THE ELECTORAL COMMITTEE

Southland Times, Issue 23888, 5 August 1939, Page 5

THE ELECTORAL COMMITTEE

To The Editor Sir, —I was rather interested to read a letter over the signature of “Progress” in your issue of August 1. In commenting on the statements made by the sitting members of the Electoral Committee he states: “Their implied suggestion that the granting of another licence would load the industry with further costs does not hold water.” Further on, in referring to the applicants for a new licence in Southland, he states: “Would these companies be prepared to invest £500,000 in erecting works if the circumstances did not warrant it.” I wonder if he really thinks that these companies are anxious to invest their money for the sole purpose of helping the farmer and not for their own personal gain. Taking his own figure of £500,000, a little calculation will show that 5 per cent, interest on capital cost, plus 7J per cent, annual upkeep and depreciation, plus £5OOO for overhead expenses would amount to £67,500, which sum represents about one shilling a head on the total number of sheep slaughtered in Southland-. He states that the element of competition would prevent any increase in costs. Surely he has not lived through the last five years without learning that competition is fast becoming a thing of the past. In the present system of trading two courses are open to the farmer: he can either sell on schedule or ship. If “Progress” thinks that any company will continue to pay a premium on his lambs above schedule for all time, then he will surely awake to realities in the not distant future. The schedule will be fixed in the future, as it has been in the past, by or in consultation with all the operating companies, and whether the farmer likes it or not, all capital costs and running expenses will be taken into consideration. It is true that some companies have made huge profits in the past, but at the same time other companies buying on the same schedule and operating on the same f.o.b. charges have not returned much by way of dividend to their shareholders. It is also true that a considerable number of lambs are railed from Southland to northern works each year but it must be remembered that Finegand, BumSide and other works have keen representation, especially in Eastern Southland, and would continue to operate even although new works were established. I am sure we are all of the one mind with regard to the progress of Southland, and hope to see our production greatly increased in the next decade, but we as farmers should not allow ourselves to be stampeded into a state of believing that a new freezing works is going to be the end of all our troubles. The most economic unit in the freezing industry should be the one with a reasonably large output. But the farmers must look at the matter from their own point of view. If the companies at present operating have reached their economic capacity or if they refuse to meet the requirements of the farmer then let us press for an additional licence. But let us elect men to the committee who will consider the matter rationally from every angle, and not demand a new licence irrespective of what the consequences might be.— Yours, etc., PRODUCER. August 2, 1939.