21 Jan 2009

Overseas buyers default on wool payments

8:51 pm on 21 January 2009

The New Zealand wool industry is finding it increasingly difficult to secure insurance from banks for credit facilities and is calling on the Government for help.

The international commodity price for wool has slumped, with New Zealand now exporting almost half the value of what it was 10 years ago.

Executive manager for the Wool Exporters Council Nick Nicholson says falling wool prices and a sliding New Zealand dollar has prompted more overseas buyers to default on payments.

Credit insurers are reducing their risk dramatically, making it harder to get insurance cover on customers.

Mr Nicholson says sellers are delivering wool only to find buyers will not pay agreed rates. Buyers in China and India are the most common culprits, but the problem exists in other countries also.

Mr Nicholson says the contracts are binding, but often arbitration procedures are not worth pursuing.

He says he hopes the Government will come up with plans to assist and protect the wool as well as other export industries.