PRICE TOO LOW.

Auckland Star, Volume LXX, Issue 219, 16 September 1939, Page 13

PRICE TOO LOW.

BUTTER IN LONDON.

HIGH WARTIME COSTS. DOMINION AND GUARANTEE. That an additional 10/ per cwt for New Zealand butter in London was required to cover increased freight charges and war risk insurance rates was the view expressed by representative leaders of the dairying industry in Auckland to-day. It was stated that the maximum price of 129/ per cwt fixed for Empire butter by the British Government would not give a return to New Zealand equal to the guaranteed price. Estimates based on shipping freights and insurance conditions at present prevailing showed that a minimum of 135/ would be needed to enable the New Zealand Government to avoid a loss if it maintained the guaranteed price at the existing level for the 1939-40 season, and a further amount of at least 5/, making a total of 140/, would be required for the Government to recoup the past season's loss during the next two years. "A price below 140/ would be a bad bargain for New Zealand," said a former exporter of dairy produce, "but if a contract could be arranged at slightly above 140/, with the right to ship up to 140.000 tons of butter a year, it would bo possible to maintain the guaranteed price at the existing level without loss to the Government."

Comparing this price with that ruling in the Great War, he pointed out that it would enable butter to be retailed to the consumer in Britain at a much lower price than at that time. It would be a serious matter for New Zealand if the burden of war risks in various forms had to be carried entirely by the producer or passed on to the taxpayer in the Dominion. At the same time it could not be expected that the British Government would countenance such a rise in prices as occurred in the last war. All the great butter producing countries were continuing to send supplies to Britain and adequate stocks should be maintained.

As negotiations are at present in progress for the sale of the Dominion's output to the Imperial Government, it is considered possible that the present fixed price will be only temporary, but it is regarded as equally possible that the British Government will endeavour to arrange a contract price around the present level. As costs of production have been increased and may be expected to rise further due to effects of the war, any possibility of a reduction in the guaranteed price in the Dominion is dismissed as impracticable. Alrqady high costs have adversely afTectcd production and there is a strong desire in Government, as well as in farming, circles, to restore a healthy position.

Cheese is likely to figure prominently in any arrangement, because of its value as a part of the diet of troops, and the British Government may seek an increase in supplies from New Zealand.