WOOL INDUSTRY’S DIFFICULTIES

Hokitika Guardian, 3 December 1930, Page 2

WOOL INDUSTRY’S DIFFICULTIES

CAUSES AND EFFECTS

AX ENCOURAGING VIEW

The November number of the “Pastoral Review,” .iust to hand, contains an editorial article in which the position of the wool industry in analysed and conclusions come to that should afford some encouragement regarding the outlook for the future. After reierring to the slump, which has affected all commodities,v the article goes on to say that %Hdle it is highly improbable that wool prices will for ever remain in their current depressed condition, there appears to be little likelihood of their quickly regaining the whole of the ground they have lost in the piist two years. 1 High prices were largely caused by short supplies. That shortage has disappeared. World production of wool, which was equivalent to 9,000,000 hales in 1924, reached 11,500,000 bales in 1929. MORE CONSUMERS ALREADY ATTRACTED. “A production of those dimensions can only he consumed at reasonable prices. Additional users must be called in to absorb it. Cheap wool . had already attracted a wider circle of consumers. Re-worked woollen rags were utilised in hundreds of thousands or tons yearly when wool was dear. "Fabrics made from artificial fibres became most popular, (Lowcosting wool has brought the price of woollen rags down to such reduced levels abroad that results for many grades of them do not pay the cost of,- their collection. The- production of'so-termed artificial wool has-been abandoned. The output of artificial silk factories has been curtailed on the Continent and in England; profits in that industry have been cut to the hone. Wool undoubtedly appears to he" regathering to its old consumers who deserted it when prices were high. Feminine fashion has ranged on its side. Recent styles have tended towards the woollen garment. LOWER WOOL PRODUCTION PROBABLE. “In these developments are to he found the salvation of the sheep in-f-dustry; providing costs of production are reduced to a level which enables the sheep’s staple to he produced freely and profitably at a scale of prices which enables consumption to proceed in large volume. It appears reasonable to assume that the quantity of

wool the world grows will not be /maintained on the same scale as in •1929. L6w prices are certain to discourage production, just as high prices encouraged it. But it is not advisable that the world’s clip should fall off to snch a degree ns to- cause prices to rise again to a boom basis. The consumers who have been re-attracted to the use of the wool 'would again gradually ho lost; meantime production would show an upward curve, and eventually the same dolorous position would be reached as exists to-day. IMPROVED STATISTICAL POSITION,

“The best available illustration of the encouraging results of reduced prices is supplied by the stocks of tops on the Continent. The quantity of those semi-manufacturers ; held at the end of August this year was 44',800,0001b. In 1929 the total at the same date was 64,800,0001 b," and in IS2B 62,000,0001 b. In Yorkshire, stocks are reported to- be light. Wool holdings in the United States are lower than they were in previous years, and no abnormal stocks of the staple are held in Japan. That , improved statistical position has been achieved in a year when trading con-

ditions have been exceedingly, had

Cheap wool is the onlv sound reason to which it can hg attributed. Anoma-

lons though it may road in view of existing values, wool appears to have conquered the ills which attacked it in particular. Its recovery may be slow, but the consumption of it has kept pace with the quantity grown. In itself it was in a far less healthy statistical position in 19?8 and 1929 than it is to-dav, when, as previously stated, the Continent was embarrassed with stocks of tops.” WOOL BUYING COUNTRIES. The article goes on to say that the Continental nations, including France, Germany, Italy and Belgium, account for the greater part of the world’s annual clip. France and Italy are enjoying better circumstances than most other countries, and Germany, despite her disabilities, has bought bulky weights of wool Japan is suffering from the results of poor prices for her primary products,* of which silk is one of the chief sources of income. America is her best customer, bub owing to the financial crash she is not able to absorb Japanese silk at high prices. Japan is, however, buying good weights of wool to keep her .machines going and supply the needs of her ponoln.tion, hut can only do so at reasonable prices. The same conditions aunlv t'> Grea.t Britain, which depends largely upon exports for a livelihood. India and China have so unf''tiled as to cause a decided drop in trade, and Australia, Canada and .South American countries have suffered through decreased prices for wheat, wool, metals, etc., and for that reason British goods must be produced .it considerably lower figures than wore possible up to eighteen months ago* CONCLUSIONS. Tt is pointed out wool has been more than adjusted to the world’s level of wages and that is why it has bemi consumed. Had retailers been to adjust more quickly their sell-

ing prices to the new conditions, wool would be in a stronger position than it is at present. High rents, high taxation and high wages, however, naturally made the retail trade tardy in bringing down prices to a more favourable basis to produce volume of turnover, the first necessity to stimulate the demand for raw materials. After pointing out that the effects of the war and the large payments of war debts and reparations nre the main causes of the present general situation to which wool is am broiled, the article concludes: “The demand for wool certainly cannot become active enough to send prices strongly upward until some revival in business in commodities generally is seen, and that extenson in trade as a whole is not yet in sight. Meanwhile wool, being a necessity, will no doubt he readily absorbed at prices within certain limits. Probably the fact of it being a necessity will result in its feeling the benefits of a revival in trade more quickly than many other materials less essential to the world’s welfare. It is certainly due to do so. Values for it started definitely to decline twenty-two months ago, whereas 1930 was the commencement of the decided fall in rates for most other products. It has, therefore, had a long period over which low cost has encouraged its use and enabled it to check increasing utilisation of competing fibres.”