DAIRY INDUSTRY

King Country Chronicle, Volume XXIX, Issue 4693, 14 May 1935, Page 6

DAIRY INDUSTRY

IMPROVEMENT SCHEME. LOANS TO PRODUCERS. COMMISSION'S WISHES. The Executive Commission of Agriculture has posted a circular letter to all dairy companies setting out the conditions under which loans for improvements will be made available to dairy factory, companies and dairy farmers from the fund provided under the Agriculture (Emergency Powers) Act of last session of Parliament. Accompanying the circular is a letter from the chairman of the Commission (the Hon. C. E. Macmillan, Minister of Agriculture) who asks that the contents of the letter be brought before directors at their first meeting. "The Executive, Commission 01 Agriculture is desirous-of impressing upon all sections of the dairy industry the necessity of improving the quality of our dairy products and establishing their reputation more firmly," states Mr. Macmillan. "The Commission is satisfied that concentration on quality in all stages of production, processing, and manufacture is essential if we are to extend our markets and secure the best possible prices for our products. To this end the Commission urges dairy factory companies to give the proposals in the circular their careful consideration, particularly in regard to assisting dairy farmers either by borrowing from the Government for the purpose of relending or by guaranteeing advances made by the Government to their suppliers. It is felt that the companies will realise that it is in the interest of all their suppliers that every farm dairy should be equipped to supply milk or cream of a standard that will enable the company to secure the best manufacturing results."

A Better Fooling. The circular recalls that in the course of its report last year the Dairy Industry Commission stressed the necessity for putting the industry on a better footing as regards quality of production, and expressed the opinion that an improvement in quality would be reflected in improved export prices. The Commission made suggestions in its report as to the measures necessary to raise the standard of quality of dairy produce, and suggested as one means that assistance should be provided by the Government for the purpose of modernising the equipment in dairy factories and improving conditions in and around farm dairies.

After considering the report of the Dairy Industry Commission, the Government introduced legislation for the purpose of giving effect to certain of the recommendations of the Commission and in the Agriculture (Emergency Powers) Act, 1934, authority was given for advances to be made by the Government for (a) The construction, ' reconstruction, equipment, and improvement of dairy factories; (b) securing improved conditions in ! and about dairies (within the meaning of the Dairy Industry Act, 1908). The intention behind the legislation was to encourage the expenditure of capital upon the modernising of equipment in dairy factories and improving conditions in and about farm dairies, with the idea of improving the quality of our dairy produce for export, and thus bringing about an improvement in export prices. Dairy companies for whom the statement was primarily intended would at once realise the importance of this and would, it was hoped, lend their cooperation, without which the movement could not succeed. A.statement was recently made by the Acting Minister of Finance (the Hon. Adam Hamilton), indicating that advances under section 26 of the Agriculture (Emergency Powers) Act, 1934, would carry interest at the low rate of 4 per cent, per annum. It had been decided that the administration of loans under the Act should be undertaken by the Treasury.

Applicants' Procedure. Applications for advances under the Act would broadly fall within three.categories as follows': (a) Applications from dairy companies for advances for the purpose of modernising factory equipment; (b) applications from dairy companies for loans to enable the companies to make advances to dairy farmers for the purpose of improving conditions in and about farm dairies; (c) applications from dairy farmers for loans • to improve conditions in and about farm dairies.

The circular contains instructions for the guidance of intending applicants for advances under the Act. Applicant dairy companies should, before making the application, notify the cheese or butter instructor of their district of their proposals. The instructors may be able to make valuable suggestions to dairy companies as to the type of improvements to be carried out to obtain the best results. They would also be able to advise as to whether any proposed improvements were in conformity with" the regulations under the Dairy Industry Act, and suitable to be recommended to the Minister of Agriculture for approval. Applications should be made on forms which have been prescribed for the purpose, and should be forwarded to the Secretary to the Treasury, Wellington. Applications should specify the work proposed to be carried out with the advance asked for, and, wherever possible, plans and specifications and estimates should be forwarded with the application. If plans and specifications had not been prepared, details of the work should be given and preliminary estimates supplied. The Treasury, after obtaining all necessary reports from the Dairy Division of the Department of Agriculture and/or from other sources, would notify the applicant companies or dairy farmers of the decision in regard to applications received, and, in the event of loans being granted, full instructions will be given as to — (a) The form of security required; (b) the arrangements made for the

drawing-up of the security; (c) the provisions for repayment of the advances; (d) the arrangement for payment of the loan to the applicant on completion of the necessary documents.

"Generally speaking, loans will be paid out either in progress payments as the work proceeds or on receipt of a certificate that the work has been completed to the satisfaction of an officer of the Dairy Division of the Department of Agriculture, or other inspecting officer nominated by the Treasury," the circular continues. "It is very necessary to secure improved conditions in and about farm dairies, and in this connection the Government would like to obtain the co-operation of dairy companies. A full measure of co-operation would have beneficial results and would enable improved conditions to be secured .at the source of supply with a minimum of delay and trouble. Dairy companies can lend their support by obtaining •financial assistance from the Government for . the purpose of enabling them to* make advances to their farmer suppliers.

"An improvement in the quality of the raw product received into dairy factories is the most important factor in the manufacture of dairy produce of the finest quality. • Advances made to dairy farmers for the purpose of securing improved- conditions on the farm will assist in securing for dairy companies a continuity of supply of milk and cream of the highest quality. "It is confidently expected that companies will consider the desirability of obtaining power, where necessary, to borrow money from the Government under the Agriculture (Emergency Powers) Act, 1934, for the purpose of lending to their farmer suppliers. It would then be a matter for the companies to arrange with their farmer suppliers for repayment of the loans. As an alternative to borrowing by the companies the suggestion is put forward that the companies may prefer to guarantee repayment of advances made by the Government to approved faimer suppliers, and if such guarantees were given the administration of the loans would be very much simplified with advantage to all concerned.

Debenture Security. "As has been stated by the Acting Minister of Finance, advances made to dairy companies for either of the purposes specified above may, in addition to or as an alternative to any other security ' which is available, be secured by way of a debenture over all the assets of the applicant company, and the debenture will incorporate an agreement to repay the loans by the setting aside of a fixed proportion of the butterfat returns for the purpose. In cases where the assets of a company are already pledged either to the bank or to other lenders as security for advances already made, the Government will also be prepared to make advances on the security of a debenture ranking second to the existing debenture or such other security as it available. The Government will also be prepared, in cases where a debenture is already in existence, to protect advances made by the first debenture holder up to an agreed-upon limit. In this way the overdraft accounts of companies will not be adversely affected, and their operations pending the sale of their output will not be hampered.

"In the case of applications from farmers desirous of obtaining loans direct from the Government for the purpose of improving conditions in and around farm dairies, the same administrative procedure will be follows —that is to say,. applications will be received by the Secretary to the Treasury, and the subsequent administration of advances will be in the hands of the Treasury. The seciir-i ity in such, cases will be by way of a binding and enforceable agreement between the Government, the farmer, and his mortgagees for the repayment of the advances and interest thereon as a first charge on the produce from the farm. The agreement referred to will be supplemented by an order on dairy cheques in favour of the Treasury. In some cases other security may be available and the farmer will be required to give full particulars of his financial position in making his application."