FLOUR INDUSTRY.

Press, Volume LX, Issue 18222, 5 November 1924, Page 11

FLOUR INDUSTRY.

v . DISTRIBUTION OF OUTPUT. BASIS OF THE SCHEME. irszss AssociiTtoK teijeg»im.) DUNEDIN, November 4. In tho flourmilling case, William George McDonald said that ho was Wheat Controller under the Government from January Ist, 191S, to October 31st, lf>22. H© had been chairman of the Board of Trade from March, 1916, and was still chairman while being Wheat Controller. In October, IJV22, he .became managing director of Distributors, Ltd., holding office till October last. In his opinion, Government wheat ccntrol saved the industry from destruction. Control was established to deal with actual shortages and anticipated shortage. If flour, bran, and pollard were not to reach almost famine level, at some stages, it was necessary to establish a control system, in b}?J.~ tho millers indulged in liberal purchases, thinking that t-ney could increase their business, forgetful that they could uot permanently increase flour consumption by this method. On June ittth ho was at a meeting addressed by Mr Myers. Nothing was said at this meeting about his futuro position. Subsequently, he saw tho' rainuto of tho resolution passed at a meeting of tho millers' committee offering him the position of managing director of distributors, Ltd., at £2OOO a year. If he had known about this at the time, he would have refused to accept the positic-n, because of the terms of the appointment, nor did he subsequently accept these terms. His attitudo to his Ministerial heads in the matter had been quite candid. Tho possibility of his joining tho miners had been discussed openly. Ho accepted tho appointment on September 26th, and took office on November Ist. He bad absolutely refused to disclose to tho millers the outputs of each individual mill under tho control scheme, and had quarrelled with them, because of this. There was no limitation of output under the distributors' scheme. They had sold all the flour that.it was possible to sell. The basis of the scheme was that if the millers were in open competition, the prices paid would kill the industry.. It was thought better that each mill should get a proportion of tho trade at a stabilised price. There was no fixed quantity in the agreement,, which allowed for any low variation in tho demand which might bo expected to arise for any particular brand. Tho proportion of the manufactured articlo was fixed as nearly as possible on the proportion of wheat each mill received under the Government scheme. Distributors, Ltd., endeavoured to provide as far as possible that tho flour of each mill should go to its old customers. Many agents had arrangements covering purchases of certain brands before they became agents for Distributors, Ltd. In some cases these were binding contracts for seven years. , Witness said Distributors, Ltd.. were solicitous in regard to the quality of the flour, and made every effort to "turn out an article of good quality. A copy of the agreement was sent to the Board *>f Trade about November, 1922. before these proceedings were com■nenced witness had not received any ! ibjection to the legality or expediency ! of the agreement. The brands produced by one mill varied in quality. This was common to every mill in New Zealand, and no mill wouid day by day produco flour ,of unvarying quality. Tho per capita consumption of flour in New Zealand was approximately onetenth of a ton per annum, and if ono knew tho population of a particular town or district, he could make a forecast of tho consumption of flour in that locality in any given monthWitness proceeded to explain the system of allocation adopted in regard to flour. Allocations were prepared early in one month for distribution in' the following" month. Distributors, Ltd., sent to the agents advice regarding the flour to be sold'in any month. That advice gave particulars as to quantity and brand. Thero was almost as much jealousy between the agents as there was between the millers to keep their own trade. The millers were notified of .the quantity of flour'they would! bo required to manufacture in any particular month, and. the agents were notified what quantity would, be sent

to them. The agents were apprised early in one-month regarding tho supplies to be forwarded to them in the following month. Trade in one month had fluctuated between 744G tons and 8935 tons, the mean being 8190 tons. The millers could be compelled under the agreement to supply 5935 tons per month, but witness did not guarantee to sell any particular quantity. If the demand amounted to 7000 tons, witness guaranteed to sell each miller's proportion of that quantity. The scheme had worked better than any scheme he had undertaken for the Government. The complaints he had received were almost ncgligiblo as compared with those received in rogard to the sugar scheme. The complaints were mostly from Distributors Ltd.'s agent?. The ground was not ready for witness's operations until March, 1923. because up till then thoy were engaged in carrying out contracts provided for under tho agency agreements which had been undertaken by tho millers. Witness first, interviewed the bakers at their conference iu Wanganui in January, 1923. On April 26th, 1923, he had a conference with (he Bakers' Union in Dunedin, and emphasised the necessity for sending in orders for fiour in good time. The head office of Distributors. Ltd.. received very few complaints in comparison with tho volume of business done. Witness attributed that to his efforts to work in with the bakers' unions. Broadly speaking, after June, 1923, there were no complaints, and there would not, under normal conditions, bo any complaints in regard to specific brands if bakers would notify their requirements about tho first week in tho mouth. The Court adjourned . till 10 a.m. to-morrow.