HOLDING WOOL

Nelson Evening Mail, Volume LXIV, 21 January 1931, Page 8

HOLDING WOOL

. FACTORS IN PRICES WITHDRAWALS DEPRECATED .“The points mado against withdrawals of wool by a Continental woolbuyer in an interview in “The Press” are quite sound,” said Mr W. 11. Nicholson, secretary oE the Canterbury Sheepowners’ Union, when seen by a reporter. “If you hold a product off the market to ifiduco consumption,” he continued, “something else takes its place, and the. effect is the same as if values are forced to a level unduly higher than the market warrants, as this also gives an inducement for the manufacture of substitutes. “We have had experience of that during the period of very high prices for merino wool in Australia, which made it possible for artificial products to be manufactured and sold at a profit. The result has been that there are certain well-established markets for these synthetic products, which were not in existence before, and, very probably, they will displace the natural product permanently in some places. "The holding up of production or the realisation of production is economically wrong, and must react detrimentally on the community which practises it. This is not admitted by Labour people, but it is quite true.

LIMITING. PRODUCTION , k “Suggestions have been made in some quarters that wo should stop producing, and that we should have bred no lambs at all this season, the object being to balance supplies, and the expectation as a result the realisation of higher prices and a. keener demand during the following year. But the reverse would be the case, as the market which now absorbs our supplies would, of course, have to look elsewhere for its requirements, with the result that unless our product of the following year was produced at a still lower, level of value than that of the period when supplies were stopped, we should have very great difficulty in re-estahlisliing our market, the channel of supply having been diverted to other quarters, with all the requirements of industry, such as collection and distribution at tho producing end, freezing, and shipping, connected with it. “A case in point is the Canadian wheat, which is being produced under guarantee and held to be marketed at the fixed price which it was estimated would cover costs of production in Canada at the time the pool was first formed. The price fixed under, this guarantee, however, was sufficiently high to induce competitors, who had not previously grown wheat for export, to enter the field, the result being that each succeeding year finds the Canadian farmer carrying a greater surplus of wheat in store, while competition lias been promoted through the attempt to maintain a price calculated to cover internal costs of'production without regard to the purchasing power of the market which it was intended to supply. LIVING ON OUR RESOURCES “This, in effect, is the subconscious idea of all holders of wheat, wool, or any other commodity, and if this policy is continued in New Zealand with our exportable products, then we can only live on our own fat. and' we can do that only so long as our economic constitution can stand the strain. “An instance I have in mind is mustering. To 'muster a-block of country, which takes ten days, and with six men paid t lie present award rates, means the product of six- bales of wool, the product of 300 to 350 sheep, without taking into calculation the cost of food. It will bo obvious that the country cannot supply sufficient produce at .this ■price to pay costs, “The same thing applies to the whole of primary production, including the dairy farm, and would al§o apply, were it not for the protective duty, to our wheat lands, with Russia producing wheat at approximately 2s 6d per bushel and Australia at about 2s lOd. “The withholding of the whole of New Zealand’s wool clip would not have any great effect on prices, except those for a few special sorts- Thiq can easily be realised when it is remembered lthat one drought year in Australia lias been responsible in the past for the loss of more sheep than is comprised' in ail New Zealand flocks, but still the wool trade of the world is carried on.” *