DAIRY EXPORT

Evening Post, Volume CXIII, Issue 139, 16 June 1927, Page 18

DAIRY EXPORT

FIXED PRICE FIASCO

A DOCUMENTED REVIEW

MB. lOBNS ON GOODWILL

Even the poorest intelligence should have recognised that by attempting to cut out the brokers and penalising the wholesalers we were ostracising sections of the trade that had been in the business for many years to the great advantage of New Zealand producers.

The above sentence occurred in an exhaustive and candid jreview made yesterday by Mr. "W. A. lorns, a member of the Dairy Produce B6*ard, at its meeting. The full'board was present, including Messrs. "W. C. Motion and Mr; lorns, who have justfreturned from representing the board in London; also Mr. William Goodfellow, who had. also just returned from a flying visit to London.

Mr. lorns in opening his review said

"I am not here tp:day in any sense | to give an account of- my stewardship—rthat is not required—but a certain amount of misunderstanding and consequent friction has arisen 'during my absence; which, it seems to me, should be discussed at the earliest possible moment. For my part, I •want to do this -without any personal acrimony and without any recriminations, though there are several matters I shall have to refer to with perfect candour. . My first duty, as a member of the board, is to the producers of the Dominion, and this cannot be fully discharged without'placing before them quite frankly the facts" of the position. DICTATION A FAILURE. "Very shortly after my arrival in j London'l realised that any attempt on our part, to cut out any legitimate chan-1 nel of• 'distribution, or any medium between the producers and the consumers that already was serving a useful purpose would be disastrous. This had been demonstrated clearly enough by the investigations'"of" the British Food Department during the Great War, and by the failure of .the prolonged and costly efforts of a great American concern to establish a meat monopoly. If any further.demonstration had been required it-would have been furnished by our own recent attempt at price-fixing. Even the poorest intelligence should have Tecognised that by attempting to cut out the brokers and penalising the wholesalers, we. were ostracising sections of the trade that had been in the business for many years to the great advantage of New Zealand producers. The adoption of this policy drovo a number of operators, into the arms of the Dominion's .rivals and immediately resulted in the lessening of the premium which had existed for New Zealand produce and the widening of the premium for Danish. This dictatorial attitude on our part, opposed to all British methods, had it been prolonged, inevitably, would havo driven the big buyers in England to-the formation oi a "Buying Committee," which would have deprived New Zealand of. the advantages of trade competition." toss or goodwill. In this connection, and in order to save the time of the members of the board, he quoted a letter addressed by the agents of the Now Zealand Dairy Board to the board's office in London, pointing put "the gravity of the situation that had arisen early in March as s.;conMquence -of..the board's price-fix--ing policy.' The letter was from representatives of the provision trade, sighed C.J. Pollard, chairman. It pointed out that as at 4th, March the present unsatisfactory sales position of New Zealand butter - and cheese is due, in our opinion, to a large extent to the loss of the goodwill of New Zealand produce among the distributing trade, which is shown by the persistent and determined efforts on their par* to boycott the board's produce as far as possible. The principal reasons for the hostility referred to above, and also for the present position, are as follows: (a) The fixed.price policy adopted by the central board, (b) Fixed prices nullify the value of experience and judgment both of buyers and sellers and bring about a lack of flexibility'in the market, and a lack of security in tho buyer's mind consequent on artificial movement of price as against tho market being governed by natural condition, (c) The failure of the board to carry out its declared policy to always maintain prices at economic sales levels. The London agency have reversed this policy by maintainingprices at a level which has not resulted in a satisfactory clearance of arrivals. Under the present Bystem there is no effective arrangement in being for the co-operation with the trade to carry out the policy of fixing prices always at sales levels. It is our urgent recommendation that, if tho whole industry is to avoid a severe crisis, immediate steps should be taken: to do away with the . fundamental causes which.have brought s about the present position. PRICE-FIXING GOES. "Having quoted these high authorities on the. effects of price-fixing," Mr. lorns continued, "it is scarcely necessary for me to weary' you with the other overwhelming evidence I have 6n:the subject, but I should like to place 'on record one or two extracts from letters I received from importers, wholesalers, distributors, and others immediately after. ■' the announcement that the board had decided to discard its unfortunate experiment."

Mr, lorns then put in letters expressive of general satisfaction of the trade at the abolition o,f price-fixing. Extracts from these letters read:—

" The short experience of price-fixing has. proved a disastrous failure, and a costly .one for New Zealand producers, and we. hope that the New Zealand producers will see to it that no such colossal blunder will again be permitted to paralyse their industry."

"This decision will meet with the unanimous approval of all sections of the provision trade in this country, and will go a long way towards restoring mutual good feeling between the producers and the distributors."

"We.hope now we shall soon settle down to a trade that may be profitable and mutually satisfactory."

"Goodwill in all business transactions does count for a great deal, and I think it is not too much to say that during tho short time that control was in force all goodwill that hitherto existed was absolutely abolished."

Many other letters to the same effect, said Mr. lorns, were received between 31st March and 6th April, within, a few days of the discontinuance of price-fixing, but of course most of the expressions of approval came to ; him and others attached to the London agency verbally. "Quite probably those members of the board and others who still cling to the delusion that wo I could compel the British merchants, j distributors, retailers, and consumers to I submit to such terms as we cared. to impose upon them, if we only hung on long enough, will tell • you that the people who are rejoicing over the. collapse of price-fixing are animated only by the prospect of making.more money for themselves out of the unfortunate New Zealand producers.' " j "THIB SILLY STORY." "I am not going to follow them in their reiteration of this silly story," continued Mr. lorns, "but it is only due to the friends the industry bag at

Home and to the personal friends -\ve have made there ourselves to say that it amounts to nothing less than a gross slander. I have dwelt upon this pricefixing episode at considerable length, not because 1,, have any fear of the experiment being repeated in our time, but because I want its incidents definitely, placed on record. Having done this I will refer only briefly to other matters which I have to have an opportunity to discuss with the other members of the board in the near future." THE DUTCH BELIEVED. Mr. loi-ns read other correspondence of the same tenor, with special reference to the question of Imperial preference for New Zealand goods. He •added:— "When I was in Holland recently several Dutch merchants stated to mo that they had regarded the embargo placed upon their meat as the -first step towards a 'British-Empire preference' scheme that would shut them out of the English market. But their fears had been relieved.. ' , ■■ "The indignation aroused in England by New Zealand's attempt-at price-fix-ing, they said, had so angered the consumers there "was not likely to be any further talk -of preference. While in Denmark I heard the same opinion expressed by responsible people. "I was astounded by Mr. Gooodfellow's statement, reported in' the! newspapers a little while ago, to | the effect. that there was no ; such thing as goodwill on a Whole-^j sale market," . Mr. lorns contin- i ued. "Every wholesaler handling our products in London speaks of goodwill as an important factor in his business, and if Mr. Goodfellow had been up": against the 'ill-will' the London j Agency encountered while it was try- ■ ing to establish price-fixing ho.would have realised what the ■ other term meant. One firm in Liverpool that prior to price fixation had been takini- • 1000 boxes of New Zealand butter a week, stated to me when fixation was initiated they would take no more of our produce,under the new conditions, and since then their orders have gone to the Danes;- Surely 'goodwill' and 'ill-will' had something to do with this change. . I should say, by the way, that British goods.in general, and New ,Zealand goods in particular, make a very real appeal to the British consumer, and it was only when the agency attempted to fix prices that ho began to kick. I am satisfied that if in any reconstructed scheme any company or any group of ■ companies employs similar tactics the result will bo detrimental, not merely to the dairy farmers, but as well to the great body of New Zealand producers;" ' ■ >-A COMPLAINT. After dealing with high grading produce, and quoting cables which ho had dispatched, Mr. lorns remarked: "There are a number of more or loss personal matters, which cannot be discussed in.any detail in a statement of this kind, and I can only indicate them here as a subjfict for our"early attention. I never have been able to understand why the board has not paid more attention to tho representations made to it by the agency. The manager's practice of consistently communicating with the chairman of the board and Mr.Goodfellow without even informing-the representatives of the board of his intention to do so caused an undercurrent of uneasiness. There could bo no 'team work' in the office uiftter such conditions. There is a widespread feeling at -Home that the administration of the agency in London is not altogether impartial and that it is swayed to some extent by old trade associations: The appointment by the board of a big London firm as its selling agents in the United States and Canada is quoted as a case in point. This was the occasion of a good deal of irritation to-other "sellers 'of;;our" produce. I say definitely that equality .of treatment to bur; customers docs apt exist. ■.■'•'-,- '"■:' : '■■ , ' ':: A FREE PRESS. "There can be no doubt, I think, that much harm has been done to the interests of the producers by tho publication of the "Exporter" newspaper under the auspices of the board. There is a free Press: in this country, which tho whole world is commending, and surely this ought to be good enough for all of us. One- of the 'largo dairy companies in New Zealand had asked each of its agents to contribute £250 towards the institution of the "Exporter," and the paper is now being used to further the ideas and interests of individual members of the board. These arc'some of I the personal-matters wo should discuss, and it is obvious wo should approach ■ them without and, with the single purpose of promoting , tho best interests of the producors, wham we are here to represent and tc> serve."