FLOUR MILLING

New Zealand Herald, Volume LXXIV, Issue 22724, 10 May 1937, Page 11

FLOUR MILLING

CONTROL BY STATE ■ CRITICISM IN AUCKLAND WHEAT COMMITTEE REPLY [by telegraph—OWN correspondent] CHRISTCHURCH, Sunday "Our attention, as the Wheat Committee, has been drawn to a report on certain remarks made by Mr. J. A. Peacock, chairman of the Northern Roller Milling Company, Limited, in the course of his annual address to the shareholders of the company," said Mr. L. J. Schmitt, deputy-chair-man of the Wheat Committee, to-day. "These are calculated to give such a wrong impression concerning many aspects of the wheat and flour plan for the rationalisation of the milling industry, that they cannot be allowed to pass without comment. "Mr. Peacock has described as disastrous the effect of what he calls Government interference in the industry," said Mr. Schmitt, "but he must be well aware that disaster to many of the millers was narrowly averted only by the Government's action in stepping in to assist the industry. Wasteful Price Wars "Continuous and wasteful price wars were ruining the milling and allied industries, and the Government's action stabilised trading conditions. He says that the Government owned slightly more than half the shareholders' business. From this he infers that the Government is knowingly pledged to confiscation. "This inference is wrong. It must be pointed out to him that as the result of the Government's action the Northern Poller Milling Company has acquired a definite right to an output allocation of 27,541 tons of flour. Under the control scheme, this tonnage, which is considerably greater than their account sales on their own grist in 1934 and 1935, is assured to them and is now a'realisable asset of great value. Amount of Flour Handled "It is very doubtful whether the amount of capital on which the company desires to pay dividends is not in excess of the amount of capital actually required for the mill producing the quantity that represented the output when the allocations were made under the control scheme. Mr. Peacock st/ites that, prior to the inauguration of the rationalisation scheme, his company was handling about 34,000 tons of flour, but he knows quite well that about 6000 tons or more of this total were being manufactured by South Island mills.

"The Northern Roller Milling Company," added Mr. Schmidt, "is warehousing this quantity of flour by agreement with the southern mills, for the purpose of stabilising the market without disturbing the Auckland price, and to ensure the southern mills some share of the Auckland market. For this service they are receiving a small commission from the southern mills."