Price Tribunal Has Refused To Reduce Or Increase Stock And Station Agents' Commission

Wanganui Chronicle, 31 May 1949, Page 6

Price Tribunal Has Refused To Reduce Or Increase Stock And Station Agents' Commission

WELLINGTON. Last Night (PA). —“It is clear that the general application to reduce the rates of commission must fail,” said a judgment delivered by the Price Tribunal today in the application by the Director of Price Control for a new schedule of livestock commission rates charged by stock and station agents.

The hearing of the application was commenced by the Price Tribunal on April 26. It then was adjourned until May 10 and concluded the following day. The Tribunal’s finding states that the rates of commission 'nave been unaltered for 30 years or more. “No application to increase them has been made till now, notwithstanding very considerable increases in wage and other costs,” says the judgment. “It is admitted that none of the companies whose accounts were investigated are making excessive profits iiT this branch of their business, that some are making only a moderate margin of profit, and that others are operating at a loss. Nevertheless, it is argued the companies are doing so well over their businesses as a whole that they can well afford to operate this branch of their trading at reduced rates. This reasoning seems to the tribunal to be fallacious. “While it would be a good answer to an application for authority to increases rates that companies overall are doing very well, although making little or no profit on the stock department, it is, in the tribunal’s opinion, no reason for reducing commissions on the sale of stock. If companies are making excessive profits in other departments of their businesses, or on particular lines of merchandise, it is in those directions that *the division must look to bring about reductions. “There is another aspect of the matter which must weigh heavily against the application. The people who are called on to pay commissions are farmers, and the tribunal thought it proper to invite Federated Farmers to send a representative to the hearing and to make submissions if it thought fit. The submissions read by Mr. A. P. O’Shea, which he said were prepared by a committee of the Dominion Council of his organisation, were to the effect that no reductions .were called for, and that so far as what was called rationalisation was concerned, it was preferable that any matters coming*- under that head should be settled by negotiation between farmers and stock agency companies. The application was in fact strenuously opposed by Federated Farmers, which, it was stated, has a membership of approximately 50,000. “In arriving at its conclusion the tribunal has not overlooked the fact that at least 10 of the 35 companies concerned are farmers co-operatives, and that it appears that shareholders in six others are mainly farmers. The reductions proposed by the division, estimated by the Stock and Station Agents’ Association, to amount in the total to £150,000 over all their members, would affect seriously the finances of the co-operative companies,

and in the event of there being a period of falling prices in New Zealand's primary production, they would be severely affected, if past experience is any guide. “The tribunal exists manly for the reasonable protection of those who have to pay,” states the finding. “The position which has arisen in this case is, in the tribunal’s experience, unique and it is obvious that very great weight must be given to the views expressed on behalf of such a large and representative body as Federated Farmers. So far as ‘rationalisation’ is concerned, a number of cases were referred to by the division in which the rates of commission appear to be anomalous. It was submitted in reply, however, that these are accounted for by differing local conditions and variations in services rendered. On consideration, the tribunal is of opinion that there is not sufficient information before it to justify its making an attempt to correct what may be anomalies, or, may-be difference resulting from local circumstances. It is open for any body of farmers in any particular district to make application to the tribunal for review of commission rates payable on the sale of livestock in that district.” At the conclusion of the hearing of the application to reduce commission rates, the tribunal also heard an application by the Stock and Station Agents’ Association for fixation of uniform maximum rates. The tribunal’s finding says that Mr. G. D. Stewart, public accountant, gave evidence in support of this application and stated that the total increases in commission fees payable on the sale of livestock by stock and station agents throughout the Dominion, if the application were granted in full, would amount approximately to £60,000. The tribunal noted that this application did not receive any support from Federated Farmers. The finding says, in conclusion: “While it was shown that the profits made by companies as a whole in the stock and station departments of their businesses are very moderate, the survey also showed that over the whole of their businesses the companies arc doing very well. Speaking’ generally, they have paid good dividends, have increased shareholders’ funds, and have been able to place considerable sums to reserve. While the tribunal has declined to reduce commission rates, in view of the fact that returns from the stock departments are only moderate, when it comes to an application to increase fees, the tribunal must, in accordance with its well established practice, look at the overall results of the industry. These results are such that, in the tribunal’s opinion, no ground has been shown to justify an application for increased commission rates, and this application must also fail.