Cheese And Butter Prospects

Press, Volume CIII, Issue 30391, 16 March 1964, Page 10

Cheese And Butter Prospects

The 10s per cwt rise in the price of New Zealand crated cheese in London is encouraging news for the New Zealand dairy industry. The first change in price for four years, it augurs well for the marketing of this year’s output. More than 90 per cent of New Zealand’s cheese production is exported, and about 90 per cent of the exports are sold in the United Kingdom. Apart from 1958, when the United Kingdom market slumped badly, cheese has been a consistently profitable export in recent years, even when butter prices have been depressed. At 231 s per cwt, the New Zealand cheese sold in Britain for the last two years has shown a surplus of about 16s per cwt above the basic butterfat price. The price increase brings this margin to 26s per cwt, compared with about 20s per cwt on butter at its current London price of 335 s per cwt. At first glance, the Dairy Production and Marketing Board might appear to have “ backed the wrong “ horse ” in its recent policy of diverting production from cheese to butter. Certainly the unexpected rise in London cheese prices will call for a reassessment of this policy; but it is still probably the right one. The diversion of milk supply from cheese in New Zealand last year was to ensure that New Zealand would fill its butter quota, raised from a basic 164,000 tons to 166,000 tons. This year the basic quota has been further raised to 168,000 tons. New Zealand’s cheese exports, as a result of the diversion in the latter part of 1963, fell from 92,000 tons in 1962 to 87,000 tons in 1963; and cheese manufacture in the seven months ended February showed a drop of 7.6 per cent on the comparable 1962-63 figure. The drop in New Zealand supplies (and in supplies from other sources) was partly responsible for the recent price rise in Britain. Any substantial increase in New Zealand supplies would tend to reduce the price. The Dairy Production and Marketing Board’s main aim this year must be to fill its butter quota. Not until it is sure this quota can be filled should it divert milk supplies from butter back to cheese. While market prospects for both products are so encouraging the board should aim to stimulate overall dairy production in 1964-65.