DAIRY PRODUCE CONTROL

Dominion, Volume 18, Issue 153, 25 March 1925, Page 10

DAIRY PRODUCE CONTROL

MARKETING METHODS REVIEWED POSSIBLE RISKS 111. In this the concluding article on the question o£ dairy produce control, the writer sets out some of the risks which confront the producers of the Dominion in the marketing of their goods overseas under conditions which may antagonise not only those engaged in the trade but public sentiment.

The tw’o main arguments put forward in support of “Absolute Control”—that it is the only means by which shipments to the London market can be regulated, and by which the disturbance of the market by speculators can be prevented—have been discussed. It remains to mention only two or three minor contentions which have been advanced by the supporters of the extreme proposals of a majority of the members of the Dairy Board. Denmark’s successful invasion of the London market is being quoted in this connection with the implication that the Danes employ the methods the board is now contemplating. But, the truth is that compulsion never has been employed in Denmark. Trading in Danish 'butter is absolutely free. The members of the board’s delegation in their own report, make this point perfectly clear. They say that about 25 per cent, of the total output of Danish butter is purchased in Denmark from the dairy factories by two of the large British distributing concerns, the Co-operative Wholesale Society and the Maypole Company, which have their own agents in Denmark and buy from the factories direct. A further 40 per cent, of the output is sold by the factories to export merchants, and the remaining 35 per cent, is handled by eleven separate co-opera-tive export associations. There is, therefore, neither compulsion in Denmark nor anv big organisation dominating the position. The whole of the marketing is done under the stimulating influence of competition in the open market. The Danes sell practically the whole of their produce in their own country, consigning little, or none at all, to Britain. The supporters of absolute control by the Dairy Board have called to their assistance, strangely enough, the case of the various cooperative associations in America, which handle fruit, cotton, tobacco, and other produce on behalf of the growers; but here thev surely cannot expect to find a precedent for compulsion. There is no compulsion of any kind in connection with these concerns. They meet free competition in all the markets they enter and do business only if they render a better service than do their rivals;

Revolutionary Methods. The proposal of the Dairy Board to handle the whole of the New Zealand dairy produce on consignment, it is contended, is opposed to all the principles of successful marketing in other parts of the world. Here is an authoritative opinion on the subject: "Practically, the universal system, whether farm products or manufactured articles, is to sell the commodities in the country of their production. If wholesale buyers want these goods for distribution purposes they must obtain them in the country of their origin, cither through agents or by direct purchase. Danish butter is practically all sold in Denmark. if British buyers want it, they go to Denmark to buy it. If German buyers want it thev must do the same. The Danes do hot consign it anywhere; they sell at home. It is the same with Canadian cheese, the chief competitor with New Zealand cheese in the Home markets. Practically the whole of the Canadian cheese is sold in Canada. If British buyers, or German buyers, or anv other buyers, want it, thev must go 'to Canada to get it, just as they would have to go to Denmark to get'Danish butter. The same rule prevails in regard to New Zealand and Australian meat. Comparatively little meat is sent to London on consignment. The producers in both countries sell their meat as near as they can to their own farms. Wool is another example. Nowadays almost all the Next Zealand and Australian clips are sold in the country of their production. The same rule applies to manufactured goods. Consignments on anv large scale are rarely, if ever, sent abroad. Manufacturing countries sell their goods where they are manufactured, and overseas countries that want them for distributive purposes go to the market. Calcutta jute goods provide another example of this almost invariable practice. New Zealand is a large buyer of both corn sacks and wool packs; but if a New Zealander wrote to the Calcutta manufacturers informing them that there was a good market for their wares in this country, lie would be told that the corn sacks and wool sacks were manufactured and sold in Calcutta, and that if New .Zealanders wanted them they must buy in the usual market.”

Cause and Effect. These things do not happen without a cause. If consigning to consuming markets were a better system of marketing than selling goods where they are produced, the consigning system would have grown and become more widely established than ever. But the very reverse has been the case. The consigning system is dying out. Producers in every part of the world, whether of the soil or of the factory, sell their goods in the country of production, and they do this, not because thev have no choice, but because, mahv vears of trading experience has proved'it to be the best system. In some quarters farmers and the public at large arc being told that the opponents of absolute control by the Dairy Board are averse to co-operative marketing. There does not appear to be any just ground for this imputation. A business man of very high Standing in the community has given ' it an emphatic 'denial. “I am verv strongly against the compulsory marketing of all the Dominion’s dairy produce by the Dairy Board,” he said the other day when interviewed on the subject, “but 1 am not against co-operative marketing, t believe that well-managed co-operative organisations play a useful part in the world of industry, and I wish them well in every' respect. There is room for both co-operative organisations and proprietary organisation, and I think this opinion is shared by the whole business community. It is absurd to describe us as being averse to cooperative marketing, or to any other legitimate effort.” Other prominent business men have expressed themselves to the same effect. Thqy are equally unanimous, however, in saving that if the Dairy Board takes complete control of the whole of the New Zealand butter and cheese output, and consigns it to Great Britain for sale, it will mean that no section of the trade will be interested in keeping prices up while every section will be interested in bringing them down In Conclusion. Finally, it may be said there are problems in connection with the as-

sumption of absolute control by the Dairy Board which do not appear to have received sufficient attention from the promoters and advocates of the movement. The board’s policy in consigning the whole of the Dominion’s dairy produce to Great Britain for sale on account of the producers, at such prices and under such conditions as it may think fit, thus practically constituting itself the sole seller, in addition to antagonising the trade, as already suggested, may lead to the constitution of a sole buyer. This is a contingency which cannot be ignored. It. might be brought about either by the trade organising to fix a limit, or the Imperial Government setting up a purchasing board with authority to fix prices. In neither case would this be good for New Zealand. Readers of Ute Loudon papers will have gathered that many people at Home are becoming restive over food prices, and hinting that the Mother Country is being exploited by her oversea Dominions. Leading journals have gone the length of demanding that prices shall be fixeo with some regard to the interests of British consumers, and not wholly in the interests of the oversea producers. Then there is the question of finance. The chairman of the Dairy Board, in his platform campaign in support of absolute control, has stated that he has assurances from the London commercial houses on this point; but so far as can be gathered from the reports ot his remarks these assurances seem to be no more tangible than “friendly conversations.” Probably the commercial houses, would be ready to arrange reasonable advances against shipments. but it is doubtful if they would be equally accommodating in regard to produce stored for an indefinite period in the Dominion, and certain they would not take 'over the liabilities of individual farmers and factories to the merchants and shippers who arc to be pushed out of the business These are a few of the points which require to be cleared up before the Dairv Board can expect to find the community unanimous in approval of its proposals.