PRODUCERS THEIR OWN MERCHANTS

Korero (AEWS), Volume 2, Issue 23, 15 January 1945, Page 15

PRODUCERS THEIR OWN MERCHANTS

We recently asked a correspondent to write, for the particular benefit of servicemen overseas, an account of developments in marketing in New Zealand, developments of special importance to farmers. Our aim has been to tell you simply what has been done. But from the facts which this article sets out group leaders may be able to work up material for a useful discussion. Reference to C.A.B. No. 14, “ Producer and Consumer,” may be helpful.

Farmers and housewives everywhere look with suspicion on the price difference that exists between what the one pays for food products and what the other has received for growing them. Therefore efforts are every now and then made from one end or the other to narrow this gap—“ to cut out the middleman.” When consumers make them, the result is usually a co-operative retail shop. When farmers make them, the result is a producers’ wholesale organization. In New Zealand we have never had consumers’ co-operatives on anything like the huge scale in Britain and Scandinavia. But during the “ twenties ” the greater part of our exports came under the control of producers’ Marketing Boards. Some of these confined themselves to general welfare work for their industries. ' However, the Honey and Fruit Export Boards very effectively made

themselves our sole exporters of honey and apples. But when the Dairy Board attempted to exercise similar powers, it failed, and the move for farmers to extend co-operative processing—he., dairy factories—into co-opera-tive marketing came to a halt. In 1936 a Government came into office that was pledged to provide a guaranteed price for dairy produce. To implement this promise it set up a Marketing Department to do the bulk export selling which the Dairy Board had attempted. Then, because the same price had to be guaranteed for butter sold to be eaten inside New Zealand as for that going abroad, it had to create . an Internal Division of this Department. Once the Division was in operation, the producers of eggs, honey, potatoes, onions, raspberries, hops, lemons, and Cook Island oranges all sought its aid to improve their

conditions by securing more orderly or less expensive marketing. Later, when the war shipping shortage prevented us from sending apples abroad, the orchardists handed their Fruit Board organization

over to the Internal Marketing Division, feeling unable themselves to tackle the enormous task of selling our export crop locally at a payable figure. At the same time the disposal of our other main crops came under Government control for war reasons. In short, by 1943 most New Zealand produce was being marketed collectivelybut now by Government, not by producers’, organizations. Since then however, a third stage in this development has begun—Govern-ment-Producer Marketing. One form this has taken is Marketing Councils, composed half of producers’ representatives and half of Government appointees, including consumer representatives, and using as machinery the Marketing Department organization, staff, and experience. The first to form was the Fruit Marketing Council, which now directs the sale of all apples and pears (except direct producer-consumer transactions) both internally and for export. A similar Honey Marketing Council is under way, and a Commercial Gardeners’ Council has been proposed. Councils differ from the old Producer Boards not merely in being ProducerGovernment partnerships, but in controlling (or at least having power to control) all wholesaling in their produce i.e., both overseas and local. Government and growers combine to be their own middleman. Whether farmers are to export their own meat and wool—either individually as hitherto or by some collective arrangementwill have to be decided when the emergency period ends. No serious suggestion has yet been made, however, that

Government purchase of dairy produce, our leading export, should be abolished. However, the Government does not buy all our dairy produce. The 20 per cent, of it that is consumed in New Zealand is sold by the factories that make it either to wholesale distributors or else direct to retailers. Formerly these made their own terms and there was much waste and confusion. But since 1937 distributors must be licensed by the Internal Marketing Division. Their profit is limited to |d. on each pound of butter. And if their service to the retailers of their area is unsatisfactory, their right to trade is transferred to some one else. The Internal Marketing Division itself does not normally distribute butter. It merely keeps farmers’ returns from the local sales equal to what they would get by selling for export, and sees that no district goes short. Hence the way has been open for dairy factories to join into regional groups to become their own wholesalers.

Recently this has been happening. In six —Gisborne, Hawke’s Bay, Manawatu, Wanganui, Christchurch, and Westland— the co-operative dairy factories have formed (with the Pig Marketing Association) co-operative distributing companies, have applied to the Division for licenses, and have been given the sole right to wholesale butter in their respective areas. Thus in Hawke’s Bay for example, the pioneer " Hawke’s Bay Co-operative Farms Products, Ltd,” whose shares are held by the Woodville, Te Rehunga, Norsewood, Hastings, and Wairoa dairy companies and the P.M.A., sells to local retailers butter and bacon from all these concerns, and no one else

may wholesale any butter from any source anywhere in the province. Thus again the Internal Marketing system, which looked at first as though it were going to end producer selling, has

in practice proved the means of making it possible in a form that safeguards the interests of both producers and consumers —the former by monopoly, the latter by Government oversight and fixed profit margins. A third development in co-operative selling has grown up inside the wartime organization that has been necessary to spread the supply of eggs. For it has not been allowable—to prevent inflation—to raise city egg prices sufficient to offset the increased country demand wnich shortage of alternative foods has caused ; and therefore a system of “ egg catchment areas,” draining into the cities and their “ reservoirs ” for shipping, has had to be built.

The collecting agency in each catchment — i.e., in each main egg producing district—has been its Central Egg Floor. Some of these are proprietory concerns that have been given the monopoly of wholesaling in their district “ for the emergency period ” in order to make possible their service of sending all except a local quota or . ration to more needy areas. But six of the eleven now operating are co-operatively constituted by the poultry farmers in the district (some being linked with the local Dairy Distributor Co-operative) and will make the producer his own middleman when the.war is over.