“NEXT BEST TO CONTROL”

Taranaki Daily News, 13 July 1929, Page 15

“NEXT BEST TO CONTROL”

‘ NEW MARKETING PROPOSAL i MR. GROUNDS SUPPORTS SCHEME. ’ ITS CONSTITUTION EXPLAINED - INTENTIONS OF “EMPIRE DAIRIES” 1 (By "Wire.—Special Commissioner.) ! Whangarei, Last Night. The basis of the scheme for the coordination of the marketing of dairy . produce recently completed by Amal--1 gamated Dairies, Limited, in conjunction with Australian interests was explained . in detail by Mr. W. Grounds, chairman of the North Auckland Dairy Association, and Mr. W. Goodfellow, managing director of the New - Zealand Co-opera-tive Dairy Company, at a meeting of dairy company representatives at Whangarei this afternoon. Mr. Grounds, who convened the meeting as chairman of the North Auckland Dairy Association said: “Since my intimation at the North Auckland conference of the prospect of a basis being found for co-ordinated effort in marketing, the air appears to have been full of rumour, speculation and wonder at the prospect of this unexpected development. There had been disappointment at the breakdown of the control policy, of which marketing had been the essence. Supplementary efforts in the way of shipping, insurance and storage had been helpful, but the central idea remained and there was no justification fop confusing it with the supplementary. “Failing compulsory control, it had become obvious that a scheme of voluntary marketing was the only immediately practicable way and that nothing effectual could be accomplished without including the large Waikato interests representing, closely organised, 25 per cent, of the industry. Negotiations with Mr. Goodfellow have been on that plane expected of leaders of the dairy industry, and a few days ago an agreement was reached which we felt justified in I accepting as the basis of a renewed effort.”

POINTS IN AGREEMENT.

Tho main points in the agreement, continued. Mr. Grounds, were that Amalgamated Dairies would be reorganised to allow of fuller participation in the business by all the companies linking up with the whole. Unacceptable conditions in the present articles of association of Amalgamated Dairies were to be eliminated. A council was to be established consisting of the chairmen of directors of all contributing companies. It would annually nominate three members to the board of Amalgamated Dairies, the associated factories thus electing three of the seven directors. The associated factories would share in the prolits according to the volume of their supplies. Profits due to the associated companies might be de- I voted at the discretion of the ’directors to an issue of preference shares, fixed deposits with the company or cash rebates, share dividends to be limited to 8 per cent, (ordinary) and 6 per cent, (preference). The existing ordinary share capital was to remain us now allotted to the New Zealand Dairy Company, Mr. Goodfellow and Mr. J. B. Wright. The provision for the dairy companies ! to gradually grow into the business Mr. I Grounds regarded as most satisfactory and acceptable. If any new issue of ordinary shares were made the contributing companies could take up their quota on the basis of the volume of their business. The arrangement was for seven years, subject then to review and mutual agreement on renewal. Alternatively, tho industry might then buy out the interests of Messrs. Goodfellow and Wright and distribute their shares amongst the industry on a supply basis.

Provision had been made that the existing salaries, commissions and dividends were to continue up to a defined figure, after which a larger share of the profits would be paid to the contributing companies, thus safeguarding their interest. As the business increased all the allied companies would participate in the results of an established carton and package trade. M LINK WITH AUSTRALIA. In the marketing arrangements had been made for- Amalgamated Dairies to link up with Australian dairy interests by the formation of a company for the joint marketing of Australian and New Zealand dairy produce. Amalgamated Dairies held the largest interest in the new company, which would be called Empire Dairies, the management of which in London would be in the hands of Messrs. J. B. Wright and A. E. Gough. “I advocate the acceptance of this scheme as the soundest and most practicable available. There is no intention to take advantage of anyone; we simply desire to protect the producers and provide an opportunity for the fullest development of the industry,' 5 said Mr. Grounds.

Mr. Goodfellow said that on a recent visit to Canada he saw the urgent need for.price fixation and co-ordinated marketing, especially in Vancouver, where the merchants themselves asked whether the prices could not be fixed on a flat rate in New Zealand for the prevention of undercutting competition among themselves. They declared they could sell at Is fid as easily as at Is 4d, and as much in quantity if prices were only stabilised in New Zealand.

This season Amalgamated Dairies would sell ex-stock and not c.i.f. at Vancouver. A vast market was waiting in eastern Canada, where the same conditions obtained, and Amalgamated Dairies this year was going to carry a constant stock at Halifax, selling cx-stoek at the London parity as well as c.i.f., but the results would probably encourage ex-stock purchasing by merchants in future.

Mr. Goodfellow elaborated on the constitution of Empire Dairies, saying that thereby the Australian Producers’ Wholesale Co-operative Federation’s dairy produce selling floor in London would be used for the joint sale of New Zealand and Australian dairy produce at fixed-prices to the mutual advantage oi both countries. New Zealand produce would continue to command the usual premium over Australian. It was hoped Canada and South Africa would later co-operate.

In Empire Dairies, Amalgamated Dairies would hold a 50 per cent, interest, the Australian Federation 3G per cent, and the balance would be reserved for other British dairy producing countries. Tooley Street merchants would be allowed to sell allocations of produce

from Amalgamated Dairies at fixed prices as hitherto, while Empire Dairies at the same time would sell at the same prices on its own selling floors in London and other centres in England, opening up now markets, particularly in the West of England. The speakers were asked a number of questions, answering some of which Mr. Grounds said the industry’s representatives on the board of Amalgamated Dairies would be two from the North and one from the South Island. The voting power on the council would be one factory one vote as in Denmark. Mr. F. McDonald: Some day, it is to be hoped, we will again have something approaching absolute control. This may be a step towards that. It appeals to me, but it depends upon the support accorded it by the individual companies. Mr. Grounds appealed to all to work together in this “the next best movement to absolute control.” He had received requests by telegram from Taranaki and other parts of the North Island to address meetings on the marketing scheme. Both he and Mr. Goodfellow would explain it at many centres.