DAIRY PRODUCE

Taranaki Daily News, 16 June 1923, Page 7

DAIRY PRODUCE

CONTROL REJECTED. TARANAKI’S DECISION. VOICE OF PRODUCERS. MORE DETAILS WANTED. After an all-day sitting at Stratford yesterday, a representative meeting of directors of Taranaki dairy factories decided that the information placed before it in connection with the Dairy Control Bill was utterly inadequate to warrant giving the measure support. Mr. W. Grounds, Chairman of the Control Committee, was present, and explained the Bill at considerable length, answering numerous questions.

Mr. Arthur Morton was voted to the chair, and there were present about 200 representatives from the following factories: Awatuna, Ararata, Bell Block, Brooklands, Cardiff, Cape Egmont. Eltham, Hawera. Jolls, Kaupokonui, Kaimata. Kahui, Lowgarth, Lepperton, Mangatoki, Midhirst, Mangorei, Maketawa, Manutahi, Moa Farmers, Melrose, Maoriland, Ngaere, Normanby, J. W. Neilson, Newall, Oxford, Omata, Oaonui. Okato. Puniho, Pihama, Patua, Pembroke, Rotokare, Riverdale, Rahotu, Royal Oak. Stratford, Tikorangi. Tariki, Te Popo, Tuna, Tarurutangi, Tirimoana Warea, ai-toi-toi, White Cliffs, Wanganui Fresh Food and F. S. Butler.

REASON FOR EARLIER MEETING. Mr. Morton, in introducing the speakers, said the reason for calling this meeting before the month since the last meeting had expired was so that advantage could be taken of Mr. Grounds being available at this time to address the representatives of dairy companies. Mr. J. S- Connett said that, as one who took a prominent part in promoting the meeting, he felt that perhaps some explanation was due. The resolution passed at the last meeting at Stratford was to the effect that the next meeting would be held a month later so that dairy companies would have an opportunity of discussing the Bill and coming to a decision. The object in calling the meeting-before - the-month had expired was to get an expression -of opinion before the Palmerston North meeting. The promoters had no desire to go past the spirit of the resolution. The notices calling the meeting had been issued a fortnight ago and he thought this should give dairy companies ample time to meet.

Mr. Grounds prefaced his remarks by stating that he was pleased to have the opportunity of addressing the dairy producers of Taranaki, where he was conscious a good Heal of opposition to the scheme had been engendered. He was familiar with all the details of that opposition and knew that it was framed largely on misconceptions as to the powers of the control committee and the control board. Though they might not agree with him, he wanted them to understand his point of view. Like most of those present, he had set out to make a home for himself in the wilderness and had done so. They could therefore be assured that he looked at the industry from the same point of view as themselves, viz., as an actual supplier and as one who participated in the actual work of the farm when at home. If he had had the opportunity to view the matter from other points that should be all to the good.

NOTHING TO CONCEAL. He stated that he wanted to cover the whole ground as briefly as possible, but lest it be inferred that he was skipping any aspect of the question he would deal with all its aspects. He had nothing* to . conceal whatever; he was not expounding his own views, but the views of the council after mature deliberations. If they could show any weakness in the scheme the council would welcome any suggestion calculated to improve it. Criticism used as a big stick that simply smashed, down a scheme without substituting anything in its plate could be ruled out- He asked them to approach the matter with an open mind and judge dispassionately. The Bill, he said, provided for the setting up of a control board, to consist of nine representatives of the producers and two nominated by the Government, and one representative of mercantile and proprietary concerns. Of the proi ducers’ representatives six would be ' from the North Island and three from | the South Island. It was provided that the producers’ representatives should be elected by the council, which would be ; representative of the producers of the whole country. This council would consist of 20 from the North Island and ten from the South Island, elected on a provincial basis according to output.

ELECTION OF BOARD. It was provided that this council should be elected every year by the producers. - In some quarters it had been suggested that the actual dairyman should elect the council direct, but experience had shown that it was advisable to leave this in the hands of directors of dairy companies. The great mass of dairy farmers did not take much interest in the conduct of tiielr factories. This was the duty of the directors, and consequently they were in the best position to elect the council. Regarding the criticism that the council and the board would be irresponsible bodies, he pointed out that the Bill provided for the council being elected by the producers every year, and if not satisfied with their actions, the producers had it in their power to replace them the following vear. Three members of the board also‘retired each year, so that if the hoard was not pursuing a course generally acceptable to the producers, twothirds of the members could be replaced in two years. He considered that it was of great value to the industry to have the council acting as between the board and the producer, to be called together if necessary for conference. A LONDON AGENCY. He took the responsibility for the statement on the first circular which said that the present council would elect the first board. This had been pur in bv mistake, as the intention was that both the council and the board should be newlv elected after the Bill had passed the House. They clearly appreciated the desire of the industry to have the opportunity of electing the new council in the event of the Bill going through. The next clause provided that a Lon don agacy-.should be set up, acting under instructions from the boaid and composed of men closely in touch with the trade the other end, and whose

integrity was unquestionable. This should contradict the statement that some were endeavoring to get places of position and power. Provision was made for produce to be exported as provided by the board. It was clear to all that someone must exercise control. Though compulsion and .other harsh words had been used, it was not necessary to go beyond the word in the Act —control —which was to decide what was best to he done when a difference of opinion existed. This was necessary in the interests of the industry. The next clause was introduced by the Parliamentary Committee, to whom it was represented that various companies had entered into contracts for several years and that these must be honored, and the promoters had readily assented to a clause safeguarding existing contracts. The next clause provided that the board was to be responsible for arlanging the sea carriage. They had asked the Government to eliminate the second part of this clause, because they found that there was a good deal of misunderstanding in regard to their relations with the Meat Board, it having been asserted freely that they would he subservient to the Meat Board, and consequently that their interests would be subordinated to the Meat Board. Provision was made for a joint contract with the Meat Board, but if the Meat Board passed a resolution that it was not desirable to make a joint contract then it was open to the Dairy Control Board to make one. The whole idea was to provide an improved shipping contract and improved shipping facilities generally.

QUESTION OF A LEVY. The JBill provided for a levy on all produce exported of l-8d per pound of butter and l-16d per pound of cheese. So as to show that there would be no fear of the board creating huge reserves for imaginary purposes as suggested, hepointed out that the board would be in exactly the same position as dairy factory directors, who would not dare to set aside sums for reserve in opposition to the wishes of the suppliers, who desired to be paid the maximum amount of the result of the year’s working. The board was entirely in the hands of the producers, and if they did not do as they were required to, they could be put out and new men appointed. The Bill provided that these levies should be paid into the consolidated funds. That had been put in to safeguard the producers. He had had an opportunity of inspecting the methods of the Meat Board, which had a splendid system, and he was convinced that they could not do better than follow this in safeguarding the interests of the producer. The Bill provided that the produce should be used as security to enable the necessary advances to be made, i.e.,-the same system as was In vogue with dairy factories now. It also laid down that the expenses should be provided out of the funds. Finally, there was the setting up of the necessary machinery to enable the board to carry out its duties, and he had shown them how that board was in the hands of the producers. Mr. Grounds then covered the ground taken when the Bill was placed before the Parliamentary Committee. This time last year all were struck by the great disparity between the prices that had prevailed during the previous season between New Zealand, as compared with Danish butter, which on occasions was as much as 56s per cwt. It was suggested that this had been caused by the release of the large stocks held by the Imperial Government and also by the difficulty in exchange. Danish was not the best butter on the London market: it was generally recognised that New Zealand was equal to it. This had drawn attention to the speculative manipulator on the London market, and in asking the Government to bring down the Control Bill they had placed him in the foremost position, though he was prepared to recognise that if they arranged other difficulties the speculative manipulator would not play such an important part. He then outlined the reasons advanced in favor of the Bill, which were to cut out the speculative manipulator, arrange shipping contracts, improve shipping conditions, establish a satisfactory intelligence department, improved marketing methods and costs of distribution! also, to introduce a system of advertising and to develop new markets.

ACTION BY SPECULATORS. Some of their critics said they did not understand what a speculative manipulator meant. These now were common to all produce and stock markets of the world. They sold forward considerable produce that they did not possess. They next brought small quantites which they put back on the market at reduced rates, thus depreciating the price level. They continued this process until they were able to buy the amount they had sold forward, at a price that would yield a satisfactory turnover. Such men were no friends to the industry. Regarding shipping, every witness before the Parliamentary' committee agreed it was necessary to obtain more satisfactory shipping conditions and shipping contracts. This could not be done satisfactorily until some central authority was set up with power to act for the whole of the produce of New Zealand. A voice: What about the N.D.A.? Mr. Grounds said the N.D.A. had no power to do so, as no factory was bound to accept that contract, and in the event of a contract being made with an outside shipping company there would be a cutting of prices by the existing concerns and a general run to them. The committee had made inquiries from other sources in order to obtain information, including those countries that depended more or less on primary product®, as New Zealand did. As an instance of what could be accomplished, he referred to the development of the Argentine in connection with chilled meat, which had practically ruined the New Zealand beef trade. They were led to belive this was largely owing to the excellent shipping contract they had been able to make and owing to three firms controlling the whole of the meat, with the result that the meat was sent direct from the ship to the shop, eliminating the expense ot storage. Moreover, the ships were specially built for expeditious handling, demurrage being paid by the meat company or shipping company, according to which was responsible for the delay. INDUSTRY TOO MODEST. Sir Thomas Clements had said that the dairy industry was too modest. With 120.000 tons of produce they d ould be able to obtain good facilities. The committee had made enquiries and I it had been asserted that they intended • to introduce another line, but they had ; other avenues to explore before deciding ! what was best. They had no desire to dis-associate themselves from the Meat Board in making a contract, as every . interest had to be considered, including I that of the general community. It .they ‘were assured they could receive a better contract separately he would support that, but he felt that the combined boards could secure more satisfactory shoeing contracts.

No one would argue that the general shipping conditions had been satisfactory. Companies had made losses because of the failure of shipping companies to discharge their produce quickly when the market was falling. Moreover, butter had got away and cheese had not. This was because the shipping companies had the whole matter in their own hands and there was no other body with sufficient influence to talk to them.

BETTER MARKETING. The next point was to establish a satisfactory intelligence department. Regarding the need for improved methods of marketing he stressed the disparity that always existed in price of Danish and New Zealand butter, though it was admitted that the best New Zealand butter was quite equal to Danish. Returns for the forty-one weeks from September 5 to May 12 showed there was an average difference of 13/per cwt., while for the seven weeks from December to January, the period of the first slump, New Zealand suffered to the extent of 26/- per cwt. Based on the quantity of butter shipped from New Zealand to arrive in England during that period viz. 45'5,394 boxes, the loss to New Zealand represented £296,000. Another factor for the reduced price was that butter had been shipped to various centres which could not absorb the supply, and the holders had sold it at a lower price, thus reducing the price in other centres. If they were going to leave the retailer to take the necessary steps to secure storage to ensure regularity of supplies, as he instanced from a letter, could it be said* they were running the business end satisfactorily?

It had been suggested by their opponents that if they were to regulate the supply all hands would be grouped and factories would not be able to dispose of their individual brands. He had discussed the matter closely with Sir Thomas Clements and regretted that a misunderstandng existed. It had been made quite clear to him that the first step that would be taken was to send Home a responsible committee , to analyse the whole position in conference with Tooley Street and other commercial interests. He recognised that a certain amount of goodwill had been established by certain superlative brands flowing through the same channels for years; probably several firms had one or two such factories and had established a clientele. No sensible body of men would think of breaking that down, unless they found that its continuance would be prejudicial to the whole of the industry. Then again there was the question oi the ' centre of distribution. All were desirous of shipping to different ports. Those who knew anything ,of the industrial undertakings in England knew that each of those centres was capable of handling Targe amounts of dairy produce, but experience also had shown that’ they had not the power to absorb all that‘was sent, and thus had a tendency to break down the level of prices. It was necessary, therefore, to regulate the supply in* accordance with the rower to absorb, as over-accumulation in one port broke down the prices in mother. Within half an hour the whole of England knew the price paid and it it was lowered in one place it was lowered in another. Referring to the question of advertising Mr. Grounds said there was only one man on the Parliamentary committee who was not in favor of a system of advertising. All were agreed now that careful thought must be given to the results aimed at. A satisfactory supply must always be on hand immediately a demand is created. How obuld they ascertain what quantities of goods were on hand to meet the demand unless they had some central 'body in coptrol, and how could they, therefore, embark on an advertising system without a central body? Without it money spent on advertising would be wasted.

FINDING NEW MARKETS. The development of new markets was next touched upon. What dairy company, asked the speaker, could make inquiry into the possibility of developing new markets outside of those they were operating in? The individual companies could not spend money on inquiry into other markets in other spheres. Nor could they send their goods to other unexplored markets lest they received lower prices than in their usual markets. With a controlling body the necessary inquiries could be made without breaking down prices. The committee controlling the Bill had arrived at certain conclusions, and they did not wish to retract from any one of their points. They were convinced of the wisdom of the course they had taken, and the evidence taken before the committee had strengthened that conviction- He said, without reservation, that there was not one sound suggestion made by the opposition that had not already been covered by the promoters. The difficulties hail grown up on misconception. He would like it understood that they were not contemplating any wild revolutionary changes, but that they wanted the assistance or all that was ‘best in. the present system and to take advantage of the possibilities of improvements. This was only possible by the consolidation of inter- i ests and a round table -conference with those interested in the industry in LonThe committee had asked that the evidence taken in Wellington be published, continued the speaker, because they were sure that they could convince the* sceptics even out of the mouths of those who criticised the scheme. A NATIONAL QUESTION. Mr. Grounds then proceeded with the criticisms which had been levelled against the scheme. The least satisfactory of these was the personal references, and he was prepared to meet these critics on any plane In reason, but he was not going to descend to personalities, because the issue was a great national matter. The whole Dairy Council was ready to abide by what was best for the industry, and if it was proved that it was best for them to stand off they would be the first to want to dp so. It had been said that the N.D.A. was not representative of the producers, but the N.D.A. was outside the question. To assert that the scheme was being run by a clique or by the executive of the N.D.A. was and misleading. On the council of 30 there were only three members of the executive of the N.D.A. The view taken by the N.D.A. was that the scheme was a national affair, and they acted accordingly. Turning to the financial aspect, Mr. Grounds said a pool was not the question before them, and there, was a distinct difference between a pool and the scheme of control before them. They recognised there were disabilities in financing exclusively with certain Lon- < don houses, and had come to the eon- . elusion that more satisfactory arrangements could be made with the Associated Banks. The Associated Banks had ‘been interviewed by members of the ' council, and they were of the opinion satisfactqiy finance could be ar-

ranged. It had been suggested that a united body, such as the control bpard, representative of the whole industry, would not be able to make such satisfactory arrangements as the individual dairy companies, but this was wrong. Leading financial authorities laughed at the suggestion. Other critics said the big companies would control the scheme. He had gone into this aspect, and believed that no other scheme would so safeguard the smaller companies. In the past the smaller companies had not been able to make sales as satisfactorily as the big companies.

A voice: You are wrong. The small companies had never been able to guarantee an equal price for an equal quality as the big companies had. A voice: Many of the small factories did better than the big ones. In stressing the belief that a united board would have much more weight than the individual factories, Mr. Grounds said the individual could no longer stand alone, or he was almost bound to be swept off his feet by the big combinations. The individual right had to be subordinated to the general interest. Was there anyone who questioned the soundness of the compulsory grading system which caused individual interests to be sacrificed? He contended that the talk of individual right was just humbug. Some took up the attitude that they had managed their own business very well and did not want to be interfered with.

EXAMPLE OF DENMARK. It had been said, continued the speaker, that New Zealand should develop as Denmark had done without legislation. Denmark was a small, compact country close to the markets, which had developed along co-operative lines, and as a result of this they had faith in their power to select men capable of looking after their interests in their co-operative endeavors. It was easy to understand the position of Denmark, which was really one district. In New Zealand factories were spread over a distance of 1000 miles. How could New Zealand make the same advance without legislation? l£any years might elapse before New Zealand was sufficiently drawn together to get the best out of her produce without legislation. It had been urged that someone should be sent Home to investigate the markets and report. Many responsible men had visited the Old Country and had come back with the impression that it was essential that something should be done to improve marketing conditions. If they sent a man Home to report on the position they would let loose the forces of those whose interests they were coming up against, and these forces would be organised against the producers. If the investigators were not given power to finalise after they had analysed they could do no good. They could not place all their cards on the table unless they were prepared to come to a decision. A report on the position would always be colored by the fact that any suggestions made would have to have the consent of the producers, changes in the position meantime having to be allowed for. The best arrangements could not be made unless there was a board to finalise the position and decide on this or that. SUPPLY AND DEMAND. The question of supply and demand, said Mr. Grounds, depended for its. re- ; liability upon every branch functionI ing properly. Some years ago the stores were full of meat and daily pro- ! duce, while people at Homo were starvi ing for these commodities because the • means governing the law of supply and I demand were disorganised. This showed the necessity of some kind of control. The public should not be misled by statements that the whole business was a matter of supply and demand. Every branch must be analysed and organised. The promoters had further been criticised by statements that they were in a hurry to push the Bill through, and that insufficient time had been given for its consideration. The Bill had been before the producers for a year, and they should have decided the question, or something was wrong with their judgment. The whole industry was very well aware of the. position. If the Bill was put through during the present session there would still be plenty of time to arrange for next season. It would be disastrous to unduly hurry the inquiries as to the best course to take. It had been suggested that the promoters were avoiding details of the scheme, but he hoped the position had been made clear. Nobody could say exactly what could be done until someone was deputed to get the details into operation. All the other colonies, continued Mr. Grounds, were casting about for some means to increase the returns from their produce by similar lines to. those proposed by control. It was recognised that the individual could not stand alone. Consolidation was going on, and if New Zealand did not consolidate she would be drawn within the mesh of the combinations. The South Island, said Mr. Grounds, had postponed their consideration pending further information. When that information was given a substantial majority was in favor of the Bill.

SOME POINTS CLEARED. In answer to questions Mr. Grounds said:— That when the suggested pool Bill was before the country it was proposed to finance on letters of credit on the Tooley Street merchants. It would be generally recognised that there were weaknesses in this proposal. The present proposal was not for a pool, and he believed they could finance better with the Associated Banks. That the industry would be given an opportunity of electing the boardThat contracts would not affect the shipping position at all. No factory in the country was bound to ship through any contract entered into by the N.D.A. That the proposed levy was to provide the necessary funds to allow the board to carry on its work. That the manipulating speculator would drop out because there would be no money in it for him. That what continuity of supply would mean would be decided by experience; their ultimate aim must be to spread an even quantity over the whole year. That if every producer stood honorably to his undertaking to the industry there would never be any need for compulsion. That, ho had made it quite clear that they could not control prices. They could not get outside the determining factors that fixed prices, but they could endeavor to harmonise the prices of their produce with those of similar commodities from other places. That it was inevitable that New Zealand would meet with fierce competition 'when Siberia exported again. Success I then would largely depend on the methods we had in handling our produce, and 'that only stressed the necessity for organising. . That it was not proposed to lean entirely on Tooley Street for finance. If the financial institutions and Tooley

Street said that it was not advisable to hold the produce the board would be influenced by their opinion. It was hoped the Bill would be passed and the board constituted so as to be able to stabilise the market in the glut period, and that, together with improvements in shipping, would be the first direct results of the board. That it would be difficult to estimate the amount that could be consumed and so regulate the supply. CASE FOR OPPONENTS. Mr. Maxwell said they were all opposed to compulsion. Mr. Grounds had said that no one shouold raise opposition or criticism of the Bill unless he was prepared to suggest some constructive measure in its place. This was not logical. They had to deal with the most wealthy industry in the Dominion. Its progress had been marvellous; it was excellent, although not perfect. They desired improvements without compulsion; improvements by -ordinary business methods, with proper negotiations between the different parts of the industry. They did not want to experiment with the best industry in the colony. It had been inferred that the board would be representative of the producers, but they had no assurance of this. There were a lot of links in the election of the board between the producers and the men who would comprise the board. The Bill was a blank cheque. Was there one man at the meeting who knew more about the proposed finance of the scheme than before the meeting? (Cries of “Yes,” and “No.”). Mr. Grounds’ speech was an able one, because he had taken up time without giving any explanation.

MOTIONS MOVED. 4 ’ Mr. J. S. Connett then proposed a motion supporting the pool, providing that the New Plymouth port was retained as a main port. Mr. Sutton seconded. Mr. Connett said that the Meat Control Bill had saved the producers £700,000 in freight and had reduced the insurance from 3us to 2fls. The cost of running it had been £lO,OOO or £12,000, whereas the levy provided for £26,000. The opposition had served a useful purpose in criticising the Bill. It was decided to divide the motion into two parts, and Mr. Connett accordingly moved: “That in the opinion of this meeting, after hearing the proposal embodied in the Dairy Control Bill fully explained by Mr. Grounds, it is desirable, in the interests of the industry, that the Control Bill should become law, and that this meeting support it.” Mr. Sutton seconded. Mr. Freeth moved as an amendment: “That the meeting is satisfied that the information placed before it is utterly inadequate to warrant giving the power asked for.” Mr. Tosland (Pihama) seconded. Speaking to the amendment, Mr. J. Hine (Tikorangi) said that his company had decided to oppose the control. In the South Island Mr. Grounds had stated that if the board assumed control they would be able to advance 80 per cent, to dairy companies, or, if storage was necessary, 70 per cent- or 75 per cent., whereas at present his factory could get an advance up to 100 per cent. The .ideal the control board should have in front of it was regular shipment, not the regulation of shipments. Mr. Maxwell considered Mr. Hine had

struck the vital point in connection with finance. Under the present system there jwas no trouble about finance, as they could get 100 per cent, advance. Eventually it was decided to close the discussion, and the amendment was declared carried on the voices.