FLOUR WAR?

Otago Daily Times, Issue 22368, 15 September 1934, Page 14

FLOUR WAR?

DISTRIBUTORS, LTD., THREATENED . COMPETITION BY FREE MILLS Unless the unexpected happens within the next day or two, Sonyi Island flour millers will probably find themselves engaged in a flour war. Already Distributors, Ltd., have reduced the price of flour by £1 per ton, and it is stated that, unless the seven independent mills operating in the South Island ugicc to come into line by next Wednesday, a meeting of the associated millers to be held in Christchurch on that day_ will almost certainly decide that war is to be waged on them. Distributors, Ltd., which includes some 40 mills in its association, is an organisation that has been in existence for a number of years. By agreement with the Wheat Purchase Board, it buys its wheat from the pool, issues warrants to the individual millers for the purchase of specified quantities and allots the amount of flour which each miller is to sell for a year at a price that is also fixed. The present agreement,, which has been in force for the last six years, will expire on September 28. Under that agreement, the price, of flour for the past two years has been £l4 2s per ton, but about a month ago that price was lowered by 10s per ton, and a little later a further reduction of 10s per ton was made. This has been brought about by the action of the free millers, who have refused to link up with Distributors, Ltd., and as a consequence have been able to sell as much flour as'the market would allow, untrammelled by the restrictions of any general control. It is contended that these free millers, whose businesses have been of recent growth, have been reaping all the benefits accruing from the organisation of Distributors, Ltd., and yet have refused to accept the restrictions which the associated millers have imposed upon themselves for the benefit of the industry ns a whole. It is' stated that, while the mills in the associated group have been working far below full capacity, the free mills have been working at pressure, and that as a result of the consequent reduction in their overhead expenses they have been on a much better footing than the others. The associated millers claim that up to 25 per cent, of their trade has been lost as the result of the operations of the free mills, and that, while the quotas allotted to them by Distributors, Ltd., are already low enough, this loss of trade is making the position unbearable. Although overtures have been made to the free millers with a view to having them link up with Distributors, Ltd., they have consistently refused to adopt this course, and the associated millers feel that since the present agreement is about to expire the time is ripe to take action to force the position into agreement or out of the trade altogether. ‘ At the meeting in Christchurch, to be held next Wednesday, the whole position will be discussed, and it is stated that in all probability, unless the free millers make a. last minute capitulation, the organisation of Distributors, Ltd., will be broken up, and the individual members of the group will wage war against what is regarded as unfair competition. , .. . Should this he the case, the price of flour will be reduced still further. While this may appear at first sight to be a matter for congratulation to the rest of the community, it is stated that the ulimate results will bo anything but beneficial to, the country as a whole. For one thing, the associated millers claim that the price of wheat will be forced down to a much lower level than at present exists. The Wheat Purchase Board,'it is claimed, could hardly function without the organisation of Distributors, Ltd., which in the • past has materially assisted it in its operations by making purchases of wheat at an earlier date than was necessary for the millers’ requirements. .The milling industry generally would be completely disorganised, the Wheat Research Institute would suffer from the loss of financial assistance given by Distributors, Ltd., with a view to encouraging the growing of better milling wheat, and all that has been gained by the work of years would be lost. And despite this the price of bread would scarcely show any vccluc-. tion, since that price is governed to a much greater extent by baking costs than by the price of flour.