PART 6

SUGGESTIONS FOR THE AMELIORATION OF THE POSITION OF FARMERS.

Distribution. Whilst it is generally recognised that the industry cannot be rehabilitated without a lowering of production cost, no effort appears to be in progress towards lifting the intolerable burden of distribution charges. It has been pointed out that, whilst he is practically unorganised as regards the selling of his products, the farmer has to face an array of associations set up with the obvious purpose of eliminating competitive bargaining.

  Your Commissioners do not necessarily condemn associations having for their object the prevention of ruinous competition, as uncontrolled competition can easily develop to the great disadvantage of the community, but on the other hand, so, too, will disaster to the farming community react to the grave disadvantage of their suppliers, and it is considered a more enlightened self-interest should be exercised during the present distressful period.
  The cost involved in competitive price quotation has been transferred to sales organisation cost, but there is a difference, that whereas formerly the farmer benefited from economical buying, to-day his purchases are loaded with the overhead costs of expensive organisations by means of "association prices."
  Almost without exception witnesses have bitterly assailed the system of concentrated canvass in vogue, whereby districts are said to overrun at certain periods of the year with travellers vending the same commodities and services. Again, the expense of territory agencies involving the payment of commissions irrespective of direct or agency sales has been instanced.
  It is considered there is scope for economy in commission business, with eventual benefit to the farmer in the form of reduced prices, and your Commissioners make the suggestion that city merchants and others consider the advisability of giving some inducement to farmers for placing orders direct with the principals.
  It may be generally known, but your Commissioners have ascertained that the Cuming Smith-Mt. Lyell Fertilizer manufacturers, like Cresco Fertilizers, Ltd., will deal direct with any settler but for cash business only, and while there is no differentiation in the prices in this regard—the manufacturer retaining the amount of 4s. 3d. per ton which would otherwise be paid to the distributors—a general development of direct buying must tend eventually to cheapen the cost of the commodity to the farmer. The policy of direct buying of every commodity where possible should be preserved with by the farmer for this reason.
  Your Commissioners consider that the margins retained by fertiliser distributors for cash and distribution charges are excessive. So far as the Cuming Smith and Mt. Lyell Companies are concerned these are — credit 8s. 6d. per ton and cash 4s. 3d. per ton.

the allocations of these prices to farmers are:— Cuming Smith and Mt. Lyell

                                                                           CREDIT             CASH
                                                                           £   s.   d.           £   s.   d.

Sub-agents (per ton) 0 2 0 0 1 3 Distributors' costs, including net profit 0 6 6 0 3 0 Discount to farmer for cash before delivery 0 5 0 Payment to manufacturer 4 6 6 4 5 9 List price to farmer £4 15 0 £4 15 0

Cresco Fertilizers, Ltd.

  The sales method of this firm is somewhat different to those of its competitors but the cash result to the farmer is the same.

  The cost of credit is also a matter of comment. Until this year the extra terms charged on superphosphate were 1s. 6d. per ton per month, but it was specially designed to induce the farmer to pay cash for super. However, since April of this year the extra terms have been reduced to 8 per cent. per annum.

  On the other hand no alteration has been made by the jute merchants' association with its members to reduce the rate chargeable for credit on cornsacks. The rate at present is 1d. per dozen per month which, with a drop in the price of sacks, works out at an excessive rate of interest.

  Farmers are not in a position to pay such a rate for extra terms, and your Commissioners suggest that if nothing is done in this regard by voluntary effort, legislation may be introduced to limit the onerous terms for credit.

Trading Corporations.

  Your Commissioners suggest that all trading corporations, insurance companies, merchants and associations thereof, should meet and endeavour to reduce production cost to the farmer. These production costs include insurance and all essential commodities, such as cornsacks, fuel, oil, spare parts, agency charges, and the distribution costs of phosphates. Particular attention should be made in this respect to the excessive terms imposed for credit.

  The State through its railway and water schemes must endeavour to reduce freight, water rates, and charges for excess water.

  It is of little use carrying on the wheat and wool industries in the expectation of increased prices. The reality must be faced. A period of adversity must be lived through by the primary producer, and all costs must be lowered to meet existing conditions.

  If concerted action is taken, we feel sure the farmer will do his part, if he sees all others in the community assisting him.

  The mercantile community must realise part of the life-blood of its business flows from the farmer, and in this crisis profits should not be the predominant factor, but the maintenance of the farmer on the land should be the main objective of all.

Associated Banks and Private Investors.

  All corporations, companies, and persons holding mortgages over farming propositions, should consider whether they cannot voluntarily reduce rates of interest under their securities, and, further, whether they cannot give some definite assurance to the farmers that, while the farmers are doing their best for the mortgagees, they will not be disturbed in the possession of their farms.

  It is noted that the State Legislature is introducing a measure providing for reduction in the rates of interest.

  Your Commissioners are forced to the opinion t hat, with the present low price for wheat and wool, the farming community cannot meet a higher impost for interest then five per centum, and, further, all penalties and super-imposed charges should be removed.