RECONSTITUTION

Evening Post, Volume CXVIII, Issue 94, 18 October 1934, Page 20

RECONSTITUTION

THE DAISY BOAED

FOUR STATE MEMBERS

WIDE POWERS OF CONTROL

The rcconstitution of the Dairy Board to provide for a board of eight members, four of whom aro to be Government nominees, changes in the present electoral system, including the i-odue: tion of tho number of wards to four, and the granting of wide powers to the board to control the industry were nmong the recommendations made by the Commission.

The Commission pointed out t-hatat present there was no established head of the industry charged both with the responsibility for administration and direction of policy. Tho industry had grown up round the present system under which, particularly in the developmental stage, the Dairy Division of the Department of Agriculture had "fathered" the industry and had been tho dominating factor in its development. "It seems," tho report stated, "that tho industry is now entering upon anew phase, which demands a measure of administrative reorganisation iv. order that present and future problems relating to oversupplied markets, uneco-1 nomic prices, possibilities of quantitative restrictions, and the need for further quality improvement may be adequately met. This suggested reorganisation envisages tho creation of a body established as administrative head and capable of dealing with tho current problems of the industry more expeditiously and effectively 'and with more authority than has been- possible in tho past. "The existing method of introducing reforms and new regulations only after they have been thoroughly canvassed amongst the various and often divergent sections and interests in tho industry is cumbersome and unsatisfactory. Under tho present system the Government has not beon ready to gazette new regulations unless the measure of support for them has been substantial. As :i result, progress has been, retarded through delays in introducing neodod regulations and through con-

cessions that, have been made to tbe more assertive sections of the industry.

"Probably tho main defect in the constitution of the present board is its establishment as an export or marketing board having no powers in regard to the internal administration of the industry. In these circumstances, the board has been reluctant to participate in matters of internal administration, although it has become increasingly apparent, particularly since the board relinquished " absolute control, that the board's usefulness to the industry has been limited by confining its activities to matters of external marketing. UNCERTAINTIES IN POLICY DIRECTION. "In our opinion the fact that the board has had no powers in respect o£ internal administration has led to uncertainty in policy direction in the industry as a whole, to wasted effort, and to a lack of co-ordination of the1 varied activities counected with the production and marketing of dairy produce. Probably also it has been the. outstanding reason for tho lack of unity and fixity of purpose of the board itself and for the absence of team-work and co-opera-tive approach to its many problems. There is ample evidence that the present board cannot work in a truly cooperative manner, because of the existence of sectional and divergent interests within, the board, and recent discussions on important questions of policy have resulted in decisions clearly showing its divided nature. There have also been occasions when the Government has sought a lead from the board on questions of particular moment, to the dairy industry and to the Dominion. On these occasions the board'has been >sp divided in opinion that it has been quite unable to give any helpful indication or lead to the Government. "It is,' of course, not. represented that there should be no difference of opinion on the board, but it is-suggest-ed that the team spirit should survive discussion and division on questions of policy, and that co-operation amongst board members in the furtherance of the interests of the industry they serve should always be the guiding motive. "It appears to' us, however, that the views of the'members on many questions of policy are so divergent and so impossible of reconciliation that the board in its present form is incapable of acting as the administrative head of the industry, particularly in view of the important questions relating to pro- j duction and marketing which face the dairy industry today. It is unlikely, we think, that the necessary confidence of the industry, the Government, and the public will be accorded to a board in which dissension. plays so prominent a part. RECONSTITUTION OF BOARD. "It is clear that .there is a definite interrelation between the production, processing, and marketing of produce, and that a properly-balanced and soundly-constituted board vested with powers of administration and control over .all these aspects is necessary if the industry is to cope effectively with the acute problems confronting it It is significant that many; competing countries, including Great Britain, have established organisations: for the better regulation, co-ordination, and control of production and marketing of primary products. "It has been said that New' Zealand dairy fanners aro not truly co-operative in outlook, and that co-operation as known in Denmark ia not to be found here. There is abundant evidence to show that inter-factory competition frequently violates the co-operative ideal. "We consider that it should be a function of the board to encourage genuine co-operation within the industry, and that it should have the necessary control, authority, and standing to prevent uneconomic competition and to promote the general welfare of the industry as a whole. "It is considered that many suppliers and factory directors have in the past concorned themselves overmuch in dairy industry politics, instead of devoting inoro of their time to the ■ improvement of farming methods and to the production of the highest-quality butter and cheese. To/some extent the reason for this attitudo is to be found in'the absence of definite leadership, which has led to an all-round' participation of farmers and others in policy' and administrative matters. THE ELECTION SYSTEM. . "The Commission considers that sup-plier-shareholders and factory directors should have reasonable trust m their elected representatives. These representatives are chosen to act as the trustees and administrators of the industry, and, having been ' elected, they should not be harassed or subjected to undue interference by the interests which they endeavour to serve; Adequate safeguards are provided by law for shareholder-suppliers in cases where directors or other elected representatives act improperly. If the administrative system of any large-scale; proprietary trading business is examined, it will be observed that there is a gap between th© shareholders and the administration, and in normal '.circumstances the shareholders do not 'crowd in' on the management and influence tho administration, as has sometimes happened in the dairy industry. The Commission therefore'believes that an elective system which provides for the election by suppliers of the factory directors, who in turn are to elect the industry representatives on tho Dairy Produce Control Board, is' eminently sound. "There ■ was general agreement among the greater number of the witnesses heard on the subject that, the present board is too large and unwieldy, and that its constitution tends to divide the members into conflicting sections. "The present method of election ot the board under the Act as it stands is generally condemned. The. procedure is to take' a vote of the individual suppliers to determine which candidate is to be credited with the tonnage votes allowed to the respective dairy-com-panies operating in the ward. The Eeturning Officer acertains in respect of each company'the number of valid votes recorded in favour, of each candidate. He then ascertains the quantities of butter and cheese produced by the respective factories and exported during the last period of twelve mouths ended March 31, and proceeds to allot to each company a number of votes on tonnage as follows: — For every 20 tons or part thereof up to 500 tons Ivote For every additional 30 tons or part theraof over 500 tons' 1 vote "Two tons of cheese is computed as 1 ton of butter, and 14 crates of cheese equal 1 ton, and 40 boxes of butter equal 1 ton. FIVE OBJECTIONS. "The result of the election is determined by the allocation of the tonnage votes, the candidate for any ward who has received the greatest number of valid votes from, the suppliers to the factory or factories of any company being entitled to receive all the tonnage votes allotted to that company; and the candidate who receives the greatest number of. tonnage votes is deemed to b© elected for that ward, j | Tho objections'advanced against tho j

present method of election" are" as fbl-' lows: — .. . . 1. The system of election of board members by the vote of individual: suppliers is unsatisfactory, because 44 per cent, of tho dairy farmers in the Dominion have herds of nine cows or less, and thus cannot bo regarded as being dairy fanners in the true sense. 2. During the past three years'only 43.56 per cent, of the suppliers entitled to vote actually recorded their votes. 3. The system of the combined tonnage vote and individual vote, which has been described, is open to the objection that the elected candidate may actually secure fewer individual votes than one of the defeated candidates. 4. The disposition of the wards is such that in one particular ward at the present time it would be possible for the suppliers of one company, by a majority vote, to elect their own representative, notwithstanding that tho total number of suppliers of that company in that particular ward_ is less than the total number of suppliers of all other companies in that ward. The Commission has ascertained that this situation has actually never eventuated, and that the elected candidate for this ward has had ■ a majority of supplier votes as. well as of tonnage votes. The possibility, however, exists. • ■ 5. It is considered that the dairy company directors are' in a better position to judge the worth of candidates for election to the board than are the suppliers to idairy factories, many of whom hay no opportunity of knowing anything of the candidates oi- of their views upon current problems. Thus there is a general expression of opinion that the election of dairy industry representa-. tives to the board should be in the hands of thu dairy company directors as the representatives and ..trustees of the suppliers to dairy factories. "It is' considered appropriate to .record that under the .absolute control scheme of 1926, the officers of the Dairy Produce Control Board demonstrated that all matters regarding accounts, storage, handling, and shipment'of produce finance, and pooling. of returns, could be successfully undertaken by the board. The Commission .has been impressed by the good work of the officers of the board in the carrying-out of their duties and responsibilities under the system of limited . control, which has been in. operation since 1927. MORE EFFECTIVE ADMINISTRATION. . "The Commission "considers it imperative that for the good of the industry, and in order, that the administration may be reorganised to meet present and future problems involving all phases' of production and marketing, the board be reconstituted in a manner likely to enable it more effectively, to administer tho industry. It is recommended that control of the industry be entrusted to a new Dairy Produce Control Board. This board should, m addition to its other activities, control the local marketing.of butter and cheese. Envisaging: the necessitiMVof. the .industry in regard to new markets for surplus produce, and the. measures of control of production and marketing likely to becomo necessary to meet the present and future problems of the industry, as well as control of the local marketing of butter-and cheese, to which reference has been made else"where in the- report,'the Commission believes tliat the State must of necessity appoint some members of the board. The proposal that farm and factory instruction should also be the responsibility, of tho newly-constituted Dairy Produce Control Board is an additional reason for State interest in the appointment of the board. For these reasons- the. Commission has. decided to recommend for the board a constitution which, it is considered, gives recognition and fair, balance to the interests both of the State and of the producers. "It is therefore recommended that tne Dairy Produce Control Board be reconstituted and given wider powers, embracing control of volume and quality of the production, processing, and manufacture of dairy produce and control of local marketing as well as export marketing--4 CONSTITUTION OF BOARD. - The Commission recommended the following -reconstitution of the Dairy "The present Dairy"PrJiiice Control Board to be dissolved, an-J replaced by a board of eight members, four elected by the industry (to bo desenbed fes 'elected members'), and four appointed by the Government (to be describe* as 'appointed members'). It is proposed that, for electoral purposes, the Dominion be divided into four wards; "Ward 1 to be the present Wards 1, &, and 3, with the addition of the counties of Matakaoa, Waiapu, Uawa, Waikohu, Cook, and Wairoa; "Ward 2 to be the present Wards 4, 5, and 6, excluding the above-mentioned counties; Ward. 3^ to comprise tho present Wards 7, 8, and 9. We propose that the New Zealand Cooperative Dairy Co., Ltd., be excluded from the territorial basis of ward division and be constituted a separate ward —Ward 4. Tho reasons for this recommendation "for the alteration of # the existing ward division of the Dominion are >: briefly:—" (a.) A better balance of volume of production is secured by the inclusion of the Poverty Bay group of counties in the new Ward 1. (b) The New Zealand Co-operative Dairy-Co., Ltd., by reason of its size, its policy,, and its' association with certain marketing interests, presents a difficulty under the present system. It operates in: at least three of the present wards, and, unless segregated as recommended, it may exorcise a controlling influence- in those wards, ■ virtually disfranchising, other, .'.interests. This company handles between a fifth and a quarter of the total Dominion production of butterfat, and is entitled to have a member on the board . to ' represent its interests. The Act could, of course, be further amended, if and when necessary, to make similar provision for separate representation of any further large amalgamation of interests that might tend to disturb the territorial system of representation. METHOD OF ELECTION. "It is recommended that the present system of election bo abandoned. It has been ascertained that 33,000 out of the 72,000 suppliers to dairy factories own fewer than 10 cows, and cannot, therefore, be regarded as dairy farmers in the accepted sense of the term. Many suppliers do not trouble to vote, and tho 33,000 to whom reference has been made have only a casual interest in the administration of the industry. We have already described the present system of combining tho votes of individual suppliers with the tonnage weighting of the factories they supply. This system is generally condemned as inequitable, and it is undoubtedly cumbersome. We havo also expressed the opinion that tho best method of enabling tho suppliers to exercise their influence in the election of members of the Dairy Produce Control BoaTd is to j jgive the" voting power to the directorj ates of the companies. The directors

are chosen, ia the majority of cases, .by the suppliers to look after their interests, and are more qualified than the individual suppliers to judge the suitability of the respective candidates. "It is recommended that the election' should be conducted by means of postal ballot, the following procedure being adopted:— ' : (a) Candidates ■ (not • necessarily producers) to be nominated by'at least two companies. (b) A voting paper to be issued to ' each company or to the owner of a factory in the case of a factory not ow.ned by a company. (c) The voting paper to bo completed by resolution of the directorate and to be executed under the common seal of the company (or the- hand of the owner), and to be posted to the returning officer. . . (d) The returning officer, to credit the company or owner with one vote for every ton of butter manufactured during the season «nded on the pre? ceding June 30, 2 tons of cheese'being treated as equivalent to 1 -ton.of butter, and each. 20001b of butterfat in whole milk used for other manufacturing and processing purposes being treated as equivalent to 1: ton of butter; tonnage to include.processing and manufacture both for local con-; sumption and for export. " ' -' (c) Where a company or other owner has factories in two or more wards, that company or owner '.-to Tote in any one- ward only in. respect of the Yonnagc of the factory, or factories in that ward. "Provision will have to be made for the. collection of statistics of.butter and cheese and butter equivalents processed and manufactured for local consumption as: well as for export: The 'latter only is dealt-with in the regulation*, gazetted on December 23, 1926. ' ■' THE APPOINTED MEMBERS.; "It is .recommended that the four appointed members to the Dairy "Produce Control Board shall have" among them as wide a range of knowledge and experience useful to tho. industry as possiblo. It is therefore suggosted that one appointed member shall have tech-' nical'knowledge of production-and-manufacture of dairy products, that'another shall have administrative experi--enco in dairy factory, matters, andthafc a third shall have commercial: experience, but not be actively interested in any dairy produce marketing-organisa-tion. It is suggested that : tho fourth appointed member should be, a.producer, selected for general experience and breadth of outlook. "It is recommended that,'subject to the necessary changes during the initial period, all members shall, bold, office for four-year terms, but that.no change, be made for the first two years of the life of the new board.. At the end'of each'of the second, third, fourth, and fifth years one elected menibor and one appointed member (chosen by lot) shall retire, but shall be eligible for re-elec-tion or reappointment. Thereafter, on» elected member and one appointed member shall retire each year in rotation. The ..first chairman shall be appointed from the board of eight by the".Government, and shall "hold office for two years; thereafter the ".hainnan shall bo elected annually by the members, of the board, after the new members have been elected or appointed.'■' FUNCTIONS OF BOARD. The Commission recommended that the newly-constituted board should be given the following additional ■ powers and functions:— .-■ ■ ,(a) To.have control of the. production of milk and cream and the processing and manufacture of dairy produce, in ordekv to ensure a high standard of quality and a suitable type of product for. .tho markets in which the board is operating. .; It is proposed that all farm dairy instructors and dairy factory instructors sh6uld bo recognised by the Government and given. the status and authority of inspectors, but should be employed by and be responsible! to-the Dairy Produce Control Board, and that farm 'dairy instruction should ' be' on the block system on a Dominion-wide bays., .These officers would enforcd the maintenance of standards, as laid -:down in thejAc't' on the farms and in the f aetories,.«nd would check the grading and testing of milk and cream,,and the grading at tho factories of butter and cheese intended for local consumption, (b) To have control of tße transport to : and storage of dairy produce . at grading ports. The actual grading of dairy produce .for export will still remain a function, of the State, but.it is recommended: that the Department of Agriculture and the Dairy. Produce Control Board confer from time .to time on the fixing of standards of grading, in order that instruction may be definitely related to grading. •• ' :.,.: (c) To have control of'the marketing within New Zealand of butter and cheese- and to have as full powers in respect, of butter and-cheese marketed locally as are' given to the- board, in respect of butter and cheese, intended, for export from New Zealand, and; -with power, in particular, (1) to prohibit the sale on the local market of butter and < cheese by owners of dairy factories an* wholesale distributors, except undcf licence granted by the board; (2) to r» quire the owner of any dairy factory from time to time to supply for th« local market such quantities of buttef and "cheese of such grades as the board may consider necessary; (3) to limit from time to time the area .within which, the butter and/or cheese,manufactured in any dairy factory may be marketed; (4) to fix from time to time the minimum wholesale prices to be charged for butter and , cheese by licensees and to .fix: discounts, commissions, and other concessions, and to prohibit any marketing practices that it-may consider to be unfair or undesirable in the interests of the, industry; (5) to levy on owners of dairy factories in respect of butter and cheese marketed within New Zealand at,such rates as the board, with the, approval of the Governor-General in, Council, may from time to time- determine, and to add tho amount of such levy'to the amount of the levy made under the provisions of section 15 of the existing. Act, and to retain such part of the proceeds of such levies as it may require for the purposes set.out in.para-, graphs (a) to (c) of section 17 of, the existing Act, and for any other purpose* covered by this report, and to distribute the remainder to all owners of dairy factories in accordance with their total output of butter and cheese respectively. The board may keep separate accounts for the North, and South Islands respectively. . \ EFFECTING ECONOMIES. (d) To effect economies to and improve the administration of the industry by (1) minimising. overlapping; in collection of milk and cream, (a) by; zoning suppliers, (b) by defining collecting routes, (c) by arranging for contracts for collection,or(d) : by other means; (2) making contracts with the New Zealand Government Railways Board anjl other transport authorities, companies, firms, and persons for-the transport within New Zealand of butter, cheese, and other dairy produce; (3) arranging for and effecting theamalga- ;- niation of dairy companies, the. purI chase, srfle, or closing of. uneconomic factories, and, where necessary, fixing the-.terms and conditions thereof; als»

providing for regulations to -carry policy into effect; (4) requiring, all dairy companies to keep ' standardised books of account and to prepare and submit standardised balance-sheets and statements of account, and . statistical statements and other information in such form as may from time to time be directed by the Dairy Produce Control Board; aiso empowering the Dairy Produce Control Board to ; examine books and records. '*■ (c) To make grants for research work in respect of tho production of milk and cream and the processing, manufacture, storage, and transport of dairy produce. ■ (f) To take such, measures as it may consider desirable for improving the efficiency of labour in dairy factories and for .the 'welfare of workers therein, including the provision of bursaries and/or scholarships for assisting the education of workers engaged in the dairying industry. (g) To subsidise owners of dairy factories, and/or to erect, purchase, or lease" dairy factories and equipment, if Such factories and equipment are required for' instructional or experimental ; purposes. . . "■ '■ (h) To borrow :and lend money for any of the purposes of .the board. .-.. (i) To control the volume.of production, manufacture, or processing of milk and cream and of any -class of-, dairy produce, and.to. require the owner of : any dairy factory to manufacture or process such volume of any particular class of dairy produce as it may require. (j) To take all such measures as j Jmay-.appear to the Dairy Produce Con- J troj Board to bo necessary or desirable for the eradication,--control, and prevention of diseases of dairy stock, other than the diseases scheduled in the Stock Act. (k) To terminate, on giving . such notice as tho ' Dairy Produce. Control Board may deem reasonable, any contract for the sale.or" dairy produce infended for, consumption in Now Zealand. . . (1) To make special levies on dairy produce graded for export at any port and to disburse the amount of any suchlevy to the owners of the factories grading through that port in accordance with the grading points allotted to each parcel of dairy produce graded. ~(m) To have power to purchase and sell, either for the local market or for export, milk, cream, and dairy produce, and to subsidise or compensate any person/firm, or company in respect of any such produce as it may require to be made available for opening- new markets, developing existing markets, or regulating markets. (n) To recommend to tho'Gov.ernment ' and to advise the Government on any regulations to bo made under the( Dairy Industry Act, the Dairy Produce Export' Control Act, and any other Act affecting dairy produce, subject.to the powers of the suggested Council of ' Production and Trade.

A number of detailed amendments to the Dairy Produce Export Control' Act, 1923, were also, recommended ■by the Commission. . " ■ • •-.■/■