CO-OPERATIVE SELLING

Ellesmere Guardian, Volume XLVI, Issue 3231, 26 June 1928, Page 5

CO-OPERATIVE SELLING

BENEFITS TO PRODUCERS

A SPREADING MOVEMENT

MR. STRACHAN'S ADDRESS.

A lucid statement of the benefits of the co-operative marketing by farmers of their own produce, based upon observations made on his recent visit to America, was given last night by Mr J. E. Strachan, M.A., B.Sc, president of the Canterbury Progress League, before the Ellesmere branch of the Farm-

ers ' Union,

AMERICA 'S PROSPERITY,

Civijisation in the right sense of the word was founded upon the agricultural industry, said Air Strachan in introducing his subject. So long as these foundations were sound, communities prospered, but when elementary facts associated with production were forgot ten and a more or less artificial state of society was erected, the frailty of the foundations was speedily revealed and a collapse was threatened. His impression of America was that there was a- danger of that weakness developing throughout the States, and in this view he had been supported by many prominent economists who had given the situation careful consideration.

There was no doubt about the prosperity of America. In the cities there was not the conspicuous poverty that was usually associated with the great cities of Europe. Certainly the costs of living were high, but wages, generally speaking, had increased at a more rapid rate than the cost of living, with the result that the average man was better off, even with the high prices, than before the changes took place.

The prosperity of America, however, was closely associated with the city life. The rise of great manufacturingcities was usually dated from the Industrial Revolution, and this was the result of greatly increased scientific knowledge which put into the hands of men extraordinary powers of initiative and control over the forces of nature. As a consequence of this applied knowledge, great cities founded upon such commodities as coal and iron had sprung up and organisation had proceeded apace. America showed perhaps more clearly than any other country, to what an extent this organisation of forces could go.

The secret of America's prosperity was largely the genius of her city people in organisation, but on enquiry into the welfare of the rural communities under these conditions, he had foune that the avearage farmer was probably worse off than ho was 50 years ago. This, however, was not universally

true. Economists were alarmed at the extent to which the better class of farmers and farmers' sons were giving up farming and being attracted to the cities, which offered more remunerative and safer employment under better conditions than the land offered. That was one of the principal problems that America had to face at the present time, and economists were pointing out the necessity of adjusting the rural situation and increasing production. One of the most hopeful means of bringing about a better state of affairs, and a better adjustment between the two elements, was co-operative marketing by farmers.

UNITY IS STRENGTH.

There were some notable exceptions to the cases in which he had stated that the farmers of the States were not prosperous. For example, the Californian fruitgrowers were excedingly prosperous, and that prosperity, if not directly traceable to the ■ system of marketing, was certainly traceable to the fact that they were a united body ,of people. The most prosperous elements in society were those that were most thoroughly organised and banded together. When a farmer went into business, as he must do nowadays, he found himself dealing as an individual with organised industries with an enor mous capital behind them. This was a ridiculous state of affairs. The one essential element in the community life was the man who was producing food from the land. If the wheels of time could be turned back, and civilised society became utterly disorganised, every individual would have to be a farmer. That being the case, the strategic position of the farmer was very [strong, but unfortunately his tactics I were not so good, and he emerged badly when he came into commercial relationship with organised industry in the arena of business, where sentiment played no part. There could be no doubt that, in Denmark, co-operative marketing had more than any other single factor been responsible for the great change which had taken place in the last fifty years. It was not marketing alone that had accomplished these changes, and there

was no miracle to be expected from cooperative marketing, but some of the results that followed organisation for marketing were chiefly responsible for the prosperous condition of the Danish farmer to-day.

FINANCIAL BENEFITS

It was a mistake to imagine that the effect of co-operative marketing would be to raise the price of the final product. It was not an institution intended to raise prices and make the general public pay more than they were paying at the present time. Nor would it in any sense of the word convert an unprofitable farm into a profitable one if the fault was in the farm management. The farmer was inclined to imagine that the middleman who was handling his products was making enormous pro* fits. This contention was proved erroneous by a careful analysis of the costs and charges of the middleman made recently in America. The conclusion drawn from this enquiry was that the profits of the middleman ranged from 1 per cent, to 10 per cent, of the value of the product, but that they were very seldom over 5 per cent., so that it was incorrect to assume that the middlemen were making huge profits out of the selling business.

I Undoubtedly one object of co-opera-tive marketing was to save to the producers that margin of profit gained by the middlemen, and a profit of even 5 per cent, or less on wheat saved to the producers might make the difference between success and failure. This was one of the direct benefits of co-opera-tive marketing, but more important than that was the fact that the proper organisation had the effect of reducing the actual operating costs of

selling.

One of the best example's of co-oper-ative marketing was the Canadian Wheat Growers' Association. In Canada the growers had been paying as commission for selling, -Id per bushel but under the co-operative scheme the operating costs of selling had worked out at less than l-10d per bushel.

The greatest financial benefit of cooperative marketing arose from the fact that it provided a better service to all concerned, with correspondingly better prices for better products. This had been brought about first by a proper system of standardisation of pro ducts. Another consideration was that the products from various farms and from various districts were properly named and identified, which stimulated competition among the farmers to have their particular products well thought of and well known.

One of the features of the scheme that should appeal to growers was that it reduced the risks of farming. At the present time, there was often a rush to get into the market early, and wheat was sometimes threshed before it was ready. The competition became so intense that the millowners were able to take advantage of the demand for their services and to charge what he considered too high a price.

Another improvement that turned to direct financial benefit was the elimination of speculative considerations, which was one of the chief evils in this country. In Canada, the speculative element had practically disappeared. Farmers were conversant with the prices and knew that they were going to get the best prices. They were thus able to concentrate with more confidence on the actual producing of their grain. Besides these direct benefits, there were many indirect advantages which could not be assessed in terms of £.s.d. To illustrate some of these, Mr Strachan quoted from the booklet written by him, wherein several aspects of the scheme enuring in indirect benefits are briefly dealt with. DISTRIBUTING RISKS. It had been contended that farmers who remained outside the group could get higher prices than those who participated in the scheme. That perhaps was true —sometimes. He had figures from America to show that, whereas the co-operative price for wheat was level, the prices paid to farmers outside the co-operative institution fluctuated and most of them were lower, the average bing 4d per bushel below the co-operative price. The argument was perfectly sound in some instances, but not every year. The great advantage of being in the group was that the risks were spread. CANTERBURY WIT RAT POOL Mr Strachan went on to outline the pooling scheme drawn up by the Wheat Committee in Canterbury, whereby it was proposed to establish a company on the basis of one man one share. The company would not come into existence unless a certain percentage of the area under crop was secured for the pool, and every "member was to enter a con 1 tract to sell the whole of his wheat to the pool. The farmers were to store their own wheat and present their insurance dockets as proof of the quantity hold. Tn the States, said Mr Strachan, there were two types of cooperative marketing associations, the federated and the centralised, and the one to be employed was determined by the nature of the product.

He had been asked what he consider-

ed the prospects for the success of a co-operative wheat marketing scheme here. It seemed to him that the problems of Canterbury wheat growers were fewer than those of the Canadian growers. In the first place, the area of production was strictly limited. Again, there was no question of exporting a surplus on the world market; it was only the domestic m/irket that we were concerned with. Thirdly, the Government had given protection against the dumping of outside wheat upon the market. These three considerations made the problem much simpler in this country, and that being so, it was amazing that the farmers as a whole during the last two or three years had been receiving a price that was at least sixpence below what it should have been

He hoped that the Wheat Committee would do something to remove the undoubted disabilities of the farming community in New Zealand at the present time. Most of our troubles were due to the fact that farming was not so sound a business proposition as it should be in New Zealand, and as Ave were so dependent upon the products of the land for our prosperity, it was clear that what was wanted was a thorough examination of the rural situation. There were symptoms of trouble on every hand. It was utterly absurd for instance, that unemployment should exist to the extent that it did in this country. There were inclined to be too many people in the cities and too few on the land. MILLERS' ATTITUDE. After his address, Mr Strachan discussed with the meeting various aspects of the proposed wheat pool, and replied to a number of questions. Cooperative marketing, he said, was a growing movement throughout the world, and those countries which had adopted it were desirous that all others should do so. It had been objected that co-operative marketing was opposed by certain commercial interests. He had not had much evidence that that was the case,, but if it was, it was a mistaken attitude. Everyone should know that the prosperity of the country was dependent upon the prosperity of the farmers, and the business community benefited when farm returns were good. One miller had told him that he would welcome the pooling scheme, one of his reasons being that it would save storage. Mr A. Anderson considered that the AVheat Pool would be beneficial if it could be soundly established, but he anticipated opposition from commercial inerests for the first year or two. Mr R. T. McMillan mentioned the probability of strong opposition from the North Island, if not from CanterI bury millers. , Mr Strachan agreed that this was a possibility. However, he considered that co-operative marketing was certain to be introduced eventually, not only in wheat, but in every other line of produce. Where the members had been loyal, and where the organisation had been controlled by men of sound business knowledge, the scheme had always been successful. The fact that the movement was growing so rapidly over the farming world was prima facie evidence of its success. One point that should be of encouragement to New Zealand farmers was that the Canadian AVheat-growers' Organisation was interested in this Dominion, and was prepared to give all the assistance it could in the establishment of the movement here. A vote of thanks was passed to Mr Strachan on the proposal of Mr A. Anderson.

The president (Mr R. G. Bishop) expressed thanks to Mr P. R. Climie, organiser of the Canterbury Progress League, who had brought out Mr. Strachan.

In acknowledging, Mr Climie signified his willingness to assist branches at any time by arranging for lectures. The League was now arranging a fortnightly sequence of broadcasted lectures on alternate Thursday nights. These w Tere delivered by experts in their particular line and were proving of interest to a wide circle of listeners.