WORLD'S RICHEST CONTRACT

Otago Daily Times, Issue 23005, 7 October 1936, Page 14

WORLD'S RICHEST CONTRACT

CARRIAGE OF DOMINION PRODUCE £14,000,000 IN THREE YEARS (From Oub Own Correspondent) (By Air Mail) LONDON, Sept. 2. One of the world's richest contracts and, for New Zealand, the world's most important contract, came into force yesterday under new conditions. It is known almost universally to New Zealanders as the " freight contract," and it specifies the terms and . conditions under which the Dominion's primary produce—the life blood of her economic existence—shall be transported to the Home markets. It is worth approximately £14,000,000 for the three years of its duration to the four shipping companies which contract to carry the food supplies home to England. This year no fewer than three months' negotiation was required before the Dominion's representatives and those of the shipping companies reached a decision. Then, as already announced, the rates were 2J per cent, higher than those of the last contract. An increase was regarded almost as inevitable before the discussions began. The shipping companies' costs have risen considerably during recent months, not only in New Zealand, but throughout the world. In the Dominion, of course, restoration of the wages cuts and shorter working hours are two items alone that have given them an added burden to contend with, increasing their costs at one step by £400,000 per annum. And to add to their argument they had the indisputable evidence that New Zealand freight rates had been reduced by an aggregate of 14 per cent, over a period of 21 years. New Zealand's representatives, therefore, expected a swing of the pendulum when they began the discussions, and it is universally agreed in shipping circles that they struck an exceptionally good bargain .by the new contract. *, The four companies concerned are the New Zealand Shipping Company (with which is incorporated the Federal Company), the Shaw, Savill, and Albion Company, the Commonwealth and Dominion Company, and the Blue Star Line. One representative from each of these companies conferred weekly with Mr James Begg and Mr R. S. Forsyth (for the New Zealand Meat Producers' Board), Dr R. M. Campbell and Mr H. E. Davis (for the New Zealand Dairy Board), and Mr R. Paynter and Mr H. Turner (for the New Zealand Fruit Board). An additional point of interest in the discussions was that, for the first time, the New Zealand Government itself was directly interested as future "owners" of the Dominion's dairy produce. Virtually these four shipping companies hold a monopoly of the transportation service for primary produce between England and New Zealand, but on the other hand the New Zealand trade is practically their " living," so that in arriving at a new contract the two parties were almost on ec-ucl ground. The chief point to be determined, naturally, was the price or the rate. For the shipping companies it was a matter as to how high an increase could be gained, and, for the Dominion representatives, how much the various industries concerned could afford to pay. , During the weeks* which ran into months, it was a case of proposal and counterproposal; discussions very often continued away from the conference table and then referred back to the full meeting. Not only may this contract be regarded as the world's richest, but also as the world's most unique cargo service. The service is one of the most difficult in the world, for the greatest distance between any two points has to be covered. Over 110 sailings are required to carry Home the Dominion's output, involving a vast organisation, both in the Dominion itself and still more, perhaps, in the Old Country, where the markets must be carefully watched. It is a fine tribute to the shipping companies that both producers and retailers regard the service as an excellent one, an opinion which is endorsed by the high regard in which the Dominion produce is held in England and. what is more, by the prices commanded in comparison with produce from other countries. ' • The feat of bringing Home a cargo such as was transported by the Raranga recently would have been regarded almost as an impossibility less than half a century ago. Yet only part of this vessel's holds were filled with 163,400 carcasses of lamb, 20,000 carcasses of mutton, 2230 carcasses of pigs, 750 quarters of beef and frozen sundries. In addition dairy produce was transported and other food for the British public. Very often, in their keen study of markets and prices, farmers may. overlook the service that is supplied by the fleet plying the seas every day of the year. Yet their task is none the less important than that performed by the man who rounds* up the cows, or the man who sells a pound of butter, or a shoulder of lamb, over the counter.