Australia’s Experience with Its Wool Buffer Stock Scheme 1

This chapter aims to use Australia’s experience with the collapse of its wool buffer stock scheme in order to illustrate the problems involved in using a buffer stock scheme and in disposing of accumulated stocks, particularly after the collapse of such a scheme. Wool is one of the most important export industries in Australia. The level of wool supplies in Australia is influenced by many factors including seasonal conditions, production costs, and returns from wool in both absolute terms and relative to returns from other agricultural commodities such as grains, beef, and sheep meat, all of which compete for farm resources. The 1987 act devolved responsibilities for setting floor prices and the tax rate to both the Australian Wool Corporation and the Wool Council of Australia. The potential benefits from the Reserve Price Scheme to wool growers need to be weighed against the operating losses of the scheme incurred by the Australian Wool Corporation over the life of the scheme.