and is therefore an indirect influence on the wool market.

From January to October last she took 10,841,700 square yards of woollen and worsted fabrics from Britain being one of England’s best customers for those materials. There is little doubt that as years go on China will not only become a greater indirect influence on. wool demand but will gradually become a direct buyer of the staple. Japan’s development in that respect is well known. China offers an almost untouched field for development, Publicity in China would pay ultimately although it may be slow at first. Scientific research and publicity are the best factors for a sick wool market.