Wool export scheme needs more cash

Not enough funding has been put into a government export credit scheme aimed at giving greater access to short-term trade credit insurance, according to the Wool Exporters Council. Wool exporters had lobbied the Government to make changes to the export credit scheme after losing millions of dollars in payment defaults reports The Southland Times. The defaults, caused by the economic slowdown, meant exporters were having difficulty getting credit insurance. In some cases wool shipped to contracted buyers in other countries had been left on the wharves, leaving the NZ suppliers to either find another buyer at firesale prices or ship it home again. Council chairman Nick Nicholson said the Government package was welcomed by exporters but the $50 million set aside for credit insurance fell well short of expectations.The wool sector alone was a $700 million industry, he said. "It's a very small amount and too small for our industry, they really need to put another nought on the end of it," he said. None of the council's members had yet used the scheme, Mr Nicolson said. Earlier this year defaults had become a regular occurrence, costing NZ companies tens of millions of dollars, but Mr Nicolson said these had reduced significantly. However, a fall in the NZ dollar, which would usually have been positive for the industry, had been matched by a corresponding fall in demand. Exporters were in a tough position because long-term customers were also having orders cancelled because of a lack of demand and then asking for extensions on contracts. "You've dealt with the guy for years and he's under pressure and says `can you delay for three months', what do you do," Mr Nicolson said.