N.Z. DAIRY ASSOCIATION

Pukekohe & Waiuku Times, Volume 7, Issue 388, 2 July 1918, Page 2

N.Z. DAIRY ASSOCIATION

And Dried Milk

RIVAL SCHEME CRITICISED

A meeting of dairy suppliers, convened l.y the N.Z. Dairy Association in conjunction with the Franklin Sub-Provincial area of the Farmers' Union, was held last Friday evening in the Premier TTall, Pukekohe, for the purpose of discussing the dried milk industry. The attendance numbered about 60. Mr W. C. Motion, a Director of the Association, presided and was supported on the platform by Messrs W. Y. Kirkmau (Manager of the Pukekohe Dairy factory), H. W. Dent (Secretary to the Association), C. J. Parlane (the Association's Manager at Franktonj, and M. Shaw (local representative). Mr Motion, in opening the proceedings, trusted that those present would consider the matter in all its bearings and not from any biassed point of view. THE ASSOCIATION DEI-ENDED Mr Kirkman, having briefly al luded to the regretted absence of Mr Pacey, the Association's Managing Director, mentioned that the meeting had been called at the request of Mr Oldfield, the organiser of the Franklin Sub-Provincial area of the Farmers' Union, so that the general aspect of a dried milk proposal could be put before the suppliers and others interested in the question. Before a factory could be erected, he said, it was necessary to secure a guarantee of supply from 3000 cows and to meet the capital expenditure for the erection of a factory a deduction of £d on each pound of butterfat was made from each supplier. The term of supply in respect of the Matamata »nd Matangi factories was for 4 and 5 years and beyond that period the supplier was not bound to the Association. He felt sure that factories erected in those districts had been a decided advantage to the suppliers there The system adopted was to make a standardised article, named Glaxo, which was packed in tins hermetically sealed and it was then ready for transport. The whole of the Association's output was sold uader guarantee to Messrs Nathan and Co Instead of the full cream powder as manufactured by the Association it had been suggested, said Mr Kirkman, that a skim milk powder should be produced and put on the market, a statement having been made that ?>a 6d lb butterfat could be secured for it. Mr Kirkman pointed out that the Association at both the places mentioned had the necessary plant and equipment to manufacture the skim milk powder if necessary, but it was not deemed wise to do so. If, however, the local suppliers desired to manufacture such an article the Association would be quite prepared after full considera*tion to 'erect a suitable factory for the manufacture of skim milk powder at any suitable centre. The financial aspsct of the question, however, needed serious consideration as if shipping facilities were not afforded financial arrangements would have to be made with the Bank to ensure regular monthly advances in which tharc would be a difficulty at present. It was necessary to approach the subject with cautioa so thit whatever decision was arrived at would be in the interests of all the suppliers. Referring to a recent statement made that the Prime Minister would be able to secure a free market for the skim milk powder, Mr Kiikman said Mr Massey represented the Dominion and acted on behalf of the Imperial authorities and if milk powder secured an advantage over other butter products that would be unfair, unjust and iaequitable, when butter was held up although sold under Government control. Mr Kirkman concluded his address by inviting any suppliers interested in the dried milk powder to arrange with the Association to visit the factories at Matamata and Matangi where thay could see the manufacture of the article for them--8 dves and meet the suppliers and perhaps get a batter idea of the dried milk business. He could assure the meeting that the directors would be only too pleased to cousider any scheme for tho benefit of all sup pliers (applause).

VALUES OVER-ESTIMATED

I Mr Dent was tie next speaker. At the outset of his remarks he claimed that the Dairy Asaoci ation could do whatever cmld be done in respect of dried whole or skim milk Practical experience in connection with the dried milk industry had put them in touch with facts and figures which enabled them to speak with some certainty as to the present prospective values of milk products. They had taken care to reiuforce their knowledge by cables to the world's centres, and those continued their opinion that immediate prospects of obtaining u h adesirable return as Ss.fid. f >r their pro iuct did not appear to be quite probable. However, as was stated in effect by the spoki sman who was making the promises to which he referred, that was not his particular worry, as it would lie the dairy-farmer who would eventually hold the bag, as ho was the man to guarantee the supply and finance the arrangement under what appeared to bo exceedingly heavy commitments, differing very widely from the light commitments of tho3e who were supplying the N Z. Dairy Association for the conversion of their product into whole milk powder IA.TOHV Euni'MEXT. Continuing, Mr. Dent said that it had been reported (hit the necessary guarantee per cow would be £5 or £lO ; a jorot and several bond had also been statod to be necessary, and the expenditure for each centre was variously estimated from £15,000 to £20,000. According to their experience, the spokesman referred to was conservative in his estimate. For a suitable factory to provide for the product of 8.000 cows they did not think that even £20,000 would cover the expenditure necessary. As a case in point—in some recent negotiations for a boiler which was

quoted before the war at £1,400, the priro was now quoted at £2,700 snbjf it to shipment. That indicated tho extrerao difficulty of furnishing the factories and such difficulty similar ly existed more or less in connection with materials as well as plant required in the manufacture of the product OI.AXO V. SKIM MILK TOWDKH. Mr. Dent next dealt with the product of Glaxo as against skim milk powder. The responsibilities of those who were supplying the Dairy Association for Glaxo manufacture were, he said, covered by id per lb. deduction butterfat, not 6d. per lb. as required for the proposition under review. Another advantage was that the return to the Association's people was guaranteed for ten yean on a minimum basis and the actual annual basis was on a butter-cheese value, which at present was a high one, the suppliers, therefore, getting the advantage of the present favourable market for milk products. What, he asked, would happen to the suppliers under the new scheme if the skim milk powder could not be marketed at a payable rate? That possibility gave food for thought. It was quite possible, as was stated, that Mr. Massey might be able to arrange for shipment of the product. At present, however, that seemed a little doubtful, but even if shipment could be eventually made the product would need to be stored and advances would, presumably,., need to be made to suppliers. Did the promoters of the scheme intend to advance a reasonable figure to the guarantors? By 'reasonable' he meant a figure which was in proproportion to the heavy liability under which they were working. If they did not, would the Government make the advance ? From past experience it would appear that the Government would need to purchase the output before such an advance would be thought of. Would the Government purchase at 3s 6d per lb butterfat ? At present the American market was prohibited to import. They did not know whether the delegation to the States had been able to get a permit to get under that prohibition. Their cable advices informed them the that present market price of skim powder was 20 cents, and therefore even if the product could be got on to the American market, it would realise including butter at lsßd, only 3s Id loss manufacturing and marketing costs on the skim powder. Such prices would not enable 3s6d, less 6d, to be paid to the supplier. The English market was almost in a similar condition. The whole of the milk products were under the Ministry of Food control. It was open knowledge that a purchase of dried whole milk powder had been made for the coming season and their cables indicated that it was exceedingly difficult, to get any other shipment on to that market. In normal times skim milk powd*r had realised from £l6 to £3O per ton, which was a long way from £l6O per ton and the probability was that there would be a considerable drop on the realisation on milk products when the war ceased and the markets became free. Was it a good business proposition to enter upon such heavy commitments as were proposed in view of such a doubtful return ? Their < xperience had not been in favour oLskim milk powder as against whole milk powder, especially considering the form in which their product was purchased under the present terms The American delegation might have some inside information, which, if they knew, would alter their (the Association's) opinion. However, the dairy farmer did know that he was safe in supplying for Glaxo, and he could purchase his cows with confidence and make his plans for years ahead.

EITF.OTS OF THE HO3M Mr Dent added that one aspect of the present commotion was to be very much regretted, and that was the reflection of the excitement upon <he price of dairy cows. The grab for cows gave promise of creating an something like the Vfelbourne land Inom and it was •o be deplored that farmers with no more to go on than the present promises were content to pay such all prices just because they feared being excluded from the "elect." The Association had tiied to figure out the interest which was behind i lie promise but they had failed. It lid not seem likely that any big interest would purchase skim milk powdtrat those prices when they could purchase at so much less a price in Australia, where butterfat values were ranging from Is 81 to Is lOd nnd where there was no talk whatever, so far as could be learned of 3sGd per lb fat. Would not a sensible operator in the dried milk market exploit Australia anl every other milk producing centre before offering such rosy prices to the New Zealand farmer r

DIFFICULTIES AHEAD They did not know whether they had hoard rightly that it had been stated that skim milk powder did not need to bo sealed in tins. They thought that that statement could not ba correct as the powder was, of its nature, subject to contamination f>ud obviouslA* would reach a distant market in a very questionable condition. Indeed skim milk powder had been found so unsuitable as to be refused for chocolate and biscuit making. As it was necessary to provide tins for the powder the question of procuring tin plates would necessarily be an urgent one. Anyone who was on this market would know the difficulties under which the tin merchants were labouring at present and it was becoming practically impossible to procure an adequate supply. They knew of an instance where a man, whose business was in manufacture of cane, was'at present endeavouring—and not very successfully—to secure tin as a last resource in America. Had the promoters secured their tin plates ? It might be that some other ' method of preserving the quality of the powder had been discovered, such method being cheap and readily accessible to the manufacturers concerned, but the Association had not yet discovered it.

AILEGED EXCESSIVE PROFITS Mr Dent went on to say that it had been reported that the Association had sold itself to a proprietary concern, but how, he asked, could that be so when the Association had built 4 was building and equipping mes at its own cost, no outside eye being invested therein ? The manufacture was carried on by the Association, the product only being sold to purchasers in the same way that other products were sold by cooperative companies. Other dried milk than Glaxo could* be manufactured by the Association and consigned or marketed just as the Association pleased. However, the Association realised that Glaxo had created a market of its own which was a staple one, and owing to the money sunk in creating the trade name a higher price was obtainable in dried milk in that name than as a simple commercial product. The Glaxo proprietors'alleged huge profits had been well published throughout the Waikato and the remark had been passed that if Nathans did not make that money out of Glaxo th°y should state what they did make. That was a very easy way of getting out of the difficulty of proving one's statements, but was it reasonable ? The Association had had an opportunity of seeing figures therein and they had no hesitation in saying that the claim made was on a par with much of the other information which was being spread broadcast throughout the Waikato. Upon investigation they found that the profits made by Messrs Nathan and Co. on the whole of their operations were so much lower than the amount claimed as to make the statement ludicrous. The matter of the butterfat content of Glaxo furnished another instance of mis-statement but such was probably made through ignorance of facts. The butterfat content of Glaxo had been stated to be 2 6 per cent. However, it approximated 4 per cent and indeed it was only a few decimal points off that standard. That misunderstanding probably accounted for the claim of the huge estimated profits he had referred to.

THE ASSOCIATION'S POLICY The Association, Mr Dent continued, did not wish to blind the dairy farmers of the South Auckland Province to prospective values of their products. The Association had always stood for progress and sound finance, and would continue so to stand. The object of his remarks was to call a halt before such a wide reaching decision as guaranteeing to the proposed scheme was undertaken, and to suggest to tne suppliers a little quiet thought and calculation before ■igning up He advised them to adopt the same procedure as they would do if they were enteriug into any other "business proposition. As they feared that in some cases the Association would be held to have a bias against dried skim milk powder, they recommended that an enquiry should be forwarded to the Government Dairy Division which was in possession of all facts in connection with milk products and whose advice could at any rate be relied upon to neutral* § In conclusion, Mr Dent referred to the recent movement towards amalgamation. The Association, he said, bad ever been favourable towards the amalgamation of the interests of the whole of the farmers of the South Auckland Province. Its Directors took up the matter cordially and regretted the breakdown of negotiations through the withdrawal from the arrangements of other companies. The principle of amalgamation had since been affirmed on several occasions by the Board and the present revival of that ideal had the cordial sanction of the Directors of the Association.

XTR PARLANI's CONTENTIONS. Mr Parlane reminded his hearers that according to a report which appeared in the "Waikato Times" of the 19th June, 1916, Mr Goodfellow approached Messrs Nathan and Co. on the subject of the manufacture of dried milk, but when later he found that the Association had the greatest support in the Matamata district he condemned the scheme, and recommended the manufachire of j cheese. Mr Parlane emphasized the , fact that the 'Glaxo' proposal was | not forced on to the suppliers.who, on I the contrary, readily accepted it with ft guaranteed minimum payment for ten years. It was not, said Mr Parlane, the Glaxo suppliers who were complaining, about their prospects, but outsiders. Mr Parlane contended that the Association was in every way a co-operative concern, and suggested that Mr Goodfellow was originally the proprietor of the Waikato Co-operative Dairy Co, Ltd, snd was a 'proprietary man by instinct and nature.' He believed a farmer having 50 cows nnd desirous of being a supplier to the proposed skim milk factory suggested by Mr Goodfellow had to provide £250 within twelve months. Such a ?roposa! drastic one. Mr 'arlane further pointed out that no guarantee could be given by Mr Goodfellow that the payment of 3s 6.1 per lb could be made as all his figures were based on suppositions. Concluding, Mr Parlane said the Association were the first in the dried milk business, and he assured them that if 3s 6d per lb could be obtained the Association would get it. (Applause) THE TBTJTB WANTED Mr 8 Oldfield, sneaking on behalf of the Farmers' Union, emphasized the fact that the attitude of the Executive of the Farmers' Union was a neutral one. They simply wanted the truth of the dried milk question put before them. If it were possible to get 3s 6d per lb as had Men mentioned recently, then the farmers would like to get it as there were very few farmers who were dairying for the fun of it. On the Subject of amalgamation of dairy interests Mr Oldfield said that it was not in the best interests of the farm- • »ng community to run two dairy factories in a district when one would suffice (hear, hear) He contended that the farmers should seriously consider the proposal to amalgamate as where the interests

were purely co-operative there was nothing to gain by opposition. In support of his contention he mentioned that some of the largest farmers' trading concerns in Canterbury and other districts had recently amalgamated. mr. Mackenzie's advice. Mr R H Mackenzie, a Director of the Association, pointed out that the difficulty in connection with the realisation of high prices was largely dependent on the transport of the pn ducts, and he advised that the question of changing from their present methods of manufacture should be carefully considered before any action was resorted to. CABLE ADVICES. At this stage Mr Dent announced that in reply to a cablegram asking the market price of dried skim milk powder the Association's agents in Seattle, U S.A.had replied—'Twenty rents, importation prohibited'; the Director of the Uairy Division, Washington, U.SA, bad cabled 'lmport prohibited.' Messrs Lovell & Christmas, Dairy Produce Merchants, of London, had cabled—'Dried milk no market at all All controlled by Ministry Food who have contracted all they require. Large quantities waiting shipment in Colonies and Argentine. Impossible to procure machinery and freight at present. Will cable again immediately any chance of business." Messrs. A. Clement & Sons, Dairy Produce Merchants, of London, had also cabled—'After fullest enquiry cannot advise yon doing anything on condensed or dried milk meantime. Impossible secure permits. Necessary plant and costs prohibitive. Watching prospects and will advise you if conditions alter. Writing fully." VOTE OF THANKS. Mr Hodgson Keith proposed a hearty vote of thanks to the Chairman and speakers for their addresses, and this being carried with acclamation the meeting closed.