MR. GOODFELLOW ON DAIRY CONTROL

Sun (Auckland), Volume 1, Issue 55, 27 May 1927, Page 9

MR. GOODFELLOW ON DAIRY CONTROL

LAUGHING STOCK

FAILURE OF DAIRY CONTROL MR. GOODFELLOW REVIEWS SITUATION “GOLDEN OPPORTUNITY HAS BEEN LOST” H A ° the Dairy Control Board stuck to its guns and not abandoned thonsandstin^ 1 , 0 ? New Zealand producers would not have lost many Gonrifefl POU " ds to the enrichment of Tcoley Street dealers. Mr. W. Cornea v i'„ a ha , ,rman ( °t f the New Co-operative Dairying inq the commit statement, rev,ews the circumstances surroundParty and Vh? iih of . th ! s co,< ?ssal blunder.’He blames the Labour and their insist erals * or their opposition to the original measure the bond’s unanPmTt °" the _7°" e ma " °"e vote principle” whereby less he savs anH th y wa f destroyed. The pool at present is valuethe old system hv h' et '® no loneer given the lead it had under in London" former! Ancho1 ’” brand, the dominating supplies g"ven exclusive7v In ? ontrolled Price-levels. This statement interview in the ‘‘Dairy ' S bei " 3 PUbMshed 33 an Rcside,lt Reporter.) ally f orce( J arrp nt the motknj

WELLINGTON, Thursday-, , f n a very long interview with the New Zealand Dairy Produce Exporter, the official organ of the Dairy Control Board, Mr. William Good , who . has j ust returned from England, gives his views upon the reasons for the failure of the control system, and describes three blunders which he declared the board has made m policy. The first blunder was to remove price fixation during the season; the second was to retain the pool with the price regulation abolished; and the third was the action of the board in broadcasting its decision to the effect that 90,000 boxes of butter and 45,000 crates of cheese roust be sold each week, which had led the trade to take the view that the board was adopting a system of liberal rationing of the market.

The net effect of the change in policy made by the board, he said, was to wipe out at one blow the premium formerly commanded for New Zealand produce over Argentine, Australian, and Siberian produce.

NO BOYCOTT ‘‘There was no boycott by the merchants,” Mr. Goodfellow asserted. “It can be seen that all we have heard and been told about the loss of goodwill, boycott, etc., are gross exaggerations of the position. I could find no foundation at all for any such statements—in fact, there is no such thing as goodwill on the wholesale market. There may be a certain amount of goodwill with the i l dividual consumer, but as between the Importer, the merchant, and the r;tailer they are influenced by only two points, and they are the quail V and price.

“Producers can take It as certain that goodwill does not count for much in Tooley Street. The buyer has to meet keen competition, and he considers only two

things—price and quality.” “The largest individual merchant Importer, with whom I came into contact, volunteered the opinion that had the Control Board’s scheme been adequately assisted by the producers ir New Zealand, and had there not been dissension both in New Zealand and in London, there was absolutely no doubt, in this opinion that the Control Board’s policy would have been a success. The position now is that the scheme of absolute control has been wrecked by the propaganda of vested interests. They created and developed dissensions within the industry, and that led to an unstable board. The scheme as a scheme was proved to have been commercially sound over a period of years. It is the same scheme that is being commercially applied to-day in all big-scale manufacturing establishments. They succeed, however, because they are applied on business-like lines, and with continuous and capable administration on a uniform and not a variable policy. WRONG MEN ON BOARD No Government representation was desired. If Parliament had granted legislation to the producers along the lines originally asked for, then the desired stability would have been attained and the control system would have proved a success. As it was, the wrong men were on the board because of the method of election. In dealing with the future, Mr. Goodfellow said he thought the producers had lost the greatest opportunity they ever had of placing the dairy industry on a sound commercial basis. It would probably be many years before an attempt would again be made to bring forward a marketing policy which would in any way approach the ideal of 100 per cent, coverage and comprehensiveness that was represented in the board's attempt. In Canada, those connected with the wheat pool absolutely refused in any circumstances whatever to have anything to do with any person who was in politics. They were obsolutely sick and tired of politicians.

He predicted that New Zealand would find itself following the example of Canada, Europe, United States, Denmark, and other countries in the formation of group export marketing companies which will act for a large number of factories.

“Competition among selling factories must be eliminated if the best prices are to be obtained for the good of the producer,” he declared, "and the only way that can be accomplished free of political influence is by the formation of group export marketing companies of the nature Indicated.”

I RESPONSIBILITY for the present v state of the Dairy Control Board must rest largely with the Labour Party and the Liberal Party, says Mr. Goodfellow. To the measure as brought down by the Massey Government these parties presented a combined opposition for “the democratic principle of one man one vote,” so that a compromise had to be effected. At the time the Minister of Agriculture, the Hon. W. Nosworthy, was entirely sympathetic to the producers and fought hard to give them what they desired. There is little doubt that had the board been selected on the council system the desired stabilitv would have been attained and the whole scheme would have proved an unqualified success. “In my opinion, with a full knowledge of facts, it is hardly fair for the leader of the Labour Party to endeavour to blame the existing Government for the breaking down of control, when in reality it is largely due to the action of the Labour Party thy the producers were origin-

ally forced to accept the method of election which had been directly responsible for the complete collapse of the scheme.

“As one who has loyally supported the policy of the board throughout, and as one vitally interested in the success of dairy-farming, I would like to say without hesitation that I am quite prepared to accept personally a

full measure of blame for the failure of absolute control policy, under the conditions and circumstances outlined. I consider it utter foolishness to try to camouflage the position, and I believe it my duty to the industry to state, quite frankly and straightforwardly, how the matters stand. HOPELESS NOW “It is absolutely hopeless to think of re-establishing price-fixing Those firms who were prepared to support control in the first instance now feel that they have been badly let down by the supporters of control, and in my opinion the board is now the laughing stock of Tooley Street. It has fallen out with its friends, and is despised by its enemies in London, and any attempt to reinstate pricefixing would simply be another serious blunder. We must face the unpleasant facts and realise that absolute control has gone, and that producers have lost their golden opportunity, an opportunity which will not again present itself for many years to come.”

After leaving on March 2, Mr. Goodfellow said he was astonished some ten days later to receive a radiogram advising that the Control Board had decided to reverse its policy regarding the fixation of prices covering the marketing of New Zealand produce in Great Britain. “With the understanding,” said Mr. Goodfellow, “that this policy would remain in operation at least for the season, and until my return, I left the country. “On receiving the astounding news of the stampeded decision of the board, I decided that the best thing to do was to cancel my American engagements, and proceed direct to Great Britain, where I arrived early in April, and immediately commenced a careful investigation of the position. I soon found that the stock position was absolutely sound —in fact, better than it had been for —and I was therefore forced to conclusion that the Control Boerd had been stampeded by pressure being applied from certain members of the board.

“Further inquiries also made it apparent to me that the pressure had come directly or indirectly from a small group of Wellington exporters, assisted by their useful medium for propaganda, the Free-marketing League.

“There was absolutely noth : ng from the statistical point of view to justify any change in policy, and had the board adhered rigidly to its policy for a further tv/o or three weeks, there was no loubt that the few big buyers who lad been able to hold off the market since the time of their heavy purchases of New Zealand butter during the slump of October and November would, by exhaustion of those supplies, have normally come back on to the market.

“The alarmist statements of the freemarketers, when analysed, proved to be a comidete mare’s nest. New Zealand farmers had been told by coloured commercial cablegrams and inspired anonymous Press messages that there were huge accumulations of dairy produce in London, that New Zealand dairy produce was being boycotted by the merchants of England, and further, that the New Zealand factories had lost the goodwill of the trade, etc. Undoubtedly, this propaganda was directly responsible for the board’s rash act in throwing up the sponge, an act which will cost the country a huge sum of money, but an act by which admittedly a small group of New Zealand exporters will hereafter benefit very considerably financiallj’. “There were no huge accumulations of dairy produce in London —the full stocks being 6,000 tons less than they were at the same time 12 months ago. and even the total New Zealand stocks were 1.500 tons less than they were at the same time 12 months ago.

• Personally, from the very commencement of this movement. I have stressed and reiterated again and again, the importance of electing the Board on a basis which would give perfanence of policy. Obviously con-

tinuity and full trial were essential | to success. The dairy industry originally asked Parliament for a coun- | cil to be elected by the directors of | factories on an export output basis, and this body would choose the Board to carry out Its policy. THE“ANCHOR” SYSTEM “For four years prior to control coming in,” said Mr. Goodfellow, "the practice had been pursued by the N.Z. Co-operative Dairy Company, Ltd., which exports 25 per cent, of the dairy produce from New Zealand, of rigidly fixing prices and regulatingsales through four of the largest London produce firms. This undoubtedly gave a lead to the market, and did in effect fix the price of New Zealand butter in London for about eight months of the year, but during the flush of the season heavy New Zealand arrivals of other butters made it impossible for the company to exercise Its Influence adequately then, on the market. Asked whether he had, when in London, seen anything of the other members of the board, Mr. Goodfellow said that he had seen Mr. Motion, but, although he was in and out of the board’s London office very frequently, he had not seen either Mr. Paterson or Mr. lorns, the latter being, he understood, on a visit to Germany at the time. WHAT/OF THE FUTURE Questioned as to the future, Mr. Goodfellow said that quite frankly absolute control had broken down for reasons outlined. They realised as producers that they could not expect any real help from a Government or from a politician. The New Zealand producers must reach the same conclusion. They must realise that the question of improving the marketing of their produce was entirely in their own >.mds, and they must look to themselves to evolve some marketing organisation. There was no use looking to Parliament to help. That was the opinion reached In Canada, and the producers of the United States were rapidly coming to the same conclusion. It was recognised that parliamentary assistance was unstable, and would always be unstable, because It was always open to the pressure and influence of the moneyed and mercantile interests, to which pressure politicians were particularly susceptible. WHAT ABOUT AUSTRALIA? Asked as to the operation of the Australian Board in London, Mr. Goodfellow said he had noticed that the freemarketers had been advocating the Australian policy, and naturally he was interested to know what the Australians were doing. They had appointed a London manager, but Australia was admittedly adopting the policy of “wait and see” to ascertain whether the New Zealand scheme was a success. Up to date Australia had taken no steps to tackle the marketing problem in Great Britain, yet New Zealand producers were told how successful their efforts had been! No doubt those freemarketers were well aware of the actual position when they advanced Australia as a model. FAULTS OF THE POOL In conclusion, Mr. Goodfellow said the first thing producers had to do was to get rid of the pool. As now operating it was definitely costing them money, for they were losing from a penny to a penny half-penny a pound through pooling without a price lead being given anyone interested in the market. The elements of marketing required attention to be given to price, and yet on the present basis there was no protection at all. Therefore the quicker that method went the better. Summarised, the objections could be stated as follow; 1. The agents had no incentive to get the best price, because the returns were pooled, and inter-trading was now permitted with the removal of control, so that there was no check upon capacity to sell, and brokers could be used to get rid of the allotted quantity. 2. There was now no premium for finest quality, as first grade and finest were all sold at one price. 3. New Zealand produce had been reduced to the same level as Argentine, Siberia, and Australia. 4. British outports, such as Liverpool, Glasgow, etc., might at any time undersell the London market in the absence of a definite price level under one authority. 5. Financially weak holders, when selling through brokers, tended to weaken the market.

6. There was no lead being given to the market, and, so far as the producer was concerned, he was worse off than for many years past. 7. The system now gave no advantage to factories, and simply represented an expense without any corresponding gain.

FARMERS HAVE FAITH IN GROUNDS’S OPINION

APPROVE HIS POLICY AND AWAIT LEAD (From Our Own Correspondent.) WHANG AREI, To-day. At the Farmers’ Union conference in Whangarei yesterday, Mr. W. H. Allen moved: “As the pooling of dairy produce under the present system is depressing prices, and is not in the interests of the producers, this conference requests the board to abolish the pool forthwith.” In the lengthy discussion which followed, objection was taken to any action without knowing the views of Mr. Grounds, and decision was deferred pending a telegram from him. Subsequently the following wire was received from Mr. Grounds: “Goodfellow has not yet submitted his proposal. My present view is that we should adhere firmly to central control in interest of industry’s future development.”

In view of this reply, Mr. Allen’s motion was not further discussed, but the following remit from Bay of Islands was carried: “This conference has implicit faith in Mr. Grounds, chairman of the Dairy Control Board, and in the fair marketing policy advocated by him.”

MEETING AT CAMBRIDGE

CONTROL HOTLY OPPOSED (.Special to THE SUN .) CAMBRIDGE, To-day. There were about SO producers present at a meeting held in Cambridge

on Thursday evening when Mr. Fred Lye, who is seeking election for No. 3 Ward on the Dairy Control Board, explained his views. He opposed the compulsory clauses of the Act, but approved of the measure in other respects. He was against the dangerous theories and extreme experiments of the present board. At the conclusion of the meeting, Mr. Lye was wished every success in his campaign and the following resolution carried; —“That this meeting is strongly of the opinion that the compulsory clauses of the Dairy Export Act should be repealed and a return made to personal freedom of contract and mrketing; and pledges itself to work to this end.”

CLEAR-CUT ISSUE

ELECTION SPECULATIONS FREE-MARKET OR CONTROL? (From Our Resident Reporter.) WELLINGTON, Thursday. Now that the voting has commenced for the election of producers’ members of the Dairy Control Board, there is much speculation as to the results. Those interested in the commercial side of produce disposal are confident that advocates of anticontrol will be returned to seats at the board table, as this is the first occasion upon which the producers have been given an opportunity of expressing an opinion on the clearcut issue of control or free marketing. One man who has recently been through the country goes so far as to say that he believes the producers, apart from the extremists on either side, will be 70 per cent in favour of free marketing . .