Private wool selling : benefits to the grower and implications for wool marketing

Abstract

Concern has been shown by those involved in the New Zealand wool marketing system for the recent trend for growers to sell more wool to private merchants and less through the auction system. If this trend continues, industry restructuring may be required to meet channel members' requirements. Telephone surveys were conducted with 120 wool growers in the Canterbury region to determine why private selling of wool had been increasing in the period 1981/82 to 1986/87. Fifty nine percent of growers surveyed sold all of their wool through the auction system in the 1987/88 season, while 28 percent sold to a private merchant and 13 percent sold through both systems. Quicker payment was the most preferred reason. Certainty of payment and convenience were also reasons for selling privately. Small scale growers sold significantly more wool to private merchants than the average. Eighty eight gross private wool prices were analysed and compared to gross prices that could have been obtained at auction, there was no significant difference. However, after discounting costs associated with selling and time, growers selling privately had a price advantage of 33.5 cents/kg (clean). Comparisons of the cost structures between the two selling systems was inconclusive.