Dairy Marketing Structure Reviewed

Press, Volume XCVIII, Issue 28980, 22 August 1959, Page 9

Dairy Marketing Structure Reviewed

A few well-chosen words of comment on the dairy x industry were made this week by Mr W. G. Macartney, of Tai Tapu, who has retired from the Dairy Products Marketing Commission after having served on that body since its inception in 1947.

Mr Macartney is well qualified to speak on the industry. A dairy fanner himself, he joined the board of directors of the former Tai Tapu Dairy Company in 1925 and has sat on the board through the merger with the Central Dairy Company and has been chairman of directors of the Tai Tapu Central Co-operative Dairy Company since 1939. His grandfather was one of the original suppliers to the old Tai Tapu factory at Tai Tapu and his father was a director from 1918 to 1925, being succeeded by his son. In 1945 Mr Macartney was nominated as a member of th® Dairy Board and resigned two years later to become one of the inaugural members of the Dairy Products Marketing Commission. His retirement was due to illhealth, as he felt he was not doing justice to either himself or the industry. “I think the Dairy Marketing Commission has been an unqualified success,” he said. “With the organisation and personnel it has it will continue to function efficiently and protect the interests of the dairy industry. Last Year’s Panic “Unfortunately during the period of extreme low prices overseas last year, both the Dairy Board and the Government panicked unnecessarily. We might have had a happier solution to all our problems had the price fixing authority been allowed to function as set out in the act giving it its powers. “The exportable world surplus of butter is small in relation to the total world production. Outside Denmark and New Zealand I don’t think there is any other country which operates without a subsidy on either butter or the milk produced for its manufacture “The effect of getting such countries as Sweden, Finland, and Holland to reduce their domestic prices of butter has been greater than the partially successful attempt to get the United Kingdom to apply anti-dumping laws. In those countries the consumption of butter has risen with the lower prices at the expense of margarine. “The leaders of the New Zealand dairy industry realise that we must stand on our own feet and that the accounts must be self-balancing. I do believe, however, that some partnership with the Government to supply the necessary finance is essential. “Basically, the guaranteed price is based on 38.25 d per lb, a figure which was arrived at between the Dairy Board and the previous Government. I would like to question whether this could be

sustained today, as no real examination of the cost factor has been made since 1938,” Mr Macartney said.

Production cost movements since then had been measured by the price index and general movements in farming costs, he said. "Neither the Government nor the Dairy Board were happy to leave the decision on the guaranteed price to the fixing authority. The failure to do this harmed our present guaranteed price structure and caused unnecessary disharmony in the industry.” Future Prospects The prospects for the dairy industry were quite good, but considerable fluctuations in price for our produce had to be expected. There was no practical method of pegging prices down to the optimum level of balance between price and consumption, he said. “If butter rises on the United Kingdom market to 390 s per cwt, at which point consumption is likely to drop, we must take the profits or they will be absorbed by trade speculation.” Discussing • milk powder marketing, Mr Macartney said that the demand for the solids-not-fat fraction of milk was likely to increase and markets should be better. Exchange was the limiting factor in the expansion of trade in these products. Countries such as India could not afford to buy our milk powder, which she needed, because the whole matter hinged on the balance of trade. “If we don’t buy from them, they cannot afford to buy from us,” he said. Revolutionary Step By fixing the price differential for cheese at 6d per lb butterfat the industry had taken a revolutionary step. This was justified by present market conditions, prospects for future trade and the contribution that cheese had made to the dairy funds pool in the last 12 months. “Cheese realisations, and not casein and butter returns, will be the deciding factor in fixing the differential in future years. It is futile chasing high prices for casein, which is a highly competitive market, and have factories changing back and forth from casein to cheese,” he said. Mr Macartney sounded a note of warning about the internal future of the New Zealand industry. “There is a tendency today for some persons to say ‘we can run this show alone’,” he said. “This is a result of last year’s chaos over the guaranteed price. “I would point out that under arrangements applying today, factories receive payment for their produce on the 20th of the month following grading and that large-scale loans necessary for the financing of the industry are made at a low rate of interest by the Reserve Bank and are guaranteed by the Government “This has played a major part in the stabilising of the industry and has enabled the farmer to know at the beginning of the season the price he is to receive. “The present arrangement should not be lightly discarded,” Mr Macartney said.