Industry needs to knit some survival plans

By HUGH DE LACY

If a starting point is to be found for the rescue of a dying industry, it must surely be where all the otherwise diverse and competing interests converge.

Wool is a dying industry because its production costs are rising inexorably over time (unlike cotton and synthetic fibres, whose production costs are steadily decreasing), and also because it is expensive to process.

But wool is becoming a dying commodity mostly because the global economy can do without it, and, apart from a few tiny niches, wouldn't notice if it ceased to exist.

As with any industry there is an inevitable conflict of interest between growers, who need to be paid more to keep producing wool, and manufacturers, who need to pay less to continue using it.

And since the emergence of cotton as a major world fibre in the 19th century, followed by the exponential growth of synthetics in the second half of the 20th, woolgrowers have been on the losing end of that conflict.

That is because wool producers cannot switch to producing cotton or synthetics, whereas manufacturers have only to make a one-off capital investment in new machinery to escape their dependence on wool.

Most fibre manufacturers have already made that investment, and the number staying with wool is falling rapidly.

This leaves woolgrowers trapped in a cycle of ever-diminishing returns.

But just because growers have less leverage within the wool commodity trade than manufacturers doesn't mean they don't share a common interest in the recovery of wool.

Reversing the decline of wool would be as much in the interests of manufacturers as growers.

So here, at this point, there is that vital convergence of interest between grower and user on which the preservation of the wool industry must be predicated. And a unified approach is needed.

Unfortunately, no such unity exists, and since they have more to lose than do wool users, the blame for that lies squarely with the woolgrowers.

It is a responsibility that growers refuse to face, instead dumping it in the lap of their producer board.

Of course, the Wool Board bureaucrats are only too happy to spend the growers' money on any wild-eyed scheme the growers can be induced to accept.

That is the nature of bureaucracies.

But instead of standing up and taking responsibility for their industry, the growers swallow the board's line that it is the buyers and the selling system which are to blame for wool's decline.

The auction system has been the scapegoat for growers' problems but a unified seller-buyer approach to saving the industry would inevitably explode forever the carefully cultured myth of the Wool Board's influence on prices.

Whether the auction is the best way of selling wool - and it may not be - is beside the point. It happens to be the main way in which wool is sold, and it is showing no signs of losing its common popularity.

Falling demand is the real problem. And that can be addressed only by developing a sense of common purpose between seller and buyer - the purpose being to expand global demand.