DAIRY PRODUCE

Evening Star, Issue 20254, 15 August 1929, Page 7

DAIRY PRODUCE

PROPOSED NEW CONTRACTS CONTROL BOARD'S ACOUIESGEHGE SOME PECULIAR PROVISIONS OTAGO’S STRONG PROTEST On .July 10 the Dairy Export Control Board met in Wellington. The board’' secretary (Mr T. C. Brash) reported to that meeting that he had receiver, from the Exporters’ Association partic" lars of contracts that were proposed to b. used as models in thepurchase of butter and cheese, it being (so ho stated) the general desire in the industry that a standardised contract shouhi be available. The Dairy Control Board, after discussion, resolved that the contracts ‘be accepted as standard contracts for the f.o.b. sale of butter for seasoned outputs and monthly makes. In regard to cheese, the board ‘‘ balked ’’ on the provisions regarding shrinkage and other details, and decided that the question of the contract he deferred to its next meeting, the various cheese organisatc be consulted in the interim as to their views on its provisions; Mi W. G. Wight,. of Dunedin, sec-, rotary of the South Island Dairy Association, thereupon wrote to Mr Brash asking for copies ot the proposed contracts. Mr Brash replied that ho conic not supply them as they were the properly of the Dairy Produce Exporters’ Association,| and his board (the Dairy Export Control Board) had received no authority, to supply copr s of the contracts to anyone except that board’s members. Mi Wight wrote in reply that tho hoard’s own organ (the ‘ New Zealand » Dairy Exporter’) in its issue of July L’G had stated that the various cheese organisations would be consulted as to their views on the proposed contract. Ho also pointed out that it was impossible for thi South Island Dairy Association to express its views on tho contract unless it had copies of it, Mr Wight, liowevc’, also wrote to the secretary of tho Exporters’ Association asking for copies of tho contract, which wore promptly forwarded to him. On these .copies being thus available to the South Island Association, Mr William Lee, of Goodwood, who is also a member ot the Dairy Control Board, expressed dissaproval of the contract. At his request a. meeting of the South Island Dairy Association's Otago representatives was called It was held yesterday in Dunedin,- and to that meeting Mr Wight submitted the (al-lowing’-report, which speaks for itself : MR WIGHT’S ANALYSIS. 1 have carefully perused copies of tho proposed contracts, and after due delibernti .11 feel it to be my duty to place before yon my views thereon. It must he clearly understood that they are entirely my own personal view! and not those of tho Dair" Association’s executive, who hav* not yet hail an opportunity of dealing with the matter. j.ne contracts are in my opinion adeliberate attempt to lower the market value of our butter and cheese. My reasons for arriving at that conclusion are those. - Under the present contracts for f.o.b. sales the price for both finest and first grades is tho same, with a ’•eduction for second grade of (cl per lb in the case of butter and Id per lb in the case of cheese. The proposed new contracts provide that tho price tor first-grade butter shall he Id and second grad Jd pe. lb less than for finest, and first-grade cheese l-8d and second graoe 3-Sd pei lb less than 'for finest. The followTig examples will show what the otlcct would be;

Taking the quantities of first and second-grade butter and choose exported from the dom nion for the twelve months ended March last, the suggested reductions in price for those two 'Tack; would amount to £125,910. divided between- -butte £58,740, and cheese £67,170. The North Island would contribute jC110,270 and the South [sland £10,635 This, 1 think you will agreo wool i be an extremely "generorie annual gif: iron) the dairy Fanners tc the merchants trading in our produce There is little or no justification lor tho proposed difference in price between finest and first grade. The market value of the two grades is practically'the same. Jt happens sometimes that, a small premium is got for finest over first, but, on the other hand, frequently first grade gets tho better price. The grade certificates arc not altogether tho deciding factor; in very many cases tho quality is judged by the. individual taste of the buyer, and again some buyers display preference for particular brands. In any case, there can be very little difference in the market value of butter or cheese graded 93 and that graded 92 f. Tho present allowance of fd per lb for second-grade butter and ;jd per lb for second-grade cheese more than compensates tho buyers for the difference in the market value, and there cannot be any justification for the proposal that this allowance should bo increased by 50 per cent.

Prior to September 1,192 G, there was no “finest” grade. This grade was instituted at. the request of the Control Board with the view of raising the quality. ' As an incentive to factories the board, during tho year 192627, when they assumed control of the marketing of tlie produce, adopted a system of differential; payments according to grade. Finest butter received Td per lb more than first, first-grade Id more than second, finest cheese id more than first, and first id more than second. The disparity in tho prices realised for the various grades ou the Home market, however, was considerably less than tho premium fixed by tho board for the higher grades, and consequently the difference had to he made up at the expense of the lower quality produce. This system, while it lasted, was, 1 am pleased to say, greatly to the advantage of South Island producers. more especially the cheese 'producers for the reason that the percentage oi finest grade manufactured' was much higher than the average for tho whole of the dominion, and the percentages of first and second grades correspondingly lower 1 cannot tel! .you, why tlie board should have specially favoured the South in this mariner: it may he that they considered the poor farmer in this island .was more deserv-

ing than his brother in the North, or j perhaps’ it was duo to the perspicacity of the gentlemen who at that time represented us on the board On January 1, 1925, the level for first grade was raised two points—from SS to 90—which reduced the value of all butter and cheese between those points to that of second grade. I believe that it would bo to the interest of the industry if the “finest’' 1 grade was abolished and wo went back i to the previous system of having .only 1 two grades for export—first and second. 1 There is no evidence that the adoption of the “finest ” grade has in any way enhanced the market value of our butter and cheese, and its abolition would certainly frustrate any attempt like the present one to depreciate the value of the produce graded below 93. ft is riot possible tor a factory to manufacture a high-grade product From raw material of an inferior quality, and efforts to raise the standard of our produce should he centred more in the ■■direction of educating tho individual supplier. _ The compulsory grading of cream with differential payments ac- | cording to grade will undoubtedly be a big factor in raising the quality of our butter, and if a system could ho found lor the grading of milk and for cheesemaking on similar lines an immediate improvement in tho quality of our cheese would unquestionably "be effected. It is noKright that “the farmer wiio supplies high-quality n'iilk should bo penalised because his neighbour is not so particular or is not so’well educated in his business.

Tho proposed contracts provide that the bnyct will accept sound secondgrade butter or cheese up to 15 per cent, of the total in any one shipment, I with tho option of accepting or rofus- ! ni ff any quantity in excess of that proi Portion. Jt is surprising to me that j there should bo any limit at all fixed, ; in view of the low price to be paid 1 ‘ or second grade. Jn tho present coni tracts tho limit is 5 per cent, j There are other clauses in the oon . | tracts _ which are inimical to the proi oncers interests, and very much in S buour of the buyers, and the action oi tho Control 1 Hoard in approvin' l, of and accepting they butter form as the standard contract is to mo quite incomprehensible. i lie contract forms which wore approved of some years ago by the Exporters’ Association and adopted by tho south Island Dairy Association are, subject to one or two minor alterations to inset now conditions which have since j arisen, perfectly l satis factory and fair j to-hotly parties. As a matter of fact, j most of the clauses in tho new conj tracts are word for word exactly - the | same as those in the association’s forms. I would strongly advise you not to have anything to do with the proposed I contracts,-.and when negotiating f.o.b. sales to insist that under no considerai;on whatever will a contract be entered into excepting on tho terms laid dowi l in tho forms adopted by your own association. OTAGO’S ENDORSEMENT. The above report was endorsed by Mr JT. J. Middleton, chairman of the | South Island Dairy Association, before I being submitted to the meeting. After it had been road and discussed tho meeting passed the following resolution unanimously:—“That this meeting of Otago dairy producers strongly condemns the .proposed new contracts submitted by tlie Exporters’ Association, which will -have, the effect of reducing the market value of our produce. 'Wo view with tlie greatest alarm the action of the Dairy .Produce Hoard in aporov- : ’ng a contract wh-ch appears to have been framed solely in the interests of the- exporters ff it is the desire of the hoard to act in the interests of the producers wo ttrough 1 urge them to .withdraw their acceptance of tho butter contract at tlie earliest opportunity, inrid not-to ratify the proposed cheese I contract until both butter, and cheese ( contracts are submitted to, the producers j through their dairy associations.”

BUTT FillPresent Proposed Contra < t. Contract. Finest Is Gd pt lb Ls 6d peril) First Is (kl pci lb Is 5;,'d per lb Second Is 5.V per lb Is aid peril) _ CHEESE. Finest ... 9d per’lb 9d per lb First ... 9d per {l> 8J-d per lb Second 83d per lb 83d per lb