DAIRY PRODUCE.

Taranaki Daily News, 29 June 1920, Page 6

DAIRY PRODUCE.

THE MARKETING SCHEME, AN INTERESTING DISCUSSION. (Report continued.) In our issue of Friday we gave a report of the opening speeches delivered by the leaders of the National Dairy Association at Palmerston North last week. MessrS: Pacey (Nathan and Co.), and G. H. Buekeridge (Lane and Co.) having spoken. Mr. W. D. Fowdrell, said that the» arguments of the opposition had only done the case good. If the best men in the dairy industry in New Zealand were linked up with the ablest business men of England, thoy would have a great combination. They had gone into the dairy industry with very little caoital. The National Dairy Association started with no capital, and now had between £30,000 and £40,000; the Rennet Company, with £1827 capital, showed a profit this year of £SOO, thus proving that they could run their business on very little capital. He thought 'he proposed combination would dp as well as the present business men. It did not require much capital to be a commission agent, and he considered the proposed company strong enough. He would agree that they wanted the highest price for their produce, and supposed the other people wanted to buy in the cheapest market. He would like to know of any body in the world that bought in the dearest market. He believed that thsit <laj\, marked the downfall of the present system—not that it would go right out at once, but each day the producer would get stronger and they weaker. *Tlie opposition knew they were lighting a life and death struggle. He thought the farmers had the intelligence to follow the leaders of industry, who had done so much in the way of co-operation and had not made a mistake. This proposal was another link in th° chain of co-operation between producer ruid consumer. He was sorry the National Dairy Association could not take it up. It was far better to have some control in London than none at all, as at present. The Board of Control was practically their agents, and need not sell to the C.W.S. Various meat companies had agents in London, so why should it be bad for the New Zealand dairy companies to have agents at Home? Their opponents' said that they would be connected with ultraradical socialists, etc., because they knew the word .was a bogey to the farmer. The C.W.S. had met them in every possible way. The producer fixed his own price, and was not tied to give the C.W.S- the first jffer. He agreed tfith tlm need for competition both here and at Home. A veiled threat had been made as to what they would do with their produce if they could not sell it to the C.W.S. He considered there was j no need to worry, as the retailers would I take their produce if sold at market I price. The i producers here would be In j touch with the Board all the time, and very little money would be required to ru« the Board, as the scheme would be self-supporting, because it would get half the prolit made on the commission by the sale.of butter. There had been a missing link between the producer and the consumer. He believed this would to some c-NiV'.t fill it. They need not fear failure, as ;yhcn *irmers made up their minds to achieve success they did so. Mv. P.. W. D. Robertson (Clements & Son), who announced himself as "Tooley ; Street, unadulterated," said that in a ! great revolutionary movement one nat- ! urally looked for a reason why this should be. The only apparent reason was that there was grave dissatisfaction with the system existing before the war. Tooley Street had nothing to do with the system during the war. He did not think they could point to any concrete instance where a factory had

lost money through any default of Tooley Street, but they could see evidence of prosperity. The scheme was wrapped up in the old eloak —the wickedness of Tooley .Street. This, however, was worn threadbare, and it was a pity they had not used something stronger. They had heard it said that a charter had been attempted to be filched from the producers, but he read an extract from The Grocer that denied the report. The Butter and Cheese Imports Committee have not any honorarium. It

had been said that the iniquitous commissions charged during the war were the same as before the war, but he gave

figures to show that it was actually V/> per cent less than before the war and less than a quarter of the quantity handled, and the importer also had to advance 80 per cent of the value of the butter. Ag this cost twice as mueli he had therefore to employ more capital. The proposal, he considered, really meant allying themselves to the great labor unions.

Mr. J. G. Harkness (secretary of the N.D.A.) urged producers to look at the matter without bias or prejudice. Tliey had tried out one system, and it had failed. He considered a good deal of piffle had been talked. It was time that the C.W.S. were large producers of margarine. They, however, catered for all classes, but he pointed out that other concerns had their blending houses. There was plenty of competition at this end to get oinputs, but there was not a healthy competition at the other end. The principle of buying in the cheapest market and selling in the dearest was followed by all. The C.W.S. had purchased 20,000 tons of butter from the Danes each year, at prices fixed by the Danes, and had sold it in competition I with the rest. s The use of the combined churn had brought down the color of our butter, so that now there was not the slightest difference in color between our best butter and what was made in Denmark. He had had his heart in cooperation for years. This was a great opportunity, and capable hands would make of it a grand success._ They need not be afraid, of financial conditions, because there was not a bank that would not do for them what they would do for private individuals. Mr. S. Turner (.T. J. Lonsdale) held , ihat the buying public would have what it wanted. He did not consider it a jood plan to ignore the C.W.S. They could give the C.W.S. a small quantity, thus making 25 competitors instead of 24, and make them toe the line by comparing returns. If they proved better then give them the business. He did not consider it British to do awav with firms that had treated them well. His company had a big turnover of New Zealand produce, but he had not raised n finger when the Government took it over." He was satisfied the factories who would not support the four Toolev Street firms, and so had broken down the previous scheme, had missed the bus, but he was convinced they would come back after they had tried the proposed scheme, He pointed out the immense amount of capital involved in the pcheme. New Zealand's import was 10 per cent, and was a surplus quantity yVish could b» ignored, S« would give

£r,M to the Salvation Array if it could :>e proved that t-lic C.W.S.' had gut as much New Zealand <-!iocs<e trade for the throe years of the war mure than Lonsdale's, or if they provided more Mipital. He stressed the point that mder the present system producers had more finance ami more outlet. Movhjvit, the importers were specialists Gutter and eheese and knew when to put Llie priee down—an important feature. Mr. Boyd (Waikato) said that lie had come there with an open mind, but afier hearing the Tooley Street people he was absolutely convinced that the scheme was a good one, because it could be put in the market as' New Zealand produce, which was not genera! now. between the produce here ind the consumer at Home would bring ibout a better state of affairs in labor matters. He 'pointed out that Tooley Street was the only one doing the squealing at present. Mr. J ft. Martin (Wright, Stephenson & Bona) pointed out, that through a subsidy company with £IO,OOO capital they ivere going to endeavor to finance £lO.500,000 worth of produce. It was difficult to arrange advances from the Bank 9i England. They were going to throw over lenders with huge capital to do business with a concern capitalised at £4,500,000. They should be careful in making any change in the face of the enormous difficulties that they would meet this year in the way of finance. He understood that the Governmentjiad aot yet considered the question of guaranteeing the finance. Mr. Powdrell said that Mr. Massey had assured them that the Government would stand behind them in the way of finance. Mr. E. Maxwell (Kahui) regretted that the majority of the farmers had not explained their views. He considered Mr. Powdrell misunderstood the matter r)f guarantee from the Government, as lie understood that the reference only ?pplied to the meat on account of the great block of shipping. The C.W.S. was a very excellent institution, and bad done great service to its members, tt had been suggested that its interests (vera in common with the co-operative producers here, but he considered this ivas a fallacious argument. The only justification for its existence was that it should supply its members with the needs of life at a lower price than the members could obtain elsewhere. On the other hand, they co-operated here as producers and to complete their business must obtain the best prices in the market for their produce. Just how to let that was the problem. It had been said that they could get it from the C.W.S., but he was satisfied the interests were diametrically opposed. Their trading was entirely confined to one class—that of the working man. On the other hand, did the producer desire that the market should be confined to one class? It was to his interest to have all classes. The operations of the C.W..S. were almost entirely confined to the North; very little in the Midlands, and nothing in the South. Whereas it was to New Zealand's interest to have the trade spread all over, he considered tiie North not so favorable a market as the South and Midlands, where it was well established and the procueo was favored. The people of England were very conservative, and would pay for whatf they wanted, and it happened that the paler butter was more readily saleable in the North than the highly colored butter in the South. Could the C.W.S. serve two masters? It had been suggested that it was possible to get the higher price by eliminating the so-called middle man. As a small dairy farmer he had no axe to grind and viewed the matter with grave doubt on account of the secrecy and the fact that the meetings were not ope.i to the Press, apparently to prevent the scheme being public. He had therefore taken steps to make the other side public and open up a Press controversy.. There was no suggestion of eliminating the mfddleman. The scheme Reemed an alluring one, but he thought that by getting rid of the old system they were gaining nothin?. What was the scheme, anyway? Either they were going to sell their stuff to the C.W.S., handing themselves over body and soul, • the C.W.S. having had a hand in fixing the price and thereby eliminating competition, or our produce would be sold, in the open market to be bought »by Tooley Street as hitherto, with the difference that our Company was an added middleman and hothing would have been done to eliminate the evils of the present system. Hon. J. B. Gow (Opotiki) 'said that the only argument against the scheme seemed to bo that their interests were diametrically opposed, but he pointed out that in all matters of trade the interests of buyer and seller were divergent, but they had a mutual interest. The question of finance might safely be left to the gentlemen they put in charge of the scheme. He thought that both seller and buyer would be benefited by the closer coming together of producer and consumer, and doing away with intermediates. There must be safeguards. It would not do for the seller to place himself in the hdnds of the buyer, and for the buyer to place himself in the hands of the seller. They had retained the right to fix the price, which was the crux of the matter. The produce would not be consigned to the C.W.S. but to the company, where they held an equal interest in everything and the preponderant voice in the fixing of *ne price. If another selling agency went on the floor, he did not think people would refuse to buy. People bought because they wanted to consume and if their produce was of good quality it would sell whether consigned throng! their own agent or through the proposed company. Regarding the threat of boycott, he did not think Tooley Street would damage its reputation in this way. Every hand the produce wenl through was a pull off the prici they received. Mr. W. R. Wright (Cape Egmont) supported the proposal because the New Zealanders were going to have the pre ponderance on the Board, and by puttinj up a big competition they were going t( increase the market.

Mr. J. R. Corrigan (Hawera) said that New Zealand had nothing to learn from other countries regarding 1 co-operation up to the port of shipment, but thereafter lost control. There were some weak spots in the scheme, but everything had to have a beginning. By keeping control of the English market they could eliminate expense to firms of their agents running round the country. Ho favored forming a company of their own, not allied to anyone. Surely New Zealand should be able to finance a company of £IOO,OOO, The Board of Control should comprise tho best commercial men of Great Britain along with Mr. Ellison, With their own Control Board, they could dictate the terms in which they sold. If the C.W.S. were co-partners in the Board there might be influences that would be at work. He thouzht New Zealand butter was sold by the importers. Mr. Chrvstall (Shannon) considered that New Zealand should have its own selling floor. He did not like the formality of the a she ma, *s he took it JJjat

if a resolution was carried by the meeting, factories would sign away their output for years. (Cries of No!) If he could be satisfied that a factory could withdraw at any time lie would support itMr. Gray (Koivson and Hodgson and Co.) said that to put it mildly the firm's they had been .doing business with would lose interest in their product and deal with the produce of other countries. He held it was the consumers, and not the merchants, that desired to have prices controlled. The only system to bring the best results was open competition. Mr. McFarlane (Riverbauk) said that the opposition of Tooley Street could be narrowed down to self interest. If they wanted to control their produce right to London, they had to finance it, ond should he prepared to put their hands in their own pockets. A capital of £1,000,000 was required instead of £IOO,OOO. He was going to suggest that n dairjs company sho'.ik'. contribute Jd butter-fat towards the capital. This would bring in in ons year £100,084. A trading department should be started in New Zealand. They should also ask for a charter of a co-operative bank through which they could finance, and as a result could teach boards a lesson similar to what they were going to teaeli Tooley Street. Started on a proper foundation there was no end to the possibilities of the scheme.

Mr. Mosg (Newman) said that cooperation had been forced on the people at Home. When the N.D.A. discussed the question of establishing a selling floor at Home the question of finance and distribution was the difficulty. He nrged them not to believe that the C.W.S. were out to rob them. If farmers pulled together they could carry everything before them. Mr. Gilson (Rahotu), who claimed to know something of the co-operative movement at Home, said there were many erroneous ideas about co-operation at Home. He knew there were many farmers wishing to put their milk, produce, etc.. through the co-operative concern, They were not out to sell at the lowest price, but at the same price as other concerns. The only difference was that they divided the profits among themselves, instead'tof these going to another class, which they had eliminated. He denied that these associations were ultra radical and socialistic. He agreed that the crux of the question was finance, and in this they wanted a little more enlightenment., Mr, H, D. Forsyth stressed the point that control was lost from the time the produce went on the ships, and the producer was, then absolutely at the mercy of the importer. While at Home with Mr. Murdoch he had met many of Gie importers and wholesalers, who endeavored to persuade them that thev were absolutely essential, but he thought the time had arrived when they should reduce the number of links bej tween consumer and producer; further, I that the speculative middle man should |be eliminated as far as possible. They understood that importers had endeavorled to obtain a charter. Producers 1 were | to bo given representation, but the importers were, to have predominance and I control prices. He then detailed the conditions during the war. Two per cent to the' importer and 4 per cent to the wholesaler meant halfli million tliat was being paid for between the producer here and the consumer at Home. Prior to the war the importer was given 21 per cent, during the war he had very little risk " and received 2 per cent on nearly double value. He had heard the ■statement on the other side that it would be worth .thousands to the importers "to have decontrol. Ir that was so they must have been making something more than the commission. They did not find fault with the firm's handling their produce, but with the principle involved. All would agree that tho first thing.? in handling their produce was control, and that meant that they should get, the best possible price with the least possible cost of distribution to the consumer. They should ask what the benefit would be to the C.AY.S-, because it looked as if tho producers were getting all the benefit, Well, the only benefit they got was that they secured New Zealand's produce first hand without going to Tooley Street. Regarding the marketing, he said they received aceonnt sales in the market at

the time their produce arrived, and if the market improved within a week they received no benefit. This gave room for speculation, and the producer to prevent a slump when several vessels arrived at one time, should be able to put the surplus in cool store and feed the market week by week, thus getting actual market value, for their produce, and the C.W.S. had cool storage available. • He pointed out that the want of concerted action in marketing was the reason why Ireland received less for its lutter than Denmark, which had p committee that fixed its price week by week. Neither the Danish nor Irish butter went through Tooley Street, as they were able to fix a price so near to market value that there was no profit for Tooley Street. Our geographical position being six or eight weeks away left room for rise and fall if the price was fixed here, and the only alternative was to have our own selling floor in London or set up a committee. The weakness of the former lay in lack of finance and distribution, but the scheme outlined gave them their selling floor fnd the means of distribution, if they so desired. He urged them to be united and set in, motion the machinery, I and so make a' success of it. It was j hard to compute their losses in the past. | and the sooner ,they stopped there the better. The opposition only showed that the scheme was a strong one, and that the farmers were sufficiently learned and enlightened to carry out their own co-operative marketing scheme. Many arguments had been advanced against the scheme, but the biggest one was that they were out to sell in the dearest market and the Co-operative Association was out to purchase in the. cheapest. Well, he would admit they were out to pet the best price, but at the same time he recognised that everyone was out to buy in the cheapest market and he said the matter would be placed on a business basis. He urged all to throw in their lot and support the scheme and give them the opportunity of making this the biggest, concern ever tackled on a co-operative Mr. Manx (Manpatoki) said that the nuestion that exercised bis mind was finance, and unless something more was disclosed this would be found a stumbling block to a director in submitting the matter to his co-directors. If tlic Prime Minister had promised to slnnil behind them they should know it. He considered the promoters of tne scheme should take tlicra into their confidence regarding finance. Mr. Paviouv Smith (Dannevirke) said that they had come to Ihe parting of the wars, and must, leave Toolev Street, but he did not favor this scheme, rather preferring the scheme outlined bv Mr. Corrigan to have their ' own selling'" floor in London irrespective i of any outside body. , and he thoushc i task..» JWWOttl &ould;'J» SMfisi; Jheta

was 110 veil son why they should share profits with another party. New Zealand had the finest produce that went on the London market, and need not fear of disposing any surplus During the war our produce had gone into countries that it never went before. .Mr. Fears (Waikalo) said that all were out for the best price for their produce. It was true they did away with all profiteers. At present it cost 2s per pound to produce butter-fat, and they wanted nil that was in it. Farmers should he. al>le to finance any scheme of their own. The producer should he given a say as to whether they should have their own ships, and, in 'fact, follow the produce from the paddock to the consumer. Mr. flallichan (Rangiotu). did not favor the formation of a joint company with a capital of £100,000,' which he did not think sufficient. A company of £1,000,000 would lie more favored. He had yet to learn where tho C.W.S. came in. The price was rejfiUated by

i the law of supply and demand. If : £IOO,OOO was sufficient why not finance it ! in New Zealand? 1 Mr. J. B. Murdoch (Joll's) said the question of marketing their produce to obtain the best results had been agitatl ing their minds for years. It was a question of finding out the best method of marketing-. He was not of opinion . that the C.W.S. offered the best solu- , tion, but one had to take the best offeri ing. If the C.W.S. preferred to undertake the finance, it was alright, pro- ' viding the producer retained control of the fixing of the price. The repreI sentatives of Tooley Street just now i did not have a very big clientele, that : having entirely disappeared owing to the many years of war. This then j, teemed an opportune time to take up their own marketing, and he thought they had enough brains in New Zeaj land to carry out the scheme. New 1 (Continued on Page 7.)