TO ELIMINATE WASTEFUL PRACTICES.

Horowhenua Chronicle, 12 September 1935, Page 2

TO ELIMINATE WASTEFUL PRACTICES.

Dairy Companies Seek an Economic Survey.

Executive Commission of Agriculture Meets Directors.

A unanimous decision was readied -yesterday by dairy companies operating in the Manawatu, to have the Uxe«»ti\T Commission of Agriculture make a comprehensive survey oi the district and bring down recommendations calculated to put the industry on a better economic footing. The detailed work is to be undertaken by two qualified accountant-secretaries connected with the industry but residing outside the area vo be investigated. The Commission, with which is associated a sub-committee of the Dairy Produce Board, has been asked in particular to endeavour to formulate a plan that will eliminate the waste caused by overlapping in cream collection and if possible, provide sonic sort of. "blood transfusion" for the small ailing cheese companies whose supplie rs are drifting over to butter. On both these subjects, Sir Francis Frazer, deputychairman of the Commission, had something pertinent to say to the conference.

Mr S. A. Broadbelt, chairman of: the

Alnnawatu and West Coast Dairy Companies' Association, presided and the following factories were represented: Awahun, Apitt, Ashhursl, Cheltenham. Kuiranga, Levin, Otaki, Oroua Downs, Marawatu-Relianco. Raugit i kei, Rata, Rongotea, Tokoniarn, Taihape, Tiakitahuna, Makowhai, Tui, .Shannon, Taikorea, Whakarongo, Glaxo, Newbury, Kuku, Dairy Union, Marton, Rangiotu and Mauakuu.

Air Broadbelt expressed pleasure at the large attendance and hoped the results of their deliberation would be something tangible to help the industry. The Commission and Dairy Board were anxious to get a free discussion. The situation seemed a serious one and an investigation by an independent authority was desired. There was a large volume of work ahead of the investigators.

Sir Francis Frazcr, in addressing the I gathering, said their visit, was partly in order to learn and then, if called upon to do so, to advise so far as it lay m their power. But first, of all they had to learn the circumstances in the district. They knew there were a large number of factories and that difficulties had arisen in respect of some of the small cheese companies. However, they did not know the details of the positions of the respective factories' funds and the like. They did not know how many of the suppliers of cheese factories wished to turn over to butter but these were matters they had come to learn about. Tliey had also to be apprised of the views of the companies themselves, but had been told they were not likely to make a great deal ot progress at this particular meeting. The information desired, however, could bo secured by meeting the directors of the various companies at their factories. As to the economic survey required, the Commission could not very well make it as there would be a- great deal of detailed work involved. They would desire the meeting to appoint say two dairy company secretaries of wide experience, not necessarily from this district, to go into the detailed work and the Commission would accept their report. Those two investigators would be instructed as to what the Commission required to be advised upon and one or their first jobs would be to reduce dairy company balance sheets to a common level. They would also be able to supply the Commission with an idea of the collecting routes and general location of factories, suppliers and such like With, all that information on hand, the Commission would then have the material which it now lacked. Cream Collections.

pects for cheese were,

Sir Francis proceeded to talk about the whole question in a broad, general sense. He said there appeared to be differences of opinion as to how best to rationalise cream supplies. Some favoured zoning, others amalgamation, and others still thought the rationalisation of road transport would meet the case. In fact, there were a number of ways in which the present system of cream collection could be improved upon. However, it had been found that straight out zoning was difficult of application and when! far tone* wi_-.-e ciose together it was likely to lend to a great deal of disturbance. Jn some cases a great deal of good would follow amalgamation of interests and where that was noi desired or impossible of achievement, much could be done by fixing boundaries and allotting certain side roads to certain companies. "We are very pleased to find that there is a genuine desire for a better measure of co-operation in this district,'' added Sir Francis. "That is the most hopeful thing about this meeting. "When I first came into contact with the dairy industry I was firmly of the belief that it 'was thoroughly co-operative hut I am afraid I have been disillusioned. I have discovered that in many parts of New Zealand, co-operation ceases once it gets outside the walls ol the factory. There is inter-factory competition for supplies and in some cases a certain amount of animosity. '' The speaker added that in the Wanganui district there had been manifest a general desire to draw together and a desire not to trespass on another company's territory. The Commission had been pleased to find that growing

spirit of co-operation and that same spirit was manifesting itself in the Manawatu. The Commission wanted to foster that spirit and bring- it to fruition. That they had been asked to attend such a meeting as this one, was very hopeful and augured well for the future. Cheese Versus Butter. As regards the position of cheese and butter, there was a desire on the part of suppliers to change from eneese to butter. There was also the desire of cheese companies to hold those suppliers against their will. In this matter the Dairy Board and Commission were presented with a big problem for they were both acting in the interests of suppliers as well as dairy companies. The Commission had very wide powers and so had to be very careful in the way it exercised them. As things stood at present, cheese -was not maintaining the margin over butter that it should—a margin of round about two-pence and so the Commission had to consider seriously the case of those suppliers to whom a change over meant the difference between coming tinder the ju- I nsdiotiun of .Mortgage Corporation ami keeping out of it. At the same time the Commission was not in a position to give those farmers any advice as to whether they should change over. They did not know what the future pros-

All knew that Canada's cheese manufacture had been tapering off with the result that the Government had subsidised it to the extent of a million dollars. This was to prevent cheese companies turning over to butter. Canada made barely enough butter for its own use and the Government was afraid of getting an exportable surplus which would crash butter prices. Anil so they had decided to subsidise the cheese companies. .Sir Frances then referred to the tendency in Britain to make butter out of the surplus milk supply instead of cheese as in the past and said that here he hud presented arguments for and against New Zealand decreasing its cheese output. There were many other factors affecting the situation, even to the price of meat at Home for when meat became dear" the people changed over to cheese. The Small Cheese Company.

Coming back to the question of closing up the smaller cheese factories, Sir Francis said that -in .New Zealand there were many areas that were not purely dairying districts. In those areas was carr I out a little agriculture, grazing and some dairying. Now, it had to be borne in mind that the modern cheese factory, to be efficiently worked, should h r, -e an output of somewhere about 300 tons and they could have a unit of that size only when a considerable area around the factory was purely dairying country. In many districts those conditions did not exist with the result that there were small factories 'f .100 tons and less — factories that were approaching the period when their usefulness was worn out and rebuilding would be necessary. The directors of those concerns would have to look at the situation from a proper business viewpoint and consider whether it would be wise to take the risk ol spending from £3OOO to £SOOO on modern equipment with no guarantee as to the future of cheese.

"If one of these small cheese factories were to sell out to a neighbouring butter company, it does not mean that New Zealand will be transferring entirely to butter," added Sir Francis. "No great harm will be done the industry by one of these companies selling out —it will not affect the volume of cheese in New Zealand as the definitely cheese areas in other localities, like Southland and Taranaki, will be able to take care of any drop that might result.'' The speaker urged companies that were in the position indicated seriously to consider their assets. At the moment they had a goodwill in a potential supply which was worth money but by hanging on they might find those assets dwindling and in the long run be faced with having to close up altogether.

Sir Francis said the Commission had

no axe to grind nor personal interests in the matter. All interests would be fully considered from the point of view of the country as well as the industry

itself. The relationship between the Dairy Board and Commission was an exceedingly cordial one and he Imped the companies would display confidence in the investigations to be made. All information given by companies would be treated as confidential. The chairman said the directors would realise thai the investigation was m good hands. Air. J. Kyle thought a guaranteed remedy would be to put the factories on the same footing as freezing companies and sale yards. At present it was a case of fight each other and personal animosity often entered into policies. With the salj yards and freezing works all went to their nearest. Mr. (Jr. 11. Wales asked if the Commission had had any officers carrying out similar economic savings in other districts. .Sid Francis said so far they had not been asked tor a similar economic survey and secondly, they had been dealing with much smaller areas than was represented by this conference. However, the Commission would far rather the meeting appointed its own ftivestigaturs. Answering JMr. Kyle. Sir Francis said one obstacle to zoning was the presence of proprietory factories which had a perfect right to exist but on occasion.--: did get their supplies from farmers who had become disgruntled with the factory they originally supplied. Tt wn» hoped that some just method would be found of absorbing the unwanted factories. Bequest to Commission.

Mr. P. B. Desmond (Cheltenham; moved that, with the object of conducting the economic survey Within this territory, the Commission be requested:

(1) To make an inspection of each factory with regard to location, capacity, equipment and manufacturing and cream collecting facilities. (-) To invite each company to give evidence separately in camera regarding its manufacturing operations, cream collection and the like.

(3) To arrange for an independent examination by qualified person* of the operating costs of eacii company.

(4) To collect any other evidence which they consider necessary for the purpose of ascertaining a true comparative statement of the position. (5) To advise dairy companies ot the procedure nece.ss;; ry to bring about any desirable reform. Mr. Kyle ventured the opinion that the evidence should not be taken in camera. Each company should hear the other's case. Mr. Gimblett (Levin) thought that to take evidence in camera was the only possible way of conducting tho investigations. Mr. S. E. Algar (Taikorea) suggested that, in addition to two secretaries, there should be an engineer attached to the investigating committee as the

; i latter would bo better able to give ini .formation as to the value of machinery I and buildings and cost needed to restore s iliem to the state needed for efiieieitt I working. ' Mr. J. Devine seconded the motion. Mr. F. Dixon (Makowhai) asked tor ' information on such a position as all ; the suppliers or a cheese factory about to sell out, not wanting to go to tiiu ' butter factory which had bought out 1 the goodwill of that cheese company. 5 JSir Francis said the arrangement 1 could be for the various butter factories 1 supplied to each pay a portion of the • goodwill. The Commissioir would have sooner or later, to limit the distance over which cream can he sent in the interests oi quality as well as in the interests of true co-oper-ation. This would be something in the nature of zoning but it would still allow suppliers to make a , choice of factories. The Commission, however, was against a farmer going past 12 factories to supply the 13th. Mr. Staliard (Dairy Union) ask«tl whether in amalgamating companies, one factory would be closed down or the two factories run as one unit. .Sir Francis said the policy would depena on the circumstances. The economic butter unit was about .1000 tons output but smaller factories were necessary in outlying area's. But what he did want to impress upon the small companies was that it would be better to sell out wtiilc they had something to sell rather i than wait till they were stone-dead and the large companies had picked up all their suppliers.

.Mr. J. Boyco (Tui) put in a plea for the small choose factories of the district- who were faced with gradually diminishing supp.ies. Mo quoted figuies showing tlit; drop in tonnage that had taken place. His own factory had dropped last season from 2DO toils to 2JSS tons and the estm ate for the present boason was still lower. There was a gradual drift all the time yet the factories I - .id plant that could cope with a irrc-it deal more and was now lying idle. The swing over from butter to cheese and vice versa followed the market trend. Air. Boyee pointed out that, Avhereas Xew Zealand supplied about 1- per cent, of Britain's butter requirements, it supplied about 70 per cent, of (he choose needed. It seemed cheese at Home was the only thing the ,

Dn;*r ,,; nri had a say in. The cheese industry was worth protecting' as there was already enough butter being made. He wondered il‘ there was a butter company that would buy a cheese company out. They '■ uld have no guarantee of the suppliers sticking to them. He ashed if the Commission had considered an equalisation scheme for payments as

between butter and cheese lactones. Mr. Boycc .spoke oi: the need for factory manager* being placed in the position of refu.-ing milk or -ream ihat was not up to slaiiward without tin; ,. that supplier going to another conipany. Mr. Algar thought that hall ij. changing over by suppliers could be avoided if all companies compelled suppliers to take up shares. (Sir Francis said it would be improper for a co-operative butter company to | juggle with its share regulations m 1 crder to take a supplier away from a cheese company. Mr. P. Dixon expressed the opinion that the "wierd" regulations introduced by scientists to improve the quality ot cheese—"and which had not" — had had more to do with the loss of suppliers at cheese factories than the | butter factories. Mr. W. Gloyn (Kongotea): We have heard a lot about private companies toI day but in our area :,he so-called cooperators are the worst. The motion was carried and the investigation will cover the territory from Paraparaumu to Taihape. J.t was left to the Ommissinp to select thi> persons to make the survey. There wero r -- suggestions put forward for meeting the cost of the investigation. One was that the Diary Board should pay. The other was that the companies snould meet the cost pro rata on :i tonnage basis. The first was favoured. Mr. Hale pointed out that the decision might hold up me investigation. It w"s hardly a lair thing to ask the board to moot the cost of something that did not rightly concern it. Mr. .warciinnt said he, also, could not pledge the board to me commitment. It was only reasonable that die district shouu. pay for its ow survey. Mr. A. Linton, the third member ot lue i;airy Board, «'ioke in similar strain. It, would be illegal to spend national funds on a district problem. The investigation had been u"-ked for by r district. Mr. M. L. Kiiudseii (Whakarongo) sa.d that the companies had' been given to undcrs-ta at the outset that the 'Dairy Board "sired the investigation j ana ..• v st had agrecu to be the first "to lie operated on." .i Francis Frazer thj companies were not being charged with the expenses ' • Commission's visit but it d : d appear that there was no direct claim on tne Dairy Board for any outside costs. In ot the representations made, it was decided to pay pro rata 0:1 a tonnage basis. At the conclusion of 'he meeting arrangements were made for members ot the Commission, to visit the factories in the area in order that directors can put Jorward i.iie;r par. ilar views. The visit will also enable the Con. 'is/ion to visualise the location of each factory and the condition of the buildings ami ackinery. The members of the Commission and Dairy Board were accorded a vcie ot Ua-uiis .10. -.eir visit.