DAIRY CONTROL.

Southland Times, Issue 19837, 7 April 1926, Page 9

DAIRY CONTROL.

To the Editor. Sir, —In your issue of April 1 Mr John Bourchier challenges the writer to demonstrate where methods which the Dairy Control Board has been constituted to introduce, has been successful in commerce. I am further challenged to name one pool established by compulsion that is a success. I propose to endeavour to meet the challenge in both cases, but first to settle the other matter upon which Mr Bourchier and the writer are at variance. Mr. Bourchier contends that “the consumer fixes the price,” I submit he is wrong. He refers me to the operations of the fruit marts. The consumer, he puts it, bids until the last bid of the man who will have fruit fixes the price. Here is where Mr. Bourchier stumbles. It is not the last bid of the man who will have fruit that completes the business, but the acceptance of that bid by the seller. The price is the figure at which a sale is made; a bid is not a sale until accepted. It takes a buyer and a seller to fix a price. The price then is fixed by a bid and acceptance. If the consumer fixed the price the bid would have to be accepted by the seller irrespective of whether he liked it or not. Under those conditions all bidding would be downwards and in fact there would be no bidding at all—the consumer would take the fruit for nothing. The price then is fixed, by agreement between the buyer and seller, at a point where a sale is made. But the buyer and seller take into account certain factors in agreeing upon a price and a sale. They take into account mainly supply and demand. Supply is equivalent to the production and demand to consumption, hence the law of supply and demand is not the consumer only nor even the producer, but simply a statement that where production exceeds consumption, or in other words supply exceeds demand, prices will tend to fall and contrariwise.

The law of supply and demand is not the consumer, it is not the producer, it operates through both. As well term the rum merchant in the United States the Prohibition Act as to say: “the law of supply and demand rules the price, this being the consumer.” To pass to instances of pools established by compulsion which are successful. A pool, I take it Mr Bourchier will agree, is a combination of persons for a business operation. These people, producers or consumers, wage payers or wage-earners combine to carry through some operation in consumption or production, in buying or selling. The Dairy Control Board is a pool or a combination of butterfat producers to sell their produce. A pool may be formed for very minor operations, for instance advertising to warn against rabbit shooting on holdings held by those in the pool, or combinations may be formed to control the whole process of production from its commencement until the commodity finally reaches the consumer. These combinations monopolies, cartels, pools, associations, conferences, unions, co-operative societies, amalgamations, federations, etc., have all for their object, the carrying out of some business operations to the advantage of those in the particular combination. In New Zealand there are complete or partial combinations in every line of business in the retail and wholesale trades, in the production of meat, butter-fat, timber, etc., in banking and shipping and also in labour matters. In Great Britain the United States of America, Canada, Germany, France, in all countries where production and consumption is carried on, organisations of some kind exist to benefit the members who combine to carry out in common some business operation. If Mr. Bourchier will visit the Invercargill Library he will be able to obtain a book, “Co-operative Marketing (Steen. H.)” which contains an account of pools in the States which handle such commodities as apples, dried fruits, cotton, tobacco, vegetables, fish, etc.’ Now these organisations may be termed successful if they continue to carry on over a number of years. It is quite apparent that any combination which does not continue to benefit or approve advantageous to those who have combined will disappear. If then an organisation or a pool continues to exist after a period of years it may be taken for granted it has achieved some measure of success which persists, but which would disappear if the pool or combination dissolved.

Now the writer some twenty-five years ago had personal experience of a pool which is still in existence. This pool was formed to achieve very similar objects to those which have brought about the formation of the Dairy Control Board. Between Great Britain and South Africa at one time various steamship companies operated to carry cargoes. These companies operated quite independently, ships sail-

ed from ports close together sometimes partly loaded, sometimes no shipping space was available for long periods. Freights varied, now up, now down. Freights were reduced to get cargo for a boat partly loaded or raised to a higher rate when it was apparent no space would be available for a long period. In short the services of the ships were dumped like butter-fat on the market haphazard, now a glut, now a scarcity, no method, no regularity. Finally the various companies took a tumble and saw that by competing against each other they were making a mess of their job. By pooling their shipping services, by standardising their freight charges, by regular sailings, by combined advertising, use of various appliances, etc. they saw they would all benefit, become more efficient and benefit the shippers both in South Africa and Great Britain. The pool became known as the Conference. It was not a complete pool of ships, etc., it was a pool of freight charges and sailings chiefly. However its aims were regular supply of space, reduced operating charges, stabilisation of freights, etc. It must be looked upon as successful as the pool of interests still continues and shows no signs of disappearing. It was' moreover not a voluntary pool; compulsion was brought to bear upon those companies who at first were not inclined to join the combination. Having once come to an agreement the principal lines charged the shipper the regular freight and added a percentage, thus freight £lO plus 40 per cent. This per centage was returned to the shipper after a period, but only if he shipped entirely by Conference lines. The outside lines, therefore, could get no cargoes from shippers averse to losing large sums in rebates and as these lines outside the conference group could not berth sufficient ships to serve shippers nor work all the ports they were compelled to join the pool to get a share of the trade.

I submit this particular instance, a pool to sell shipping services, as a successful, compulsory pool because it was brought about by similar conditions which prevail in the marketing business of the New Zealand butter-fat producer. Each company sold its services against the others, all companies put their services on the market without method or regularity. The buyers, i.e., the shippers, played one company against another until the business was not much good to any of them. However, Mr. Bourchier may require an instance nearer home. I submit the various Labour unions in New Zealand for consideration. These unions are pools of labour. 'That is, the wage earners pool, their ability to work and sell it in bulk, supply and demand does not regulate either rates of pay or conditions of labour. If Mr. Bourchier proposes to work in a sawmill he will be compelled to join the pool or lose his job. The union, otherwise the pool, is successful, it. shows no signs of breaking up. It is held together by compulsion which has been brought about by legislation. Compare the rates of pay, hours, etc., with those of a farm worker who has not been able to pool his commodity—his labour. The fact that two ploughmen are after one job would tend to reduce prices of ploughmen, not so in the case of sawmill workers. And finally I would point out to Mr. Bourchier that the wheat growers in Canterbury are up against a tough proposition in the combination of millers who have it appears pooled their freedom to buy. lam not sure that the growers will get the price they are holding for, if they do not I venture to think it. will be because they have neglected to pool their crops, finance their pool and wait until the millers allow the law of supply and demand full and free play in fixing the price. I have seen it stated that Australian wheat cannot be landed at less than 8/- per bushel whereas millers want to buy New Zealand grown at 7/- and less. It appears that the pooled buying interest of the miller i.e., the consumer will defeat the nonpooled selling interest of the producer i.e., the grower. What I suggest to Mr. Bourchier is that a Wheat Control Board is an urgent necessity to the growers, with a very* drastic compulsory clause to ginger up the free marketers among the wheat growers.—l am, SUUM CUIQUE.