THE FLOUR TRUST.

Ashburton Guardian, Volume XXIX, Issue 7815, 7 June 1909, Page 4

THE FLOUR TRUST.

THE MILLERS' ASSOCIATION,

' Writing on June i. m regard to ; the Millers' Association %\id Timaru correspondent of the i^yt-teltoa Times says: iYLillers. who., have. been, interviewed ■upon the subject have deblaf ed witbeufc hesitation their opinion that it is to the advantage of;: all concerned— millers, farmers, bakefs and the public, generally—that the New Zealand Four j Millers': Association should not be allowed to be burst upland at a general hie'eiiiig of the Association which ,was held -on Fridiy last .a • decision" to' fex-1 tend tlie existing agreement for a further period of three months was ed at by a unanimous, resolution. I his morning some enquiries were made by a reporter with a. view to ascertaining the reason, since there is this unanimity of opinion on the, question, why the millers do riot, subscribe to an agreement covering a similar period to the one that has now expired? The Association, was first formed about seveti of. .eight yejirs ag6, but all the millers, did not join• .the. corporation from the outset. Then .m February, 1904, an agreement, which was to operate, for five years,, was drawn iip and signed by all'the .millers- manufacturing flour, except one < large firm m Auckland and two small ones m Otago, which have changed hands m the interval and were also carried on independently of the Association. That agreement expired in' ;February last, but as a difficulty arose which' is now confronting the associatecr"millers it. was not renewed for a, similar number of years, but simply extended for three months. At the expiration of this period the question;had to.be considered whether the Association would dissolve or not. and a decision m the matter was deferred by the meeting on Friday last for a further period of three months, about forty millers signing a contract agreeing to this arrangement. So far as can be ascertained, there are only six millers who are formally incorporated m the Association who have not signed; and the reason for this arises out of dissatisfaction on tlip part of some of. them with the rate of production fixed for{ them by the Association, which, m order that the quantity of flour manufactured m the dominion may not exceed the demand, determines how mahv sacks per hour each mill shall produce. One of the dissatisfied mills is the Timaru Millinc Company, .whoso present allowance is eighteen sacks per-, hour. When the Association was formed every plant was tested by experts employed by the Association, and-the capacity thus ascertained was fixed as a basis for the output for all mills, m the Association, and it was agreed that no increase: m plant would be permitted beyond that test. ■ :; v - When the Timaru. Milling Company's plant was. tested it was found that its plant was'capable of manufacturing twenty-four sacks :per hour. This came as a surprise to the Association, and it. declined to allow the mill to operate a^B this rate, and after considerable negotiations the company, agreed to accept eighteen sacks per hour as its rate of output. It' was then decided by the Association that this should be the maximum output for any mill. During the past five years the company has worked only one shift, and even then found that at the rate of output fixed by tlie Association the mill could work for only nine months a year. The stoppage of the plant represented a 1 considerable, loss on the year s operations. The company recognises the benefits of the Association, but it has decided that it is not.to its advantage to continue under the present arrangement. It Admits that during the existence of the agreement it has improved its plant by the expenditure of £6000 or £7000, kit it does not ask for consideration on .that account,- but merely that it should be allowed to operate at a, rate at which its plant is capable. Five years ago the Atlas Milling Company, of Timaru, had a production of, sixteen sacks per hour, and the company declares that if the Timaru Milling* Company is allowed to work at a rate of twenty-four sacks per hour it will make a proportionate increase. Neither of these companies has signed the latest agreement. A third milling company, the Bedford, protests against either of the other two being granted increases, and declares that if this is done it will hot- have anything further to do with the Association. Of the other three dissatisfied millers, one is an Ashburton firm, ■ and two are carrying on business m Otago. They are asking for the right to double their output. . ...■'■.!■■ . A miller was asked, by a . reporter this morning for some information regarding the benefits that were derived by the associated millers from the existence of a corporation, arid was told that the principal benefit was that it made the carrying on of their business more economical arid more stable. When the Association was first formed there were twenty-seven agents of millers m Wellington,, and every one of them received 5 per cent commission on' sales. 'Now there was one agent only one commission was paid. The. whole flour milling business of the dominion, with the exception of that of a few millers who were not associated, was controlled, by the Association, which fixed the prices m accordance with the prices of wheat, and gave instructions' regarding the quantity and destination of all flour shipped from the mills to other; parts of the dominion. All purchases had to be made through the Association, and consequently millers had to make no ■provision for bad debts, as they were m a position as a close.corporation to refuse to give credit. In his own case he used to have bills for two, three or four months, amounting to £6000 or £7000, whereas now he had nothing of the kind, except what was payable to him by the Association. That made it possible to work with less capital than before. Another factor that militated against > the' stability-' of business that was now removed was forward sales. A miller might make-a contract with a baker to supply hinv w,it_h flour for sis months or a year, and if the price of wheat went down the miller would be all right, but otherwise he, would_ not. At present the millers were paying a commission of-5 per cent to the Association, and this was-utilised for the payment of rent, Salaries, wages and other administrative expenses of the various offices of the Association. If there were any profits at the end of the year a dividend was declared m the ordinary way. In particularly good years the commission had been reduced to as low as 3£ per. cent. The reporter also addressed a question to the miller regarding the criticism of the Association to the effect that the millers bought wheat at the lowest possible price and unloaded it m the form of manufactured flour, little by little, "taking advantage of every subsequent rise m the price of wheat to increase the price of flour. He replied that, naturally, as business men, the millers bought,their raw material as cheaply as possible, and the prices fixed by the Association were always such as would leave, a fair margin of profit on wheat bought "at current prices. The extent to which a miller could make purchases depended upon the state of his finances and :the 'accommodation his banker was; prepared to give him, and if subsequent fluctuations m the market were advantageous he should surely received the profit, just as he would if engaged m any other business. Those of socialistic tendencies, however, declared that the miller should sell his flour at the same rate as he paid for his wheat. Enquiries made m Christ-church on Friday showed that neither the members of the Association nor the direcors had met since Friday, May 28.