PRODUCE MARKETING.

Waikato Times, Volume 107, Issue 17966, 11 March 1930, Page 3

PRODUCE MARKETING.

CHANGING OF CONDITIONS NEW COMBINATIONS IN BRITAIN. REVIEW BY MR W. GOODFELLOW. The trend of conditions in the marketing of dairy produce was discussed by Mr W. Goodfellow, managing director of Amalgamated Dairies, Ltd., at a reception to touring Australian farmers at New Plymouth. Mr Goodfellow proceeded to deal with the inception of improved market ing of dairy produce in New Zealand and the necessity for its continued development. The marketing movement really dated back eleven years to the time when three large competing organisations in the Wailcalo combined, and as a result of that combination were able to open a‘London oflice and appoint. Mr J. B. Wright to manage it. As most of them knew, following on that the Dairy Control Board was set up to institute a system of organised marketing. Before commencing to market produce they sent a delegation to the United Kingdom and elsewhere to investigate conditions, and as a result they unanimously recommended, the dairy industry of New Zealand to adopt the system then being operated by the New Zealand Go-operative Dairy : Company, Ltd. f The Dairy Board, however, failed to accomplish its objective, and as a result of that failure Amalgamated Dairies was managed in London by Mr J. B. Wright and by himself in New Zealand; and in order to contradict a statement which had'been widely disseminated he desired to say that both Mr Wright and himself had signed a service agreement under which they were in effect the servants of the dairy industry, or at least of all those associated with Amalgamated Dairies, of whom there were now 48 companies concerned in marketing enterprise. This service agreement provided that ' neither of those concerned could buy or sell or be concerned or interested directly or indirectly in the sale of dairy produce from New Zealand. lie made this statement because of certain statements which had been industriously circulated. Process of Amalgamation. Some might ask, proceeded Mr Goodfellow, what necessity there was for the establishment of Amalgamated Dairies and Empire Dairies. The necessity for orderly marketing lay in the changed conditions obtaining in the trade. The condilions of trading in Hie United Kingdom, and parlicularly in Tooley street, had undergone a rapid change in Iho past few years. Four or tivu years ago there was considerable eompelilion'*between certain large groups and trading concerns. To-day, on Ihe contrary, there were large groups purchasing dairy produce in enormous quanlilies, working under, definite amalgamations. There was, for instance, the Margarine Union, which since iLs amalgamation with Lever Brothers, had a i&pital of £27,000,000, and was by far The largest manufacturer of margarine and distributor, and also by far the largest buyer and distributor of. New Zealand butter and cheese- ItJ ' was not the only combination. There were a number of other companies, some with capitals of several millions. In addition to these multiple shop groups there was the Go-operative Wholesale Society, which had been organised for the express purpose of supplying its members with cheap food/ it had a capital of £100,000,000 and a membership of six mil.ions. It was organised for buying on the same basis as the multiple shops. There was now a third group consisting of the small grocers of Hie United Kingdom, who, in order to compete against the multiple shops ami the C.W.S., had been forced to combine and . form numerous buying organisations. This meant that lhore were three groups mainly concerned in the buying, and this meant a marked elimination of competition in buying. Tooley Street Movement. A further move, as to which news was not yet definite, was that it had been suggested and the effort instituted for seven of the Tooley Street firms to combine with the Margarine Union. If this did take place it would mean a further elimination of competition. It would thus be seen that the whole method of trading in the United Kingdom had undergone a very radical change. Instead of all these people competing for our produce as in the past there were now only three main groups working more or less together. The multiple shop people Axed their policy, the C.W.S. was practically forced to follow on that policy, and the small groups followed in turn, so that in reality there was one central organisation fixing the price of New Zealand produce, and that organisation was a buying organisation and not a producing organisation. It had been stated that Amalgamated Dairies could not do anything l-o improve the marketing of New Zealand dairy produce because the total quantity" that New Zealand supplied was only 20 per cent, of Britain’s total imports. Examination of the facts, however, put a somewhat different complexion on that statement. The total imports of Britain for the year ended December last were 320,000 tons of butter and 140,000 tons of cheese. The 320,000 tons of butter were not imported in equal quantities each month. Most arrived in Ihe months of January, February, March and April, when the flush shipments from New Zealand were arriving. Another Factor. For January Britain imported 32,000 tons, of which 17,400 came from Australia and New Zealand; so that in that month we sent more than half of Britain’s impoVts. If we were shipping equal quantities each month the percentage, of course, would he less, hut in the months when our hulk shipments were going out percentage of the total was greater than half. That being so, it was certain that if Amalgamated Dairies could he entrusted with the marketing of 50 per cent, of New Zealand’s export of butter, and if Empire Dairies could secure 50 per cent, of Australia’s export, then something very substantial could be done to improve the position and influence the organised buyers on the market. As regards cheese, New Zealand sent more than half of the total. In January New Zealand sent 13,700 tons out of 16,891 tons imported into the United Kingdom. Therefore during the months when New Zealand shipments were heavy the Dominion was the major supply influence on the market. If a substantial quantity of this could be marketed through the one channel then substantially better prices could he obtained on a weak market, lie

mentioned a “fveak market” because on a strong market selling 'was not difficult and the demand covered the position, but on a weak-market the position could be improved by better marketing and controlled marketing. There was another factor in Hie position which required attention, and that was this —that figures allowed Australia and New Zealand sent to London 92 per cent, of the total imports of butter and cheese to the United Kingdom, whereas London was the distributing centre for only half the population of the United Kingdom. That was a position that could be improved, and what was lioped for was that Amalgamated Dairies would be able to concentrate on opening up the oulports on a steady policy and spreading the marketing of Now Zealand produce over a large portion of the population of Great Britain. Cheese producers might think that they were not closely concerned with the position, as the outlook for cheese was fairly good at the moment —belter than it was for butter. However, it could easily be shown they were concerned. . In Auckland Province. The Auckland province expected in the next ten years to increase the production by not less than 50,000 tons of butter. This meant doubling the present output. If the cheese position continued much more favourable than that of butter there would be a switch to cheese, which would have the effect of overdoing supplies and affecting price returns. There was therefore abundant need for cheese producers to concern themselves with orderly marketing. Apart from suplies, one of the main reasons for declining prices was the fact that most countries of the world had given up paper currency and returned to the gold standard. As a result they had declining values not only in food supplies hut in practically ‘every article. This gradual deflation had been accentuated by the recent financial collapse in New York. They had to recognise that they were facing declining markets. Accordingly, it was a matter of good business for New Zealand to endeavour to improve its methods of marketing dairy produce,