FRUIT INDUSTRY

Evening Post, Volume CXXVIII, Issue 114, 10 November 1939, Page 9

FRUIT INDUSTRY

MINISTER'S PLAN

WHY IT WAS REJECTED

BOARD'S STATEMENT

A statement setting out reasons why the proposals involved in the Government's plan for dealing with the fruit industry were unacceptable to growers was made by the New Zealand Fruit Board last evening. ,

The statement points out thst the offer, by Mr. Nash included a proposal to purchase 1,000,000 cases at 7s a case f.o.b. • The board says that the fundamental objection to this proposal is that it does not offer to the industry any medium for financing a reasonable return to the growers for the rest of the crop, nor does it assure the industry that there will be any cool store space available to it for disposing of the 2,500,000 cases left with the growers. The growers' average cost is regulated by operation of the Government's economic policy.

"The f.o.b. price of 7s is not what it appears to be on the surface," says the board. "This figure is below our actual costs, but the industry is prepared to make a sacrifice at least equal to that of other sections of the community.

"We are not haggling over'the question of 7s a case, but have pointed out to the Minister in definite terms that, because his purchase price is based , at the f.o.b. point and makes growers responsible for cool store charges and the condition of fruit while in cool store, it does not give to the grower any definite figure which can be regarded as the net return from the Government purchase. Transport charges between assembly point and f.o.b. are known and definite; in the case of Nelson fruit they amount to ls O-gd a case. Cool storage rates are also definite, but the period is indefinite, and this item may represent anything from 7£d to Is 7£d a case. EXPORT SHIPPING. "The Minister did emphasise quite strongly that export shipping space might not be available. We can at least appreciate that shipping space under emergency conditions will not bs so readily available as in normal times. All the fruit will require cool istorage and much of it may be in store for several months. This uncer- ,. tain factor has a definite bearing on the Government's purchase price, and it is for that reason that growers have requested the Minister on several occasions to nominate his price at the assembly point, the Government to take the responsibility of storage charges and of the fruit after delivery to officials at the assembly' point. This the Minister refuses to do. "The more imporant and fundamental reason why the Minister's proposal was not acceptable to the industry is that his proposal does not offer any medium for financing a reasonable return to the growers for the rest of the crop, nor does his! proposal assure the industry that there will be any cool store space available to it for disposing of the two millions and a half left with the growers." The board states that Mr. Nash was prepared to buy one million cases. That left two and a half million cases for sale on the local market. The expenses involved, covering production, cost of packing (both export and local), transport charges; cool storage, and repacking fruit from cool store before sale on the local market .(which was insisted upon by regulation) amounted to approximately £1,123,000. Against that expenditure of £1,123,000 there would be receipts represented by the million cases bought by the Government, £350,000, plus returns from local market, estimated at £179,000, or a total sales return of £629,000, leaving the grower £494,000 on the wrorig side of the ledger., SALES AT LOW PRICE. "The estimated prices on the local market would mean that the consumer would probably have the fruit available at a figure lower than ever previously known in the history of the industry in New Zealand," the statement proceeds. "Is it likely, in view of this position, that any bank would be prepared to finance to the extent" of £394,000 above the £350,000 from the Government, plus the £100,000 finance, against cool storage sales? The growers' representatives claim that in disposing of such a large quantity of fruit on the local market low prices must prevail—prices which cannot hope to Cover the aw;ard rates of labour or the ordinary commercial charges for services rendered by carters, waterside workers, freighters, cool store operators, and suppliers of the necessary materials such as case timber and wrapping paper."

After referring to the increased costs that had followed higher wages and shorter hours, the statement proceeds:

"The reason given for the cessation of Government assistance was that many growers who- had defaulted in

their grading standards had not played the game. It was pointed out to the Minister that the Government refused to take action against any one of those defaulters. :

"Mr. Nash then stated that he would not continue assistance to the industry till the industry had requested Government control. We pointed out to Mr. Nash that the industry would not be unanimous in this question. He appreciated that and said that if the organisation asked and made the request he would take this as his authority for £bing ahead. The organisation made this request before Mr. Nash's departure for England early this year. Mr. Nash now states that notwithstanding the difficulties created by the war he would not be averse to taking control if the industry were unanimous, but he points out that a section of the industry is against, the proposed Government control. We are left wondering why Mr. Nash has changed his mind." A STATE RESPONSIBILITY. On the question of how to deal with a glut, the board says that it has suggested that portion of the commercial crop should be withdrawn from the market and used for by-products. "We contend," the board states, "that there is a responsibility resting upon the Government at all times; that responsibility becomes more acute in emergency conditions such as the present, but there is an additional responsibility resting upon our present Government because of its economic policy, which, on a low estimate, has caused an increase of at least Is a box on growers' costs, which represents a round figure of £150,000 on a threemillion crop. THE GROWERS' PROPOSALS. "Now what are the growers' proposals? They are: (a) That the Government take full control of marketing (both export and local) and give to the producer the cost of production plus a fair standard of living—the price to be fixed by the Minister and based on the report of Mr. Picot's committee of investigation; or (b) that the present Fruit Board, augmented by representatives from the New Zealand Fruitgrowers' Federation, Internal Marketing Department, and Department of Agriculture, be given statutory power to control marketing (both export and local), and the producer be guaranteed an average minimum return of 5s a case. "The growers' average costs are regulated by operation of the Government's economic policy and Government regulations, and amount to 3s 4d for production, equal to Id a lb, plus 2s 6d a case for grading and packing," the statement concludes. "Any reduction in this figure falls not on merchant, transporter, or worker, but on the grower. The grower is prepared to make this sacrifice of lOd a case and, further, is prepared to agree that, if market returns exceed the growers' costs, the surplus be deposited in a marketing fund and if necessary used against deficits in jfuture years." '