MARKETING HIDES

Dominion, Volume 33, Issue 117, 10 February 1940, Page 7

MARKETING HIDES

Objection To Scheme Expressed FARMERS’ ATTITUDE Mr. Mulholland’s Letter To Mr. Nash Strong objection has been expressed, on behalf of the New Zealand Farmers’ Union, by the Dominion president, Mr. W. W. Mulholland, to the principle involved irfthe scheme proposed by the Government for the marketing of hides.

In a letter to the ■ Minister ot Marketing, Mr. Nash, Mr. Mulholland criticizes the suggestion that the farmers should be required to subsidize other industries by supplying them with their requirements at lower than a parity market value-.

The following is the text of Mr. Mulholland's letter:-— «

On behalf of the New Zealand banners' Union I desire to repeat, my strong objection to the principle involved in the proposed'scheme of marketing hides, that is to say that the farmers should be required to subsidize other industries by supplying them Witt) their requirements at lower than a parity market value. I desire to protest to you most emphatically against the unfairness of compelling farmers to bear the whole burden of this subsidy, and I would point 'out to you that the burden is not even equally distributed over the farmers themselves as the proportion of the value of stock represented by the hide varies with different classes of stock and may generally be said to be much higher in regard to the stock a dairy-farmer has to sell than that which the producer of beef cattle has to sell. Consequently this method ■ of subsidy becomes proportionately a more severe impost upon the dairy-farmer than upon the regular beef producer. Urgent Problems. I would further bring to your notice that one of the most urgent problems with which the Government is confronted in New Zealand is that of making available to the farmer a sufficient return for his produce to enable him to pay competitive rates of wages with other industries which is, as you know, at the root of the farm labour pro Clem. This scheme is actually intended to reduce the farmers’ returns.

I wish also to object to the proposal to establish a Government marketing organization for marketing hides as being a violation of your definite promise that the Government would not control commodities which were not purchased bv the United Kingdom Government. It is'a further violation of your definite statement to a deputation from the Dominion executive of the Farmers’ Union on November 2, 1939, when you stated that the wa? would not be used as an excuse for the extension of Government control of the marketing of primary products. I hope that the proposal will be very ' carefully reconsidered before you place me in the position of having to. regard the promises of a Cabinet Minister as being unsubstantial. In your telegram you have raised the point of securing- the supply of rawmaterials for local tanners. It .is easily possible without any extensive marketing scheme to secure the full requirements of the tanners, and representatives of the Farmers’ Union have offered, with my cognisance, to place the tanners in a better position than they were in normal times. That is to say to give them the first refusal of all hides with the opportunity of picking those that they desire to take. This was a very generous offer as you must realize and would mean some sacrifice to those whom I represent. Levy Suggested.

Further, if you are determined that the farmers must supply local requirements at below their true value, it is easily possible to do this without any extensive control by simply imposing a levy on hides by which the tanners could )>e reimbursed the amount which their iddes might cost them over and above the price at which it was determined that they should be supplied. This would make entirely unnecessary 'the expensive and complicated organization which it has been suggested that you should set up; would enable the ordinary marketing channels to be used without any interruption or dislocation, and particularly to maintain the channels'of trade with other countries which it is so essential should be maintained intact for happier days when the war is over. I would remind you again of your definite promise that the existing channels of distribution with regard to primary products would lie maintained in order that they might be in a position to function when control is abandoned at the conclusion of the war, and would point out to you that the operation of the suggested scheme would inevitably destroy most of those channels of trade and would violate still another of your undertakings. I hoix. 1 that before a final decision is arrived at you will give the fullest consideration to the points raised and to others that have been put before you by our representatives from time to time.

I can assure you that in the attitude which I am presenting to you I have the very strong support of my organization.

MINISTER AND UNION

Exchange Of Telegrams OUTLINE OF DISCUSSION Copies of telegrams exchanged between Mr. Nash and Mr. Mid holla nd, and an outline of the discussions that have taken place, have been issued by the Farmers’ Union. 'The telegrams follow:— Mr. Mulholland to Mr. Nash, February 2. —-Emphatically opposed lo proposal to supply local users at prices below British parity at farmers’ expense. Particularly unfair to dairy farmer, as hides large proportion of value of cull dairy stock. Mr. Nash to Mr. Mulholland, February 3. —Your wire relative hides fully appreciated. Necessity to prevent undue price rises and supply of Dominion's requirements makes control and pool necessary. Arranged increase for local requirements will shortly be announced. Procedure and policy is in entire accord with expressed determination of all sections not to profit out of war conditions. Every step is being taken to ensure efficient sale of overseas supplier with price related back to Pr Mr.' Mulholland to Mr. Nash. February s.—Thanks your reply my wire re hides. No undue price rise in sight, and supply Dominion's requirements can lie assured without extensive control. I’ool only necessary to supply local users below parity price at. farmers’ expense, to which

1 maintain my strong objection. Unfairness increased by loading farmers with expense of costly organization to keep their prices down and maintain in fu.l profits of wealthy local companies. Proposals conflict with your undertaking that commodities not controlled by Britain would be free here. History of Discussions. (1) A meeting of all inlerests was called bv the Minister of Supply on September J 3 and it was agreed that-tanners should be supplied temporarily (while more permanent arrangements were being made) with hides on the basts of September J. prices. A further meeting was to have been held before October 1 to agree to a permanent- basis. It was agreed, however, that if the British Government requisitioned hides the requisition price would become the basis of all transactions. This principle was later reaffirmed by the Minister of Marketing at a meeting held on Decembei 12, 1939. A further meeting was held on October 18* to arrange for immediate supplies for tanners. No producers’ representatives were invited to be present at this meeting. (2) A meeting was called by the Controller of Primary Industries on November 20 to reply to a cabled inquiry from British tanners re quantity ot hides available for export. .The information asked for was given, but in reply to a request for an offer the High Commissioner replied that the British Government was not prepared to purchase in bulk at present but might be m a position to do so later. If it did it would be at world market parity. Price Fixation Policy. (3) A further meeting was held on December 12 at which the last mentioned information was given by the Minister, wlio said that hi« promise of a free market or products not requisitioned by the Uniletl Kingdom Government conflicted with tie policy of price fixation operated by the Minister of Supply. , Tlm various interests sat in committee but could not agree and submitted different reports as follows:— Producers’ interests: Free market required. but with priority of supply to local tanners.

Exporters: Plan for a limited pool operating through norma! channels, controlled bv export permit and extending temporary arrangement, with priority to local tanners for a nominated and fixed percentage of all hides but without prejudice to the price issue. , n Tanners: Understand they asked for a general pool. Tanners to receive bides at September 1 prices. (4) A meeting was called by the Controller of Primary Production on December 13 to try and reconcile the various suggestions. The meeting was ineffectualbecause the tanners refused to continue the discussion but the remaining interests sent the Minister a memorandum asking for a free market subject to priority for local tanners at market prices. Military Requirements. (5) On December 18 a further meeting of representatives of exporters’, freezing companies’, the Meat Board and Farmers Union decided to go even further and offer all hides for military requirements at September 1 prices.

(6) On December 19 a further meeting was held but this proved abortive because the tanners and footwear manufacturers were unwilling to concede anyground at all in order to reach agreement. After this meeting a memorandum was sent to the Minister by the following interests who were in complete agreement: The New Zealand Meat Producers’ Board, the New Zealand Farmers’. Union, the freezing companies; the New Zealand Livestock Butchers’ Association, and the New Zealand Hide and Skin Exporters’ Association.

The memorandum set out inter .alia: — (a) The Meat Board and the’ Farmers’ Union strongly objected to paying for machinery to keep farmers’ prices down.

(b) Though the Meat Board and the Farmers' Union were willing to make sacrifices on account of the war they were unwilling to make . a subsidy to the manufacturers of New Zealand and their customers in the form of making hides available at prices below United Kingdom parity. (c) Provision of cheap hides at the farmers' expense was inequitable, and if the British Government saw no necessity to fix hide prices there was no need for New Zealand to do so. Local Pool. Id) The institution of a pool would involve: (i) A loss to the farmer; (ii) his payment for the machinery ; (iii.) a certain amount of loss of employment and of skilled knowledge and experience; (iv) loss of goodwill and competition in overseas markets. For this reason a pool was unwise and unfair.

(e) We should not ask Britain to pay more for hides than we asked- our own people to pay for them, and such an arrangement would be a breach of the spirit of Ottawa.

(f) New Zealand manufacturers already have extra protection in exchange control and export licensing and cheaper raw material would be an extra advantage.

(g) Overseas buyers would tend to offer prices not in excess of local prices. On the other hand, farming requisites were daily advancing in price. (h) A free market for hides would mean an advance of 1/6 a WO for beef or 11/6 on a 7501 b. bullock. (i) The extra cost of leather on a free market basis would be approximately 1/per pair of shoes, or the cost of a dozen cigarettes or two pints of beer.

Local Consumption.

(j) If the tanners’ idea of a pool were adopted and tanners were given complete option over abattoir hides this would mean higher prices for meat for local consumption.

(k) As it was previously indicated all parties concerned except tlie tanners and footwear manufacturers were prepared to go to the limit in providing an adequate supply of hides at September 1 prices for all leather required for military purposes. It was pointed out that apparently the' producers and those associated with them were the only people willing to make sacrifices for war purposes. (l) The memorandum asked that the Minister publish all the facts when his decision was announced.

(7) On January I) the producers' representatives and the freezing works and exporters' representatives put forward a suggestion to .provide machinery to enable local tanners to draw supplies of hides at London parity prices. <Bl On January 1!) representatives of the New Zealand Meat Producers’ Board, the Hide Exporters' Association, the Live Stock Butchers’ Association, the Freezing Companies’ Association and the New Zealand Farmers' Union resdlved unanimously that, they were prepared to make any provision necessary to ensure supplies of hides to local tannery, but that they were unwilling to jeopardize future meat and other agreements with the United Kingdom by discriminating in price against Great. 'Britain’s manufacturers as compared with New Zealand manufacturers. Further, that they were prepared, by a levy system, to provide iiides at September 1 prices for military purposes. till On January .">(» a meeting was convened by the Meat Board at which were present al<->o Sheepowners’ Federation and Farmers' Union representatives. Machinery Held Unwieldy. After a considerable discussion the Meat Board and Sheepowners’ Federation representatives indicated their agreement with the pool plan, witli prices for local sales of hides at 25 per cent, above September 1 prices. The Farmers.-' Union representatives indicated that they were unable, to support the principle and that further they considered the machinery proposed to be unwieldy and that the conception of bonus payments was unsound in that they could not be [iaid back to the farmer. (10) On February 5 the Dominion secretary of the Farmers' Union wrote to the private secretary of the Minister of Marketing asking him who was representing producers, particularly dairy-farmers, al the talks in progress on the subject of hides at that date. (11) On February 5 the Minister of Marketing announced in Auckland that, the Government intended to purchase all hides.