THE BACON INDUSTRY.

Franklin Times, Volume 9, Issue 652, 22 July 1921, Page 5

THE BACON INDUSTRY.

NEED FOR CO-OPERATION. BY PIG PRODUCERS. AN INTERESTING ADDRESS. The need for co-operation among bacon producers was emphasised by Mr S. G. Baron, manager of the New Zealand Co-op. Bacon and Meat Packing Company, ‘at a meeting held in the A. and P. Society’s office on Monday. There was only a fair attendance of those interested and Mr J. Clark, a director of the New Zealand Co-operative Dairy Company,' was voted to the chair and briefly j explained the objects of the meeting, after which he called on Mr Baron to deliver his address. Mr Baron, in che course of a somewhat lengthy and interesting discourse interestingly traced the ristory of the bacon industry in the North Island, mentioning the many difficulties that had beset it for many years. He pointed out the necessity of co-operation among the producers, which would prove the salvation of the industry, for what the pig raiser did not get in straight out payments, he got by way of bonus, thus getting all there was to be got. The business was recognised by all concerned as a very -difficult one. The New Zealand Co-operative Bacon Company handled about 60 per cent, of the baconers in the North Island. There had been a great deal of misapprehension in the minds of many that co-operative companies were of a spurious nature and it was only natural that farmers desired to know how this company stood. They had confronted a good deal of opposition to co-operative movements. „ There were a great number of “curly tails ’ in circulation. The enemies of co-operation had come forward in an endeavour to stab it in the back. Rightly applied there was no argument against co-operation. The aim of the company was to give the best results to the farmer. During the last six months they had been faced with violent fluctuations in the pig market. Farmers had received the fictitious price lid per lb for pigs. It was a great pity this price was ever mentioned.. The farmer was pushed into the market to pay big pi’ices for store pigs. This price was governed by the price of bacon.' The price had fallen suddenly and there was a great deal of anxiety. There should have been no ne'ecl to ask the Government to fix a minimum price of 7d per lb. During the last six months they had faced a big slump in farm products. The beef, mutton and lamb industries were slightly different to dairy and pork which industry had been held up. They were not producing sufficient for the demand. Half of the pigs in New Zealand were required fo'r local demands. The real price for pigs was round about 7d or 8d per lb, but lid was not a real price at all. Referring to 1916, the speaker .said the situation was then very serious. The whole storage capacity in New Zealand was utilised, and it looked as if they would have to enter upon the 1917 season with full stocks in hand. This was an ugly position for the farmer, but right into the hands of the proprietary concerns, who could have bought at about 3d or 4d pei - lb and hung on until the markets improved. However, the position was realised by Messrs Barugh and Banks and the late Mr Powdrell. M.P. for Patea, and these gentlemen put their heads together to see what could be done to relieve the congestion. On behalf of the producers they appealed to the Imperial Government and this resulted in 14,000 carcases being sent away. Thus t*he position was relieved. It would have suited the proprietary concerns for tne congestion to remain, and then they would have been in a position to buy at a low figuie and await an opportunity to export later on.

The bacon industry was very difficult to handle. In the first place the handling of a shrinking product always called for great attention and carefulness. The shrinkage problem was a hard one to contend with. In New Zealand 27M- per cent, was allowed between, the live and dead weight. This was .a fair average. In Denmark it was 25 per t cent, delivered to the factory, while in Canada it was similar. In answer to a question as to what was reckoned a fail shrinkage from the live '.’.eight to the dressed weight, a United States pig journal stated: "An average of about 25 per cent., but it ad depended on the weight and quality. It also depended on the ‘fill, which is the custom here of loading a pig up with food and water, the latter principally, just prior to weighing up to the buyer.” Then there was the difficulty of finance in regard to the business' and in that respect the business was almost of a unique nature. There was scarcely any product again, ts which tthe farmer could not get some form of advance in ordinary times, there was scarcely any product, sucl

as wool, butter, meat, etc., against which the London buyer would not advance, either in the store or immediately on shipment, but in regard to pork products, there being no export trade to cater for, no advance whatever could be obtained from the buyer, and in /many instances pork has to be held in store some months before realisation, which meant the locking up of a considerable amount of money, and that difficulty in con-' nection with the. business was fully recognised.

Looking back over the last 20 to 25 years 41 bacon companies had commenced in a small way but had gone under through lack of capital.

Reverting to conditions in *1916, Mr Baron said the different interests got together with the object of forming a co-operative jconcern. At that time the Frankton Company had £7OOO paid up capital and £9OOO subscribed, while Taranaki had £7OOO paid and £II,OOO subscribed. For these to carry on a joint and several guarantee at the bank was forthcoming for £30,000 and £25,000 respectively. Messrs Drmock and Co had £70,000 of paid up capital and as they had the lion’s share this placed a difficulty in the way of merging. It would have been an easy undertaking to have merged three proprietary concerns into one but here were two contending elements diametrically opposed to each other. However Messrs Dimock and Co. agreed to dispose of the whole concern to the CG-operation, but the farmers were met with the difficulty of finding £70,000 to satisfy the shareholders in Dimock-and Co,, who possessed property‘and capital to tiffs extent, Dimock ahd Co,’s shareholders agreed to accept shares in the amalgamation sc a co-operative company was formed. Mr Baron said it was just at this point that their opponents drew a red herring across the scent, pointing out that the concern was not of a co-operative nature, because of its outside capital. Provision was then made for a board of directors consisting of ten, three of whom would represent Taranaki, to be voted for by the Taranaki farmers only; three to represent Waikato, to be voted for by Waikato farmers; and four to represent the holders of the £70,000 worth of capital held by the Dimock shareholders.- These latter shareholders next required to know how they would get on for interest on their money, as they had surrendered the control to the farmers. It was pointed out that the memorandum of the company provided for the distribution of profits, the first cal! being 6 per cent, dividend which could be to 7 or i 8 per cent., but not before the shareholding suppliers of stock had received a bonus of 1 or 2 per cent, n stock supplied. Once the “divvy” reached 8 per cent, it must stop there. There was no limitation of what amount could be paid as a bonus for pigs supplied. The position would never be .satisfactory until they got on to lines of the N.Z. Co-operative Dairy Company, when farmers could receive a steady progress payment throughout the year for articles supplied, supplemented by bonuses. During last year £21,000 had beeh paid out in bonuses, while the farmers had only put in £22.000.' Within two years they had received back all they had put in except £IOOO. Since the £22,000 was paid up the share capital paid up had increased to £47,00 and it was on account of the financial stringency

that efforts were being made to add to the capital of the company and thus place it is a stable position financially They commenced a campaign about two months ago and had raiased about £30,000, of which £17,000 was from the Waikato. £12,000 in Taranaki, £I2OO in Manawatu, but in the latter district 26 dairy companies were considering the matter of taking shares Thirty-eight dairy companies in the North Island had taken shares totalling £26,000. They now had over 4800 shareholders as well as a large number of producers who were not shareholders. This alone should be sufficient to convince the most sceptical that it was not a spurious company. Provision had been made for dairy companies to enter on the basis on one share to one ton of cheese and two shares for each ton of butter produced. The minimum number of shares was 10. The position faced during the last, six months could have been minimised if the company could have been run on similar iines to the Dairy Company, by steady progress payments, supplemented by bonuses at the end of the season. If they had had sufficient capital they could have paid 7d per lb and possibly Sd throughout the season. They had been approached from north and south and asked to pay 5d per 'b but the company refused, and was told that a fight would take place. The farmer only had to stop and reflect on what would be the position without the presence of the company. , Last year they would have lost about Id per lb on about 80,000 pigs and this meant a great loss to the farming community. If the company had been

financial it could have saved the farmers thousands of pounds. He appealed to the farmers to assist the company by taking up a small number of shares. They were slowly getting into a desirable position. Progress had been retarded for the want of working capital. The N.Z. Dairy Company had recommended it to its suppliers as a, company of repute and well worthy of support.

In conclusion Mr Baron said that recently that trenchant critic “Cambist” had said that the company’s value to the farmer was at least £40,000 to £50,000.

Mr J. Clark said the directors of the Dairy Company were warmly in favour of the present company. He urged upon all farmers the need of supporting it by taking a few shares. The industry was in danger of going back to the proprietary concern if the farmers did not take a greater interest in it than hitherto. He appealed to them to support tion in the true sense of the word. In the past the company had been hampered in its operations through insufficient capital. They would be throttled if control reverted to the private concerns.

After an interesting “chat” with, these present on the subject, the meeting terminated with votes of thanks to the chair and to Mr Baron for his interesting address.