DAIRY CONTROL

Hawera Star, Volume XLVI, 3 November 1926, Page 5

DAIRY CONTROL

PROBLEMS OF THE BOARD. ADDRESSES BY MEMBERS ~ UNANIMITY STRESSED: ' • Addresses outlining the policy and operation of the .Daily Produce Con- > trol Boavd were given by Messrs HD. Forsyth, and J. R. Corrigan, membens,of the board, at- Stratford yester-. day to a meeting of the Taranaki Dairying and Farming Industrial Union of Employers, which, was also attend- ’ ed by dairy factory managers from various parts of the province. The-'., total number present was approximate-• • ly 70. Mr. J. S. McKay, president of the union, occupied the chair. -..•••- In his opening remarks Mr. Forsyth said that .suggestions liad been made to the effect that sufficient information was not available as to the manner in which the Clontaol Board is functioning and. with. Mr. Corrigan, the speaker was taking the opportunity, in response to the invitation of the union, to present various phases of the board’s views. Mr. Forsyth said he wished first of all to refute the rumours prevalent to the effect that the board was a divided one. “While we may have had differences of opinion.” he continued. “I .want to say that we are now down to a general policy, in following which the board is unanimous. . Statements have also been made concerning lack of unanimity in London, but, so long as we have unanimity here, I think it must follow that we will have it at the other end. Now that we are unanimous,we want the widest publicity given to the boards affairs, as we appreciate the fact that the boards business is the business of the producers;” STORED PRODUCE. Rlefenring to statements which had * been made oernoeniing stored produce in London. Mr. Forsyth said be was sure it would be realised that any storage had not been brought about by the board. It was stated that 1,000,000 boxes of butter were in store in.. London and that 700,000 boxes were from New Zealand. . He considered, however, that if the board, had- been functioning for the past twelve months, such big holdings, equivalent to five weeks’ .supply’, would not have accumulated. It was the intention -of the board to get away, as soon as possible, the whole of the butter and .cheese which could catch the Christmas market. -

POLICY OUTLINED. Mr. Forsyth proceeded to briefly'outline the policy of the board, which, he stressed, aimed at a. system of service, not monopoly .for price raising ' purposes. Giving details, he continued: “Regulation of shipping dispatches will be undertaken to maintain regular supplies to. market. “The board will exercise supervision of shipping temperatures and conditions in order to- maintain, the .quality of produce. . If the board is satisfied’ that e.i.f._ London sales to actual distributors will tend to stabilise markets such sales may be made by the London agency on behalf of the whole industry. “Distribution will .be made through the merchants at present engaged, in the trade. Their initial allocations wall be based on the average quantities received, by them during the past-three years. - ■ - k:t.j Merchants will be required to establish letters of credit to cover the amount of their allocations. If the amount of any allocation proves to be, in the opinion of ..the board’s representatives, beyond the capacity of any firm to satisfactorily distribute, the board will have the power to transfer portion of the supplies to another distributor on payment of the advance made against them by the firm in question. / PAYMENT UPON QUALITY “Payment for both butter and , cheese will be made upon quaEty grade, tlie price differentials between the different grades to be based as near as possible upon actual price realisations in commercial trail suctions. The board awaits reports from its London ./ agency and London, merchants before deciding-the actual basis upon which this differential payment -mil be made. “All superfine and first grade quantities of butter and cheese, will be packed under a national brand Which is -being registered in. London for this purpose. . “The board has no intention .of interfering with the ordinary -process by which, economic factors determine the market level of price. The board’s London Agency will decide in conjunction with the distributors their pricelevel from day to day. which price ; must as an ordinary business necessity be kept at the sales’ point enable business to l be done.’’ “ ’ - Dealing further with the policy of sales. finance and marketing, 'Mr Forsyth said the London manager, rereived his instructions from the London agency, which arrived at its decisions by conferring with representatives of Tooley Street. A committee of three members of the London agency and three to be appointed by thq importers would confer as. to the. basis on which the goods were “fco' be disposed. This meant that action to a great extent would be taken on the advice of the importers, who would have the best knowledge of the markets. The board had no intention of holding back sup-! nlies in the endeavour to beat tlie market, but it did desire to spread its - shipments so that they would arrive atr r regular intervals. To this end it . was conceivable that a small proportion, say, 10 r>er cent, might be held back in' order' that the offerings could; he regulated during a lean supply period. CREDITS ARRANGED. _ The board’s credits were satisfactorily arranged. The credits were in the name of the board, and were transferred to local banks as required. The transfers were free of local exchange, the local banks receiving a Share,or the ordinary London exchange, said "T Mr Forsyth in conclusion. Mr W. C. Green (Gpunake)':: Is.-Mr. .1 Forsyth in favour of absolute control? Mr Forsyth: I have- already voted in favour of absolute control, but I - made it clear to the board at the time that I wanted a say as to how far, the control would go. ' Answering a further query by Mr. .. Green, Mr Forsyth said the board did "• not compel anyone to store in New Zealand. All tlie board did in this direction was to allocate shipping space. - -. • : Mr J. R. C-orrigan prefaced • his re-4i-marks by explaining that, though a.,; comparatively new member of the , board, he had been allowed access to its files. While he concurred in some of its business, there were other as- - pects in which he did not agree, and he had voiced his opinion accordingly. He Ivelieved that the criticism which had been levelled against- the board could be uarrowed down to one plank of its platform, that of price fixation. This, however, had been done affray ‘

with, and the hoard did not intend to go in for price fixing. Explaining the reason for the withdrawal of his notice of motion to the last meeting of the board to the effect that certain minutes regarding the matter of fixing prices be deleted, he said that the five resolutions recently published had made the motion unnecessary. It had been agreed that the 30 merchants handling New Zealand produce should appoint three representatives to act in conjunction with three from the board’s London agency to give a “lead” as to prices to be* asked, week by week, or day by dav. IMPERIAL COMMITTEE’S > OPINIONS. Continuing, Mr. Corrigan quoted from the 1026 report of the Imperial Economic Committee dealing with the marketing and preparing for market of foodstuffs produced within the Empire. Referring to the establishment of control boards with statutory powers to govern the export ox dairy produce from the Dominions, the report expressed the opinion, inter alia, that the holding up of butter in cold storage in the Tnited Kingdom for a reserved price was to be condemned in the in terests of the producers _ themselves. It was clear that the New Zealand Dairy Produce Control Board and the New* Zealand Government were fully alive to the criticism which had been aroused in the United Kingdom by the action of certain New Zealand factories, and there was every reason to assume that the Control Board would consider the larger aspects and the ultimate consequences of its policy much more carefully than would an individual factory. Such a board would appreciate the economic dangers resulting from mass speculation under the lead of a national organisation, and would undoubtedly also he more sensitive to public criticism, both in New Zealand and the United Kingdom, than would private traders. The Australian board had been in operation since August, 1925, and had shown no evidence of adopting such a practice, and representatives of the board who had appeared before the committee had declared that it would he entirely contrary to their existing policy. In connection with the development of a system of orderly marketing, the report called attention to a practice adopted by the London agency of the Australian Dairy Produce Control Board. Tin's agency held weekly consultations with importers in London of Australian "butter, and. at tli6S6 joint sittings an endeavour was made to (rive a “lead” to the market in regard to price. For some years past the sellprice of Danish butter had been based upon the Copenhagen official blitter quotations fixed weekly by a committee representing both producing and exporting interests. The price was not “fixed,” but the quotation was regarded a.s so far authoritative that bargaining between buyers and sellers started from it. As a rule contract prices when struck, were somewhat in excess of the official quotation. The expressed intention of the Australian representatives in London was to iollow that practice. PRICES “LEAD” FAVOURED. “While the committee is definitely opposed to any attempt to ‘fix prices,” concluded the extract quoted by Mr Corrigan, “we think that, from all the evidence we have heard, muci good may be done by the publication of a weekly ‘lead’ as a guidance to the market, and we think that m this matter the Control Board caxfnot tail to render great service by co-operating with the traders who are doing the business. * * The report, Mr Corrigan, contended, justified the poliey of the board of leaving an indication as to price to a committee with equal representation between producer and importer.. In doing so, the board was following a line of policy which had been, successfully adopted by others as indicated, Dealing with his own position, Mr Corrigan said he had not gone on the board with the idea of opposition but wished to co-operate in serving the best interests of the producers. He pointed out, further, that no one man dominated the board. Referring again to the London committee, he explained that the London agency representatives comprised two representatives of the producers and one Government nominee, and if both the producers’ representatives agreed that any proposals were derogatory to the producers ’ interests they had the power of veto. They thus had the balance of power. It had been urged in certain quarters that the board should dispense with the services of one particular man in an administrative capacity, but tha speaker pointed out that when a man was employed he could hardly be “sacked” before he was tried. The individual mentioned was now required to follow a defined policy. If he overstepped its bounds it would be time to discuss relieving liim of nis duties.

DECORUM OF BOARD MEETINGS. In conclusion, Mr Corrigan said he wished to refute certain reports to the effect that the hoard meetings had been noisy and acrimonious. Such reports were fabrications, and he. could assure the meeting that the deliberations of the board had always been conducted with decorum. Replying to Mr A. B. Muggeridge (Alton), Mr Corrigan said that in the matter of price fixing the board had made a slight modification, as previously indicated, and this had ensured the unanimity of the board. Mr J. W. Snowdon (Tnaha):.ls Mr Corrigan in favour of maintaining the marketing policy of the board? Mr Corrigan replied that, while some modification might later be deemed advisable, the policy was on the right principle and was satisfactory, for a commencement. It accorded with the present method followed by the Danish and Australian exporters. The board, however, could not do exactly as the Danes were doing on account of the greater distance of New Zealand from the market. Answering further queries as to the “lead” concerning prices, Mr Corrigan explained that the system did not mean “price fixing.” It was merely the means of reaching a basis of negotiation. Replying to Mr Q. Gibson (Rahotu), Mr Forsyth said that the Danes actually set a price, but had no compulsion. They were, however, more loyal than was the ■ ease in New Zealand. Sometimes the prices'received did not reach the level decided on, while at other times a higher figure was obtained.

The question of admitting the press to the board meetings was raised by Mr Gibson. Mr Forsyth said that at the last meeting an Exporter reporter had been present, and it was hoped that the whole of the press representatives would be admitted to future meetings. A SAVING OF £60,000. Information was also asked concerning the concession to the merchants of a thirty days’ instead of a sight draft. Mr Forsyth said that the concession would cost the industry approximately £20,000, but, on the other hand, the merchants were conceding a half per

cent in commission, which meant a saving of about £BO,OOO to the producers. Mr W. Honeyfield asked if the speakers had power to divulge the contents of the confidential cable forwarded from England by the New Zealand Prime Minister.

Mr Corrigan explained that, the message had been sent to the Minister of Agriculture, who had placed it before the board. As it was a confidential document, it could not, in fairness, be given to the meeting without permission. The speaker could, however, give an assurance that the cable had been considered and acted upon. Mr S. A. Farquhar (Awatuna): Is there any hope of a greater advance this month?

Mr Corrigan replied that the board had asked the London merchants to arrange, if possible, for a more liberal allowance in respect of cheese for the October-November period. Mr T. A. Winks (Government nominee on the board) said he had received information from a private source to the effect that the merchants had agreed to an increase of |d per lb in respect of cheese, though he had not as yet been advised officially of the alteration. . After further discussion the meeting concluded with a vote of thanks to the speakers, moved by Mr A. 8.., Muggcridge and seconded by Mr G. Gibson. divideeTopinions INTERESTING REVELATIONS. PRICE FIXING AND LONDON AGENCY. (.SY TELEGRAPH PRESS ASSOCIATION.) - INVERCARGILL, Nov. 1. A member of the Dairy Produce Board, Mr T. M. Timpany, of Southland, one of the producers’ representatives on the board, in an interview regarding the recent decision concerning the board’s price policy, discloses the text of telegrams from London bearing on the matter. . . ■ , He said he opposed price fixation, but Mr J. R. Corrigan, of Taranaki another producers’ representative, tabled a notice of motion bearing on the subject, and he waited. A statement appeared in the press after the previous meeting of the board suggesting that ill- W Grounds, chairman of the board, and Mr \V. A. lorns, of Pakiatua, were opposed to each other, but no reference was made to Mr Stronach Paterson, the other member of the London agency, who supported Mr lorns in demanding a change and the removal of Mr J. B. Wright, the London manager of the board. Mr lorns cabled on October 4 as! follows : “Fixing the minimum price and retaining the present management has already resulted in some boycotting ol New Zealand produce. If persisted in it will, in my opinion, result in disaster. If this is the board’s policy, I request the board’s cabled consent to my returning to New Zealand immediately. If board adopts Australian price-contro. system, accepts Mr Wright’s resignation, and replaces liim with better man who easily obtainable am confident position can still be retrieved and control policy successfully applied for benefit of producers, and I am willing to remain here and work to this end. Please reply promptly. —W. A. lorns.” The next day Mr Grounds expressed his opinion in the following message: “London, October 15, 1926. —Most practical course present difficulty recall Mr lorns, make Mr W. Claud Motion chairman London agency. Leave London agency reconstruction until Alt W. D. Hunt returns and Mr Grainger and myself report. Mr lorns indicated opinion by cab I ©.” Then following on this message from Mr Grounds cam© the following from Mr Paterson, who is the Government representative on the London agency: “In case board would like my views on the position, they are as follows: I concur in Mr lorns’ views. First necessity is change of manager and abandonment- minimum price fixing in favour of Australian system of price control. I concur in Mr Grounds’, view reorganisation London agency desirable,

but do not agree his immediate' proposals to that end. feeling they would identify the hoard’s control policy even more closely than hitherto with the past policy of the New Zealand Co-op-erative Dairy Company. These methods would result in accentuating present acute hostility throughout the whole trade.” Nothing further was heard by the board, and the position when the board met a few days ago was unchanged, except perhaps that the difficulties were a litt'e more acute. Mr Corrigan’s motion had been altered, following a conference between two members of the board and the Minister of Agriculture, and it was adopted, though not unanimously, as the newspaper account stated. The decision changed the name of price fixation, but in the essentials ’eft the policy unchanged, and ignored the cabled warnings of Messrs Iorn« and Paterson. At that time it was known that a -cable from the Prime Minister was on its way and the text was hurried over to the meeting, reaching there just before the luncheon adjournment. That cable dated London, October 27, said: — “Influential deputation representative importers, binders, multiple shops, wholesale provision merchants and retailers has made very strong representations to me, firstly, objecting to control. secondly, protesting against price lixing; thirdly' objecting to the present manager London agency. Regarding firstly'. I to VI them that control policy definitely settled and would continue. They recognised this position, and state they desire to contimie work in interests of New Zealand dairy trade at this end and accepted my statements. Regarding secondly, I 'am convinced strongly it would bo a great mistake to attempt anything in the nature of minimum price-fixing. and in view of serious position, any method at this juncture .ikely to engender antagonism should he avoided. Regarding thirdly, very strong objection, expressed to Wright, in whom trade apparently have no confidence, and this attitude very detrimental interests of New Zealand producers. Matte! - has been discussed with Grounds, who is meeting same people to-day. Paterson’s telegram to board, in my opinion correctly represents feeling majority of trade here. Give copy this te’egrnm to TTawkcn. Matter most urgent. Board meets October 27, "Wellington.” “Now comes the strangest part of the business.” said Mr Timpany, in referring t<> the cables from London. “Mr Coates sends a message from London on October 27 and it reaches Wellington on October 28. Mr Paterson, of the LonLon agency, sends a- cable on October 23, after having shown it, or a copy, to Mr Coates. Yet Mr Paterson’s message only reaches New Zealand on October 28,'the dav' after the board meeting. Mr Paterson’s cah'e says: “Cannot urge too strongly that to avoid disaster board should abandon minimum price-fixing and adopt Australian system price dontrol. All allottees with the exception nn'v of Lovells and Wilson Soars, have this week officially in writing strongly represented to agency that owing to keen hostility of aH brandies trade throughout country m -ice fixation would be detrimental best interests producers. Strongly urge also board shou’d dispense with present manager, who completely lacks conficUjtic© of trade and in mv opinion can never secure trade’s goodwill and co-

operation. Wright has repeatedly stated Australian system price control both use'ess and unworkable. If, therefore, board adopts this system all the more essential change manager. Eminently suitable man of great experience and highest standing in trade is prepared negotiate for position if, and when, it becomes vacant, but declines Alow his name disclosed unless and until board creates vacancy. In any case anticipate no difficulty in replacing Wright with more suitable man. Think reorganising London agency not urgent, and can wait Grounds’ return in the meantime. If board bv adoption course above suggested lays foundation essential for re-establishing goodwill and confidence present agency with suitable new manager can get business working smoothly. . . . Whatever the cost believ-e change manager essential. Above message sent with cognisance of Prime Minister, who requests you to hand copy immediately to Acting-Prime Minister.” “Now,” said Mr Thnpanv, “the position is just this. We have antagonised the trade in London and they are retaliating hv boycotting butter and reducing advances on both butter a:mi cheese. I moved to get an increased advance on cheese, and was informed that it was out <>f the hoard’s control, because the amount of advances available depended upon the merchants hhndling our produce. D the market was open to-day our cheese would sol at round about fid per U>, f.0.b., vet all that vs being advanced against shipments is fi-'.d, which dairy fanners know only too we'l will result in disaster. 0 r •'onrsc the hoard promised to consider my request for an increase in. the advances in cheese, but there is the position wholly in the hands of the merchants.” Mr Timoany has given notice to reopen the 'finestion in the light of these cablegrams - and consider Mr Wright ' position as manager. NO COMMENT TO MAKE (MTNTSTF.R ON THE POSITION. AUCKLAND, Nov. 2. “I do not care to make any comment,” said the Minister of Agriculture, the Hon. O. ,T. Hawken, when the report issued by Mr T. M. Timpany concerning cablegrams received from the Prime Minister and _ others respecting the policy of the Dairy Pro duce Board was referred to him. “Tt does, however, appear to me to he n nit.v that the affairs of the hoard should he made public in such a manner,” continued the Minister. “If a statement is to he made one would think that it should he made by the chairman of the hoard and not by a i|emher after the meeting is oyer. That is just my view on the subject generally, for I do not know the circumstance* that have led Mr Timpnny to take the action lie has.” The Minister said the Government did not interfere with the work of the hoard. The Control Act had been passed by Parliament and the hoard had been established, and it was now its business to carry on the work for whieh it had l>eon created. The hoard was a business concern, and it must conduct its business along accepted

lines. He agreed tnat there might be something in the suggestion that its policy and work might probably have been more clearly understood if fuller information were given at the time of the uoard’s meetings. During the period he had been a member of the board there had been-very little that could not have been made public, and the meetings of the boafcl could quite easily have been open to the press. Of course, there were matters that it would not be in the interests of all concerned to broadcast, but these could have been taken, in committee. The Hon. Mr Hawken said he was not disposed to view very seriously the present slump in prices for New Zealand dairy produce, nor was lie inclined to be pessimistic concerning the future of the industry. We liad had many slumps in butter. “This slump,” he said, “has been caused by some factories holding over their produce, and in the aggregate there has been too much butter held over. How much is now in store or how much is being sold from week to week? Under the hoard this could not Live happened. The Ijoard would know to a box how much butter was on the market and how much was coming forward. It would have accurate statistical information, which is, more than the industry has had in the past. “All tin’s talk about price fixing and ■figging the market is nonsense,” the Minister continued. “There was never any suggestion of it when I was on the hoard and there has been no departure so far as T am aware, from that noliev. The hoard knows that it has to sell each season’s - produce, and with information at its disposal concerning sales that are being made and the amount of produce that is available ■>r coming forward it. will know what orice to ask. Tf that price is not obtained it will have to create the ma l- - Vot. cither by reducing the price a little or by improving the demand by ad-•*e,-ti«ing. The point is that it must sell during the proper season. It is alvpvs Imd business to have old stocks •ui hand when the new season’s produce :r-fives on the market.”

The opinion that the hoard should ho "fiveri an opportunity of carrying oul policy was expressed by the Minister. Tt was only to he expected, he said, that there would he some opposition to the establishment of absolute aontro]. and he thought that once the hoard was carrying out its policy to the full the opposition would die. There had been a great deal of agitation when the hoard was about- to make the first money advances under control, hut Mie hoard 1 had woir through, and the 'armor was now receiving his money •nst ns he did before. In this connection it must he remembered that Tooley Street made the advances according to the market prospects.

PRIME MINISTER OPTIMISTIC THAT ARRANGEMENT WILL BE REACHED. •> Y O \ PT>E —PRESS A ssnn * ttov—rnr'rTUOHT LONDON. Nov. 1. Mr. Coates deliberately devoted part oi his speech at the Eimpire Produc-

ers’ luncheon to the co-operative organisation of New Zealand’s primary products a.nd to co-operative marketing in London as a necessary corollary thereto, as lie was desirous of removing some misapprehensions which have recently arisen in London connected with the Dairy Hoard operations. Mr. Coates is optimistic that an arrangement is within sight which .trill avoid antngonisnis and friction with live London traders.