LOCAL PRICE OF BUTTER

Press, Volume LXXXII, Issue 24986, 21 September 1946, Page 6

LOCAL PRICE OF BUTTER

DAIRY INDUSTRY’S EXPLANATION RECENT ARBITRATION DECISION (P.A.) WELLINGTON, Sept 20. “The general public appears to be considerably confused as to what actually happens in regard .to the sale of butter on the local market, and this confusion has been increased since the announcement .of the result of the recent arbitration between the Government and the dairy industry,” Baid the chairman of the New Zealand Dairy Board (Mr W. E. Hale) to-day. “It is felt, therefore, that a statement regarding the position is required to make the industry’s position clear. “When the 1943 stabilisation agreement was made between the Government and the Farmers’ Federation, said Mr Hale, “it was not anticipated by either party that butter would be sold in New Zealand under the cost of production, and so no specific provision was made in the agreement to frotect this eventuality. Later in 943, when the price of butter for export increased beyond that obtaining on the local market, the industry’s representatives raised the question of the necessity for protecting the Eftoducers’ stabilisation accounts, and, again, in 1944, it w®s part and parcel of the. agreement between the dairy industry and the Government that this provision should be reviewed. The matter was the subject of further negotiations between the Government and the industry and, finally, it was agreed that it should be submitted to arbitration in the form of a question. "It was well to bear in mind at this point that no industry in the Dominion was asked to sell its goods or manufactures on the local market at lower than the cost of production, except the dairy farmers, and for that reason the industry’s representatives could not accept any compromise. As the matter to be determined involved some millions of pounds, it was agreed that a bench of three Judges should be constituted as a Commission of Inquiry to determine the arbitration. The arbitration was duly held and the decision was in favour of the Government by a two-to-one majority. The industry, having submitted the question to arbitration, accepted the verdict, but the Dairy Board would be failing in its responsibilities if it did not record the fact that the majority decision, which was in, favour of the Government, stated: ‘The draftsman has framed the question rather unhappily. Counsel for the industry insistently reiterated that the question admits and postulates that the Government had made a loss on the sale of local butter, and that such loss was incurred, not in subsidising producers, but in holding down the retail price of butter. Obviously that cannot be what the question means. If that is what was meant, there would nave been no need to have referred the matter to the commission, because the question would have answered itself—against the Government.’ “Question Carefully Framed” “The Dairy Board, therefore, deemed it to be its duty and responsibility, not only to dairy, farmers, but to the public generally, to place oif record the fact that the question, as submitted to the commission for determination, was carefully framed and agreed upon as the result of a conference between the lawyers representing the Government and the industry and in its official acceptance by both parties,.was the question that the commission was asked to determine, but which, unfortunately, according to its own judgment, it swept aside. “Because of the recent adjustment of prices paid by the United kingdom Government for our butter and ch ®e se ’ the industry made it perfectly dear to the Government that while it accepted the decision of arbitration for the last years it would not agree for the future to bear the cost, approaching or possibly exceeding £1,500,000 a season, in holding down the price, of dairy produce on the local market at the price determined by the Government—ls 6d per lb for butter. ■ , “The industry, therefore, asked either that the price of- butter and cheese should be increased locally to correspond to the export parity or, alternatively, that the Government should agree to reimbuise the industry to the position, not of the value of butter for export, but so that the dairy industry made no profit or loss on that portion of its produce that was sold for consumption within the Dominion. This position the Government had accepted, but only for the 1946-47 season, and a letter to that effect • ver the signature of the Prime Minister, is now in the hands of the Dairy Board.

Lump-Sum Payments “The general public would remember," said Mr Hale, “that a sum totalling £28,000,000 was granted by the British Government to meet part of the cost of stabilisation in New’ Zealand and thus to hold down, to some extent, the cost of production of our exports to Britain. The industry agreed to forgo any claims to the lump-sum payments and it was unthinkable that, having done that, it should be expected to agree to allow the cost of holding down dairy pioduce below the cost of production to be debited to its account. The industry felt that the cost of keeping down the local price of butter below the cost of production was a loss which the whole community should bear, instead of being charged against the dairy industry. Because the issues were involved the board considered that the position should be explained, so that both producers and the general public would understand what had been done.”