WHICH PAYS?

Northern Advocate, 18 July 1933, Page 7

WHICH PAYS?

F. 0.8. OR CONSIGNMENT? RULE RELAXED. DIRECTORS TO DECIDE. Shareholders at the annual meeting of the ALaungatapere Dairy Company yesterday decided to .give the directors a free hand hi the marketing of butter. Two years ago the company passed a resolution favouring consignment selling, but a relaxation of this rule has now been necessary.

The matter was raised yestei-day by the chairman, Mr L. .Reynolds, in his annual report, wherein he stated: — ‘ ‘ Prices of dairy produce on the London market have consistently remained at a very low level, lower than for a great many years past, but with occasional rapid fluctuations for which there was no apparent reason. These rapid fluctuations, together with f.o.b. offers generally slightly in excess of London parity, were a source of anxiety to your hoard; more so, perhaps, as the board is working under a general resolution favouring a consignment policy. “In view of the past year’s experience, 1 would suggest further consid oration of this subject. For the past season, with the exception of a few sales which proved satisfactory, your board mainly adopted a consignment

policy. ’ ’ Mr Reynolds said he supported consignment for normal times, but today times were very abnormal, and, in view of,what was transpiring, lie thought the directors should be given a free hand. During the past year the resolution passed by suppliers had been consistently at the back of bis mind, when offers were being Considered, and this had influenced him in making decisions. It was common knowledge, Mr Rey nolds continued, that some London firms to whom butter had been consigned bad sold the produce before it reached England. These sales had a depressing effect on the marketing of the rest of the consigned butter on the boat, and meant that the remainder had to be sold at the same price. Not only were these forward sales taking place, but he had it on the best authority that; some consignments had been sold before leaving Xew Zealand, If such methods were being followed, why, he asked, should co-operative com panics consign? Maungatapere operated through three good agents, and he did not believe that those Anns adopted such tactics. Mr lorns was looking into the question whilst in England. Mr Reynolds said he believed that, as the result of the policy adopted two years ago, the Maungatapere Company had not received many f.o.b. offers extended to other factories in the district. London firms cabled offers to their agents in Xew Zealand, good for 24 hours, and time then became the

deciding factor. Under these circumstances, agents first got into touch with companies favourable to f.o.b. selling, and often filled their requirements from these sources, without companies, committed as Maungatapere had been, receiving the opportunity'. Mr J. H. Hayward moved that the marketing of produce should be left entirely to the discretion of the board of directors. ‘ ‘ When the resolution recommending a consignment policy was passed hoie two years ago,” said the mover, “every agent in New Zealand, within 24 hours, was aware of the position. That accounts for our board not getting the same offers as other factories prepared to sell f.o.b. Last season factories selling f.o.b, had obtained an advantage, of Id per lh, representing a loss of £7OOO to Maungatapere. It was onlyreasonable that agents first got into communication with companies likely to sell.” The motion was seconded by Air S. Edge. Air J. A. Cutforth, the mover of the original motion recommending consignment, confessed that two years ’ experience on the directorate had changed his views. He still believed that a con signment policy-, carried out nationally, would be an advantage to the Indus-, try, but as the industry could not cooperate, the Maungatapere ■ company should change its policy- and take the offers as they- came. The motion was carried unanimously.