PRICE-FIXING

Southland Times, Issue 20200, 10 June 1927, Page 8

PRICE-FIXING

The Root of All Evil ADDRESS TO FARMERS Mr Timpany Speaks Out At Mataura yesterday afternoon, Mr T. M. Timpany delivered an address on Dairy Control matters in which he blamed price fixation for the troubles of the board and the low prices obtained by the producers.

There was a large attendance of shareholders of the Mataura Dairy Factory Co., Ltd., yesterday afternoon to listen to an address on Dairy Control matters by Southland’s representative on the board, Mr T. M. Timpany. Mr Timpany spoke for an hour and a-half and was accorded a most enthusiastic vote of thanks at the conclusion of his illuminating address. NO REGRETS. Mr Timpany, after expressing the pleasure addressing a Mataura meeting of dairy farmers afforded him, stated that he wished to deal with the position as it stood to-day i and the developments since he had joined | the board. He, like themselves, dei pended on the industry for a living, so i that his being on the board was a very : serious matter for him in two ways, first ;as their representative on the board, secondly because he was dependent on the industry. He had had to put up with a good deal of abuse since he had joined the board, but it hadn’t harmed him as he had expected it. Individually, members had been kind to him, however. He wished to state that every action he had performed had been done after mature consideration. I He had no regrets for what he had done, and faced with the same set of circumstances would do the same again. MISCONCEPTION. A great deal of misconception had existed in regard to control matters. “I want to say,” said Mr Timpany, “that the Press of Southland has had a better and a firmer grip of this question that the newspapers in any other part of the Dominion. They have been fair in giving space for the discussion of these questions and they have handed out to the producer a great deal of solid information, if the producer has been ■ ready to take it. The Exporter, the organ of the board, had been responsible for putting into their mouths much propaganda. . He would try to put before i them the true position, especially in regard ito price-fixing, but he trusted they would realise that it was not an easy task to be as definite as he could wish. He had entered , the board in innocence of price-fixing. It I had been stated that price-fixing was no- ' thing more than a name, and that it would not be put into effect to interfere with anyone. It was urged that this so-called pricei fixing was to be in reality nothing more ■ than price-naming. These two were really quite distinct. Before going on to deal with price-fixing, Mr Timpany mentioned that the Exporter had declared that he went on the board on a minority vote, but the speaker quoted figures conclusively disproving that. | PRICE-FIXING EXPLAINED. ' Mr Timpany said that he would give a I general explanation of price-fixing rather than quote figures. He would not say whether price-fixing was right or wrong. The fact of the matter was that it had met with the utmost hostility from the trade at Home. Had New Zealand a monopoly it would have been a fine thing, but the Dominion did not have a monopoly i and had to face circumstances that no other country ever dreamt of facing. He did not think %t the time he joined the board that price-fixing was to be its policy. When price-fixing commenced, it interfered with all channels the produce went through. Wholesalers and retailers were affected, and troubles fell thickly on their heads. He asked his hearers to look at the matter from a business point of view. The wholesaler considered he was not getting enough, and so on right through. They had fallen foul of practically all except the allottees. PRICE-NAMING. At the first meeting of the Board, he (the speaker), had attended, Mr J. R. Corrigan had tabled a motion to adopt a system of price-naming. That was the Australian system. Australian produce was sent Home on open consignment. The produce was put on the market and every week the merchants would give confidentially to the Australian manager returns of what was sold and what was left. The manager would average out the prices and each allottee would get a slip with the average price on it. He would know whether he had been selling above or below the average, and, if the latter, would make an effort to improve his prices. The result 1 was that merchants competed with each other. ; But once the board fixed a price the ' minimum became the maximum, with the result that the merchants either had to get the price or lose the customer. THE COMPROMISE. Mr Timpany said that when he returned from the meeting at which the compromise had been made, he had given a statement to the papers. He would repeat that statement and stand by it. When he joined the board there were two sections. The first wanted price-fixing, and were in a minority. The other section were opposed to price-fixing and were in the majority. Why the compromise was made he did not know. He had been asked to go in with them, but refused. He told them clearly that he was there to represent the shareholders and would go back and tell them what had occurred. A vote was taken and he voted against it, but with the provision that he would let the board say that the vote had been unanimous as it was necessary in the interests of producers to make the board appear undivided. He had insisted, however, that his concession had never to be used against him, yet that had been done. THOSE CABLES. Dealing with the cables that had caused so much discussion, Mr Timpany said that the meeting of the board had closed at 11.30 a.m., and Mr Coates’ telegram had ' arrived ten minutes later. During the lunch adjournment he had found out that many people in Wellington had known the abstract headings of the cablegram for ; forty-eight hours. The resolution concernI ing price-fixing had been carried on the I morning before the cable arrived. In the , afternoon he asked the board if they were 1 going to deal with Mr Coates’ cable, but '■ the other members said that they considered the matter had been already dealt with. Mr Paterson's cable had not been known to the speaker until he had reached home after the meeting. Two members of the London Agency had been against price-fix-ing and one for it. Mr Timpany said that had the board voted as they had to later, the debacle wculd have been more or less avoided. As it was there was no good blaming the London Agency, Mr Coates or Mr Paterson. The board were to blame. They had done it. Others had merely carried out their instructions.

NEGLECTED ADVICE. There were people who had spent years at Home studying the trade conditions who had advised against price-fixing. Producers should have listened to that advice. Mr Paterson was a very able man, as the speaker knew beyond doubt, and he bad seen what a position would arise and had stuck to his guns, although he was a Government representative, with obligations to the Government, not to the producers. Mr lorns had the confidence of the people he represented, and he had advised against it. So had Mr Polson, president of the New Zealand Farmers’ Union, Sir James Allen, Sir Thomas Mackenzie, and over and above these, the allottees themselves. Mr Timpany said that he relied on the advice of these experts in deciding not to vote for price-fixing. He. had depended on the evidence of men he thought worthy of reliance. No other country exporting to Britain had gone in for price-fixing and each and every one had profited by New Zealand’s lapse. All the other countries finished the season with clear boards. New Zealanders fixed the price, made themselves the gauge of the market and the others did the selling. There had unquestionably been genuine hostility and perturbation among the allottees, who could not get rid of their stocks. The trade itself had enough in stock or could get enough to ignore New Zealand. They did ignore the Dominion, and it was helpless. ALLOTMENTS. All knew that thirty odd merchants had been given the allotments, the distribution being based on the quantities handled during the last three years. Everything had been all right while the merchants were negotiating, but once they got the stuff and things did not turn out so well, the trouble started. The argument had been used that these merchants had been the only ones who had ever handled the produce. That was in the main true, but a system was really wanted whereby the New Zealand goods should be distributed all over the British Isles. For financial reasons, however, the thirty odd allottees got the produce and no one else could come into the field. That started the friction. FINANCE. Finance had seemed all right. The merchants were quite prepared to put up credits, but once the price-fixing commenced and the trade refused to buy, the stuff began to be stored. Price-fixing was the key to all the trouble. Once the produce had begun to mount up and not sell the allottees grew afraid and kept cutting down advances. Had the stuff been selling, there would have been no such low advances. The board continually protested, but to no avail, for there was no power to guarantee advances. Without liberal advances farmers could not keep going. EXEMPTIONS. As he had told them previously, exemptions had been a terrible weakness in the system. A number of factories—he could say the majority—sold their output at excellent prices f.o.b. The exemption produce was always acting against the pooled produce. SHIPPING. Mr Timpany had praise to bestow on the board for its work in connection with shipping. The efforts of the board were going to mean a big thing for the producers, and the board was going to make a great success of that feature. The handling of the produce in New Zealand and at the other end and the care in transit had been greatly improved. The board’s excellent work was going to benefit the producer in many ways, and it deserved hearty congratulations for its effort. Insurance was another feature of the board’s work. A great reduction had been made, outside factories jumping at the chance to gain from the board's efforts. ADVERTISING. The board’s policy in this respect had only just commenced to bear fruit. Advertising was an expensive matter, but it was an absolute necessity. Any recommendations the board made in this matter should be entered into whole-heartedly, even to the paying of an extra levy. He knew it was hard for him to tell them that, but it was necessary. Much had been heard of the manipulative speculator, and he was one of the troubles. Without doubt New Zealand had the best dairy produce in the world. No better could compare with New Zealand. Its keeping quality was outstanding, and this was the key to the manipulative speculator’s actions. Denmark’s butter was dated each week, and must be sold fresh. It would not keep like New Zealand’s. Now the Danes were great advertisers, every home journal having extensive advertising. New Zealand farmers, on the other hand, did no collective advertising. They should advertise to attract consumers and there would be no need of storage. Other countries did it with articles of inferior quality. Why couldn’t New Zealand? If New Zealand produce was consumed the manipulative speculator would go out of business. Last season had been a great one for speculators. The speculators had the goods, New Zealand raised the price and the speculator collected the proceeds. Mr. Timpany pleaded for all to support the board in its advertising campaign. He was merely giving his own views, but he ventured to say that had New Zealand advertised in the past as it should have done, in all probability price-fixing would have been a success because the people would have the inclination for the goods. QUALITY. The board had done great work in regard to quality. The premium they offered for different qualities had had a marked effect. All producers should never fail to keep in mind the necessity of keeping up the quality. Perfection should be the aim. The board had earned unanimous praise at the London end for the quality of the produce that year. They had never had butter and cheese like it. The premiums had been great factors in that improvement, but they had their disadvantages. The trade would not pay the extra premiums made by the board for different qualities. The cheese people had encountered this particularly. A lot of firms sold out of first grade but would not sell superfine because they could not get the premiums. He considered the system of premiums would have to go and another scheme be devised by the board. He wished to pay a tribute to the managers and staffs of factories for the way they had worked to get the premium. In Southland there was a much greater share I of premiums than in other provinces.

STORAGE. This had been a matter the board had under consideration for some time. He could not say much on this subject as his information had come confidentially but he could assure them that great benefits would be derived from storage in the future. In the past it had been awful. So-called cool stores had made produce melt, but thanks to the board’s efforts all that would be remedied. Research was another matter the board was undertaking and important work would be done. MR. COATES VINDICATED. Mr. Timpany prefaced his remarks concerning Mr. Coates’ attitude by stating that the board never thought things would go so far. Mr Coates had not gone Home on dairy control business. He had other matters to attend to. Before he left New Zealand, Mr Coates had called the board together and had asked questions concerning price fixing. Members of the board (Mr Timpany was not on at that time) had talked all round the subject and the Prime Minister had been fully convinced that there was going to be no price fixing. They could imagine how he felt when he arrived Home and found that price fixing was the policy of the board. Deputations from the trade, introduced by Mr Paterson, the Government representative, in accordance with his duties, had waited on the Prime Minister. Not that Mr. Coates wanted them, but the trade did. “I have never voted for Mr Coates’ party,” continued Mr. Timpany, “but I believe in a fair deal, and I don’t think Mr Coates is getting it. He had to size up the situation and when he had sized it up, he, as representative of the people of New Zealand generally, sent out his message of warning to the board. Was he not correct? That’s all there is to it.” MR. PATERSON. Mr. Timpany declared that Mr. Paterson had been made the scape-goat for all the trouble. Personally he, the speaker, did not believe half what was said, and had moved in the board that the matter be let drop. Mr. Paterson as the Government representative was in an awkward position. Had some of the board members known of the Press Association message that was to be sent that the board unanimously asked for Mr. Paterson's resignation, they would have had their vote recorded; but they were not aware of such a move. No Government dared in the face of the evidence to move Mr. Paterson, who had been made the scapegoat when the trouble had been attributable to price fixing. REASON FOR FAILURE. Regarding Mr. Goodfellow’s compulsory marketing scheme and its failure, he wished to be as impersonal as possible. It was now complained that the three causes of the failure were the failure to carry out the system in its entirety, the lifting of price fixation and the system of election. “My idea,” continued Mr. Timpany, “is that price-fixing was the cause of the failure of compulsory marketing. What was attempted on the London market was what no other country had ever attempted to do. New Zealand fixed the price and other countries did the selling. The board, the London agency and the allottees became alarmed. The allottees gave it ago but the financial backers pressed them and they decided that price fixing had to be lifted. Had price fixing not been lifted advances would have come down further. This is an economic problem facing every country in the world, and no other country has adopted the practice of criticising the trade as has been done by a section of the industry in New Zealand, but have endeavoured to co-operate with the trade to their own benefit. Another argument was that the board should have carried on till the end of the season. At the rate of selling, however, there would be no end of the season. Southland, a cheese producing province, had been led into a butter system with not one chance of coming out right. PRICE FIXING IMPOSSIBLE. Mr. Timpany argued that to make price fixing a success, impossible conditions were required. Ninety-five per cent, of the producers would have to be behind the scheme; the board would have to be united; the best brains of the country would be needed at both ends acting with the best possible man as manager; and finally the class of producer behind the scheme would have to be able to fight on for five years. How was that going to be managed when four months had knocked the stuffing out of most that season? THE FUTURE. Mr. Timpany concluded his address by striking a very optimistic note in regard to the future. He said there was nothing to fear if only a sane course were followed and the compulsory marketing clauses dropped. The markets should be opened up in the fullest possible manner. They wanted all the competition they could get. “We want to sell; who wants to buy?” should be the motto. The Dairy Board should be kept working at shipping, insurance, advertising and a decent intelligence department. The day that price-fixing had been lifted, Mr. Timpany said that he, acting alone, had tabled a notice of motion that they go back to free marketing to give the trade a lead as to what they were going to do. His motion had been seconded only pro forma, the seconder voting against it. Yet the very first thing that the man who brought the scheme into vogue did on his return from Home was to table a motion similar to the speaker’s. He told them that, because on the fifteenth of the month the board would have to vote on it. Mr. Timpany’s last words were an appeal to those present to assist in carrying out what he had suggested. They would find that they had the backing of the trade at Home, the industrial community here and the bulk of the producers. If they stopped personal bickering—which had been caused through the compulsory clauses—there was no reason why they should not make a great success of the future. Everything was favourable. Commonsense and unity of purpose would carry them through. On the motion of Mr. A. Stevenson, a very hearty vote of appreciation was accorded the speaker.