WHEAT MARKETING.

Otago Witness, Issue 3885, 28 August 1928, Page 20

WHEAT MARKETING.

NORTH OTAGO MEETING. A fairly large number of wheatgrowers assembled in the Waitaki County Council chambers on Friday afternoon to hear the principles of the Wheatgrowing Co-opera-tive Association explained. The chair was occupied by Mr R. B. Meek. Among those present were Messrs Talbot (Timaru) and Barnett (Morven). Mr Meek explained the circumstances that had led up to the formation of the association. The firs_t meeting had been held in Ashburton in November, and a meeting held in May last decided upon the formation of a wheatgrowers’ organisation. A committee had been set up, and a scheme had been propounded which he thought would appeal to the farmers. Some farmers had stated that the wheatgrowers could not be got together, but he asked them not to be pessimistic, but to get behind the organisation. Mr Woodfield, the organising director, had been to Canada, and had some valuable information regarding the wheat pools in that country. Mr W. W. Mulholland, chairman of directors of the association, expressed pleasure at being present to meet the wheatgrowers of North Otago. He stated that the directors were merely carrying out the instructions of the wheatgrowers in placing a scheme before them. The wheatgrowers were anxious to proceed even faster than the directors had been able to go. It was gratifying to find the growers insistent upon something being done as soon as possible. What they knew, and knew too well, was that there was a tendency for wheat to fall when the farmers had wheat to sell, and to rise when the wheat was sold. There seemed to be a discrepancy between the values of wheat and the price obtained. It had been expected that the wheat would realise 6s per bushel, but the price had slipped back until 5s 6d and under had been obtained. They had blamed the millers and the merchants, but when they got down to solid facts they had to blame the farmers en masse. There had been a steady improvement in the methods of harvesting, and this had resulted in the whole of the wheat being harvested in the course of a few weeks. The consequence was that the whole of the wheat was placed upon the market at the one time. This meant that there was more wheat than the market could absorb, and the prices were knocked down. It was the competition among farmers to sell that had brought down prices. Members of Parliament, and at least one Minister, had told them that they were breaking their own market. In practice, the individual farmer could do nothing. If one man refrained from offering his wheat, others offered theirs, and the position was not improved. What was wanted was organisation to keep the whole of the wheat off the market if it was desired. This was the reason that had prompted them in forming their present association. The scheme had met with almost unanimous approval. He disclaimed the idea that the scheme was original. It was merely a matter of selection. ' Various proposals had been placed before -the committee, and these had been pieced together ~to .suit . the . whole , of the-conditions. He

was pleased to say that the farmers were giving the scheme their unanimous support. + The proposals were approved by Ministers and by the Prime Minister. Mr Mulholland read a telegram from the Prime Minister in which the hope was expressed that the organisation would prove successful. In ■ forming the organisation they had been careful to keep those who were in? terested well informed of what they were doing. They had received encouraging communications from departments of State and from men in responsible positions. In regard to the consumers, these would not be adversely affected by the operation of the scheme. They could not obtain a better price for their wheat than its market value. What they wanted was a price on a parity with the value. They had not obtained this price in the past, and the presence of so many growers that day was evidence that this was so. Mr Mulholland quoted a speech made by Mr Stanley Baldwin in reference to the Canadian wheat pool, which had met with the strong opposition of speculators. A British federation of co-operative asso? ciations financed the wheat pool in West? ern Australia. The result was that they were able to get their wheat cheaper than before. The point he was trying tq drive home was that the wheat pool wa§ for the benefit x of the producer and the consumer. The New Zealand organisiu tion was a registered company with a nominal capital of £50,000 in £1 shares'. Only wheatgrowers could be shareholders. Each grower was expected to take one share for every ten acres of wheat grown with a minimum of four shares. Each shareholder had to give his wheat tq the association for marketing for a period of five years. A sum of 5s per share wa§ being called up. The funds available would go towards financing the pool until the wheat was marketed. The company would be controlled by directors, an<| the control would be divided between dift ferent portions of the district according to the area of wheatgrowers. The direct tors were to be appointed by commit? tees selected from the different of the district. The directorate could be entirely altered, if desired, at the end of two years. The main object had been to give the growers direct control of their own marketing. The committee appointed to elect directors would attend meetings' and would also serve as a channel of communication between the growers in the different districts and the directors". The company would be incorporated, and would operate the same as any other company, with the exception of the elec? tion of directors. The marketing scheme was a purely voluntary one, and the direc? tors were strongly opposed to compuL sion. It was necessary, in order that the association should function properly, that there should be stability about it. That was the reason for the contract". They had investigated various voluntary proposals, but those already tried had proved a partial failure. Th<? only way to bring about stability was for each farmer to bind himself with his neighbour to sell only through the asso? ciation. It was not the quantity of wheat that had broken the market, but the number of offerings. In order to stabilise the market it was necessary that they should sell through one agency alone. The speaker instanced what occured during the commandeer to show how easily the market could be broken. Unless they eliminated the individual seller they could not obtain the best results. It was the duty of the association to employ experts to keep in close touch with the markets and advise when to sell. The association would act only as agents for the sale of wheat. This had been found necessary for legal reasons. When the association took wheat it would pay out about two-thirds of its nominal value. The balance would be paid in interim payments, and the final payment would be made at the end of the season. The contract made provision for forward sales alerady made. In Canterbury a good many of these sales had been made for the coming season. If the private contract fell through the grower could fall back on the association. Should 120,000 acres not be guaranteed by November 1, or December 1 at the latest, those who had signed the contract could withdraw on giving one month’s notice. It. was not thought that this clause would be taken advantage of. There were clauses which provided that no hen on a crop should be interfered with, and that any. lien may be taken on the association being notified. In regard to the marketing of > the wheat, the grower, when signing the contract, would be asked through which firm he desired his wheat marketed. The i decision to market through merchants 1 had been reached because it was con- ‘ sidered that the setting up of a broker--1 age by the association, to operate only ! a few months in the year, -would be too I expensive. Moreover, this arrangement ’ would keep the growers on jovd L erms : with the merchants. It was not con- : sidered necessary, for the present, to ’ establish fresh storage, as it was believed : that ample storage -was at present avail- ■ able. It must not be assumed that they 1 were going to store large quantities of ; wheat. The wheat would move on some--1 what similar lines as before. The asso- > ciation would fix its price for wheat, and 1 if millers bought outside the association ’ the inference to be drawn was that they ’ were buying at less price than they could secure the wheat through the asso- ’ ciation. They did not expect organised ' opposition from the millers, though they s anticipated some warm arguments as to f prices. There was no reason to suppose (. that the wheat would not move in a very g similar manner as it had done in the past. There was, on the contrary, reason £ to think that the wheat would move more ] freely than in the past, owing to there s being organisation. The wheat would be stored, as much as possible, at the j point of production. It was proposed to .- charge a storage fee of Id per bushel for e the first three months, and 4d per bushel ;, for the succeeding months. Far* a mers would be urged to hold their "wheat s wherever possible, so that storage would e be avoided and deliveries would be spread I- over a period. The natural tendency was I for wheat to increase in price the further i. one got from the harvest. This was on i- account of the cost, of storage, insurance, a interest, etc. They would therefore ex* s. pect more for their wheat in September s than in Jiine. All wheat would be.graded i- arid placed in its proper pool. ‘There r "would be one pool for each grad® of e wheat. At present there was practically

P L ° grading. The grading , would mean that the. grower would be paid according to the quality of his wheat. The scheme would eliminate the system of rejections that was at present in vogue, and which resulted in a loss of several pence per bushel. If they could eliminate rejections they would more than pay the cost of their organisations. The speaker was of opinion that most of the rejections on account of condition could be avoided, these rejections had in the past been •largely due to hasty threshing to meet forward contracts or good markets. The association’s graders would advise growers when to sell, and competition would be done away with. When the pools were finally wound up there would be certain deductions from the gross. It was expected that this would not be more than id per bushel. There was also a provision to deduct Id per bushel as a reserve fund to meet exigencies. The reserve tund would also be utilised for capital purposes, such as the erection of storage, and to start the pool fund working. It was anticipated that the bulk of the price of wheat would be paid out by the end of July. The capital of the association would be obtained from the sale of shares and from the reserve fund. There would also be small, indivisible sums arising from the different pools, which would aggregate over a period of years. The reserve fund would remain the property of the growers, and would be divided among them at the end of the contract, either in the form of fully paid-up shares or in cash. The directors favoured the issue of fully-paid up preference shares. The division would be according to the quantity of wheat supplied. The preference shares would include interest, and would be transferable. In conclusion, Mr Mulholland said the scheme would be eminently workable, and the support already received was most remarkable. He had the greatest confidence that the organisation would go through. This district had been one of the most pressing for organisation. He now asked them to put their shoulders to the wheel and get behind the promoters.— (Applause.) , Mr C. W. Woodfield, organising director, stated that North Otago had been among the foremost to ask for a pool. It was with pleasure, therefore, that he came to this district. On a recent visit to Canada he found farmers talking in terms of production. There were whold communities of farmers there that could not speak the English language, and yet they had got together the largest farmers’ selling organisation in the world. Mr Woodfield stated that there were forces brought into the law of supply and demand that could be eliminated. These forces prevented the law from operating. No person who sold wheat could regulate the price. No farmer had ever sold a bushel of wheat in his life. He merely gave his wheat for what he could get for it. The speculator held for better prices, and eventually created a demand that did not really exist. There was some excuse for the snowbound farmers of Canada making the market. There was no excuse for the New Zealand farmers doing so. Had it not been for the Canadian wheat pool, Canada would have been bankrupt. The Canadian pool was started with 15,000 members. In the first year the prices of wheat had gone up to .well over a dollar. A- year before the Canadian pool had expired, 80 per cent, of the old members had signed up. There were now 150,000 members, which represented 75 per cent, of the whole of the farmers in Canada. The quantity of wheat controlled by the pool was 187,247,000 bushels, out of a total of 265,000,000 bushels. He was confident that New Zealand farmers would sign up. If they did not do so, it was because they did not know. In the last fortnight, in four out of nine districts, they had signed up 15,000 acres. Of those waited upon, 85 per cent, had signed up. If they went on as at present they would have no difficulty in signing up 120,000 acres in two months. He had found the farmers thinking individually, and quite satisfied with the treatment they had received in the past. But they did not recognise that they had no idea of the value of their wheat, while the buyer had. In Canada, the pool got roughly 3d per bushel for their wheat more than was obtained by those outside the pool. Some of the farmers were afraid that their financial arrangements would be interfered with. There was no justification for such a fear, as had been clearly indicated by Mr Mulholland. Mr Woodfield explained how the pools had improved the finance of farmers in Canada. If the payments were spread over a period, there would be less inducement for extravagance than at present. There was no need for alarm -in regard to finance. A staff of canvassers was now engaged canvassing farmers, and he trusted that the farmers would get away from the paltry vision of individualism and adop't the principle of cooperation. They would then get a full value for their produce. By getting behind this movement the farmers would do nobody any harm, but would do themselves an incalculable amount of good. Co-operative marketing was a step in the right direction. They were now at the cross-roads of rural destiny. If they adopted co-operative marketing they would

gradually improve their position and ascend the hill of prosperity. If they took the other road, they would . descend to poverty, old age pensions, and pauperism. He appealed to farmers to stand behind this movement and to sign up.— (Applause.) The chairman announced that a cuivesser had been appointed for. the Waitaki district, and he suggested that a committee be set up to assist the canvasser. ’The suggestion of Mr Meek was adopted and a committee representing the various parts of the district was set up. ,On the motion of Mr J. Rutherford (Duntroon) a hearty vote of thanks was passed to Messrs Mulholland and Woodfield.

Mr Mulholland, in acknowledging the vote, stated that they had met. the merchants in the morning and found them most sympathetic.