PRIMARY INDUSTRIES

Otago Daily Times, Issue 21406, 6 August 1931, Page 2

PRIMARY INDUSTRIES

ASPECTS OF RATIONALISATION A meeting of the Economic Society was held last night in the hall of the Workers’ Educational Association, University buildings, when Mr Leslie W. Bagley gave a lecture on “ Some Aspects of Rationalisation in respect to the Primary Industries of New Zealand.” The lecturer pointed out that the causes of the world-wide depression were legion; they were individual before they became collective, and it was just as reasonable to expect that the remedies would he individual before they could be collective. If people could, through a fuller comprehension of the principles of rationalisation, find themselves in accord with those principles, and applied them in their own businesses, they would find that they were hastening the day of the mental revolution necessary tro overcome world-wide depression. New Zealand farmers as a class, were intense individualists, and their independence was very apparent in their lack of coordination and in their apathy towards their social and welfare organisations. When a national problem confronted primary producers a united attack was not offered by all the different sections, from beef farmers to runholders, and their individual efforts in such cases decreased their power. This spirit of independence, very noticeable in all farmers, was desirable to a certain point. Co-ordination, for the advancerant of an industry as a whole was essentia! under modern conditions, and until this was realised by all primary producers there would be a perceptible lag in their obtaining their rights on the most essential unit of national economic life. To-day the number of farmers’ organisations in the Dominion was approximately 2000, without counting dairy factories (which number 70) and fruit-growers’ associations (which number 17). Altogether, including dairy factories, etc., the number was 2557, or one organisation to every 33 farmers. There must be tremendous over-lapping of functions under these conditions, and therefore plenty of scope for methods of rationalisation. He would not belittle the efforts of any of these bodies, but he would suggest that, with co-ordina-tion and efficiency their cost of administration could be greatly reduced. The time was ripe for greater unity amongst all primary producers in New Zealand. This had always been looked upon as a task impossible to accomplish. The late Lord Melchett once said that the greatest man in Great Britain would be he who could establish unity among the farmers there. Under present conditions all primary producers should work to the one goal of cost reduction and better quality and presentation. The lecturer pointed out by charts the way in which he considered rationalisation could be applied in New Zealand by the social and improvement organisations of the primary producers. His suggestions were: (1) A definite common goal' which would encourage unity; (2) a flexible system by which the opinion of each or any of the sections of industry could be mobilised by mail at any given time; (3) a permanent and steady medium of propaganda on cost reduction methods and achievements; (4) a capable control of these services by an industry and for the industry, wholy representative of all its sections. The whole population was waiting for a practical, bold, and constructive lead on lines of a pre-determined plan, and would co-operate and respond more quickly to an effort by the primary producers than to an effort by any other industry, because it was so vital to their welfare. Although his suggestions were for New Zealand as a whole, there was no reason why the scheme should not be attempted in Otago or any other province as, a Rad for the Dominion. Ways and means could be worked out to finance it —that was, if the industry was prepared to co-ordinate and make a practical effort to help itself. Mr Bagley next dealt with the marketing channels, which offered wide scope for rationalisation and held out a large and immediate cash return to every producer. Both the Meat Board and the Dairy Board were live channels for the rationalisation of marketing, but their usefulness would always be impaired as long as their interest in the produce rationalised marketing started at the ship’s side. Rationalisation of the dairy industry would effect savings through the following avenues: (1) Routing collections of cream; (2) coordinated processes, patting, office work, printing, and distribution; (3) discounts and bad debts. If a farmer were to figure out what the present system meant to him annually he would demand efficiency and co-ordination; he would be done with the present pseudo co-opera-tion. What happened not long ago? The present wholesale price of butter was Is 2d net in the North Island, and Is o|d net in the South. The drop of was first made by one of the cooperative factories in Canterbury. Rationalisation could have stopped the other factories in the south following sdit. This little bit of competition now cost the South Island dairy farmers £12,000 per month, or £144,000 per annum. Alone it was equal to 1.82 d per lb of butter-fat, making a total loss, through overlapping, false co-opera-tion and competition, of about 3.24 d of butter-fat. Under proper rationalisation the total saving to the butter industry of New Zealand would be approximately £843,700 per annum. Cheese factories had also to be considered, and a similar case could be made out for them. The lack of unity among farmers was a barrier to the inauguration of a successful rationalisation scheme, as was also perhaps the lack of business knowledge on the part of a number of the cooperative factory directors. It was essential to know the finer points of factory management, marketing, and administration to be able to get together and co-ordinate for efficiency. The chairman of directors should be the most businesslike farmer in the district, paid a good honorarium, and have a long tenure of office, so that he could study his job and not have to rely .solely on the opinion of the manager, who really had no capital at stake. Therefore, one of the first things to do was to get the directors to make an efficient study of their responsibilities. Rationalised handling and orderly marketing of dairy produce must come and that time could not be far distant, but it was no good looking to any Government department to do it. This was a job for the industry itself, and no Government could make a success of it. It. needed to be approached in the spirit of unity, service, and economy, and it could be accomplished. The marketing of wool, meat, fruit, grain, and other products was also ouchcd on, and in each case the principal of rationalisation was advocated. Dealing with wool, the lecturer said that for the last three years he had made a study of the subject, and had worked out, more or less in detail, what he considered was the basis of a practical scheme for the rationalisation of wool handling and classing. In working out his scheme, he had tried to find out where present methods could be improved or standardised or the cost of handling reduced. Out of this research evolved the seven principles on which the scheme was based. The principles were not new, but the scheme embodying the lot and attempting a remedy was new. The seven principles were these: 1. To utilise the existing channels of marketing. 2. To co-ordinate the brokers, in that all reclassed or bin wool is handled under modern methods, using modern conveyor and automatic equipment in a central store and yet not to disturb the brokers individuality or their relations with their clientele. 3. To standardise the classes over the whole of the country (even the Empire) and onable strict supervision to maintain the

fixed standard of classing. 4. To standardise the brands, weights, size of packs and make available larger sized parcels available for the buyers. 5. To eliminte through centralisation the vast economic waste of work in valuing, buying, and preparing for sale thousands of lots more than necessary in the selling centre. 6. To provide the means of eliminating the loose hemp nuisance and its attendant loss, to eliminate the recurring annual cost of wool packs, and to attempt to deal with the excessive moisture in damp or wet wool. 7. To reduce the cost of handling and classing to the grower, and to allow and give a better presentation of the clip to the buyer, and so encourage the higher prices which attend such an improved service. In New Zealand about 50 per cent, of the wool was reclassed by the brokers in their stores. In Dunedin about (30 per cent, was reclassed by the seven brokers. By means of a chart the lecturer showed the estimated savings, or extra not returns, to producers for wool in the Dunedin sales. The figures worked out at about 22s 6d per bale of 3001 b for wool handled through the rationalised scheme, but handled on the stations, and at about 30s per bale for wool reclassed by the brokers, and for the whole Dominion an estimate of £500,000 per annum, regardless of market fluctu ation, was, in the lecturer’s opinion, on the conservative side. Proceeding, the problems of transport and distribution charges were dealt with. The annual national production of New Zealand was £121,000,000 in 1929, and £44,000,000 was the cost of transport service in that year; therefore, for every • £IOO of production £3O went in transport costs. A scaling down of this charge was as essential as either an increase in production or a decrease in costs through other channels. To lower this annual bill only 10 per cent, would mean £4,000,000 per annum, and surely the primary producer could claim 50 per cent, of this benefit, seeing that his share of the national production was somewhere about 65 per cent, in value of products alone. Touching on the industry as consumers, the lecturer said that if the benefit from organised buying reached the stage where it was equal to 5 per cent, discount on a sum equal to a quarter of the value of their production —that was, £20,000,000 in value of goods—the primary producers would be better off to the extent of f 1,000,000 per annum. As a final remark the lecturer said that to his mind there was a practical and feasible way to get action along the lines he had advocated by calling the executives of all sections of the industry together, by setting up the farmers’ federation efficiency board, and by thoroughly organising it on sound lines, bearing in mind that the essentials to its ultimate success were: (D The definite common goal, which would encourage unity; (2) the flexible system by which the opinion of each or any of the sections of the industry could be mobilised by mail at any given time; (3) the permanent and steady medium of propaganda on cost reduction methods and achievements; (4) the capable control of 'these services by the industry for the industry, and solely representa tive of all its sections. Let the board plan a seven or ten-year campaign on nationalisation ideas, which, speaking broadly, would aim to secure reforms through the following avenues:—(l) To improve or intensify all methods and avenues of production. (2) To reduce* the cost and co-ordinate the social and improvement activities of the industry. (3) To rationalise the marketing channels of the industry. (4) To lower the annual cost of transport and distribution affecting primary producers. (5) To organise co-operative purchasing and so scale down the costs of goods bought by the farmers. It could then be said that a determined attempt was being made to rationalise the activities of the primary producers of New Zea land by the industry itself, and throughout this effort let the farmers as a body always act wisely, embrace economy, and, above all, get unity. Professor G. S. Billing occupied the chair. Mr Bagley received a hearty vote of thanks for his lecture.