Richardson-Dorber clash over CRC

29 Aug, 2001 10:00 PM

THE final sale of wool from the stockpile was unlikely to herald a new era of higher wool prices, former Wool International chief and Melbourne University's dean of agriculture Dr Bob Richardson has warned.

In an opinion article written by Dr Richardson for the Australian Financial Review, the former stockpile boss downplayed the impact of stockpile sales on fresh wool prices during its sale from 1991 to 2001.

While it was widely considered that the sale of the stockpile was seriously mismanaged by governments and blamed for persistent low wool prices, this opinion masked the reality of fundamental changes in demand for wool.

"Over the 11 years, the sale of the 4.75m bale stockpile was probably 5pc-10pc of global producer sales, so its affect on prices was modest," Dr Richardson said.

"On the demand side, competitive fibres (cotton and synthetics) expanded their value and share of wool's markets.

"This occurred at falling real prices and yet, because of productivity improvements, these competitors remain strong."

Dr Richardson said the stockpile experience was a classic textbook case of why buffer stock, price-stabilisation schemes did not work.

"The lessons from past mistakes are often difficult for rural industry leaders to accept," he said.

"Despite the protracted Uruguay round of world trade negotiations, they see huge assistance packages to their competitors in Europe and the US.

"We cannot hope to match the folly of such policies by ever repeating the disastrous experience of the wool industry with government backed intervention schemes."

In the same article, Dr Richardson also described recent sweeping changes made by Australian Wool Innovation (AWI) to wool research and development work as an "over-reaction to the failing of government policy in the wool industry."

"The recent refusal of the proposed sheep and wool CRC is a manifestation of this overreaction and sends a signal to many scientists in rural research to direct their energies to other industries," he said.

AWI's commercial approach also seemed to deny the reality that a lot of valuable long-term research and development had most of the characteristics of a "public good", he said.

AWI managing director Col Dorber responded to Dr Richardson's statements in a letter printed in the same newspaper six days later.

"Just as the industry has moved on from the days of the reserve price scheme, so too has it moved on from endlessly funding research that has no promise of ever showing a return on investment," Mr Dorber said.

"Surely even the most basic academic analysis would have to support this new approach."

Mr Dorber said the CRC proposal would not deliver an appropriate return on the investment of wool producers, and that a proposal developed by AWI that would have substantially increased funding for the centre was rejected by its steering committee.



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