DAIRY PRODUCE CREDITS.

New Zealand Herald, Volume LXIII, Issue 19418, 28 August 1926, Page 10

DAIRY PRODUCE CREDITS.

ARRANGEMENTS FINALISED. AGREEMENT FOR A YEAR. ALL MERCHANTS INCLUDED. liNIDUSTRY FULLY PROTECTED. [BY TELEGRAPH. —PRESS ASSOCIATION.] WELLINGTON. Friday. In the House of Representatives to-day Mr. W. A. Veitch (Wanganui) asked the Prime Minister if his attention had been called to the Press Association message in which Mr. W. Goodfellow was stated to have said it was a fact that certain dairy produce firms had refused to establish letters of credit m the name of the Dairy Control Board for the handling of New Zealand butter and cheese. If the foregoing statement was correct would the Prime Minister toil the House why such firms had refused to establish the necessary letters of credit? Also, did he consider the present financial arrangements of the board entirely satisfactory for the protection of tha Dominion's interest? Mr. Veitch also desired to know if the Prime Minister was aware that letters of credit already established were on the basis of drafts at 30 days' sight, whereas, in the past individual dairy factories were able to get their business dore on sight drafts. Ho added that he was informed that definite statements had been made by tho Prime Minister and Minister of Agriculture that the compulsory marketing clauses would not come into operation until the Government was fully satisfied that tho proper financial arrangements had made by the board. The Prime Minister, in reply, read the following statement supplied to him by the Dairy Control Board:— (1). When Mr Goodfellow made tho statement referred to certain of the merchants were holding out for conditions upon which an agreement had not been reached, but th ese matters have now been settled and oredits have been established by all merchants for 12 months. (2). This is answered in reply to question No. 1. (3). The financial arrangements made are satisfactory and the industry is as fully protected financially as ever it has been and is in a better position so far as marketing is concerned. (4). The letters of credit established are on the basis of 30 days' sight. It was quite a moot point with ,t,he board whether or not it would ask for 30 days or sight drafts. In the final return there is practically no difference between the result of drawing at 30 days and drawing at sight. When drafts are drawn at sight the merchant has to pay cash immediately he sights the documents, , sometimes weeks beforo the produce reaches Great Britain. The practice adopted is that the merchant then charges interest from the time the draft is met until the produce is sold. On the 30 days' draft, while the exchange is a little higher, no interest is incurred until 30 days after the draft is sighted. It is generally conceded that there is very little difference between the actual result of the 30 days' draft and the draft at sight.