DAIRY PRODUCE CONTROL

Auckland Star, Volume 198, Issue LVII, 21 August 1926, Page 6

DAIRY PRODUCE CONTROL

THE COMPULSION ISSUE,

QUESTION OF FINANCE

Although the New Zealand Dairy Control Board is proceeding apparently with complete confidence to set the compulsory clauses of its marketing policy into effect as from August 31, it is freely asserted by opponents of the principle "that the board has by no means overcome all its difficulties. In fact the all-important one of finance is said to be still in abeyance.

As recently as yesterday the copy of a cable was received in Auckland to the effect that practically the whole of the Tooley Street importers were steadfast in their refusal to establish credits in the name of the board. In other words, if they are to continue to market New Zealand butter, they insist upon doing the business through their own New Zealand agents, with whom they will establish credits.

In this connection some interesting details are gathered from the report of a conference which took place in London on April 15 between representatives of the New Zealand Dairy Produce Exporters' Association and of the Control Board. The chairman, himself a leading importer, sad he assumed that interest would be charged from the day the draft was sighted until seven days after sale, as had been the case in the past. Mr. Motion, for the board, replied that finance would be arranged as in the past. Some firms might be in the happy position of making better arrangements with their bankers than others, therefore under the new arrangement they might have to pay a little higher rate as it would be unfair to penalise anyone who could not make such arrangements.

Mr. lorns supplemented this by stating that it was the intention of the board that all should be .on the same footing, small or large.

Another importer asked if it was intended to have 30-day drafts or demand drafts.

Mr. Motion replied that this was a matter which the board would consider.

During a subsequent discussion, it was pointed out that it had been the custom of the trade to charge factories one p*?r cent over Bank of England rate for interest. It was not reasonable to expect merchants to accept a two per cent commission, and without further remuneration furnish capital as well. In this connection a member pointed out that commissions were based on immediate sale. At one time, he added, an inquiry was made from the trade regarding the actual cost of distributing dairy produce, for the reason of income tax returns and assessments. and it was found that there was a profit of only one-quarter per cent after expenses were deducted. If by chance they thought that under the proposed contract the nett return was unsatisfactory, naturally their efforts would be diverted to lines where they could make

Replying to the suggestion that a charge of one per cent over bank rate should be allowed Mr. lorns said the matter would be referred to the board.

Further evidence of uncertainty on the board's part appears to be disclosed in a statement made by Mr. Motion at the same conference. Asked whether the. whole of the butter and cheese for the coming season had been allocated to different marketing firms, the board's representative replied "We (the board's London representatives) suggested that the board should reta-in 1000 tons of butter and 1000 tons of cheese for future consideration, and they cabled back asking us who was going to finance."

There has not since been any public pronouncement as to agreement on these matters with the exception that the chairman of the board reported that he i had received a cablegram in which the Tooley Street importers agreed to establish credits in the name of the board. llt is now pointed out that this agreement was subject to certain terms and j conditions which apparently have not been complied with. I NEW MARKETING SCHEME. CONTROL BOARD'S POLICY. During conferences which took place in London in March and April last between members of the New Zealand Dairy Produce Importers' Association and Messrs. I Motion and lorns. representing the New I Zealand Dairy Produce Control Board, the (question of the board's proposed markeij ing scheme for the coming season was ! fully discussed. Mr. Motion stated that |it was the intention of the board to dis- | tribute the produce through 30 firms, 1 including 16 members of the association, who had been handling New Zealand butter in the past. The produce would be allocated according to the average sales made by these respective firms during the previous three-yearly period. Weekly prices would, be fixed after consultation with the importers. A lengthy discussion took place on the question of commission. Mr. Motion saia j that in the past the majority of agents had charged 24 per cent commission, of which $ per cent had gone to their New. Zealand representatives. As the, board "was now intending to handle all work at the New Zealand end, he.asked if the association members would accept 2 per cent. He stated that some agents outside the association were willing to accept that remuneration. Mr. Motion said the board had offered to do the business on that basis. During the discussion which ensued this proposal became merged in the question of finance, and no definite conclusion was arrived at. It was made clear that the arrangements entered into with the various agents were liable to be terminated at j the close of the first season.