MARKETING DAIRY PRODUCE. UNITED FRONT NEEDED.

Waikato Times, Volume 106, Issue 17804, 31 August 1929, Page 9

MARKETING DAIRY PRODUCE.

UNITED FRONT NEEDED.

MR. W. GROUNDS’ EARNEST APPEAL

FIRST SPEECH IN THE WAIKATO

e Suppliers were present from the e Tatua, Norfolk, and New Zealand Coil operative Dairy Companies. Mr W - Darrell, chairman of the Tatua Come panv, presided, and, in introducing Mi d Grounds, said that perhaps no one in r the world had a wider knowledge oi _ all sides of dairying and marketing. f Twenty years ago, said Mr Grounds, _ the marketing ’of our dairy produce in 1 Britain was easy, as our supplies were .. needed to make up the winter short•j age there, but latterly, our produce, with that of Australia and other countries, made the winter supply greater than the summer supply in London. It became necessary to spread our shipments over a longer period of the 2 year. It had 'been suggested by some j people in Britain that we should aim = at winter production, but farmers knew - that that was impracticable, for the , winter produce was inferior to that of , the summer, even when the latter had . to be kept in cool store. It was a far t sounder policy to store part of the butter for a time in order to lengthen . the marketing season. As to cheese, ; the market was shared between New Zealand and Canada, so that the bulls of our trade must be done when the ' Canadians were not on the market, though we should aim to keep up regular supplies throughout the year to (hose buyers who desired them. The people of the West Coast ports in England had tried to get shipments direct from New Zealand, and had offered special facilities, but because of the lack of unison our factories had sometimes flooded the Western ports and caused a slump. It was easy to see that the opportunities of tills ouiport trade were not being used, for 50 per cent, of all dairy imports into England went to other ports than London, whereas of colonial dairy imports 92 per cent, went to London. He thought the development of the West Coast trade was one of the most hopeful outlets for our produce. The need was for better organisation, and the realisation of the. need was one of the reasons for the establishment of dairy control. Tho Control System. Mr Grounds went on to review the working of the control system. When control had been established, there were 30 agencies selling New Zealand dairy produce in England. Would any company send out 30 travellers and tell each to get the best price he could for the goods? Sucii an idea was ridiculous. They must have standard prices for standard qualities. That was all that was intended by the socalled “price-fixing” policy. They . simply desired to keep their finger on the pulse of the market and get the I best price available, .as unorganised sellers could not hope to do. It had been said that New Zealand, with only 23 per cent, of the British import trade, should never hope to control the market, but there had been no desire to control it. All that was desired was to stabilise the market and prevent undue speculation. Combination had been proceeding among the buyers, who were able to manipulate the market to their own advantage, and this country had suffered immeasurable losses as a result. The losses would continue to be immeasurable until w ; e had a sound marketing organisation. The Control Board had shown what could be done by united action in the matter of insurances. As a result of consolidation the insurance offices had been able to cut their rales down to bedrock, because risks were spread over the ; various boats. Before consolidation ! Uic individual insurance companies had j lmd to underwrite a maximum cargo, whereas now premiums were paid on only the actual cargoes. Ilcnce the , premiums had been cut down from 13s to 8s 2d for cheese, and from 11s j to Is for butter. Just as great a | gain would come from' the organisation of marketing. It was ridiculous that £20,000,000 worth of produce j should be sent from this country without supervision. ' The Control Board had been able to 1 save enough in freights alone to more ) than pay for the cost of the levy, and ' in addition had saved large sums in insurance, in storage charges, and by I improving storage and shipping condi- [ tions so as to ensure better quality. 1 However, marketing had been the 1 central purpose of the control. He 1 had imped to have the marketing f placed in the hands of the board, but since the effort had not succeeded he v had been looking round for the best f ivay of progress, and had decided that I Amalgamated Dairies’ scheme held out v ;hc best hope. Since the failure of c mmpulsory control there had been ihaos and suspicion, and the tendency ti .vas to go from bad to worse. Nothing ,vas so greatly needed as a co-ordin- p ited marketing system. The only jf ;,me course was to disregard personal s inferences in the interest of the in- |.| lus try as a whole. For the past two it cars they iiad been living in a rr

False Security, based on the temporary good prices. He predicted that if a season of full production in this country should come at the same time as a good season in Australia, prices would be so affected llial people would look back to the protection they might have had under the control system. Mr Grounds said lie realised that there was some feeling on the part of small companies against the power of the New Zealand Co-operative Dairy Company, but lie urged that the best hope for all was to work with Iho ■company’s marketing organisation, lie had consulted with Mr Coodfellow, and had learned ft'Om him of liis desire lo accept any reasonable proposal. lie (Mr Grounds), had not been in any hurry to make’ up his mind, lie appreciated the advantage of Australian collaboration, but lie was chiefly concerned for a sound foundation for New Zealand. After three months’ conversations they had arrived at an understanding which lie felt lie could, fully recommend lo all concerned in the industry. Amalgamated Dairies. The speaker reviewed the basis of the proposed reorganisation of Amalgamated Dairies, Ltd., from which, lie said, there had been eliminated the

An earnest appeal to dairy farmers to present a united front in marketing their dairy produce overseas, was made by Mr W. Grounds at a meeting at Tatuanui last evening. This was his lirst speech in the Waikato in support of the new organisation arranged by the Amalgamated Dairies, Ltd., in co-operation with Australian sellers. He emphasised the fact that the buyers were increasing their bargaining power by union and that it was necessary to meet strength with strength.

clauses to which objection had been taken. One important provision in the present articles, was the limitation of the earnings of the marketing company to 8 per cent, on ordinary shares and G per cent, on preference shares. He had thought it best to leave the capital as originally arranged, but with provision that, in the event of any future issue of shares, other companies should have the right to .subscribe capital equally with the New Zealand Dairy Company. After seven years a revision of the managerial arrangements was provided for so that the industry in general would have the opportunity of taking over the marketing company. The usual marketing arrangement under the new scheme would be that each quality In each shipment should be a separate pool, but at any time a company could take its produce out of any pool. The companies would thus be quite free, and they could make any f.o.b. sales they desired. The profits would not come out of the price of the butter, but out of the 2J per cent, commission which was now paid to any of the London merchants handling the busi--1 ness. Under the control system the commission had been reduced to 2 : per cent., but immediately it had been raised again to 2f. Amalgamated Dairies could get the actual marketing done in London at Iper cent and the expenses at the New Zealand end averaged j per cent., so that j per cent, remained to Amalgamated Dairies, and this amounted in total to a considerable sum. Another source of gain would be Ihe floor in the London market to be taken over by the Federated Australian and New Zealand selling organisation, as the selling on the floor could be done at about 1 to i J per cent. Two-thirds of the profits from Ihesc two sources would be divided among the factories themselves. It had been said that the management of Amalgamated industries might gel £IOO,OOO out of these profits in seven years. He hoped they would; for this would mean that the companies would be getting £200,000 or enough to buy out the management interest if they wished to. He spoke simply as one of themselves.

No fixe To Grind. “I have got no interest in the organisation of Amalgamated Dairies,” lie said, “I have got no interest in its success beyond what you have gol -—that is, the interest of the industry itself.” (Applause.) In face of the combination of buyers, said Mr Grounds, it was absolutely necessary for them, the sellers, to unite. Their activities would be paralysed, he proceeded, if they did not get rid of their personal differences. He traced the progress made in cooperation in America and in Russia during the past few years. “United we stand, divided we fall” was truer than ever. Iso one had fought harder than he for the control system and no one had felt the disappointment more, but he put that and he appealed to all to unite in reorganising the marketing system. Mr Grounds was loudly applauded as he concluded. High f.o.b. Prices Explained. In reply to a question, Mr Grounds said it was true that f.o.b. sellers had obtained better prices in the past two seasons than those who consigned, lie could sec the purpose of the buying agencies in offering these attractive prices. No one could get a higher price on the London market than Amalgamated Dairies. The questioner:: “That doesn't go with the pay-outs.” Mr Grounds explained that the buying agencies had lost through pavlnt? the high f.o.b. prices. A questioner asked whether there was any advantage in producing “finest” cheese. Mr Grounds said it was often sold in England at the same price as the better quality, but this was at the expense of the whole New Zealand trade. He greatly regretted that ihe control board’s policy of paying a premium on "finest” iiad been abandoned. During the season the premium had been paid, the proportion of llnegt had risen from 37 to 57 per cent. Re hoped the premium would be offered again. The chairman pointed out that, vhile objection had been raised to the profits the managers of Amalgamated Jairies might receive, those proills vere now being taken by other agon- i nes without complaint. . Mr Grounds: "Yes, and our two- i hirds of the profits, too.” !

Mr Grounds said die amount to ho paid to Messrs Wright ami Coodfellow it they were bought out at Iho end of seven years, was praclieallv fixed j,v the article limiting the return on their investment. lie regretted that farmers concentrated on this question of the pronts, which was of minor importance. Tiie important thing was the protection that united marketing would give to the producers.

A hearty vote of thanks was accorded the speaker.