Infamous stockpile baled out, The Australian, 15 June, 2001
Infamous stockpile baled out: [1 Edition]
Stapleton, John. The Australian [Canberra, A.C.T] 15 June 2001: 40.
Abstract
There are now only 184,000 bales left in the stockpile, representing about three weeks' worth of overall Australian sales. All the stockpile is expected to be gone well before the end of the year.
At its peak, the stockpile hit almost five million bales. The stockpile was amassed as a result of the reserve price scheme introduced in 1970. The trouble began when the world price started falling in the late 1980s, but the reserve price remained high.
The conflict between the industry and managers of the stockpile disappeared after privatisation. "Growers will be pleased to see the end of the stockpile in sight," Mr [Peter Myers] said.
Full Text
THE wool stockpile, which has cast a dark shadow over the Australian wool industry for more than a decade, is finally disappearing.
In the last decade sheep numbers have contracted by more than 60 million and production by 40 per cent.
There are now only 184,000 bales left in the stockpile, representing about three weeks' worth of overall Australian sales. All the stockpile is expected to be gone well before the end of the year.
At its peak, the stockpile hit almost five million bales. The stockpile was amassed as a result of the reserve price scheme introduced in 1970. The trouble began when the world price started falling in the late 1980s, but the reserve price remained high.
Critics say the demise of the stockpile marks the sorry end of three decades of government interference which created havoc in the wool industry and destroyed the operations of many traditional properties.
This week Woolstock Australia's chairman Donald McGauchie said no matter what pressure woolgrowers put on governments of any persuasion in the future, politicians should stay away.
"Very obviously there is a clear lesson that intervention in the marketplace invariably leads to tears," he said. "The cost of this mistake has been absolutely enormous."
Mr McGauchie said the government had been dragged into the reserve price scheme against its better judgment in 1970 under pressure from the politically powerful farm lobby, but it had all proved to be at a high cost to the industry.
"It has taken 10 years now to clean up the stockpile, and it has been at huge expense," he said. "This is a consequence of a reserve price scheme which ultimately failed, as most of them do.
"The impact has been very very substantial. People have been reeling under the impact. People have gone into cattle, sheep meat and grain; in some instances they were forced to leave their properties."
Peter Myers, managing director of Woolstock Australia, said they were well ahead of their selling schedule.
The exact date when the stockpile disappears forever will depend on market conditions, the Australian dollar and, in particular, demand from China.
Woolstock Australia is a private company listed on the stockmarket and largely owned by woolgrowers. It took over from the highly controversial government body Wool International in mid- 1999.
Wool International was disliked by many in the industry. It had a legislative obligation to sell more than 600,000 bales a year and was criticised for damaging thefresh wool market by injudicious selling.
The conflict between the industry and managers of the stockpile disappeared after privatisation. "Growers will be pleased to see the end of the stockpile in sight," Mr Myers said.
Once all the wool is sold Woolstock Australia will be placed into official liquidation and wound up.
Tony Wilson of Itochu Wool, Australia's largest woolbuyers for the past 35 years, said the end of the stockpile marked the end of a period of "greed, stupidity and ignorance".
"It had a savage effect on a lot of people. The reserve price was meant to provide a subsistence level for the woolgrower, but unfortunately certain forces pushed the reserve price up. The industry at the time was powerful and had much political influence. We paid a price for that influence.
"The stockpile was a liability around everyone's neck. The lesson is that government intervention has made life for growers a misery for the past 30 years.
"Australia was telling the world they must pay what we want them to pay. In a free market you can't tell the rest of the world what to pay for wool."
Wool Council president David Wolfenden, who represents growers, said the disposal of the stockpile has meant 10 years of constant pain for woolgrowers.
"It has meant a great many bankruptcies and great hardship for woolgrowers generally," he said. "A ballpark figure, we've lost 20,000 woolgrowers. We welcome seeing supply and demand being back in balance."