NEW MARKET PLAN

Taranaki Daily News, 20 July 1929, Page 15

NEW MARKET PLAN

EMPIRE DAIRIES., LTD THE PROPOSAL EXPLAINED VISIT Or’ THE PROMOTORS QUESTIONS BY. DAIRYMEN,, The proposed new scheme of marketing dairy produce was propounded by Messrs W. Grounds and W. Goodfellowin the Workers’ Hall, New ’ Plymouth, yesterday. Mr. J. Brown, chairman of the North Taranaki Producers’ Freezing Company, presided over about 150 producers, who gave the speakers an attentive hearing. A number of questions were answered at the conclusion of the addresses. In extending a welcome to Messrs Goodfellow and Grounds on behalf of the producers of North Taranaki, Mr. Brown said ho understood they had to lay before them a fresh scheme, whereby it was hoped to make more money for the producer. If that could be done he assumed they would welcome it as that was what they were all out for. He was informed that this was a producers’ meeting and he had been asked to request agents to leave the room. A number of dairy produce agents thereupon left their seats, but someone called out suggesting that they should stay, “We want them in,” he said. Mr. Goodfellow: We don’t want them in.

The chairman said the people calling the meeting had a right to say whether agents should be there. He was quite sure, in view of that, that the agents would not wish to stay. In calling upon Mr. Grounds to speak, he said that whether they agreed with him or not he was sure they would all be glad to hear him.

After the agents present had withdrawn, Mr. Grounds said that in the past he had had the honour of addressing meetings in this district on a number of occasions. He recognised one could not expect complete unanimity on any subject, and that one could .not expect to convert everybody .in an audience. At the same time, he recalled with pleasure that when they were discussing the question of dairy, control, even though they had not always secured complete agreement among their listeners, they had established a number of friendships among their opponents, friendships based on a mutual recognition of the common aim of improving the industry that lay behind their individual ‘deals.

DANGER OF MISUNDERSTANDING.

It was not to be expected even this time that their remarks would convince the whole audience, continued Mr. Grounds, but he was sure they would give due attention to what was to bo said, and weigh , the importance of thodifferent factors before coming to a conclusion. He fully realised that, in view of the course he had followed and what had happened in the past, there was a possibility of a misunderstanding arising and, based upon that, misrepresentation might be the result, The desire that only producers in the industry should be present was actuated by a hope that when they sorted out the various points to be submitted to them for the formation of their judgment, they would be able to give the necessary weight to the central and fundamental factors in the case, without having their decision developed on one or two points or superficial and supplementary issues. He, himself, had been engaged m discussion and consideration of this subject for three months,, am. he was. therefore not so sanguine as to think they would grasp immediately the whole importance of the various points at issue to the degree that he had the period he had mentioned. At the same time, he felt confident they would grasp and give due consideration to the Important features in forming then judgment, even though it could not be honed they would assimilate all the points that afternoon. Those of them who were at the Whangarei comerence would remember there was a large amount of speculation and wonder regarding certain developments that had been talked about. . , xv It seemed to have been expected that some statement would have been made at the recent conference of the National Dairy Association, continued Mr. Grounds, but the simple matter of fact w’as that nothing had at that time been finalised and he was fully resolved to gay nothing until he was quite satisfied. While he recognised that ill-con-sidered judgments were frequently based ! upon the common error .that criticism of opinions or actions involved criticism of personality, he was pleased to think that those negotiations had been conducted on the highest plane worthy of those who had been called to leadership in dairy matters. They shared in the common effort to establish control, and there could be no question that marketing was the central essence of that movement. Supplementary efforts in the way of shipping, insurance and storage had been very helpful to the industry, but there was no reason for confusing the supplementary with the central idea, nor any justification for accepting the supplementary as the final goal of achievement. He was deeply disappointed at the breakdown of the control policy and at the subsequent differences of opinion that developed among control ‘leaders and supporters, resulting in a gradual drifting apart of sections holding kindred ideas. Issues were becoming more confused, with no sign of, any rallying point anywhere in the industry. PROPOSALS REJECTED. fhey would remember how at this stage, and at every opportunity subsequently, he 'had urged the board to undertake marketing the produce of factories that desired them to do so. Notwithstanding, however, that the commission that could have been earned by this work would have paid the whole expenses of the board, they persistently refused to undertake the responsibility and the prospect of any such effective step being taken had been steadily receding. Meanwhile among control supporters two schools of thought 'had beei discernible. There were those who believed that compulsion was essential to success, and there were those who thought voluntary effort should he proceeded with. A careful review of all the circumstances and points, advocated from these two points of view would lead to. the conclusion that the volun-

tary method was the only immediate practical way. Concentration and dilation upon differences usually led to disorganisation and dismemberment. Mr. Grounds said that it had been his steadfast determination and duty to keep the main aim in view. They must overlook the trivial and keep all parochial and personal antipathies and ambitions in subjection, so that the dominant needs of the industry might be seen clearly. ■; How, then, was this to bo realised? Approaching the subject without bias, it must be clear that nothing effectual could be accomplished without including the large. Waikato interests, which represented a closely organised 25 per cent, of the industry. Further, there was no room to contemplate their exclusion unless they insisted upon some unacceptable condition. In that case, weakened though the effort would be, they must perforce make the best of it. But fortunately a saner, better course was developing for them. When, some months ago, Mr. Goodfellow approached him and' indicated after an extended conversation that bis company and himself were prepared to accept any reasonable arrangement, it was clearly his duty, said Mr. Grounds, fully to examine the prospects of such a consolidation, while guarding against anv hurried decision. He was informed of the negotiations to secure co-opera-tion with the large Australian interests, and although he was not unmindful of the matter-of-fact advantages that such marketing co-operation offered, he was not to be influenced by any glamour introduced around that phase. The essential point to him was a sound foundation for New Zealand development. Subsequent conversations gradually eliminated difficulties, so that a position was reached a few days ago that he felt justified in accepting as a basis for renewed effort. MAIN POINTS. .SUMMARISED. Briefly summarised, the main points in the agreement were that /Amalgamated Dairies was to be reorganised to provide for fuller participation in the business by all companies linking. up with them. The unacceptable conditions in the present articles of association were to be cut out and provision was to be made for the establishment of a council consisting of the chairmen of directors of all contributing companies. This council would meet annually to consider’ the company’s affairs, and at any other time when it might be deemed necessary. The council would annually nominate three of its members for seats upon the Amalgamated Dairies board of directors. ° A reservation upon these appointments was provided to prevent any disintegrating influence finding its way to the board table, but steps had been taken to ensure that this precautionary measure should not restrict reasonable choice by the council. Associated factories would consequently elect three of the seven directors, the New Zealand Company two and the remaining two directors would be Messrs Goodfellow and Wright. Associated factories would share in profits based upon the volume of their supplies. . . Profits due to associated, companies might be devoted, at the discretion of the directors, tor (1) An issue, of preference shares; "(2) fixed deposits with the company; (3) cash rebates. Share dividends would be limited to 8 per cent, ordinary and 6 per cent, preference. Existing ordinary share capital was to remain as at present allotted to 'the New Zealand Dairy Company and Messrs Goodfellow’ and Wright. He was satisfied that they had no legitimate claim to rearrangement upon this point, as those concerned were entitled to. the advantages accruing from their effort, the -company being a definite piofitpaying concern. Moreover, ho fully understood the difficulty of dairy companies in finding capital for such auxiliary companies, and knew that not much would be- immediately available even if an opportunity had been provided. The provision for them gradually to grow into the business he regarded as being the most satisfactory and acceptable way. ALLOCATION OF SHARES. Provision was made, in the event of any new issue of ordinary shares, for contributing companies to have the opportunity of taking up their quo a, based upon business volume. Ihe managerial arrangement was fixed tor a period of seven years subject to review and renewal on a basis mutually acceptable at that time, or, alternatively, the industry would buy out the interests of Messrs. . Goodfellow and Wriffiit at a price mutually agreed upon, °and thereafter distribute these shares among the industry based on volume of supplies. This arrangement with the management would enable it to carry out the complete establishment of the organisation, with the extensions contemplated. Some adequate pei iod of time was necessary to give the management an opportunity to prove it could put the industry on the basis the members of the management said they could, and which he, himself, thought they could, and also so that the industry might be safeguarded. Provision for the existing arrangements to stand regarding salaries, commissions and dividends up to a. figure in profit-making might be regarded as the outcome of the effort made prior to general participation in tho business by the industry. At this point, the figure of which had been agreed upon, commissions paid to managers were to cease and a larger share of the profits to be allotted for distribution among all contributing factories. This, while providing fair remuneration and encouragement to the management, safeguarded the interests of the industry in dealing with augmented profits as the business increased. All allied companies were to participate in the results of the established carton and package trade, while plans were laid for tho extension of this important side of the business. NATIONAL CONSOLIDATION, These were the main points in the reorganisation of Amalgamated Dairies, and he had accepted them as a new basis for national consolidation. He did not care who were to be the leaders into the “promised land,” but he felt that the responsibility was still upon him to endeavour to find a wav’. The only alternative seemed to be, drifting in a wilderness of confusion and indecision, for who would say how many years. In this spirit he had approached the task and he desired to acknowledge the frank spirit in which the remodelling had been approached by the New’ Zealand Dairy Company and Messrs. Goodfellow and Wright. These had been factors contributing to the conclusions arrived at. He advocated its acceptance as the soundest and most practicable scheme available to them.

Experiences of recent years had deeply impressed him with a sense of the urgent need for the immediate and strong establishment of such an organisation, and he therefore hoped that in

their own interests and those of the industry’s future, they would not only accept, but become immediately associated with it,. In the marketing operations, 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 New Zealand and Australian dairy produce. Amalgamated Dairies was to have a controlling interest in the new company, the management of which in London was to bo in tho hands of Messrs. Wright and Gough, who had been long associated with the interests they respectively represented. It would bo sufficient for the present if he confined himself to this general survey of the position. Mr. Goodfellow would be prepared to give any information they might desire regarding the negotiations in New Zealand, Australia and elsewhere in which lie had been engaged. There was no intention in the arrangement made to take advantage of anybody. They simply desired to protect tho producers and thus provide opportunity for the development of the industry to its fullest capacity. In outlining the Empire Dairies’ scheme, Mr. Goodfellow said the intention was to form a London Co-opera-tive Empire Marketing Company with a capital of 150,000. Amalgamated Dairies of New Zealand would subscribe 25,000 shares and the Australian Producers’ Co-operative Wholesale Federation 18,000 shares. The remaining shares available-for allotment would be offered to Canada or any other Empire country. Controlling the marketing of the produce in London would be the London directors, Messrs A. E. Gough, general manager of the Australian Federation, and J. 'B. Voight, European managing director, of Amalgamated Dairies. Two directors would be appointed by the Australian Federation and two by Amalgamated Dairies. All resolutions of the directorate were to be agreed to by the Australian and New Zealand directors, this reserving for all time the control of the organisation to Australia and New Zealand.

In reply to a question as to whether the adoption of the scheme would mean the breaking down of the Control Board, Mr. Grounds said that was in the hands of the producers and did not concern Amalgamated Dairies. He was more concerned with securing the better marketing of the produce of the country. Mr. G. Gibson: Does it not seem to be the floating of a supreme authority?

It was stated by Mr. Grounds that he had outlined that question in his speech. Mr. Gibson also wanted to know if it was not a fact that Amalgamated Dairies had sold butter in Canada at Is 4fd.

Mr. Goodfellow: Yes, we sold over 4000 tons at just a fraction over that price.

“I have reason to know,” Air. Gibson continued, “that offers of Is 5d were made to other companies, yet you cleared at Is 42d. That price made a great deal of difference to the. factories that had the' offer.” Mr. Goodfellow: That is an unfair remark. It is an inference that we cut prices. He explained the arrangements existing with the Canadian agents. They had turned down an offer for between 40,000 and 50,000 boxes because the price was considered too iow. The concensus of opinion had been that if they could get Canada to buy a substantial quantity at Is 4fd net to the factory, they would have done good business and better than London would pay. Again, they had received an offer of Is 4 3-8 d for 11,000 boxes of butter and were informed that if they did not accept that price other factories would. A cable had immediately been sent to the Canadian agents stating that on no account were the prices to be reduced.

Mr. J. Hine, in referring to the statement of Mr. Grounds that he thought the industry in New Zealand would be protected with three directors on the board of Amalgamated Dairies, and that the' directorate would consist of seven, of whom. four would represent Messrs Goodfellow and Wright and the New Zealand Dairy Co., and that the three directors nominated by the council could be objected to by the other directors, inquired whether that method did not give the New Zealand Dairy Co. undue power. He could not distinguish between Messrs Goodfellow and Wright and the New Zealand Dairy Co. Mr. Grounds said that in his negotiations he had discerned that the New Zealand Dairy Company's points of view were similar to other dairies throughout the country; Consequently the knowledge he secured led him to believe that such a thing was in the best interests of the industry. Mr. Goodfellow laughingly assured Mr. Hine that when on the Control Board he was very actively connected with the New Zealand Dairy Co., but bad now, and for some years past, little to do with the business, which was under the management of Mr. C. J. Parlane. He was only nominally in charge and received only a nominal salary. “I cannot help thinking Mr. Goodfellow still wields great power,” Mr. Hine continued, "and we have been taught by certain —” Mr. Goodfellow: Tooley Street! “No, not Tooley Street,” said Mr. Hine. “When Mr. Goodfellow was on the board I had some experience of the power lie held.” The chairman, Mr. J. Brown, in moving a vote of thanks to Messrs Grounds anti Goodfellow, said they had gone into great detail and, whether those present considered it instructive or not, he was sure they appreciated the information. Mr. Grounds expressed thanks on behalf of Mr. Goodfellow and himself. He said he did not anticipate an immediate acceptance of the points outlined, but he trusted they had given food for thought. MEETING AT OPUNAKE. . (From Our Own Correspondent.) Messrs Grounds and Goodfellow addressed a representative meeting of dairy factory suppliers at Opunake in the morning, Mr. M. Fleming, chairman of the Cape Egmont Company, presiding. The speakers dealt at length with the scheme on the lines of previous, meetings, and questions were dealt with. Mr. J. C. O’Rorke (Oaonui) asked questions regarding the "Exporter,” also regarding the control failure, Mr. Grounds replying. Mr. J. 8. Tosland (Pihama) asked how the prices under Amalgamated Dairies compared with those of other factories, Mr. Goodfellow replying that they had received the 'highest prices ruling for butter. The price when fixed was the ruling maximum market price, wbereae under present proposals a factory could sell at its own price. The speakers were accorded a unanimous vote of thanks, the chairman stating that the position had been put clearly, and to his mind it appeared to be a good proposition.