RATIONALISATION

Evening Star, Issue 20864, 6 August 1931, Page 7

RATIONALISATION

EFFECT ON PRIMARY INDUSTRY ADDRESS BY MR LESLIE W. BAGLEY ‘ Some Aspects of Rationalisation in Respect to the Primary Industries of New Zealand ’ was the subject of an instructive address which was delivered by Mr Leslie W. Bagley at last night’s meeting of tho Economic Society. Professor G. S. Billing was in the chair. In liis opening remarks, Mr Bagley analysed the significance of rationalisation and recommended to his audience Major XJnvick’s hook, ‘ Tho Meaning of Rationalisation,’ which, he said, made clear that measure of systematic organisation which was now recognised as essential to industrial progress and success., Tho lecturer pointed out that tho causes of the world-wide depression were legion; they were individual before they became collective, and it was just as reasonable to_ expect that the remedies would be individual before they could be collective. If people could, through a fuller comprehension of the principles of rationalisation, find themselves in accord with those principles, and apply them in their own businesses, they would find that they were hastening the day of the mental revolution necessary to overcome worldwide depression. New Zealand farmers, as a class, were intense individualists, and their independence was very apparent in their lack of co-ordination and in their apathy towards their social and welfare organisations When a national problem confronted primary producers a united attack was not offered by all tho different sections, from beef farmers to runholders, and their individual efforts in such cases decreased their *power. This spirit of independence, very noticeable in all farmers, was desirable to a certain point. Co-ordina-tion for the advancement of an industry as a whole was essential under modern conditions, and until this was realised by all primary producers there would be a perceptible lag in their obtaining bo a perceptible lag in their rights on their rights on the most essential unit of economic life. TOO MANY ORGANISATIONS. To-day the number of farmers’ organisations in tho dominion was approximately '2,000, without counting dairy factories (which number 70) and fruitgrowers’ associations (which number 17). Altogether, including dairy factories, etc., the number was 2,557, or one organisation to every tlnrtythreo farmers. There must be tremendous overlapping of functions under these conditions, and therefore plenty of scope for methods of rationalisation. Ho would not belittle the efforts of any of these bodies, but ho would suggest that with co-ordination and efficiency their cost of administration could bo greatly reduced. Tho time was ripe for greater unity amongst all primary producers in New Zealand. This had always been looked upon as a task nnpossible to accomplish. . The late Lord Molchett once said that tho greatest man in Great Britain would bo who could establish unity among the farmers there. Under present conditions all primary producers should work to the one goal of cost reduction and better quality and presentation. , , , . Tho lecturer pointed out by. charts tho way in which he considered rationalisation could ho’applied in New Zealand by .tho social and improvement organisations of the primary producers. His suggestions were: —(1) A definite common goal which would encourage unity; (2) a flexible system by which tho opinion of each or any of the sections of industry could bo mobilised by mail at any given time; (3) a permanent and steady medium of propaganda on cost reduction methods and achievements; (4) a capable control ot these services by an industry and for the industry, wholly representative of all its sections. . ... - Tho whole population was waiting for a practical, bold, and constructive lead on lines of pro-detennmed plan, and would co-operate and respond more quickly to an effort by the primary producers than to an effort by any other industry, because it was so vital to thou welfare. ~ Although his suggestions were ioi New Zealand as a whole, there was no reason why the scheme should not bo attempted in Otago or any other province as a lead for the dominion. Ways and means could bo worked out to finance it—that was, if tho industry was prepared to co-ordinate and make a practical effort to help itself. MARKETING CHANNELS. Air Bagley next dealt with the marketing channels, which offered wide scope for rationalisation and held out a large and immediate cash return to every producer. Both the Meat Board and the Dairy Board were live channels for the rationalisation of 'marketing, but their usefulness would always be iin iiaircd as long as their interestin the produce rationalised marketing started at the ship’s side. Rationalisation of tho dairy industry would cffeci. savings through tho industry through the following avenues(l) Routing collections of cream; (2) co-ordinated processes', patting, office work, printing, and distribution; (3) discounts and bad debts. If a fanner were to figure out what the present system meant to him annually he would demand efficiency and co-operation; lie would be done with the present pseudo co-operation. What happened not long ago? The present wholesale" price of butter was Is 2d no* in tho North Island, and Is OJd net in the South. The drop of lid was first made by one of the co-operative factories in Canterbury. Rationalisation could have stopped the other factories in tho south following suit. Tins litllo bit of competition now cost tho South Island dairy farmers £12,000 per month, or £144,000 per annum. Alone it was equal to 1.83 d per lb of butterfat, making a total loss, through overlapping)* false' co-operation, ami competition, of about 3.24 d of butter-fat. Under proper rationalisation the total saving to the butter industry of Non Zealand would bo approximately £843,700 per annum. Cheese factories had also to be considered, and a similar case could be made "out for them, Tho lack of unity among farmers was a barrier to the inauguration of a successful rationalisation scheme, as was also perhaps lack of business knowledge on tho part of a number of tho co-operative factory directors. It was essential to know tho finer points ot factory management, marketing, and administration, to bo able to get lo gather, and co-ordinato for efficiency. The chairman of directors should be the most businesslike fanner in tho district, paid a good honorarium, and have a long tenure of office, so that ho could study his job efficiently, and not have to rely solely on tho opinion of tho manager,'who really had no capital at stake. Therefore, one of tho first things to do was to get the directors to make an efficient study of their responsibilities. Rationalised handling and ' orderly marketing of dairv produce must come, and that time could nob be far distant, hut it was no good looking to any Government department to do it. Tliis was a job for the industry itself, and no Government could make a success of it. Jt

needed to he approached in the spirit of unity, service, and economy, and it could be accomplished. THE WOOL SITUATION. The marketing of wool, meat, fruit, grain, and other products was also touched on, and in each case the principle of rationalisation was advocated. Dealing with wool, tho lecturer said that for tho last three years lie had made a study of tho subject, and had worked out, more or loss in detail, what he considered was the basis of a practical scheme for the rationalisation of wool handling and classing. In working out his scheme ho had tried to find out where present methods could be improved or standardised or the cost of handling reduced. Out of this research evolved the seven principles on which the scheme was based. The principles were -not now, but the scheme embodying the Jot and attempting a remedy was now. The seven principles were these: — (1) To utilise the existing channels of marketing. (2) To co-ordinate the brokers, in that all reclassed or bin wool is handled under modern methods, using modern conveyor and automatic equipment in a central store and yet not to disturb the brokers’ individuality or their relations with their clientele. (3) To standardise the classes over tho whole of the country (oven the Empire) and enable strict supervision to maintain the fixed standard of classing. (4) To standardise the brands, weights, size of packs, and make available largersized parcels for the buyers. (5) To eliminate through centralisation the vast economic waste of work in valuing, buying, and preparing for sale thousands of lots more than necessary in the selling centre. (0) To provide the means of eliminating the loose hemp nuisance and its attendant loss, to eliminate the recurring annual cost of woolpacks, and to attempt to deni with the excessive moisture in damp or wet wool. (7) To reduce the cost of handling and classing to tho grower, and to allow and give a better presentation of the clip to the buyer, and so encourage the higher prices which attend such an improved service. In New Zealand about 50 per cent, of the wool was reclassed by tho brokers in their stores. In Dunedin about GO per cent, was reclasscd by the seven brokers. By means of a chart tho lecturer showed tho estimated savings, or extra net returns, to producers for wool in the Dunedin sales. Tho figures worked out at about 22s Cd per bale of 3601 b for wodl handled through the rationalised scheme, but bandied on the stations, and at about 30s per bale for I -wool reclassed by the brokers, and lor ! the whole dominion an estimate of £500,000 per annum, regardless of mar-, I ket fluctuation, was, in the lecturer’s I opinion, on the conservative side. I TRANSPORT PROBLEMS, j Proceeding, the problems of transport and distribution charges were dealt 1 with. Tho annual national production 'of New Zealand was £121,000,000 in I 1929, and £44.000.000 was tho cost of transport service m that year; theroI fore, for every £IOO of production £36 went in transport costs. A scaling down of this charge was as essential as j either an increase in production or a I decrease in costs through other chanI nels. To lower this annual bill only 10 j per cent, would moan £4,000,000 per annum, and surely tbo primary producer could claim 50 per cent, of this benefit, seeing that his share of the national production was somewhere about C 5 per cent, in value of products alone. n J i Touching on the industry as consumers, the lecturer said that if the benefit from organised buying readied the stage Where it was equal to o per cent, discount on a sum equal to a quarter of the value of their production—that was, £20,000.000 m value of goods—tho primary producers would he better off to the extent of £1,000,000 per annum. As a final remark the lecturer said that to his mind there was a practical and feasible way to get action along the lines he had advocated by calling the executives of all sections of the industry together, by setting up tho farmers’ federation efficiency board, and by thoroughly organising it on sound lines, hearing in mind that the essentials to its ultimate success ■were : —(1) The definite common goal, which would encourage unity; (2) the flexible system by which tho opinion of each* or any of the sections of the industry could be mobilised by mail at any given time; (3) the permanent and steady medium' of propaganda on cost reduction methods and achievements; (4) the capable control of these services by the industry for tho industry, and solely representative of all its sections. Let tho board plan a seven or ten-year camj paign on rationalisation ideas, which, I speaking broadly, would aim to secure 1 reforms through tho following avenues:—(l) To improve or intensity ill) methods and avenues of production. (2) To reduce the cost and co- , ordinate the social and improvement i activities of the industry. (3) To rationalise the marketing channels of the industry. (4) To lower the annual cost of transport and distribution affecting primary producers. (5) To organise eo-operative purchasing and so scale down the costs of goods bought by the fanners. Jt could Hum be said that a determined attempt was being made to rationalise tho activities of the primary producers of New Zealand by the industry itself and throughout this effort let tho farmers as a body always act wisely, embrace economy, and, above all, get unity. Mr Bagley received a hearty vote of thanks for liis lecture.