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REUTERS
Canberra, Oct 15: Australian primary industries minister John Anderson said on Thursday he hoped the government's decision to freeze sales from the wool stockpile and privatise Wool International would be positive for prices.
Anderson said the freeze on wool sales had come into effect following written confirmation from the minor party, the Australian Democrats, that they would support the government legislation when parliament resumed next month.
The decision to freeze stockpile sales was made in August, but legal concerns about the possible blocking of the legislation meant Wool International had continued to sell wool.
"Well, we hope that it will have a positive impact," Anderson told reporters when asked what the effect of the decisions on the wool price would be.
Anderson said the simple reality of having to liquidate a huge wool stockpile and debt, as the government and industry had done, was that it was going to have an impact on prices.
It was now up to the industry to determine how tobalance maximising the value of the stockpile to growers while minimising the impact on prices, which Anderson said also had to be viewed in the context of the need to minimise the effect of the stockpile overhanging the market and creating uncertainty.
"That problem is now of course being exacerbated by the rapid rise, understandable rise, in the private stockholding as well," he said.
Anderson said he had seen estimates that by the time of privatisation next year the private wool stockpile could be between 850,000 to 1.1 million bales, and that the official 1.05 million bale stockpile had a net value of between A$450 and A$650 million.
He also said the size of the private stockpile was more a function of the price trends of wool than the government's freeze, adding that "we are all extremely concerned at the softening in that price."
But he denied the freeze was merely postponing recovery in the industry.
"I don't believe that we have postponed recovery in the industry. It has been delayed, giventhat we were looking at recovery 12 months ago, but what's happened in Asia and by the collapse in oil prices ironically, and the relatively flat nature of other northern hemisphere economies," he said.
Along with the freeze, Anderson announced that Wool International would be privatised, with shares in the new company allocated in the basis of equity entitlements in the stockpile, from July 1 1999.
Anderson said he supported the decision to privatise the stockpile. Before the decision was taken to freeze the wool stocpile, Anderson had been an opponent of such action.
Any public listing of the new company would be a decision of the new owners, not the government.
"The government is making a clear break here," Anderson said.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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