THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, DECEMBER 11, 1930. PRODUCERS AND MARKETS.

New Zealand Herald, Volume LXVII, Issue 20744, 11 December 1930, Page 14

THE New Zealand Herald AND DAILY SOUTHERN CROSS THURSDAY, DECEMBER 11, 1930. PRODUCERS AND MARKETS.

RECENTLY.it was announced that a new general manager, Mr. John McFarland, had been appointed to control the central selling agency of the Canadian wheat pool. Thus he was given charge of a vital department of the great co-operative organisation which handles so much of Canada's most important export commodity—wheat. Mr. McFarland, who, before his appointment was a prominent Calgary grain merchant, has not been long in introducing changes of method. He has just stated that the pool "has reversed its policy of direct selling overseas, and will withdraw its representatives and close its agencies at London, Paris and other European centres. The ordinary established facilities for the marketing of wheat would be used by the pool." The change, it is predicted, will have immediate and favourable results, strengthening the demand for Canadian wheat. This sounds much as if the pool had antagonised its market, and needed to restore goodwill. Though little has been heard about the effect of such machinery for selling as is now being discarded, the pool certainly came into conflict with buyers in 1928, and was worsted in the contest. With a heavy carry-over from the huge crop of 1928 in hand, pool officials demanded a price well above what was being asked by Argentine and United States exporters. Shipments fell away to comparatively nothing, but still the rates at Winnipeg were maintained at a high level. It was confidently predicted that by the beginning of this year world stocks would be short, and the prices the pool demanded would be forthcoming. These hopes were not realised, with the result that early this year the farmers, the pool, and banks that had been financing them were all in difficulties. State intervention became necessary to avoid a widespread crisis. The details of what happened are many and complicated, but the chief cause of failure in the plan to wrest better prices from an overstocked market than it was prepared to give has been described thus:—"The importers at Liverpool and in other markets are a resourceful and obdurate breed of traders. They firmly declined to pay the price asked by the Canadian holders of wheat, and proceeded to satisfy their needs from other sources of supply." The moral of this is that it is impossible to dictate either prices or methods of doing business to a market that has alternative sources of supply. The attempt ends in failure and may easily generate illwill. This is especially true of the markets in the United Kingdom. Those trading there will do business in their own way, and this has to be recognised. The facts from which it is drawn are Canadian, the commodity illustrating it was wheat, but the same moral applies to New Zealand, and to an export commodity as vital to this country as wheat is to Canada —dairy produce. A good deal is being heard at present about organised marketing. Nobody could reasonably advocate haphazard marketing, but there should be clear recognition of the distance organisation can go, and of the objectives it can safely attempt to attain. It happens just at this moment that New Zealand dairy farmers have been offered advice on this very subject by Dr. Annett, an official of Imperial Chemical Industries, an expert on farming subjects. This was the crux of what he said: "Farmers here would be well advised to leave the marketing of dairy produce to those competent to deal with the problem, and to concentrate on production." These are words the farmers would do well to ponder. There is much they can do by united action, but there are limits to their power, and a proper recognition of the limits is important.

Co-operative action for the manufacture of dairy produce has been tested by time, and justified by success. Tt is easy and tempting to argue that what has been achieved in manufacture is also possible in distribution by similar agencies. This ignores the undoubted fact that the two problems are essentially different. Organisation to arrange favourable freight and insurance rates and similar factors are useful, but organisation to establish prices and conditions of sale is something entirely different. When this was tried with dairy produce some time ago, and when it failed,, there were suggestions that if the industry had presented a united front there would have been no failure. Probably sonic, such idea underlay a Canadian move to have the pooling system compulsorily applied to all wheatEven had this boeri done, the overseas buyers, unable to come to terms with Canada, could have turned elsewhere for supplies, as they did under existing circumstances. There is no compulsory pool, and the present organisation will co-operate with overseas merchants instead of trying to supersede them. The profits merchants and brokers make attract those who advocate an overseas marketing system. Do they

also count the risks and the losses, losses which the farmer-merchant would bear himself if he did his own selling? It is not necessary to go abroad to find illustrations of this. In recent years New Zealand freezing companies engaged in shipping meat have suffered heavy losses, which represent substantial gains to the producers who sold the stock. All told, the advice to leave marketing alone is incontestably sound. Anything and everything that can be done to enhance the quality of output, to maintain a uniform standard, and to consolidate a hold on the market by a name for excellence deserves encouragement. That way leads to profit with a minimum of risk. To enter the market directly as an operator is a very different proposition. Like the Canadian wheatgrower, the dairy farmer would be wise to realise that the markets vital to him are likely to display unexpected powers of resistance if an attempt is made to bend them to his will.