GRADING CREAM

Hauraki Plains Gazette, Volume 47, Issue 2665, 3 September 1937, Page 7

GRADING CREAM

ASSOCIATION’S NEW POLICY STUDY OF THE FOUR COMPANIES Then, about the 1913-14 season, the Association commenced to grade cream and pay accordingly to its quality—a policy thus adopted 12 years before it was made compulsory by Government regulations. It is claimed that the New Zealand Association was the first co-operative company to indent manures and supplies for its shareholders. It must be noted that, although herd-testing had been carried on here and there for some years prior to 1912, it was in November of that year that the Association began operations on a comprehensive scale by introducing a central herd-testing station at Frankton.

The Association aided the reduction of manufacturing products by amalgamating all dairying interests in its area. It increased the market for the industry as a whole since it brought into prominence the manufacture of by-products from milk. It early assisted in improving the quality of dairy herds, and helped to establish a higher reputation for New Zealand products in the Home market. It is noteworthy that, when amalgamation took place in 1919, the new company retained the title of “Anchor” brand for its first grade butter—a title known to the public since 1886. A Comparative Study

A short comparative study of the policies of these four co-operative companies is useful in that it reveals the relative merits of each policy in reference to the industry as a whole.

The first great difference arises in the method of management adopted by the New Zealand Dairy Association and the two Waikato Companies on the one hand, and the Thames Valley Co-operative Dairy Company on the other. The first three companies mentioned were really controlled by a managing-director although the nominal control was vested in a board of directors. The man-aging-director was also chairman of directors, a business-trained man, who, although himself not a producer in the industry, was yet required to hold sufficient qualifying shares. His tyrannical position was further consolidated by the fact that he was not subject to retirement in the ordinary course—as were the other directors — but held his position for a more or less lengthy period for which he was previously appointed. However, there was no managing director in the Thames Valley Company. Control was vested in a board of directors composed of farmers who appointed one of its members as chairman. Subject to retirement as were the other directors, he was, moreover, only a part-time official. Naturally, he was far more restricted in his authority and business experience than were the managing-direc-tors of the other three companies.

The Thames Valley Co-operatiVe Dairy Company, therefore, adhered more strictly to the theoretical and ideal principles of co-operation. It might be said that such a large company demanded the attention of a full-time business-trained managingdirector, who could deal efficiently with the many problems of manufacture, transport, and marketing. On the other hand, the dictatoral powers possessed by a managing-director are often not in the best interests of co-operative companies, since they involve a departure from true co-oper-ative principles —at least, in all but form.

Another difference between thfe companies lay in their attitude towards the creamery and home-sep-aration methods of butter-manufac-ture. The Waikato Co-operative Dairy Company was originally operated as a proprietary concern on the home-separation system. The New Zealand Dairy Association in 1914 had the largest supply of home-sep-arated cream of any firm in New Zealand; and the percentage of homesaparated cream increased rapidly at the expense of the number of creameries in existence betwen 1912 and 1919.

But the New Zealand Dairy Association and the Thames Valley Dairy Company were both formed at the time when the creamery system of manufacture was the only one possible; and it was on this principle that both companies operated. The Thames Valley Company received 92,083 pounds of cream as against 30,425,830 pound of milk in the 191011 season in which it made provision for receiving home-separated cream. It is noteworthy that, although in the 1911-12 season the pounds of milk were 8,000,000 more than in the form-

er season, the pounds of cream received were 10 times as great. From that time, indeed, the amount of cream received has increased at the expense of the milk—there being a notable drop in the pounds of milk received in the 1916-17 season.

The home-separation system made such rapid progress that by the 191516 season the greater part of the total output of butter by three companies was manufactured from home-separ-ated cream.

The Waikato Company considerably increased its percentage of total butter output during the second season. its progress until the 1917-18 season was fairly slow. The percen-

tage manufactured by the Thames Valley Co-operative Dairy Company at no time shows any great increase, its highest being shown in the figures for the 1914-15 and the 1915-16 seasons which are. however, only on a level with the 1909-10 season. The percentage manufactured by the New Zealand Dairy Association gradually decreased —with the exception of the 1916-17 season —partly owing to the

manufacture of various by-products. In the case of the total products manufactured by these companies for the seasons from 1909-10 to 1918-19, it is noteworthy that the percentage of the total ouput of the New Zealand Dairy Association consistently decreased, whilst that for the Waikato Co-operative Dairy Company and the Thames Valley Co-operative Daily Company just as consistently increased. However, it is true for the Thames Valley Company that there was a drop after the 1909-10 season and a very slight decrease in the 1917-18 season.

Non-producers were allowed to hold shares in the Waikato Co-operative Dairy Company, Limited, but these persons had held shares in the company when it w r as a proprietary concern. At one stage, indeed, the majority of the shares were held by non-producers. But in the case of the New Zealand Daily Association, in which employees were allowed to hold shares, only 1 per cent of the shares was held by non-producers. That non-producers, whose voting powers were greater than those of suppliers, should control a company’s policy is directly opposed to the principles of co-operation. The Thames Valley Co-operative Dairy Company permitted only suppliers to hold shar-

es and thus strictly interpreted cooperative principles.

All of the companies paid interest on fully paid-up share capital; but, beginning with the 1916 season, the New Zealand Dairy Association discontinued the practice and decided to distribute all undivided proceeds on a butterfat basis. In this manner,

those shareholders who had ceased supplying received no interest on their share capital between the period of their retirement from the industry and the resumption of their /shares by the company. This was often more than a year later. The Waikato and Thames Valley dairy companies, on the other hand, paid interest on share capital held by non-suppliers up to the time of its resumption. This is in accordance with the true principles of co-opera-tion.

The Waikato companies resumed shares at full face value one year after the retirement of the supplier, but the New Zealand Dairy Association and the Thames Valley Co-op-erative Dairy Company, while resuming shares at the end of the same time limit, used to allow only 75 per cent of their face value—the resumption of shares by a co-operative company being regarded as a reduction in capital.

Development Before the Great War

Dairying in the Morrinsville district dates from the sale of the Assets Realisation Board properties from 1900 onwards. To facilitate the sale of their sections, the board built a creamery in 1902 at a distance of about half a-mile along Studholm Street. At the time it had eight suppliers, who received as the first payment for their butterfat 7id a pound,

butter then selling at about 6d. Despite the fact that factories were

springing up all over the neighbouring countryside, this establishment

served for 20 years. It was fortunate for the suppliers, however, that a desire to enter upon the manufacture of' milk-powder was frustrated by the bank, the manager of which persuaded the suppliers not to erect a large

factory for an industry which had not thoroughly proved itself. By the year 1922, some 20 years later, it was estimated that the milk of 10,000 cows was being taken to factories outside the district of Morrinsville. (To be Continued).-