Wool Exporters Not Happy With Scouring Decision

Wool Exporters Not Happy With Scouring Decision

The Wool Exporters Council is convinced that a monopoly in wool scouring will not be good for the wool industry.

Mr Nick Nicholson, executive manager of the Council said today that the wool scouring sector had undergone major rationalisation over recent years and was now pretty evenly balanced between two companies, with two scouring plants operated by each company in relatively close proximity to each other.

Mr Nicholson said that while the total wool clip continues to decline the scouring sector probably still has some overcapacity, but further rationalisation doesn’t have to mean that it should all be held by one company.

“We have two very good scouring companies in New Zealand at present. They are serving the industry well and they provide a competitive option for the industry which is what exporters need. While there is no fear of the quality of scouring being affected, exporters would lament the loss of options and the lack of competitive pressure on prices that the scouring sector currently has. It is very hard to see where there might be any advantage to any sector of the industry by having all scouring in the hands of one company.”

Mr Nicholson said that New Zealand scours most of our wool before it is exported and that he was surprised to see arguments suggesting that a monopoly in scouring in New Zealand would prevent some sort of dramatic shift to exporting our wool greasy.

“Most of our customers around the world want to buy scoured wool, particularly from New Zealand where our scours have long been regarded as the best in the world. I find it very hard to understand the suggestion that if the monopoly ownership of the New Zealand industry doesn’t proceed, we will suddenly be shipping our wool to China to have it scoured for a few cents cheaper before sending it on to our traditional customers. That is just nonsense. To do that would be to jeopardise all our markets around the world, not only because of the huge cost of dumping it in New Zealand and then the cost of reshipping out of China, but more importantly because of the huge benefits New Zealand enjoys in most markets through the government-to-government assurances regarding Health and Origin certification. To route our wool through any third country would effectively put an end to that and would probably put us out of business.”

“We have seen plenty of claims and counterclaims about what this might mean for scouring tariffs and how it will benefit farmers. Personally, I have difficulty in seeing any drop in scouring charges, let alone one that would have the slightest impact on what a farmer receives for his wool. The argument that a monopoly would take some cost out of the sector by relocating scouring equipment is valid but I think that the savings there are much more likely to be used to make the remaining operator more financially viable rather than being applied to lowering scouring rates to a point that it would impact on grower returns.”

ENDS

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