DAIRY INDUSTRY

Dominion, Volume 27, Issue 163, 7 April 1934, Page 8

DAIRY INDUSTRY

Specific Proposals by Mr. Goodfellow 10-POINT PROGRAMME New Zealand Urged to Set House in Order “PREPARE FOR THE WORST” ■Dominion Special Service. Auckland, April 6. Holding that a reduction of all internal costs is vital to the existence of the dairy industry in New Zealand, Mr. William Goodfellow, managing director of Amalgamated Dairies, Ltd., in an interview today outlined a ten-point programme of remedies calculated to meet the present crisis and enable the industry to compete successfully in the world’s markets in the future. Mr. Goodfellow suggested the following propositions for the consideration of the Government (1) National economy, including a 50 per cent, reduction in the size of Parliament. (2) Reduced tariffs and rates. (3) Bring the exchange back to •par with sterling. (4) Replace the exchange premium with a temporary subsidy. (5) Encourage dairy farmers to breed pigs, ewes and poultry. (G) Improve and maintain the quality of dairy produce. ,-. (7) Reorganise the Dairy Produce Board. . ’ (8) Actively push sales in all new markets. (9) Establish three large central patting plants in the United Kingdom. (10) Push and advertise "hernleaf” pat butter throughout Great Britain.‘'The dairy farmers of New Zealand, and of the Auckland province in partiiiillar. will be exceedingly relieved to kuo,w that the British Government defi-nitely-does not want an Empire conference for the purpose of discussing the question of a quota restricting imports of dairy produce during the period of the Ottawa Agreement,” said Mr. Goodfellow in reviewing the events leading up to the present situation. The recent “panic policy” of our political leaders, in his opinion, was to be deplored, but in justice to the Prime Minister it should be mentioned that he obviously never was keen on the restriction of the Dominion’s exports. On the other hand. Mr. Coates for some time past had been obsessed with the necessity for planning everything, and the dairy industry at present appeared to be his particular hobby. Mr. Master®, on the other hand, could be relied upon to advocate whatever best suited the secondary industries. It was questionable whether either of those gentlemen had ever given the question of restriction of exports of dairy produce any serious thought. They talked in an offhand way about finding new markets, but failed to indicate where these were to be located. Only 16 per cent, of the butter and about 4 per cent, ot the cheese produced was consumed tn New Zealand. Therefore the local market was not of much value to the industry, and could not be further developed. Mr. Coates's Booklet. Mr. Goodfellow expressed the opinion that the recent quota talk was more or less supported by local manufacturers, mainly in the South Island, in the hope that the restricted exports of dairy produce would cancel out the Ottawa Agreement and result in the maintenance of the existing high tariff policy. "The issue was first raised in New Zealand by the issue of a booklet by Mr. Coates in May, 1933, entitled ‘A Butter Quota or a Free Market,’ which might be best described as a ‘yes-no’ statement, but in favour of a quota. That booklet evidently gave the British Minister of Agriculture the impression that New Zealand farmers favoured Mr. Coates’s ideas. Subsequently discussions took place in London with Messrs. Forbes and Masters, and due to a promise given to the Dairy Board successfully resisted Major Elliot's arguments in favour of the restriction. Later, upon Mr. Forbes’s invitation, Mr. Baxter visited New Zealand, but failed to convince the Dairy Board that the restricted exports of cheese would benefit the New Zealand farmers. Upon his return to England Mr. Baxter made certain public statements which indicated that the Dominion Government had given him some promise regarding the quota. Following Mr. Baxter’s visit, and prior to his arrival in the United Kingdom, the New Zealand Government cabled Great Britain intimating that New Zealand could not accept Mr. Baxter’s cheese restriction scheme, but that it would consider a comprehensive plan. “On February 22 last the New Zealand Government was advised of the British milk subsidy—a scheme for assisting the United Kingdom dairy farmer, who had undoubtedly suffered severely due to the exchange depreciation and subsidies on part of both Empire. and foreign countries. On February 28 the New Zealand Government cabled Great Britain, stating that it had been approached by a representative of farmers’ organisations (Mr. W. J. Polson, M.P., and the Farmers' Union) regarding the dairy farmers’ position, and suggested that the question of regulating imports of dairy produce into the United Kingdom should be considered, and intimated that accordingly a conference of representatives of dairy producers throughout New Zealand had been convened for March 13. Decision of Conference. “The New Zealand Government also asked the British Government for full information regarding quotas to be pladed before the conference. On March 9 the .British Government cabled to New Zealand intimating that on February 13 Sir James Parr had made it clear that the Dominion farmers did not want a quota and that the condi tio'n in the United Kingdom had since undergone considerable change, due to the milk subsidy, and that accordingly tlie question of restricting imports was not now an immediate one for the United Kingdom. “On March 13 and 14 the Dominion Dairy Conference was held in Wellington,” Mr. Goodfellow continued. "Acting under Ministerial advice the conference agreed to send a delegation to Great Britain, but the personnel and nature of the delegation were referred to the Dairy Board, with instructions to confer with the Government. Finally the Dairy Board met the Government in conference for two days on

March 22 and 23, when, contrary to the board’s declared policy, and one can only assume under extreme political pressure, the board finally agreed to a delegation being sent to London headed by a Minister and with power to at 't-” . „ This meant that the Dairy Boaid had placed the industry in the hands of a member of the Government with power to enter into an agreement -o restrict exports of dairy produce from New Zealand. The Dairy Board was requested to meet the Government again on April 11 to present and discuss the restriction scheme to form a basis for discussion at an Empire conference in London. The latest reports received from Wellington a few days since stated that the British Government, however, has again intimated that it does not desire a conference. End of Agreement in Sight. "This roughly summarises the position to date, and as far as the interests which I represent are concerned, said Mr. Goodfellow, "we are very greatly relieved to know that all this quota talk is now over'and done with, and we sincerely hope the Government and the industry generally will get rid of these get-rich-quick theoretical schemes, and will now get down to some sound constructive plan for the permanent relief and betterment of the dairy-farmer and the industry in general. In the first place, I would like to point out once again that the Ottawa Agreement expires in less than 18 months, and that a new agreement will have to be negotiated prior to that date, which, in my opinion, will in all probability be based on results. “Politicians and those interested in the maintenance of the tariff are continually stating that the British Government will not make a separate agreement with New Zealand, but apart from past history it is difficult to find any justification for such a statement. What has occurred in the past need not necessarily be the policy in future. Britain has changed her trade policy, and now has a tariff as a bargaining counter. Well-informed commercial opinion in London favours the imposition of a preferential tariff rather than a quota. It is quite conceivable that the British import tariff will be based on the results of the operation of the existing Ottawa Agreement. If this proves to be the case New Zealand will not make a very satisfactory showing when compared with other Empire countries. Thus the urgent necessity for a reduction in both the tariff and exchange. “Unquestionably the Ottawa Agreement was intended to give the British manufacturer improved trade facilities in New Zealand., In reality, the small tariff concession granted has been more than neutralised by the exchange increase, with the result that the British manufacturer is now worse off than before the Ottawa Agreement was signed. Thus the growing dissatisfaction in the United Kingdom with New Zealand —a development which is most unfortunate from every point of view, and one which must cause our Government considerable concern. "Prepare for the Worst.” "The failure of New Zealand to reduce tariffs, to at least minimise the exchange increase diversion of a substantial business in consequence from England to Australia and the renewal of a one-sided agreement with Canada to enable Ameri-can-owned Canadian plants to obtain British Empire preference are some of the things that cause one to say that New Zealand has since Ottawa shown an almost callous disregard for her only worth-while customer. There' is yet time, but not very much time, to put matters right. New Zealand’s obligations under the Ottawa Agreement (which was her first trade agreement with the United Kingdom) should be carried out in a generous spirit and -be worthy of her past reputation. “First of all,” said Mr. Goodfellow in amplifying his proposals, “all internal costs must come down. This is a matter of paramount importance in a primary producing country selling the major portion of its production on the world’s markets. Goods of all descriptions other than food are far too dear and are restricting buying power. The farmers carried the high tariff on their backs when prices were good, but now they can do so no longer.” Regarding the first of his ten proposals he stated that no one could tell bow much longer the present financial blizzard would last. New Zealand should therefore prepare for the worst and no continue to hope for the best. When European conditions improved, and thete was little indication of such as yet, Mn Zealand would again have no difficulty 1. selling all the dairy produce it could produce, provided quality and costs "ercompetitive. Economy of some magnitude could with advantage be secured by, for instance, reducing the size of Pail ament by 50 per cent, lhe tai iff should be completely removed forthwith from ah those British goods which did not compete with local industries. I hat woul l. promptly reduce the cost of living to th_ whole community. Thereafter the Tariff Commission's report should be dealt wi u and put into operation as soon as pos--6'blC‘ Need for Betler Quality.

The United Kingdom was New Zealand’s only big market, and we should aim at a permanent policy to keen lhe exchange on a parity with sterling. Until the tariff hnd been substantially reduced and some improvement had taken place in the world s markets the dairy-farmer should receive a subsidy to enable him to carry on. The British Government established a precedent m that respect, therefore there could now be no objection from tlrtit quarter. The Government by propaganda should recommend dairy-farmers to go in for diversified farming. For instance, they shouki take advantage of the present high price of pigs for export to Great Britain and put on sheep and produce poultry rather than increase their dairy herds at the present time. The Government should aim at a steady anti permanent improvement in the average quality of both butter and cheese. That could be accomplished with the cooperation of the dairy producer. The Dairy Produce Board should be reorganised with the object of making the board efficient and a strong leader for industry. As at present constituted it could seldom be unanimous on nny subject or matter of policy. Thus endless dissension resulted. What was wanted was a board with a sound, progressive, stable policy —an impossibility under the present constitution. The directors of the dairy companies should elect a national dairy council by means of a ward system based on tonnage of produce. This council could meet occasionally to discuss matters of policy, and from its members elect an executive or board to carry out its instructions. Such a board would liave a definite objective and would periodically report back to the, council, where members would be in training to fill any vacancy which might occur from time to time. A board so constituted would get cm with the important business of the industry and give a lead in all matters of importance. He did not desire to cast any reflection on the existing board members who were obviously making the best ot an impossible position. The question of a reorganisation of the board was a matter of vital importance which could be quickly put right if the Government were genuinely anxious to assist the industry. , . , Selling System Criticised. “Our selling system in . the United Kingdom ie all wrong.” said Mr. Goodfellow. “This was realised by the New Zealand Co-operative Dairy Company when a thorough investigation was made in 1922. Nearly 10 years ago a pattin.2 plant was established in London by the company, and since that date the Anchor pat trade lias grown steadily until today about 90 tons of butter per week are being packed in the familiar New

Zealand parchment wrapper and sold in quarter-pound, half-pound, and ouepuund pats through Great Britain. "Practically the whole of New Zealand, Australian and Argentine butter shipped to the United Kingdom is wold in bulk, and thio fact makes substitution extremely easy. Further, it is almost impossible satisfactorily to advertise and push the bulk line, as there is no guarantee that the customer receives what ia asked for. Then again the palting ofisuch butter in the United Kingdom overcomes the spreadability difficulty as the result of the butter being frozen." Mr. Goodfellow said that in his opinion the Dairy Board should immediately establish three large patting plants, say, in London. Manchester and Glasgow, where the bulk of the New Zealand butter would be examined and then repacked in Jib., ilb., and lib. pats under “Fernleaf” brand. If that proposal were tackled in a businesslike manner it should be possible fairly rapidly to build up a trade in packet butter of, say, 20,000 boxes a week, which could be gradually increased over a period of years until the bulk of New Zealand butter was sold in this manner. By that means Danish prices could be obtained for finest New Zealand butter and goodwill of an enormous value would be built up for the New Zealand dairy industry in the United Kingdom. He had suggested three plants in order to give quick delivery. It would be advisable to employ about 50 travellers to be stationed throughout Great Britain, each to be responsible to canvass a given list of shops for orders weekly, the orders to be handed to the particular grocer’s wholesale distributor for delivery and the credit manager of the pat plants would buy his weekly requirements from London importers and thus prevent friction with Tooley Street merchants and at the same time raise the price by buying large quantities on the market regularly. Publicity Campaign. In addition to a large number of travellers anything from £75,000 to £lOO,OOO a year should be available for publicity of ail classes in the United Kingdom, including the talking films. In addition to organising an active campaign to cover the British market, the Dairy Board should employ several travellers to be located at central points for the purpose of developing new markets and to watch the interests of the New Zealand dairy producers and exporters. For instance, a representative could be located at HongKong, who would periodically work the whole of the East; another at Montreal, to keep in touch with the Canadian and American territory: a third man at Panama to work the Central American territory, and a fourth at London to work periodically the Mediterranean and North Africa. Mr. Goodfellow stated that his own company was doing business in all these localities, but the cost was too great for any one firm actively to pioneer small markets and the work could be done much more efficiently by the Dairy Board acting on behalf of the whole industry. The scheme would cost money, but that could be easily found if the Government gave the Dairy Board the necessary legal authority to make a marketing levy on ■all dairy factories of Id. per lb. on all loeal sales of butter and id. per lb. on cheese. Dairy produce was sold at very low prices in New Zealand and an extra Id. on the retail price of butter would not affect consumption one way or the other and wool'll be readily accepted by the public if the money were to be spent for improving the marketing of New Zealand produce. By that means the Dairy Board would collect annually, say. £250,000, without, any payment whatsoever being made by the dairy farmer. Plant in London. Mr. Goodfellow said he had given this scheme a good deal of thought and as it was based on his own experience in marketing the produce of the New Zealand Co-operative'Dairy Company for many years past lie was certain that it wouid mean an increased return to the whole of the dairy farmers of the Dominion and without any additional cost to them whatever. Referring to the London patting plants Mr. Goodfellow said that it might lie possible to induce the directors of the New Zealand Co-operative Dairy Company to hand over as a going concern at a reasonable price their new freehold property and plant located in South London. The Anchor pat factory output in Great Britain now approximated 90 tons per week and was being extended at the rate of 500 tons per annum. All expenses, including advertising, were paid out of profits. The capital required for each plant would be approximately £40,000, and he had no doubt, but that the money could readily be obtained either from the bankers of the Dairy Board or from the Government. The revenue would be sufficient to enable the cost of plants to be repaid within a period of three years. In conclusion, Mr. Goodfellow stated that it would be remembered that there was in reality no over-production of dairy produce, but rather under-consump-tion, especially in Europe, where quotas and tariffs had greatly restricted the normal consumption of butter. Sooner or later the financial hurricane would pass and once again closed markets would gradually reopen, and New Zealand would, if well equipped, be called upon to supply all high-grade butter and lamb she was capable of producing, as in the production of these two products our climate excelled all others. "Let us then,” he added, “set our house in order now, so as not only to weather the storm but to profit to the full when the world outlook is brighter. - ’

BOARD AND CABINET

More Discussions Pending When invited last evening to comment on the ten points suggested by Mr. W. Goodfellow for the rehabilitation of the dairying industry, the Prime Minister. Rt. Hon. G. W. Forbes, said the general question of the industry and what could be done to assist it in ils present difficulties, would be discussed when the Government again met the Dairy Produce Control Board in conference following n meeting of the board to be held on April 11. REVERSAL LIKELY Australia’s Quota Policy MR. BRUCE TO VISIT N.Z. Sydney, April 6. The "Sydney Morning Herald” says: “Although last year when proposals were made for the limitation of butter exports from Australia to the United Kingdom the Australian Dairy Proplan, it is expected that this policy will shortly be reversed. Mr. Bruce has conferred with representatives of duce Export Control Board opposed the the dairy industry, and it is considered certain that any action decided upon by Australia will be in conjunction with New Zealand. “Mr. Bruce will visit New Zealand on his return journey to London, anti confer with Mr. Forbes on this and other subjects.” VISIT CONFIRMED Subjects to be Discussed The report from Sydney that the High Commissioner for Australia in London, the Rt. Hon. S. M. Bruce, will visit New Zealand on his return journey to England and take the opportunity of conferring with the Prime Minister, Rt. Hon. G. W. Forbes, was confirmed by Mr. Forbes last evening. Mr. Forbes said that Mr. Bruce would discuss with him questions concerning the dairying industry Unit, were of mutual interest to the Commonwealth

and the Dominion. The “other subjects” mentioned in the cable largely concerned the marketing and quality of wool. Mr. Forbes stated that a conference of those interested in the wool industry was recently held in England to discuss certain aspects of the trade, ineluding marketing, improvement of quality, and the organisation of publicity. Mr. Bruce was present at that conference, and it had been arranged that he should discuss with the Prime Minister of New Zealand various questions raised at the conference when on his way back to the Old Country from his visit to Australia. The conference referred to by Mr. Forbes was held shortly before Mr. Bruce sailed from England for Australia. Prior to the abolition of the Empire Marketing Board the Wool Research Station at lurridon, near Leeds, of which Dr. S. G. Barker is director, was maintained by the board, and one of the subjects considered at the conference was the continuance of the work at Torridon. It has been ■suggested that the station might be kept going by means of contributions from various organisations interestci in the marketing of wool and the woolgrowing countries of the Empire. It is believed that this is one aspect of the wool business that Mr. Bruce intends to talk over with Mr. Forbes. UNFROZEN BUTTER Shipment to England NEW SPECIAL PROCESS By Telegraph.—Press Association. Cliristeliurcli, April 0. Butter treated under a special process which it is claimed will allow it to compete on an equal basis, both in quality and flavour, with the Danish on Home markets, will be shipped from Christchurch this mouth.. It is claimed also that the new process will make possible a saving of £300.000 annually to the dairy industry. Local tests of I he process have been highly satisfactory, and the inventors are positive that the butter will stand the final test of shipment to England. If the shipment is a success it will moan that butter can be exported to London unfrozen, will retain all its freshness in transit, and have keeping qualities equal to frozen butter. These at any rate are the claims of the inventors. Some particulars of the new method were given to a reporter by Mr. L. Hansen, manager of the Kiwi Dairy Company’s factory in Christchurch, where the butter has been made. The cream is treated in the same way as the Danish, to ensure butter of good flavour and preservation in transit. This is secured partily by the use of CO 2. One new essential is the use of dark wrappings to exclude light. The taste of the new butter is very different from the ordinary New Zealand fac-tory-made. It is described as “tasty,” of very tine texture, easy to spread, and in all respects like Danish butter.