DAIRY PRODUSE.

Taranaki Daily News, 26 June 1922, Page 7

DAIRY PRODUSE.

MARKETING PROPOSALS. IMPPKOVEMENT URGENTLY N EEDEDMONTHLY AUCTION* SCHEME. Considerable time was occupied by the National Dairy Association Conference at Palmerston North on Tuesday in discussing a subject that has long exercised the minds of leaders of the dairying industry—the question of some improvement in the method of marketing dairy produce with the object of ensuring that the dairy farmer gets the beet possible return for the produce. During the discuseion -the - proposed pool and monthly or fortnightly auction sales were freely discussed. It was generally admitted that some improvement was urgently required, and it was as frankly admitted that no scheme had yet been evolved that would prove acceptable to all. There was a very large attendance, the meeting being presided over by Mr. A. Morton. CASE FOR AUCTION SALES. The subject was introduced by Mr. OJerusalem (K'arira nga), who moved:— “That this meeting is in favor of dairy produce auction sales, and that it be a recommendation to the executive of the National Dairy Association to confer with the South Island, with a view to establishing such sales.” He expressed regret that the consideration of such a big question had been left so late. For guidance in considering the matter they must naturally look to the success achieved by the wool sales, and though it had been argued that there was no analogy between wool and dairy produce, it must be acknowledged that both were necessarir of life, and in demand on the world’s markets, and therefore would evoke competition. If the dairy auction sales were gone in for ./hole-heartedly it would only be a little time before they would have competition from ail over the world. One-third of the butter was consumed in Ne - Zealand, and the auction sales would fix the price for local sales on the New Zealand market, and so do away with the price cutting that was said to be going on. Instead of only having competition from the agents of half a dozen c: the big firms, they would have representatives of numerous smaller concerns, co-operative societic and multiple .dicps competing here for their butter. Th ay would also have competition from American buyers, because it would only be a little while .vhen they would have markets established. They would also have Australian competition. Indeed, in the ’"-it few months a lot of butter had gone from New Zealand to Australia, and he estimated that through not having these sales in vogue, the producers had lost Id to 2d per pound, which had gone to the middlemen. The produce would be sold on the grade note, without being looked at or handled, and as a result there would be keen competition among the various factories that would stimulate factory managers to do their utmost to turn out the highest grade article. They would have the advantage of prompt payment for their produce, which meant a lot to the producer, as it would enable him to know his position instead of having to wait several months. Compulsion had been the main objection to the pooling scheme, but under this scheme there would be no compulsion. Those factories that had established a market would not be compelled to send their produce to the sales. If they did they could fix a reserve, and if that was not reached they could still consign. There was nothing that could be considered antagonistic to the merchant. In fact, he felt that in a short time the producer would be as satisfied with the auction sales of dairy produce as the wool growers were with the wool auctions. Another feature was that in the event of a sudden rise in the market, butter or cheese afloat could be auctioned. In fact they could sell what they had in store, their whole supply or none, and make use of any rise in the markets. Many other arguments could be adduced in its favor, but he felt that if the scheme were given a trial by the National Dairy Association it would nrove a gold mine. Mr. Sutton (Moa Farmers) seconded. The chairman said that the South Island Dairy Association pawed, a resolution on somewhat similar lines, and as their delegates were present he proposed to ask them to speak. ADVANTAGES DETAILED. Mr. A. P. Fleming (Dunedin), a member of the executive of the South Island Dairy Association, explained that the resolution was the result of a series of conferences- It was. he said, no slur on the way that Messrs. Goodfellow, Forsyth and Brash had put their case that the South Island had turned down the .pool. The committee had. however, endeavored to substitute something else. He claimed that some of the advantages of the auction sales were that there would be no expense in initiating the scheme. The produce would be sold under the factories’ own supervision and control; they would have competition of the world’s markets and receive the true economic value for their produce. •Selling charges would be much lower than was the case at present, and the producer would receive his money each month. Looking hack over a series of years, all realised that something should foe done to improve the conditions of the sale of our produce, which was equal to the best in the world, but was not I bringing the price it should. He gave an outline of the scheme on the same lines as the mover, adding that the auctioneers would invoice the buyers, and that all shipments would be under the control of the N-D.A. on the principle of first in and first out. The sales in the different centres of the North Island would be under the control of the N.D.A., and in the South Island under the South Island Association. The main advantages were that they would increase competition and widen the market 4‘or N.Z. produce without any expenditure on the sellers’ part. A strong point was that the selling factories would have entire control of the produce until it was sold. That was a weak point of the I present system: the producer lost conI trol once the produce went on the ship. It was suggested that the produce should i be sold on its grade, and this he thought j would be a big impetus in raising the quality of the produce. Similar schemes in operation in Canada and Holland had proved entirely satisfactory. SOUTH ISLAND’S POSITION. Mr. C. P. Agar, manager of the Tait.apu Pairy Company, said that he understood in some quarters that there was a feeling of .soreness against the • South Island over the turning down of

the pool proposals. It had been said that the pool had been killed by four or five proprietary factories. Of the committee that had considered the scheme, four represented cooperative concerns and one a proprietary concern, three were producers and two were gon-producers. He wished to assure them that the South Island Committee had given the scheme earnest, careful and sincere consideration, and had turned it down because on its merits it was not acceptable. There was no suggestion whatever of a North v. South Island feeling. He regarded the interests of the dairying industry as Dominion wide, and any feeling of North v. South would only have one effect, and that was one detrimental to the producers of the Dominion. The pool had never been acceptable to him, and no proposal that included Tooley Street merchants would be acceptable to him. One important point also that weighed with him was that he had strong prejudices against asking the Government for legislation in regard to the industry, because the day might come when they might have a Government in power that did not regard the dairy industry in the same light as did the Massey Government, and any request they made might have a back kick in the future far greater than any benefit they might receive to-day. It had been said by advocates of the pool that they must have the merchants’ money brought into any” scheme for the control of their produce, otherwise they would not have a commercial outlet for it when they got it to the Home market. They must, however, realise that the whole of the produce 1 goes into consumption irrespective of who sells it. If there is a demand for it, it goes into gonsumption at once, but if the supply is in excess of the demand. no power on God’s earth would hold the price up. BASIC FACTS AND PRINCIPLES. They must realise that in considering any scheme for marketing, basic facts and principles must be taken into account. They could not dismiss with a wave of the hand that the law of supply and demand did not exist. The slightest thought would tell them that supply and demand is what is going to rule the prices of our produce this year and in the future. He pointed out that the proposed finance of the produce under the pool, while in theory very nice, when put into practice would prove of no vahie, as in times of crisis it would break down under its own weight.. He admitted that the ultimate aim was to market the produce on their own floor in London. They' were told that that was impossible, because Tooley Street had- the experience, capital and brains. Capital was the. first essential, and under the monthly auction scheme they might arrange for a levy that would create a fund. By starting auction sales they would get experience, and he ventured to say that they would soon get their eyes opened and learn the methods to adopt. Under the pool system the dairy producer would know no more of the marketing than they did t hat day. Though it was stated that Tooley Street had the brains, capital and experience, in the same breath it was proposed to set up a committee of three men to control the market against these merchants.

The system of monthly auctions would be acceptable to all, and if the only argument was that New Zealand was too far away from the market, that could be dismissed, as they could adopt the plan of the tea growers of Ceylon and send the produce to London to be sold by auction. Personally he would like to see it tried out in New Zealand for a season. He pointed out that of £ 30,000.000 imports per annum into New Zealand, practically none came in on consignment, and if it was good enough for the importer to sell his stuff then it was good enough for the producer. Denmark and Canada had adopted the system, and surely it was good enough for this Dominion to try it. All realised the urgency of effecting some improvement in the marketing conditions, and this scheme at practically no expence could be tried for a year. The main object of the South Island proposal was that a committee should be set up to consider the scheme, whilst the aim of the motion before the meeting was to affirm the principle. He appealed to the meeting not to reject the proposal altogether even if it were not acceptable to themNothing could be lost 'by giving the scheme every consideration, and if it was then turned down he would feel no soreness. Naturally he would be sorry, but both associations could go on looking for a scheme that would be acceptable to the whole Dominion. LOCAL AUCTION'S ADVOCATED. Mr. A. H. Mackrell (Dunedin), who was said to be the prime mover of the auction scheme, said that all were agreed that the present system of jnarketing was “rotten.” With the huge amount of dairy produce they were now handling, some drastic changes in the syttem were required. If the proposed system w’as not right, they had got to get to work to bring in some other. In support of the schemes, he quoted the experience of Canada, Denmark and Siberia. The wool growers had proved the benefit of the scheme, and he quoted figures showing that from a small beginning in 1868, a total of 409,000 bales of wool had been auctioned in 1920, out of a total of 450,000 bales. Wool growers were intelligent men, and realised the 'benefits of competition in the world’s markets. The producer was now entering upon a new season, and in a few weeks they would have to determine what they were going to do with the season’s produce. He believed the North mostly consigned, which was probably the lesser of the two evils.

With the huge amount of produce now going forward, he believed that. Now Zealand was the best place to auction in. Shies could be held every few days, and tach week the producers could ?ee by the papers what the produce was bringing. Instead of having twenty agents after their produce, they would more likely have 120. including men who controlled group shops. They would get more into touch with the consumer by bringing out to buy here the man who sold the produce over the counter. The produce now went through channels of which the producer knew nothing, and they were not getting the full market value for their produce. He believed that in a short time they would get prices on the level of Danish. They would-get the benefit of the law of com petition, and would get' its true value, which they were *not getting now.

They were now ata stage in the industry when the producer could not afford to wait several months for his money, or before he knew what his produce would bring. He instanced this season’s bitter experience. Starting with the idea that produce would realise 2s perpound, they did not know until w.e’l nr in the season that it would not mqU.-.n

that, and thev now knew th«v would not get more than in the vicinity of Is.

The producer under the auction, scheme ! would know the value of the month’s : produce, and would be able to know I What he could lay out in the way of expenditure instead of working largely in tiie dark, at present. He instanced oases in the South Island where factories had overpaid, with disastrous results. He urged them to criticise the scheme, and he pointed out that the main objection to the pool was compulsion, but there was no compulsion in this scheme. Moreover, he said, they must show consideration to the person who purchased their produce, realising that New Zealand was not the only place that sent produce to the markets, and that they must keep in the good graces of the consumers. Personally he favored sticking religiously to selling the month’s output only, as they could not afford to gamble. He recognised the need for advertising the produce, but considered that the scheme would provide the greatest advertisement by the auction prices being cabled regularly throughout the world. They must advertise to create demand, and he considered it would prove a payable proposition to spend £50,000 to £lOO,OOO in an advertising drive in one year, so as to create a demand, and when the people of England became acquainted with the merits of New Zealand produce, the men who stocked butter would be forced to come to the New Zealand sales for it. By this competition they would get Danish prices. Mr. Daysh favored the formation of a committee to sell their produce in London. TARANAKI VIEWS.

Mr- Marx (Mangatoki) welcomed any suggestion for the improvement of marketing conditions, but he did not think that wool could be fairly compared with dairy produce, a*s the latter was perishable. There was also the question of shipping and cold storage to ’-be considered. He thought that sales here would be affected by the buyer having to allow ■for a possible fall in prices between the time that would elapse between the sale and when the produce reached the Home market. He favored auction sales being held in London. One speaker considered that sales in New Zealand would create a paradise for the speculator. Mt. J. S. Connett held that the question of regular shipment was an important feature that must be dealt with, and he illustrated the position of the present season- They must have regular shipments .to ensure regular supplies to the world’s markets if they wished to prevent the specul;*. Hon that takes place when there was d 'tion or a hold up. Dislocation also -k place when no shipments went forward. Mr. J. R. Corrigan (Hawera) commended the South Island delegates on ■having brought forward a scheme. He always believed that the man who cries down one scheme should lie prepared to construct another. The South Island had only a small output, so he asked them to go ahead with the scheme, and if it proved a go< d one the North Island would quickly -follow. a periskable article, and might have 'been quoted instead of wool- He urged them not to iorget that it was the Meat Trust that governed the supply and demand in regard to meat. At one period Danish butter was 50s in advance of New Zealand. Was that caused only by supply and demand? He would support a proposal for fortnightly sales in London, which, was near the people who used the produce. If they sold the produce in New Zealand they would have “ten times as many parasites feeding on the produce” as at present. He was pleased | that all were unanimous that something ‘ better should be done, but he did not favor the proposal for auction sales in New Zealand. He believed that Canada, which had 'been quoted, did not find the sales at Montreal satisfactory, and now the bulk of the produce was going to London on consignment. Denmark had also been quoted, but there the price was fixed weekly. WEAK POINTS OF SCHEME.

Mr. Baker (Papatawa) considered that there were a number of weak points in the monthly auction scheme. Every extra man who came out here to buy would cost extra money that would ultimately come out of the producers' pockets. Moreover, the buyers would set up a ring and agree among themselves what they would give, and on arrival at Home would sell the produce at a handsome profit. Mr. Bond (Bainesse) considered that the solution was for the producers to get their own ships. The Commonwealth shipping scheme had proved a ‘ success, despite the circulation of contrary re ports. Mr. McMillan said that thew was no analogy between wool and dairy produce so far as sales were concerned. In the case of wool the 'buyer knew the exact quantity on the world’s markets, whereas the output of dairy produce was liable to fluctuations due to climatic conditions, and the buyer would always base his price on the chance that there would be a glut on the market when it arrived in London. Mr. Burton (Kaipororo) was not prepared to support the scheme unless it could be shown that the expenses were to be less than under the present scheme. MR. AGAR’S REPLY.

Mr. Agar was selected by the -South Island representatives to reply. He said it had been argued that wool sales and dairy produce sales could not be placed on all fours. He admitted that dairy produce was perishable and wool was not, but that was no argument against the auction scheme. It was admitted that it was necessary to regulate supplies, and therefore cool storage would have to be provided in any marketing schen.e where it was necessary to hold the p oduce. They did not ask the conferei\c to give time to elaborate the scheim ij. all its details, but had submitted a rough flraft. The South Island favored monthly sales, in which the .producers were the determining people as to wlint quantity of produce they would off.-r, and over what period. They would control the produce, which to-day they d cl not. If the committee decided that 't was foettei’ to hold the sales in London or elsewhere, that would be done, but lie considered the only logical reason against holding sales in New Zealand was the distance from the market. It might be possible to institute selling rooms in London and hold weekly or monthly sales. It was not the function of any marketing scheme to overcome the shipping difficulty; it was for the dairy associations to bring down a concrete scheme. He urged the meeting not to kill the scheme by introducing the shipping difficulty, as that was a difficulty to be faced and overcome. Tie considered that no stronger argument could foe advanced in its favor than the difference in the price of Danish and New Zealand butter. The. free and unfettered competition of the auction sales would tend to eliminate speculation. He considered that the tremendous rise of the past few days should have been ap-

parent to those who studied the butter market and believed in the law of supply and demand. They must have realised that ’butter must go up in summer. From information in his -possession, he had made the statement on May 23 that in the next few weeks butter would reach 200 - What the dairy industry lacked to-day was the information necessary to enable dairy factory directors to estimate the values of their own produce. Those who were appointed by the industry to watch the market should have known that butter would be worth more, and factories would have been prevented from making sales at Is 4Jd, when a few weeks later it would be worth Is 9d. They must originate a scheme that would enable the statistics of the world’s markets to be in the hands of the heads of the industry so that they would have all the available information at their disposal, instead of only getting what was offered to them by the people who wanted to buy the produce. They would then be able to get the full value. He had heard it suggested that the South should initiate their scheme. There wag not the slightest doubt but that the South, having put their hands to the plough, would carry it through. It was no. good for anyone to say: “Go on, South; have a go”; or “Go on. North.” What was wanted was for both to get together and pull to pieces scheme after scheme, until they got one acceptable to all, and go forth as a united industry. No doubt the scheme was crude a.nd had its weak points, but if they turned down the proposal to set up a committee they would be committed to the old policy, but if a committee were set up to enquire into whether they should adopt the scheme of marketing in New Zealand or not, he felt the conference would be worth its weight in gold to the New Zealand producer.

CONFERENCE MOTION. After the luncheon adjournment, Mr. Jerusalem was given permission to amend his resolution so os to provide for the setting up of a committee to confer with the South Island Dairy Association with a view to investigating the advisability of establishing auction sales or any other marketing scheme, and to submit their report within three months. . Mr. Brown (Hokianga) said that a committee had been set up almost unanimously by the North Island producers in favor of a pool, and that committee had not yet had an opportunity to report. He considered the air should be cleared of that first. He thought the auction sale scheme was going backward, and would only accentuate the speculative element. The central idea of the pool proposal was, he affirmed, a sound one. If they did disagree over the question of the Tooley Street merchants handling the produce, that was no reason why they should scrap a principle that was vital to the welfare of the Dominion. It had been assumed because the South Island had turned the pool <)own, that it was dead, but this was not so, and he thought that it was too good a thing to •be allowed to die-

Mr. J. R. Corrigan (Hawera) considered that before discussing an alternative scheme they should know what had been done by the pool committee. Since the South Island had turned the proposal down the committee had not, until that morning, met, and he did not consider the proposal was by any means dead.

On the motion of Mr. Marx, it was resolved to postpone further discussion until the pool committee had made its report. POOL COMMITTEE’S ACTION. The chairman (Mr. A. Morton) then outlined the proceedings in connection with the proposed formation of the pool, from its initiation until the meeting of the South Island Association, where it had been turned down so far as it referred to the whole of New Zealand. The defection of the South Island had made it impossible to carry on with the original scheme. He was pleased that all were agreed on one cardinal point, viz., that the position of affairs in connection with marketing was at present “rotten,” end tl<vt it was necessarysomething should be done. The difficulty was to find some way of bringing the various views into line so as to deduce something acceptable to the whole Dominion. What was required in any proposal was absolute unanimity. It had been suggested that the North Island should go on with the pooling scheme, but there were difficulties in the way of dealing with any scheme that did not embrace the whole Dominion. It had been suggested also that they should deal with ’butter only, but here again they were up against difficulties- It might perhaps be wise to set up a committee to confer with the South Island Association, not only to consider the question of auction sales, but any proposal that might improve the marketing conditions.

Mr. Brash, who attended the South Island meeting with Messrs. Forsyth and Goodfellow, said that they received a good reception, but found that fourfifths of the delegates had come to the meeting instructed to vote against the scheme. It was unfortunate that the promoters had not been permitted by the South Island Association to address meetings, as they had done in the North.

Mr. W. E. Goodfellow felt that it was almost a calamity that the compulsory scheme had fallen through. They recognised that without the moral support of the South Island it would be impossible to get the necessary legislation through the House. The pool scheme had, therefore, gone by the board, and it was now for them to instruct the committee to bring down some modified' scheme that would be acceptable. His company was prepared to accept any reasonable scheme.

Mr. Moss (Eketahuna) said that the delegates at Wellington recognised that th?y had a difficult proposition to oring Die views of the various sections together and also to allay prejudices. The 15 nth Island appeared to be afraid that they would bo out-voted by the North Island, and though only entitled to two * vo representatives on the poo] board, hid been offered four. He touched on the lack of unanimity which had prevented improved conditions in the past, illustrating that three years ago a marketing association had been launched fairly unanimously, but afterwards they had first be.en pulled this way and then that way. All the producers wanted was a fair deal from the merchants at Home, and to have control of their produce. He held that the auction sales, as proposed, would give great opportunity foi; speculation- He was pleaded at the unanimity regarding the need for improvement.

MATTER REFERRED BACK. Mr. Broadbent (Levin) moved as an amendment that the matter be referred bax?k to the pool committee to try and evolve some other marketing scheme. This was seconded. Mr. Corrigan suggested that the South Island association be asked to appoint four representatives to the committee, and in that form the resolution referring

the matter back was carried. Mr. Corrigan remarked that whatever was brought down would he in the beat interests of the producers, but they must be prepared to find that it included com* , pulsion.