POOLS AND PRICES

Evening Post, Volume CIV, Issue 22, 26 July 1927, Page 10

POOLS AND PRICES

CONTROL OF PRODUCE

"A NOTE OF OPTiMISM"

STRUCK BY MR. POLSON

"The Future of Co-operation" was the subject of the address of the president of tire . Farmers' Union of New Zealand (Mr.-W. J. Poison) to-day. "I wish Jo strike a note of optimism," he said, after 'reminding his hearers that the present was a time when economists were preaching lower values and when the primary production of New Zealand, a! it. appeared to him, was '' more or less at a standstill." "The recent set-'baek to co-operative marketing in connection with our dairy produce'" Mr. Poison continued, "to-gether-with the reduced prices obtainable generally for most of our products, have created some anxiety. Personally, I think there should be no such feeling. The present depression, although severe, is undoubtedly temporary. All the evidence, points to an increased future demand for the products of the soil, and the trend of modern economic evolution is so decidedly towards the association of individuals into groups for the merchandising of all products, whether primary or secondary, that organised marketing is inevitable, however noisy the opposition to it. ORDERLY MARKETINGS. "There is little reason to doubt that the problem of the future will be not how to find markets, but how to stimulate production sufficiently to satisfy those markets. Allied to this will be the problem of how best to meet business organisation by business organisation, by the application of orderly methods to farm marketing in order that the benefits of increased demand may not be lost through the handicaps associated with dumping and haphazard individual control." t The speaker then examined the questions of future marketing prospects and the co-operative control of markets. It seemed to him, he said, that while such an examination might not provide an immediate anodyne, it would at least help to revive faith in the business of primary production and the prospects of a successful revolution in marketing methods. He then quoted'from economic authorities on the question of the food supply of the world being sufficient to satisfy the needs, of the increasing populations of the world. Authorities might differ on this subject, he admitted, But to him it was quite evident that whatever the rate of increase in ,worl.d, populations, it mast mean the Stimulation of primary production. That is the farmer's immediate problem. They need not pursue the staggering calculations far into the future. The problem of growth would be the concern of future generations. It was sufficient for them to know that the market for the produce of the soil was beyond question steadily increasing, and that there could be no shadow of doubt about the great future of the industry. "My own belief is that pressure of population and the need for cheaper food . must in the . near future break down the economic barriers of some of .our greater neighbours and destroy arbitrary fiscal cordons which can provide no permanent national bulwark against competition," added Mr. Poison. ORGANISATION ESSENTIAL. _ The speaker observed in passing that however wide the marketing possibilities of the future might become, no adequate advantage could be taken of it without organisation. Sound organisation had been responsible for the success of producers' marketing efforts all over the world. The outstanding success of the Danes, who turned a poor country into a rich one, was due to nothing else. America's efforts in this direction had already achieved the most striking results, particularly in connection with the less'perishable products, although the perishable products had benefited largely also. This led to detailed descriptions of aoroperation in Switzerland in the middle ages) in Yorkshire (begun by Rochdale weaners), and, in latter days, in the United States, Canada, Brazil, Mexica, and Cuba, and—as to rubber—in Malaya, finally to the recent venture of the New Zealand dairy farmer in the control of his produce. Mr. Poison acknowledged that the New Zealand dairy farmers' first real attempt at co-operative marketing had been partially defeated by a misunderstanding on the part f both the representatives of. the dairymen themselves and the merchants with whom they sought busiaess relations, due to some misconceplion of the true principles of co-opera-nve control—"a. misunderstanding which it is still not too late to clear away, and which, while disconcerting to both buyer and seller, may ultimately prove a blessing in disguise." ■ An interesting' historical account of organisation of the marketing of Californian raisins was then given by Mr. Poison, who also outlined the co-opera-tive marketing enterprises most successfully developed in the United States. Then he passed to the firsthand experience he had gained in Canada of the successful co-operation of producers in marketing their wheat in face of the stupendous opposition of -vested interests. The sequel to all that hostility and its collapse was that today the co-operative grain-growers of Canada market 80 per cent, of Canada's wheat, and have recently concluded a successful conference with the whoat-growers of the world in order to establish rules for the orderly marketing of the staff of life. ■ The operations of the Canadian grain growers had been imitated by the Canadian wool growers. "The wool is pooled under the control of the Canadian Co-operative Wool Growers, Ltd Who handle 50- per cent, of Canada's clip (Mr. Poison explained). The wool is sent to two central depots for proper grading; while it is not a truly co-oper-ative enterprise in so far as it sells stock, it has been enormously successful. The operating expenses are low it has wonderfully improved the grade of Canadian wool, and Canadian woolgrowers no longer risk their wool to market immediately it is shorn, but are enabled to hold- it the year round if they so desire. The 2000 stock-holders lire practically all farmers, and the grower derives undoubted benefits. NO PRICE-FIXING. j "All these organisations eschew price dictation," Mr. Poison continued. f Price-fixing is a matter of definition after all. It is evident that the Danes control their product to almost as complete an extent as the New Zealand Dairy Control Board set about attempting. "It is impossible to avoid a conflict between co-operative and speculative interests. Nor can there be any compromiao between them. They are wholly nnliko in their fundamentals, although each serve the public in its own way. Consequently many opponents of prif.c-flxing confuso tlio methods of cooperation with arbitrary prico-fixing—a pritetico which is entirely indefensible. But co- perativo price regulation is an important incident in merchandising, although it ia a moano to an end, rather than the end itself. "- After a passing referenco to the coffee valorisation scheme of Brazil a country which ships 80 per cent, of tho world's coffee from ono State (Sao Paolo), Mr. Poison remarked: "Investigations have revealed that notwithstanding the segregation of crops and tho curtailment of exports, the disloca-

tion of prices has created sensational runaway market conditions. It would appear that control with arbitrary price-fixing is impossible without a monopoly of the product. One of the outstanding instances of control with price fixation and restriction of output was attempted in 1925 by Cuba, a country which produces over five million tons of sugar. . Powers were invested in the president, permitting him to restrict output by 10 per cent, and to fix a price. But Cuba, like New Zealand, has no mono]: ly of her principal product. The immediate effect of a 10 per cent, reduction in the output of sugar was to create an impetus in the production of beet sugar in Europe, and showed indications of bringing new sugar on the market from other cour tries. It is extremely doubtful if the experiment which was devised for a two years' trial will be made permanent. The inexorable law of supply and demand renders such schemes futile. This was the conclusion of President Coolidge''which led him to veto the famous M' Nary-Haugen Bill, the most colossal price-fixing measure the world has ever seen." POOLING IS THE SOLUTION. Mr. Poison held that the New Zealand system of control is not singular in eon- ; ferring legislative power on control boards to bind minorities, but it possessed advantages over other mandatory systems inasmuch as it did not allow any interference with pro-Votion and left it to the producers themselves to decide what measure of control, if any, they should employ. "It seems to me," ho remarked, "that pooling is the key to the successful merchandising of our products. It is impossible to contemplate organised sellinc without pooling.. Pooling gives the most important measure of control and enables regulation of the rate of movement to market and the distribution of the product as to locality and demand. To abandon pooling is to show want of study of economics and to throw away the whole position. ■ It is to betray the producers and deal a deadly blow at co-operation. The American Farm Bureau Federation in its official publications declares that 'pooling is the corner-stone of the merchandising plans of all the American Co-operative Associations that are organised on a commodity wide basis,' and practically every primary industry is so organised." FUTURE OF CONTROL. Mr. Poison maintained'that "Co-op-erative methods df control abroad and New Zealand's system are in many respects similar and aim at the same result. The main differences are: (1) In the application of compulsion to minorities; and (2) the method (now abandoned) of fixing prices. The Danes adopt a different system because they have found compulsion unnecessary, the manifest advantages of pooling being obvious to a laree enough proportion of them to make it servo their needs. The Copenhagen Committee certainly fixes prices, but they are minimum prices much below the actual selling values of the product and are in no^sray intended to hold up the market." In conclusion, Mr. Poison said: "In spite of the recent sot-back of control, I am convinced that it will ultimately achieve all that was expected of it, without price dictation, and that the producers of this Dominion will some day realise its value. One thing appears certain—that control along such lines as we have adopted is essential to the industry and that tho future of the Pri . :y. . producer, whetl • he is a grower of butter-fat or wool, need cause no uneasiness. The markets which already exist are likely to continually increase; the organisation to capture then? depends upon himself. Ho may rest assured that his competitors are developing such an organisation and that they will not lose heart at the first fusillade of tho enemy."