BUTTER for BRITAIN

Press, Volume LXXXIV, Issue 25550, 19 July 1948, Page 3

BUTTER for BRITAIN

HISTORY OF CONTRACT £6,000,000 MORE IN STERLING The Press" Special Service Q — AUCKLAND, July 17. lb 2?9 rease £ 3d sterling per -7 V 1 . e . price to be paid for New Zealand butter and a corresnondinp C =\ eeS ?- § ritain contract mintnn’s b , OU r £6.000.000 to the Do- ™ s sterling income fcr an averchlese n utput o£ bu tter and for New~7<Si flrst contracted r JNew Zealand dairy produce the Dominion has secured price increase! !f g h.T tins / 8 2s 6d sterling pe! cwt ?, £ b ; d * ter and Probably around £3 10s Sterling per cwt of cheese. On aver! crease th l S amounts to an in*£20,000,000. expcrt lncome 01 some

b lk P u r cha se of dairy produce tweSS r , ayst . e ™ <?f contract prices be- = Great Brltam and New Zeam?nnoH roS ®»i? u A. of the war ar -d commenced with the produce of the 1939- ® easo P'- ~T hc basic price agreed n? 1 ?5 d l y , £or creamery butter , 112 t 6d aterhng per cwt and for n?c^itt C 1 i eese 64s 3 <J Per cwt. This permitted an overall average of 139 s Jid per cwt. New Zealand currency, for butter and 79s 9d per cwt, fcr cheese.

Contract Extended Quantities were agreed upon from ? ln ? e .^ ims a s the war progressed, Y? formal contract was made in 1840-41, when prices remained the same, u W ij S ®* reed ’ however, that prices ■ ° e determined by negotiation in May of each year. This system was retained until 1944. when the British Government signed a four years’ conuract with New Zealand, with provision for steady prices up to 1946, revision to be made in the light of’current costs after that year. This contract was extended in 1946 until 1950. with provision for prices to be fixed annually. The arrangement has now been extended for a further five years at higher prices. The sterling prices for New Zealand creamery butter and finest cheese paid by Britain under the contract bulk purchase system since its inception are:—

•Not yet announced. Exchange Terms In terms of trade, based on pre-war price levels, the new contract prices for dairy pioduce still leave New Zealand at a disadvantage in her exchange of commodities and services with the United Kingdom. It is estimated from a study of the latest British export price indices that the Dominion would have to receive 244 s sterling per cwt for butter (against the 235 s agreed upon) to enable her to buy from Britain the same volume of goods from the proceeds of an equal amount of butter, in 1939.

The general trading position has been obscured by the inability of Britain to supply all the commodities sought from her, but there have recently been indications of a shinkage in sterling balances, due largely to the much greater rise in the prices of British imports into this country in comparison with the prices New Zealand has been receiving for her exports. A full analysis of the position cannot be made until the new meat prices are announced. Price in Britain Under the present price Britain is paying 2s Id sterling per lb for New Zealand butter. In July, 1939, New Zealand butter was quoted on the London market at 126 s per cwt, equal to 15.13 d per lb, f.o.b. New Zealand ports. Retail prices in London at that time were Is 2d to Is 3d per lb. The prices which are paid to dairy farmers for their produce are determined under the guaranteed price system and are now fixed by the Dairy Products Marketing Commission. The basic rate for the season from August 1, 1947, to July 31, 1948, was 23.852 d per lb for creamery butter and 13.062 d for cheese. It is estimated that these prices should enable efficient factories to pay suppliers 25.907 d per lb for butter-fat supplied for butter manufacture and 27.907 d for cheese manufacture. Quite a number of companies better these figures.

GREATER INCREASE EXPECTED PRICES RECEIVED BY OTHER COUNTRIES “The Press" Special Service HAMILTON, July 10. “I expected the increase to be a little more, especially in view of the prices being received by Denmark and other countries,” said Mr W. N. Perry, Dominion president of Federated Farmers and chairman of the South Auckland Dairy Association, commenting on the new dairy produce contract with Britain. He believed that Denmark intended to ask for an even higher price. . . Denmark was at present receiving 321 s 6d sterling f.o.b. per cwt, but even at this price the Danish Government was subsidising the producer to the extent of 20s per cwt to cover costs of production. Mr Perry paid he would like to have seen more of the Dominion’s dairy produce made available to supply alternative markets. Other countries were exoloiting these markets, and if the British market happened to become overloaded other countries supplying alternative markets would be in a better position than New Zealand. He was disturbed .to see that the quantity was subject to review annually and at any time if necessary for the procurement of essential commodities from other countries. It seemed that if the Dominion increased its production materially, Britain, even with the seven-year plan, might not be able to take the extra production.

Butter Cheese Stg. Stg. per cwt per cwt 1939-40 s. .. 112 d. 6 s. d. 64 3 1940-41 .. 112 6 64 3 1941-42 .. 112 6 70 0 1942-43 .. 117 0 73 0 1943-44 (Ap.-july) .. 143 U 85 64 1944-45 .. 150 6 89 0 1945-46 .. 175 0 102 6 1946-47 .. 175 0 102 6 1947-48 .. 205 0 118 0 1948-49 .. 235 0 ♦ 0