The Press MONDAY, MARCH 5, 1956. The Dairy Industry

Press, Volume XCIII, Issue 27909, 5 March 1956, Page 10

The Press MONDAY, MARCH 5, 1956. The Dairy Industry

Fundamental changes in the control of the dairy industry are proposed in the report of the Dairy Industry Committee of Inquiry, a summary of which is printed this morning. The committee’s principal recommendation is that all the powers and functions of the New Zealand Dairy Products Marketing Commission should be taken over by the New Zealand Dairy Board, except that prices for producers should be fixed by a separate authority to be known as the Butter and Cheese Guaranteed Price Committee. The committee thinks it desirable, for considerations associated with goodwill, contracts, and property, to retain the name of the Dairy Products Marketing Commission, but recommends that the reconstituted commission include only the elected members of the Dairy Board. At present the commission consists of three members appointed by the Government and three selected by the Government from a panel of names submitted by the Dairy Board, and an independent chairman. This would place the control of both the production side of the industry (now exercised by the Dairy Board) and the marketing side (now exercised by the Marketing Commission) in the hands of the same persons. The separate Butter and Cheese Guaranteed Price Committee would consist of two nominees of the Government, two nominees of the Dairy Board, and a chairman agreed upon by the Government and the Dairy Board. Other recommendations acknowledge the industry’s belief in centralised control of export marketing and in the principle of fixing prices for butter and cheese at the beginning of each dairy season, though the inclusion of dried milk powders and casein within the guaranteed price structure is not favoured by the committee of inquiry.

The proposals would, of course, take the dairy industry very close to its objective of complete producer control. A long step in this direction was made in 1947, when the Labour Government (under considerable pressure from the industry) passed the marketing of dairy produce to the Dairy Products Marketing Commission, which was constituted with strong producer representation, and gave the commission the duty of fixing the guaranteed price. In its report, the committee of inquiry discloses that the Dairy Board and the Marketing Commission have not always agreed. It refers to a difference of opinion on the interpretation of the 1952 agreement about the use of seasonal surplus funds, and the investment of part of the reserve funds in the dairy industry. This agreement also provided for additional matters to be considered in fixing the guaranteed price; and apparently there have been differences of opinion about this question. The committee believes that production and marketing are so interwoven in practice that administrative machinery which places them under separate control is bound to give rise to difficulties, “ notwithstanding the earnest desire “ of the personnel concerned to be co-operative ”. This weakness, in the opinion of the committee, is greatly accentuated under a system of free marketing when a close and direct link between production, manufacture, and marketing in an expanding and diversifying industry “ is most imperative and pressing ”. The committee argues its case persuasively—from the standpoint of the industry. But it is open to serious question whether an industry statutorily endowed with a marketing monopoly should be as free from public control (through the Government or an agency of government) as the report suggests. The committee concedes that government policy is involved and suggests that the single controlling body should include “ some government repre- “ sentation to ensure proper co- “ ordination of government and “ industry interests ”. Two government nominees are proposed for the enlarged Dairy Board of 13 members, the other 11 being elected representatives of the industry. So small a tail on so large a dog is not proposed for the separate price-fixing authority, because it is acknowledged that “ any system of price fixing “ which involves a State guarantee “ and use of reserve funds must “ necessitate a full consideration of “ government financial policy ”. The committee’s report is silent about considerations such as those in Section 12 of the Dairy Products Marketing Commission Act, 1947. This section provides that “ in the “ exercise of its functions and “ powers, the commission shall “ comply with the general trade “policy of the Government of New’ “ Zealand, and shall comply with “ any general or special - directions “ given by the Minister to the “ commission pursuant to the policy “ of the Government in relation “ thereto ”. These and other equally necessary powers reserved to the Government under the act naturally limit the freedom the industry can expect to enjoy. Favourably disposed to producer control as the present Government is, it must hesitate before surrendering essential safeguards of the community’s interests. These will be affected just as closely by the committee’s proposals for the domestic marketing of (

butter and cheese, which will be dealt with in a later report. Con-: sumer interests and the question of, the Government subsidy on butter will have to be given careful consideration here.