[ENCLOSURE.]

Hokitika Guardian, 4 August 1926, Page 4

[ENCLOSURE.]

The HOll. 0. Hawken. Minister of Agriculutre, Wellington. Sir, —I am in receipt of your letter of June 26th enclosing copy of a letter from Air John Murdoch of Ross in which lie deals with his consignment charges and makes certain statements reflecting 011 the Board and on the N.Z. Co-op. Honey Producers’ Association. My letter to you of April 28th had a copy of a letter to Air Murdoch attached giving a general review of the whole position. It will not, therefore, ho necessary to go over this ground again, so I will confine my remarks to matters more particularly dealt within his letter to you of Alay 12th. The result of his consignment to the Board’s agents given by Air Murdoch is itself a sufficient reply to his statements, that is, after an error in his figures is rectified. This error is typical of the general attitude taken up by Afr Murdoch in that it entirely misrepresents the position either intentionally or otherwise. Afr Murdoch takes iiis total costs as he makes them of £95 3s lOd, and deducts those from his returns of £lll 8s Bd. This £lll 18s Bd, however, is a nett return, the export charges of £45 6s 4d having already been deducted. To get his net earnings only his production of £49 17s 6d should he deducted which leaves him £62 Is 2d clear.

Now it is accepted in New Zealand that a 100 colony apiary can he established for £3OO. Seventy colonies therefore represent a capital investment of £2lO. and a return of £62 Is 2d for this outlay is 29} per cent, on the capital invested, and this with a very /average crop. Air Murdoch is, indeed, very fortunate. This return should he further increased by a reduction in his allowance for tins and cases which is unnecessarily high, and by the difference between railings to Lyttelton and Grey mouth, Air Murdoch's consignment having missed the Groymonth grading.

I must take very strong exception to Air Murdoch’s remarks about the N.Z. Co-operative Honey Producers’ Association. with which I have boon connected since its inception. So far as the H.P.A. engineered control that means only that the H.P.A. represents the Honey Producers of the Dominion as a whole. As for the Association not being a financial success, it has on the contrary Leon the financial saviour of the beekeepers of the Dominion. It built up the export business and its financial arrangements have enabled the honey industry to make considerable progress.

Throughout the difficult war period when honey was excluded from shipment it hold the whole of the Dominion’s honey in store and met the Producers’ requirements hv prompt advances. After the war when slump conditions prevailed, this Association was able to go on the English market, start a fresh organisation and by tlicir selling and advertising efforts there, placed New Zealand honey in the premier position in the United Kingdom. And this although the Association had at that time only a paid-up capital of £O.IO-5.

The organisation of this market cost money. The paid up capital of the Association could not provide this. The only alternative, therefore, was to take the whole of it out of sales or incur a liability (pledge tfio Association’s capital) for the amount. The first course would have been unfair and was in any case impracticable, as by doing such the returns would have been eliminated and the industry killed. The course pursued has been justified in that we have created a market for our honey at a price which no other exporting country is getting. This liability is certainly a handicap to the Association with its small capital hut it is the cost

of tlie benefits it lias secured for the industry, not the result of incompetent management as suggested by Afr Murdoch. The honey producers of New Zealand are thy only honey producers in the world who have received and arc receiving prompt advances on tlicir honey as soon as it is ready for export. Those advances have always been at or very near tbo marketable value of their honey. The amounts advanced have totalled up to £40,000 a year while the capital provided by them is. at the present time, only £9.000.

The Directors having their livelihood in the honey business have put tlicir personal guarantee behind tlie advances to the producers. I can say for the Association that it has no object. in further continuing its operations if another body is ready to take over and carry on the work it has so successfully commenced, and the Directors would be only too pleased to be rid of their responsibilities and the restrictions to their own finances due to the guarantees given by them. Any banding over, however, should relieve the Association of tbo remaining liability of its initial expenditure in the United Kingdom. | Air Murdoch, refers to a contract he had to supply Alessrs Alounstephen, Speed and Co. when control took effect and which the Board would not recognise. The evidence of this contract was principally contained in Air Alurdoch’s own statements. AVhnt little documentary evidence he had was sub- - mitted to the Board’s solicitors, ATessrs Stanton, Johnstone and Spence. Auckland, and they advised that his arrangements did not constitute a contract. The Board, therefore, under the Act,‘had no discretion in the matter.

With reference to advertising, two things were made very plain when the writer spoke on control before the act was promoted in Air Arnrdocli’s own district as well as elsewhere,. and that was that advertising should he a general charge, and that distribution should he confined to one agent. With reference to Air Murdoch's remarks dealing with the Government representative on the Hoard, these will be referred to Air Clark himself. I will say this, however, that- it- would he very difficult to get a Representative who has a knowledge of honey and what is required in its successful marketing combined with the necessary business knowledge, outside the ranks of the Association’s members. This is not overlooking Air Murdoch, who is a member of the Association. Air Arurdoch says: “If an exporter can show that he can place his honey on the London market costing an average of 9s lOd per case and the Control Board take £1 Os 7d per case I consider that you would be quite justified in giving, an exporter a permit to do so.” but as it is shown that Air Arurdoch can make 29) per cent on his apiary business under the system safeguarded by the Board why break up that system. With regard to honey being men-

tioned in the High Commissioner’s mnrkat reports, the Commissioner, of course,/ does not take his instructions from the Honey Control Board. In any ease the only quotations he could give would he the prices which the Board’s agents make. And these prices would not be informative. White honey, for instance, could be quoted at from 60s to 80s per cwt as while much of our white honey is our highest quality, some of it is only fit for manufacturing and hard to sell even for that purpose. Mr Murdoch notes his consignment as “ White Honey.” The price he obtained of 5.33 d per lb, is a very good price for our highst quality honey and it is not likely that his came into that class. In conclusion, the question is not that Mr Murdoch and two or three other shippers are now paying for advertising when they did not pay for it previously. That they are doing so is admitted. The question is whether by our organisation and expenditure we have built up a better market for our honey than could otherwise be obtained. If we have, then the duty of the Board is to safeguard that market by protecting the organisation and Mr Murdoch ns well as paying his share of the advertising costs, should also he paying for the liquidations of the initial costs and the expenses of maintaining that organisation, which he would do, under absolute control. The reason the Board did not take absolute control was, that by doing so it would .be duplicating the work of the Association hut it is strongly of the opinion that some modus operandi should be arrived at so that all charges could he equitably distributed. M,r Murdoch joined the Honey Producers’ Association in 1922 and marketed his honey through the Association that year. This was a period •when there was absolutely no buyers «m tint market for New Zealand honey and the Association was the only outlet. By 1923, the advertising of New Zealand honey commenced in 1921, had brought it into some demand in London and outside buyers were again operating and Mr Murdoch did not again ship through the Association. I am, etc., J. RENTOUL. i Chairman. Auckland, July 29th. 1926.