Wool pack price rises, clip shrinks

16 May, 2002 09:00 PM
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AUSTRALIA'S shrinking wool clip and high crude oil prices are being blamed for an 80-90 per cent jump in the price of nylon wool packs since March.

But wool brokers and grower groups suspect a lack of competition may be the real reason for the rise from $10 to $19 a pack, and will investigate the actual cause.

Higher oil prices have only increased nylon yarn prices by about $1 a kilogram, with each pack containing just 1.4kg of nylon on average.

There are also doubts Australian wool production has fallen enough in the five years since nylon packs began replacing high-density polyethylene (HDPE) packs to have tightened overheads for manufacturers so dramatically.

The price rise coincides with the demise of Australia's only locally made wool pack, the Jumbuck, which was manufactured by Melba Industries, a division of Austrim Nylex, at Geelong.

AWEX general manager of industry services, Lindsay Spencer, said all the wool packs now used in Australia were made overseas, most commonly in Asia.

Meanwhile, the NSW Farmers Association is considering whether a case exists to alert the Australian Competition and Consumer Commission.

"I suspect it must be more than that (the oil price rise), because when oil prices shot up last year it did not affect pack prices, and there was more competition around then," NSW Farmers wool chairman, Duncan Fraser, of Hay, said.

"We will look into it and alert the ACCC if there is any need to check out whether there is collusion, or whether it is just a genuine lack of packs available domestically," he said.

Wesfarmers Landmark spokesman, David Coombes, said Wesfarmers, as a reseller, had been forced to pay a large increase in pack prices over three months, from about $12 a pack to $19.

Mr Coombes said the small number of mills producing nylon packs had relied on projections of demand when the Australian wool industry switched from HDPE to nylon packs for contamination reasons.

Since that time the size of the Australian wool clip had fallen, causing the manufacturers to claim economies of scale no longer existed and that prices had to rise to justify the shortfall.

"But we would say we are not convinced these reasons are enough to warrant the size of the price rise and are looking at alternative sources," Mr Coombes said.

He said Wesfarmers was also considering revisiting the concept of plastic packs, which the company had spent considerable money developing before the widespread introduction of nylon packs in the late-1990s.

Before it left the market, the Melba Industries plant at Geelong had the capacity to produce one million packs a year, a third of the Australian market.

A Melba spokesman said the company made a "commercial decision" to leave the market just before last Christmas.

"There are a lot of vested interests in the industry," he said.

"When prices went up, we had growers call us and say, `Open your plant back up again', but I have a feeling that if we did that, other nylon pack prices would suddenly come back down again.

"We're a big company, we have moved on to other things and we would prefer to stay out of it."

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COMMENTS

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Dalby, you need to stop comparing 13% pro HRS with 10% pro APW2, and need to stop comparing USD
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King Billy, In the livestock industry its worse than you think, the processors
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Where is Peter Hannam now rabbiting on about above average temperatures ? No where to be seen.