DAIRYING INDUSTRY.

Hauraki Plains Gazette, Volume XXXIII, Issue 4416, 19 May 1922, Page 2

DAIRYING INDUSTRY.

CONFERENCE AT PAEROA.

INTERESTING ADDRESS.

The New Zeafland Dairy Company has decided upon an important change of policy. The business of the Company is increasing at a rapid rate, and the directors have felt the difficulty more and more of; keeping personally in touch with the suppliers They have, therefore, decided to convene quarterly conferences of the suppliers’ committees at suitable centres and a start was made ■this week, when the committees in the Paeroa district were called together to hear an address from Mr A. J. Sinclair, assistant general manager of the Company. Some the information was of a confidential nature, and not for publication, as the Company has decided that all inside information should- be supplied. The following committees were represented :

Hikutaia (cheese), Messrs Hansen and Bailey; Matatoki, Messrs Frisken, Clark-, and Quipn; Waikino, Messrs Grace and Crimmins; Netherton (cheese), Messrs Death; and Reid: Netherton (cream), Messrs Tayloi, Heappy, and Barton; Wharepoa, Messrs Harris and Parker; Hikutaia (cream). Messrs Ellis and Morrison ; A wait!, Messrs Harold and Crosby Paeroa, Messrs Hubbard, Jolihstone, and Vuglar ; Tirohia, Mr Vea.le. Messrs Geo. Buchanan, F. W. Walters, F. C. Hansen (directors representing Thames Valley ward) were in attendance, together with Mr W. H. Blakeway, branch secretary at Paerca. APPROXIMATE OUTPUT. Mr A. J. Sinclair, assistant general manager, addressed the meeting and gave an outline of the progress made by the Company during the past year. He st.ated that when the books were closed at the end of this month, the approximate output of the Company's various branches would be as follows:. Butter, 16,000 tons; cheese, * 5000 tonscasehir''so()w < fons~; skim milk -powder, 1900 tons. The number of. members on tne Company’s books to-day came to 7568, and that represented an increase of about 1200 compared with the previous year. CAPACITY AND PRICES. Mr Sinclair stated that the butter branch had shown an enormous increase compared with last season, when the output had been 12,600 tons. The Company had made that output under the greatest difficulties, because the capacity of. the factories at that time was only 11,000 tons, and it was by working overtime that they had been able to get through. This season they had no difficulty whatever in coping with, the 16,000 tons, because of the extensive additions that had been made to the butter plants. This represented an increase in the capacity in twelve months of about 50 per cent., and it had cost the Company £67,538 to make these additions. Unfortunately, he stated, that although the output had been increased so much, the value of the whale turnover of the Company would be only three and a half million pounds sterling, compared with four and a, half million pounds for a much spialler output in the previous year. This was accounted for by the slump on the butter market at Home, and helped, to explain the reason why out of the 7568 suppliers, approximately 7'500 were hard up at the moment. (Laughter.) A list of the Company’s assets had been made out as at March 31, and these amounted to £865,585. When the usual ca'lls on shares were made at the end of the present season ths Company would have called up share capital to the value of approximately £500,000. He pointed out that a company got into a strong financial position when the amount, of paidlup capital equalled the 'amount which had been invested in land', buildings, plant, and machinery, and he felt sure that when the suppliers knew the actual position they woulld be convinced that the Company had not asked for shareholders to contribute too much; capital.

TALENTS PROPERLY EMPLOYED. When questions were invited Mr Bailey asked what it cost to send Mr Goodfellow Home, and why he did not go round and - address the suppliers personally. Mr Buchanan explained that a full statement of the cost o’. Mr Gt.odfellow’s trip .had not yet been submitted, but 'full particulars would be available at a later date. He stressed the point .that the improvements made by Mr Goodfellow had' been of enormous service, and this remark was greeted by applause. Mr Sinclair also mentioned, that there were close on 200 suppliers’ meetings to be held in the short space of three months, and the directors considered that Mr Goodfellow was better employed in directing the policy and giving close attention to the finances of the Company. METHODS OF SALE.

Mr Harris (Wharepoa) pointed out that the directors had always been strongly opposed to selling the Company’s outputs, although it appeared from the statement made by Mr Sinclair that the consignment business on Tooley Street was “rotten.” Mr Hansen replied -that Mr Sinclair s statement did not convey that at all. It merely showed that certain practices obtaining in Tooley Street could be improved upon. Mr Sinclair also replied, and stated that it was essential that the existing channels of distribution in Tooley Street should be adhered to, but it was absolutely necessary that certain checks should be established. Many of the Tooley Street merchants had rendered yeoman service to the producers in this country*, and it would cost enormous sums of- money to go past them. MR. WRIGHT’S POSITION. Mr Harris asked whether Mr J. BWright had accepted the offer of London manager to the Company on the understanding that he would get a big job in the pool. Mr Buchanan replied that no understanding of that nature had been entered into, although no doubt Mr Wright would have a prominent position. NO DEFINITE OFFER OF PRICE. Mr Bailey asked why the Company

had turned down a definite offer of in the beginning of this year. Mr Sinclair explained that no definite offer had been received by the Company, and dealt with, the circular sent out to the cheese committees in August last. OTHER CO-OPERATIVES. Mr Vuglar asked in connection witu the fight on the local market,- why the directors had not approached the Opotiki Dairy Co. directors direct and ignored the middlemen. Mr Buchanan replied, giving some further information on this point, and showed that the Company was compelled to break away from the Distributors’ Committee. He emphasised the fact already mentioned by Mr Sinclair that the Company was not out to fight any co operative companies, but that on. the contrary they were quite prepared to pool the produce on the local market and obtain a flat return to aL the factories. THE REASONS WHY. Mr Vuglar asked why they, were only paying out Is advance payment on butter, when they were drawing Is 2d from the merchants. Mr Sinclair explained the relationship that existed .between the progress payments made by the merchants and the monthly advance payment mad i by the Dairy Company to the suppliers for butter-fat. He again refer,-, red to the heavy overpayments in the early part of the season, and showed the reason for the Company acting on a conservative basis at the present time. Mr Hanlen asked why cheese suppliers were charged 10%d per lb for cheese that they bought from the Company. With a ratio of 2.5 neclaimed this as equal to 2s 6d pec lb. Mr Sinclair pointed out that the ratio of 2.5 was on .the butter (fat, and, not on the manufactured article, and that as it cost last season about 4d per lb on the cheese for manufacture and marketing, this would be equal to lOrl. per lb butter-fat on the ratio mentioned by Mr Hanlen. Mr Sin-clajy-aisb “pointed out that there was no necessary relation between the price charged to the suppliers each month for their cheese and the amoun.t of the advance payment for butteiyfat. He quoted the position that had obtained in December in connection with butter when the advance payment to the suppliers was B%d and the price 'of butter to the suppliers had been Is Bd. The Company charged the same price .to suppliers for butter a.nd cheese as was charged to the storekeepers. OVER TO BUTTER. Mr Harris stated that according to the present price it (looked as if cheese factories should switch oyer and that the directors should give the local’ committees some fuller information on this matter. Mr Buchanan that as local director for this district lie had got in touch with Mr Goodfellow, who had cabled Home to our London manager for advice. Mr Wright had cabled out i.i reply that it. was advisable to switch over, and the committees would be communicated with immediately. TURNIP FEEDING. Mr Ellis complained with regard to the quality of butter supplied to the suppliers and put up in Anchor brand wrappers. His opinion was that turnip feeding should be stopped altogether. Mr Sinclair replied hr stating that the feeling amongst the directors was that it was their dutyfirst of all to find out-whether a substitute could not be found, and he detailed experiments that were being carried out at Otorohanga factory. He asked the committees to remember that any scheme prohibiting the feeding of turnips to cows was tantamount to asking the suppliers (in some districts) to dry off their cows in February. PRICES—LUCID ANALYSIS. The committees were then given the fullest details concerning the ’prices realised during the season; especially on the early shipments on which overpayments had been made. The reason for the deduction of. 4%d per lb butter-fat from last year’s final payment was made clear, and it was also mentioned that overpayments had been made to the suppliers in the early part of the present season, because butter on which the Company had advanced 2s per lb butter-fat had realised only about ll%d per Tb in London during the slump period. Fortunately, however, said Mr Sinclair, there was another side to the position', because the Company had been drawing only 9d and 9*4d for some considerable time on its produce, and this butter had been realising somewhere about Is sd. It would be seme time yet before these surpluses were available, and Mr Sinclair, made it clean that right up to date the Company had paid put every penny it had received ; but when the surpluses were available he stated the directors had in mind to make an adjustment on the early supply. When this adjustment was taking place the directors intended to pay some premium on butter-fat supplied between June 1 and August 31, because this helped considerably to reduce other overhead expenses at the factories, and the directors were put to encourage early supply as far as possible. The premium for the past season would be 2d per lb between June 1 and August 31. Summing up the position for the season, Mr Sinclair said it looked as if it would be a “toss-up” whether butter or cheese would pome out on top, and his estimate was that when everything was cleaned up, and providing the rest of .the output was sold at the prices which had been ruling during the past few weeks, the average payment per lb of butterfat for the whole season would be about Is 3d or Is 4d. COAL AND TIMBER Mr Sinclair" then dealt fully with the .cc-al and timber branches of the business. He mentioned that the total expenditure on the Company’s coalfield up to date was £38,047. It would probably take another £13,000 befoic the coalfield was fully developr ed. The Company used 70,000 tons of coal per annum, and the Company was being charged 28s per ton by the present coal company for steam coal in trucks at the mine. Careful estimates had been prepared showing that the Dairy Company’s own mine could produce coal at 8s per ton in

the truck at the coal mine, and Mr Sinclair stated, that the directors were quite confident the coalfield wou'd return about 100 per cent, per annum on the amount invested. In fact he believed it was as good, a proposition as dairy farming. (Laughter.) ’ BOXES AND CRATES.

In connection with the box factory this would cost altogether £32,000. The company had been supplying its own boxes and cheese crates for some time past, and the saving on this item compared with the price paid last year .would approximate £25,000. TRADING AND-ADVANCES. Mr Sinclair then gave full details concerning the position In the Auckland butter market, shewing the steps that had teen necessary in order to conserve the company’s interests at the time when the local market comes to vital importance, and also intimated that several changes of policy were being effected.. The company’s trading branch, for instance, would have its activities seriously curtailed, and only big bulk lines would be handled. The directors also decided that owing to the financial stringency and the~necess!ty of curt.ailipg expenditure in every possible direction no ■ money would be advanced this winter or during spring for the purchase of cows. This, of course, did not apply to the small Finapce Company operating in the Thames Valley district, which was independent of the company. RETRENCHMENT. The assistant manager said that tie had found a general opinion existing among the suppliers that if they had to enforce retrenchment and exercise economy during the low payments, they looked to the directors or the management to follow the.same policy in connection with the company’s business. Details were submitted lu this direction, shewing that since the slump in JDe.cemben- approx’mately■loo mon'Kad been dismissed, and the saving in wages came .to about £l6OO per week. This drastic economy had been effected partly by closing down some of the company’s branches plmost entirely, and dismissing labour as the output in the various factories eased off. Details were estimated concerning- the head office.. He asked the committees to bear in mind that the company’s total output if worked out on a butterfat basis made it equal to about 45 of the smaller dairy companies operating in the Manawatu district. The only sure basis of comparison was the butterfat basis, and on this standard the overhead or administrative .charges of the company were the lowest in New Zealand. HIGH QUALITY, HIGH PRICE. Mr Sinclair stated that one of the most gratifying features of the business had been the great improvement in the quality of the butter turned out. The average grade of all the butter sent into store for export to March 31 was 91.54. Some parcels of butter from the Paeroa factory had got 94 and 95 points, and he congratulated the suppliers in this part of the Company’s territory on the exceptionally high quality of the cream sent in. A cable had been received by the head office on the previous day stating, that the N.Z. Dairy Co.’s superfine brand was bringing 4s more than Danish butter on the Home market. (Applause.) The quality of the cheese, said Mr Sinclair, was not so high. The average grade up to March 31 being 89.79. Mr Goodfellow had returned from his trip to London, and said while we had nothing to Team at the manufacturing end of the business concerning butter, steps would have to be taken to improve the quality of the cheese. A suggestion had been made at a recent conference that the grading of milk should be adopted at the. cheese factories on the same lines as grading, of cream at the butter factories, but nothing definite had yet been done. MARKETING AGREEMENT.

Full details were then submitted concerning the new marketing agreement which had been arranged by the managing director while in London. This agreement ensured that the Company's produce wafe being marketed in many respects on the same lines as Danish butter. A minimum price was fixed by the Company's manager, and below this price no agent handling the Company’s produce could sell; Mr Sinda-i l, a^so went fully into the other clauses of the new marketing agreement, and instanced the case where on one shipment of butter the Company had saved £15,000. It was necessary, however, that the whole of. N.Z. produce should be under one control, because the N.Z. Dairy Company handled only one-third of the total export 'at the present time. Details were then submitted concerning the proposed pool for New Zealand butter and cheese. PURCHASE OF TIMBER. Mr Grace brought up a question with regard to the buying of timber. -He thought it would be more economical to buy the timber in the log, because the amount offered by the timber companies for kahikatea was only six or seven shillings. Mr Hansen replied by pointing out that if the farmers sent a log to some of the millfs to cut up they charged them 12s a hundred feet. The committees agreed that the Company’s policy of buying timber in trucks on the railway -was more satisfactory. ELECTRICITY. - Mr Frisken asked what arrangements had been made in connection with the installation of electric light in tihe homes at the factory. Mr Buchanan explained that this matter was being brought before the suppliers to the factories affected, and as it was a question of additional capita’ expenditure, the suppliers in the districts would be asked whether they approved. Mr Death asked whether the directors had considered the cost of running the cheese factories by electricity. Mr Hansen replied that the question of installing electrical improvements in the cheese factories was being gone into by Mr Kirkman with the Power Boards.

Mr Grace brought up the question of the address delivered by Mr Sinclair, and. considered it should be sent out in printed form to the' committees so that they could have all the figures and statistics and other

information available. Mr Walters said that this had also been referred to at the Waihoii conference, an.i probably something o” the kind would be done. -. . COPING WITH SUPPLY. : Mr Death asked whether, if butter was going to be a big price in England* next year, the directors had considered taking over the cheese suppliers into the butter-branch. He was afraid that the Company would not be able to cope with all the supply offering in this event. Mr Buchanan stated that so far nothing had been discussed on these lines, but if it was necessary he had no doubt that aL teraticns would be made at Kopi which would help to overcome the difficulty. TRADING BRANCH. Mr Harris desired to know whether the trading branch (which had had. a large turnover of over £200,0’00 during the season) was under, the supervisor. of the directors apart from the paid servants of the Company. Mr Hansen replied that a committee of directors met monthly in Auckland and reported to the full Board, RAILWAY CREAM SHELTERS. ' Mr Ellis brought forward the question of cream grading and said that one of the greatest complaints of the suppliers in his district was that the cream was allowed to stand in the station yard in the hot sun for several hours at a time. Mr Sinclair promised to approach the Railway Department again, to see whether it was not possible to get suitable shelters erected. The usual votes of thanks terminated the meeting, about 3.30 in the afternoon, the chairman remarking that he considered the information submitted would be helpful to the CoSmittee.