CO-OPERATION IN MARKETING FRUIT.

Otago Witness, Issue 2203, 21 May 1896, Page 8

CO-OPERATION IN MARKETING FRUIT.

The following paper was read by Mr A. Lorie at the conference of Australasian fruitgrowers recently held iv W"Ui«j{ton :—: — i Bttfore reading my paper I must explain that I am placed in an extremely delicate position, since in order to pub clearly before you the difficulties which w« experienced in forming our company I am compelled to refer prominently to' myself. I have endeavoured to do so as little as possible, but were I to alter the reading of the paper in any way I should not correctly convey to those of you who propose to form similar combinations the absolute reliance which you must repose in the psraon you select as an organiser and manage?. My directors have kindly authorised me to give any information regarding the working of our company, and I shall deem it a pleasure to render younger org- motions any assistance in my power. I may add that in order to ensure correctness of detail I have submitted this paper to tho^e of them who are attending this conference. I trust that these remarks will acquit me of any possible charge of egotism Co-operation amongst fruit-growers in Now Zealand is by no means » new thing, bub it has remained for the Teviut men to prove that it can be made an unqualified success. Numerous co-operative associations have sprung up from time to time, bub whilsb nearly all have failed to carry oub successfully the objects for which they were started, although they in very fow cases embraced anything like thoroughness, the Teviot fruit growers have tackled the entire question and pulled it through successfully, Prior to the year 1890 the Teviot men were probably as divided a bo ty of growers as could be found anywhere; indeed it may be said bhat tbeir system of handling their fruib was even more primitive than existed in perhaps any other p«t. One or two of the largest growers followed the very old-fashioned custom ot bringing their fruib into to »d, taking premise a-id selling it thi'iasHves ; others eiitrus od their fruit to these one or two to sell on their account ; whilst others again actually consigned their fruib to retail fruiterers, whom thsy allowed to fix the price wbic^i thf-y should pay for it. When there was nob tufficieafc fruit grown to meet the demar.d this latter system answered fairly, bub as soon as the supply increased serious dissstisfac'i.m arose. It was not to be supposed that retailers would pay more than they could possibly help, or that, unless they were more than ordinarily honest, even a fair price. They contended, too, that-they should not be expected to pay for fruit which d* cayed on their hands, and thus it geuerally happened that not only was a low price paid, bub a great deal of the fruit was nob paid for at all. The extreme unfairness of this system to the grower will at once be obvicw, since after ihs fruit once left his hands be was entirely at the mercy not only of the retailer's honesty, but of the various ups and downs of trade, for which risks the retailer is amply compensated by the liberal profit he insists upon. Of courge nothing like the same objections existed against the method adopted by the growers who sold their own and neighbours' fruit. They were fair men, and the other growers who entrusted them with their fruib had great confidence in them. Still, ifc was patent to all that with their rapidly-increaßing output their resources would soon be taxed beyond their capabilities, and so it was that in 1800 a deputation waited on me with a rtques-t that I should propose a system by which a reliable market could be found. After giviog the matter very careful consideration, and asceitaining as far as possible the then output and local demand, I saw that the t»sk would be one of very great diffijulty, since the then supply already very considerably exceeded the local demand, although the j*m factories took a fourth of Iha entire output, aud careful inquiry had satisfied me that it was by do means ci-t-aiii ' l a<. this demand from the factories wtmiil , i, i it», sine 3 they had already lowered their p ictjh, Lrdr. n thrir contracts, and n various wa-ya clearly sbo-vu that they int. i,dt-d , to take every opportunity of further bringing down prices. It was evident to me that their piices could not coiae down very much lower before, it would be impossible for growers to supply them with any margin of profit, and thus I had before me the certainty that whilst even with the support of the factories I had a surplus of fruit, to couteud with, I had the very great possibility that their usual purchases would also have to be provided

for elsewhere. As, however, a set-off to these difficulties I knew that the most had nob hitherto been made of the fruit, which I felt sure only required its splendid qualities to be more widely known to secure a much wider market, and so without hesitation I accepted the invitation to prooeed to the Teviob district; in order to organise the growers. My first experiences were anything but encouraging. Those who had invited me certainly supported me thoroughly, but I at once found that there were serious vested interests which could nob be easily overcome. Those who had previously consigned direcb to retailers feared that the trade would be lo3b to them if they once withdrew their consignments, whilst; those who had sold their own fruit very naturally hesitated before giving up their connection which had taken them years to establish. So it was that the first attempt to consolidate the Teviot growers ended in failure, which, however, was 1 ofc entire, since at the final meeting of growers it wa» resolved that my proposal for them to send mo the whole of their fruit should have a partial trial, the deoision being that four systems of dealing with the fruib should be tried during the next season. A portion of the fruit was as usual to be Bold by the growers themselves, another portion was to be consigned to retailers, whilst the remainder was to be divided between another salesman and myself, on the understanding that the most successful system should afterwards be universally adopted. As can easily be imagined, this was anythiug but satisfactory to either grower or salesman, since nob only was there fierce competition between rival salesmen and the locally-established grower, but the principal retailers had already been supplied by the growers who consigned to them direct. Still, notwithstanding bhese difficul'ies, it was decided by growers at the end of the season that my returns were the mesb satisfactory, and I wa* accordingly once more invited to induce the Teviot growers to unite and form a co-operative association. Again I found a most difficult task, and one reason and another was brought forward why this and that one should nob sign an agreement, until at last, despairing of uniting them by any means, I made them a ca»h <ffer for the whole output of their district, the prices ififered being those they received during the previous season, less 10 per cent, commission. This at once met with almost unanimous support. I was to deposit £1000 cash as a guarantee, and, whilst haviog the option of taking the fruit for 10 years, w&s to be allowed to cancel tha agreement at the end of 12 months if I desired it. It will at once be teen how exbrt-mely advantageous this was to growers, siuce if at the end of a yevr I decided to renew the contract, growers would have no doubts as to their market for at least 10 years. It will scarcely be credited that even to this offer there was a dissentient, who, although willing to atll for one year, would not bind himself for mare. As I wa* nob prepared to undertake *o large a contract uuless I controlled the market, I was reluctantly 'compelled to let the matter go and again recommence negotiations. This time, however, success attended our efforts. Growers, seeing I bad confidence in myaelf, were now disposed to place reliance in me, and so it was that an agreement was figned by every grower binding them to send all their fiuit to me for sale under a penalty of £100, gi"ing them, however, the right bo sell in A»jy path of the colony south ot Milton, they beiug responsible under the penalty for any fruit which might be bought there and forwarded to Dunedin. The Tttviot and Alexandra Fruit-growing Association consequently commenced its operations with the season 1891-92.

I at ones found that ifcfl control waa nob going to be an easy matter ci c j the factories *t once refused to buy the fruit txcapb diieofc from individuals as previously. The retailers, too, to"k up the same stand, and so it was that our future at the first looked extremely black. However, a firm front aud square dealing soon satisfied both factories and retail*™ that we only sought fair play, and so the end of the season enabled the association to congratulate themselves on entire success. Prices had improved and no fruit had been lost through decay, although the quantity received (116£ tons) was in excess of any previous season. The next season was altogether as successful as the opening year,a»d prices showed even a marked improvement,' all of course coing well. The uexb season, however, mi t >>!ibW be^an, Iv the spring it was evident » lu<c crop would be pulled, and the more timid of our members openly expressed their doubts of my ability to dispose of it. One or two of our largest growers, indeed, refused to again sign the agreement and bond, which some legal technicality required us to renew annually, although they pledged themselves verbally to staud by the association. -

Thus the season 1893-4 opened with trouble plaiuly ahead. The predictions of a heavy yie'd were soon verified, »ud anxious queries from growers were telegraphed im almost every hour of the day. Every difficulty was overcome, every ca«e of fruit was sold at good prices, and there seemed every prospect of the sea»on ending BaMst-'ac'orily, when, like a thunderclap came the neva that one of the growers in question had, without a word of warning, ,com»igned the remainder of hie fruit to an outside firm, thus increasing our difficulties tenfold. The buyers, who had hitherto been compelled to pay the fair prices we anked, now had the. choice of two markets, priesc s collapsed, aud so it was that the Teviot and Alexandra Fruit-gro*ing Association became a thing of the past. The last, however, was nob to be heard of it. Grower* were, on the whole, far too well contented with the result of unity to go back to tlysir old troubles, and I was again requested to organise them, this time on a footing which would admit of no treason. With the exception of the one or two growers referred to, all seemed to make my task an easy cne. I was received at Teviot in a most enthusiastic manner, publicly banqueted, and altogether made to andrrsUnd that my efforts iv the past were thoroughly appreciated. The task of drawing up an agreement; whiph could not be broken, and which would stand for all time, we entrusted to Sir Robert Stout, and it goes wifctiout saying that we got what we wanted. We learned from him that in order to get a legal status it would be necessary for us to register as a public company, which was accordingly done. None bub fruit-growers were eligible as shareholders, and even they were only allowed to take up shares to the extent oV 10 per cent, of their largest one year's crop of fruit. By this we ensure that every grower contributes to the company an amount equivalent (■•> his int-*;e» ! ' i-> th-> fruit-growing i r'n ' •\V •■<•' vi" .(; v h fu'-Hifr and

.no fiuit-giotvr rsh .1 i. piunit'ed to Ijkjo sairca unless he first signs an agreement to atll to the company (at such prices as shall from week to week be fixed by the general manager of the company) the whole of hin fruifc which is consigned to any part of New Zealand north of Milton. Such growers as do no"; agree to become shareholders can still sell their irait to the company, and in order to secure the monopoly we, of course, endeavour to come to terms with all of them. In this we have so far been extremely Bucceeasul.

The company's agreement with growers alio provides that each shareholder mivt keep bisorchard clean to the satisfaction of the directors of the company, the saying clause being provided that any regulation must be enforced against all growers, and not against one, or a few only. Power is also given to the directors to have this work done at the expense of any "* grower who neglects or refuses to do ib when called upon. It is also further provided that; the company shall annually appoint some fife and proper person to inspecb the orchards ba< longing to the fruit-growers. I may also explain that when the association was first founded, I stipulated that the growers should send down ? one of their number who should be continually in my shores, with access to all the books and papers relating to the association. I book this precaution in order that growers might bo thoroughly acquainted with everything th&fc affected their interests, and so have no exaua* for suspicions, to whioh many growers are unfortunately so prone. I take no important step without consulting the compaay'a representative, and ib will readily be under* stood tliar his preseape makes matters run much more smoothly, since he is in a position to reassure growers who may be apprehensive on any point.

I have previously stated that all share* holders are bound to sell their fruit to the company at ouch prices as are fixed by myself, and I will now explain the system followed.

Every night, after the day's fruib is sold, I confer with the growers' representative as to the prices we shall pay growers for fruit during the next day, prices realised to date having been carefully analysed and all outside agents communicated with by wire. Alter coming to a deoision we wire the prices early on the following morning to the growers, and theso prices hold good for all fruit received iuto store on that day no matter what is realised. Thus it may happen that either a profit or loss is made, but this in no way affceta the grower. 1b is of no moment to hi en what becomes of his fruib since he is atnolubely guaranteed tha price? quoted. The price paid of course varies according to the grade of the fruib, and I will now explain how this grido is determined. AC tho first meeting of the company the various standards foe grading were resolved upon, and each mt-mber of the company was supplied with a printed grading card in accordance with the resolution arrived at.

All fruit is fi'Sb graded by the grower, and this gr*ding chocked by myself with the growers' representative a« urap ; re. Immediately on receipt in store a number of men stt to work t > open all the cases, wbiohare brought to the grading table iv front of me iv such a manner that I cannot possibly see to whom the fruit belongs. I then decide its grade, my decision being final unless the growers' repre« senbative differs with me, in which event tha matter is discussed and always »m:cably settled. The fruit is theu weighed by myself; in the pres°nce of the umpire, and the weight credited to grower*' account at the price then ruling for tbat grade. The growers' interest, in the fruit is then at an end, the fruib now being the property of the company on whose account I sell ib. In disposing of it we are guided, of course, by the demand from our various outlet*, always fixing local reserve prices sccording to tho pricps ruling elsewhere. Thus if Wellington qu tps 3d and Ohr'sHinrcb 3£d, we regu* late our local sales and shipment! accordingly. Daily at 3 p.m. wo hold a eale for the trade only, which is not publicly advertised. All fruit, except such as is reserved for shipment, < is then oflVrcd, and Any not reaching tha reserve is held for the public sale, whioh takes place daily at 5 p.m The result of practically all thn Fruit goi'>g to one st'>re is at once seen. Bu,era mutt go to thp s 1' ri Ricid of, as in tho pa«t, being run after by th grower. Competition am mgst buyers necessarily results, with the attendant fair prices. Nor U tun the only good result of co-operation. Ca«e.», which were in the past always given to the buyer, have since the inceptiou of tho nsso'H&biot been charged for — this it^m alone amounting to k considerable sum a nually ; claims, too, against growers, which ia the past were a serious it«m, are quite unknown; fieifh 1 * have been materially reduoed, and satisfactory arranaemenbs with the outside markets have baen mtde, which without co-operation would nob ba possible No longer either are we dependent on the whims of a factory proprietor for th« disposal of our inferior fruit since' the profits we have made will enable u» next v< ar to manufacture on our account, and thus come more directly into oonttcb with th« cousumer. Still, it musb not be understood that we in any way disparage the efforts made elsowhere on our. behalf by our agents, from whom our return* aa a rule are prompt ntid satisfactory. Wd claim, however, that »uch returns are greatly owing to the almost perfecb manner in which we pack aud grade our fruib ; I feel sure that if all other growers would pack with the fame care they would realise a great increase on their prfinent prices.

Whilst touching on the quentioa of agents I should mention that our Rbareh'>ldfrs do oofc believe in ch~ap labour, and although they have frequent offers from wonld-S» m&nag.'rfi to undertake the duties at 5 per cent. ; they pay 10 per cent., which, of course, covtrs renb, guarantee, wages, &o.

The quf stion of payment of managers is an important one, Good men need never worfe cheap, as there i* always a demand for their services ; and as the success of co-operative companies depends almost entirply on their manager-, growers sbould b<ar this in mind.

The 'eason juat closid b»R beeu a most sue« cessfnl one, since, notwithstanding the inferior quality of our fruit owing to the unseasonable weal her and the loss of our- largest customer (the factory), who previously took a fourth of our fruit, the pricas r?alined have been even better than those of the sea?o>> 1893 4, which, were received by such satisfaction by growers. So fnr we have every reason to be proud of one compnny, which hts placed growers in a thoroughly independent position ; but it mnst not be suppose.? that we have achieved success without much heatt-burning and trouble. And specially in connection with this I may remark that should any other district of growers contemplate establishing such a co-operative com* pany, the most important feature of their constitution must be that the terms of the appointment of their managpr must be identical with those of our own company, which has not the power to dismiss iti general manager unless by the vote of 75 per cent, of the total subscribed shares. This thus ensures the manager (during his good behaviour) practically a free hind, which is abusively essential to success, since intrrfereuce with the business arrangements of a business man by growers (who ran know but little about such matters) wquld tif('--«s«rily result in disinter. The eever« pen-dtj clauses, too, on gro -ors aru also most essential, sicce otherwise ?.<-• «sinns would be continually occurring. Under our rtrjimc growers know that they are bound together for all time, and so make up their minds to pull together, the result being that the Teviot and Alex«ndrfc Fruit-growing Company hold the proud position of b*ing t,he most indspeudrnt body of fruit-growsrs iv the colony. With combination any body of fcait-growers can obtain the same pooitioa.