1. A. A. RECORD— July, 1933 



13 



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Some Facts About Marketing Wool 



By Ray E. Miller 







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RAY HIXLEB 





WHAT the wool grower wants 

 most are higher prices for 

 wool and lower marketing 

 costs. Higher prices can be obtained 

 by growers through selling collec- 

 tively and retaining their bargaining 

 ability. Lower costs can be secured 

 by growers selling collectively, thus in- 

 creasing their vol- 

 ume and decreas- 

 ing their per unit 

 cost whether that 

 cost be freight, 

 storage or grad- 

 ing, and national, 

 state or local 

 handling charges. 

 What's true of 

 wool marketing is 

 true in principle 

 in the marketing 

 of livestock, cot- 

 ton, produce or beans. True, volume 

 control will not fix prices but it will 

 help to determine prices and is very 

 instrumental in determining marketing 

 costs. 



No matter how much we may blame 

 others for the prices of farm products, 

 part of the blame for low prices and 

 certainly a lot of the blame for the 

 high costs of marketing farm products 

 rests squarely on the shoulders of 

 farmers themselves. During the last 

 ten or fifteen years particularly, co- 

 operative marketing machinery has 

 been set up by the more progressive 

 groups of farmers to handle practi- 

 cally all kinds of farm commodities. 

 When judged fairly it can be truth- 

 fully said that they have been highly 

 successful. They have demonstrated 

 their ability to affect prices, they have 

 reduced marketing costs or have in- 

 creased the amount of service ren- 

 dered. In spite of these facts, there 

 are still only a small part of the 

 growers who are taking advantage of 

 the opportunities open to them. These 

 non-cooperators are not only standing 

 in their own light but they are pre- 

 venting by their indifference or op- 

 position, other growers from securing 

 the benefits possible through coop- 

 erative effort. 



Here's What Happened 



Take the 1933 wool pool as a spe- 

 cific example. Prices opened around 8c 

 or 9c a pound. The Illinois Livestock 

 Marketing Association started the sea- 

 son with a cash advance of 7c. A 

 great many growers sold out because 

 the price looked higher than it did last 



season at shearing time. Others, of 

 course, sold because of their urgent 

 need for cash. Prices have continued to 

 advance but unfortunately a gfreat 

 deal of the Illinois clip was sold to 

 buyers at prices ranging from 10c to 

 15c per pound. Others who held off 

 longer have received more. The Illinois 

 Livestock Marketing Association is ad- 

 vancing 16c per pound, twice as much 

 as a great many growers received for 

 their wool early. 



The situation affords a striking ex- 

 ample of what the wool gn*owers of 

 Illinois could have saved had they had 

 a little more faith in their own ability 

 to market their own product. We pro- 

 duce in Illinois about 4,000,000 pounds 

 of wool. The growers of the state have 

 easily sacrificed an average of 10c a 

 pound because of the vast number who 

 sold early at ridiculously low prices. 



In other words about $400,000 has 

 passed from the pockets of the wool 

 growers to the pockets of the dealers 

 simply because the growers did not 

 use the key which reposes in their 

 own hands, namely, ownership of their 

 own property and the right to market 

 it in any way they choose. 



' :. V This Is More Serious \ r • . • .• 



As serious as this is it is not the 

 most important part of the picture. 

 The $400,000 which Illinois growers 

 have sacrificed is but a fraction of the 

 net losses resulting from this disposi- 

 tion to cash out at the first opportu- 

 nity. The buyers who have gotten 

 possession of this wool at low prices 

 are in a position to offer it on the 

 Boston market at less than its present 

 value and still make a handsome profit. 

 No matter how efficiently the Na- 

 tional Wool Marketing Corporation 

 may operate nor how skillfully its 

 salesmen may endeavor to mark up 

 their prices in accordance with cur- 

 rent values for wool these low priced 

 wools hang like a pall over the mar- 

 ket. 



If the National asked 30c for Illi- 

 nois wools there are plenty of wools 

 that have been bought by independent 

 buyers that can be sold at 28c with 

 substantial profit to the purchaser. 

 Thus, the wool grower himself by at- 

 tempting to match his wits against 

 the experience and superior market in- 

 formation of the buyer has not only 

 deprived himself of a legitimate price 

 for his product but he has contributed 

 to a market condition which prevents 

 all growers from getting fair values 



for their product. There is only one 

 answer to this situation and that is 

 the united effort on the part of the 

 growers themselves to develop their 

 own marketing machinery. 



Private Buyer vs. Co-op. 



Someone asks "What's the differ- 

 ence between the private buyer and 

 the cooperative?" That question can 

 be best answered by quoting the re- 

 ply of an Illinois wool buyer when 

 asked how he determined what to pay 

 for wool. He replied, "Well I read the 

 Journal of Commerce and the Boston 

 wool market and then I start out to 

 buy it as cheap as I can. If some 

 competitor forces me to raise my price 

 I have to raise it, but I don't raise it 

 unless I have to." Contrast this with 

 the policy of the cooperative. Instead 

 of paying the producer of wool, live- 

 stock or cotton as little as they can, 

 they pay him as much as they can. 

 Which system holds the most promise 

 for the producer? 



The pooling plan of marketing has 

 certain fundamental weaknesses which 

 we shall probably never get away 

 from. In the first place most growers 

 expect the average seasonal prices to 

 be equal to the highest price that is 

 paid for the commodity at any time 

 during the entire season. This is, of 

 course, impossible. If all growers sold 

 or attempted to sell at the peak pe- 

 riod no peak period would appear at 

 that particular time. It is easy to 

 look back and see when the peak pe- 

 riod was, but it is impossible to look 

 forward and determine when the peak 

 period will be. 



Grower Usually Easy Prey 



If the individual grower has or feels 

 that he has more knowledge of the 

 markets than the professional dealer 

 in any commodity and if he has no 

 interest in the building of a per- 

 manent selling agency under producer 

 control perhaps he is justified in sell- 

 ing as an individual. But if the 

 grower is willing to recognize that he 

 is at a disadvantage about nine times 

 out of ten when he attempts to match 

 his information and experience in sell- 

 ing with that of the professional 

 dealer, and if he does not have any 

 interest in building a permanent sell- 

 ing organization operated on a policy 

 of profits to growers instead of profits 

 to purchasers, then he should partici- 

 pate in the pooling plan of market- 

 (Cont'd next page, Col. 3) 



