The objectives, role and recent activities of the New Zealand Wool Board in market price support : A dissertation submitted in partial fulfilment of the requirements for the Diploma in Farm Management at Lincoln University

Abstract

New Zealand wool is a commodity which is subject to many market influences that are not controllable. Under these conditions there is a need for some type of grower price support. The New Zealand Wool Board is a producer board set up to obtain the best possible return for wool growers. As one of its functions the Board operate a market support scheme to stabilise and maintain grower returns. They achieve this by intervening in the market place at pre-determined levels, supporting and stabilising grower incomes in times of low prices. This intervention has effects on the rest of the wool trade. A survey was conducted in the Canterbury area and a number of representatives from different sectors of the New Zealand wool trade were interviewed. These sectors included licensed wool exporters, registered wool buyers, licensed wool brokers and wool growers. Grower support schemes were endorsed by most of the sectors surveyed, so long as the support levels imposed on the New Zealand wool market reflect the current situation and trends in the world wool market, and are flexible enough to change and adapt to changing market conditions. There are potentially adverse effects if support levels are set too high. A stockpile accumulated due to the Boards support activities will drain woolgrowers funds and will affect future wool prices. Exporters and buyers hold the view that the benefits of short term price stabilisation are outweighed by the costs and risks of stockpiling the wool, while brokers and growers believe that the benefits outweigh the costs and risks. The wool industry in New Zealand believes that grower support is necessary, but also that careful research and trade understanding is required by the Board, so that market support levels can be set that allow wool to flow into consumption and not Board stockpiles, while still supporting and maintaining grower incomes at a sustainable level.