DAIRY PRODUCE CONTROL

Dominion, Volume 18, Issue 152, 24 March 1925, Page 8

DAIRY PRODUCE CONTROL

REGULATION OF SUPPLIES QUESTION OF F. 0.8, PURCHASES 11. In this the second of the series of articles on the dairy produce control question, special attention is given to the important matter of regulation of supplies for sale overseas. It already has been shown that while Danish butter is on the British market all the year round and is always available to purchasers, New Zealand butter is available in full quantities for only seven months in the year, in small quantities for a further three months, and practically not at all for two months. Yet it is an accepted fact that any article of consumption that is required the whole year round, and is not merely seasonal, must be always available if a steady demand from the consuming public is to be cieated and maintained. Danish butter fulfils this requirement. People who want Danish butter can always obtain it in any month of the year, or any week. New Zealand butter, on the other hand, is not always available, and the supply being interrupted the demand also is interrupted. When New Zealand butter is going on to the market in reasonable quantities its price approaches nearer to that of the Danish article; but when it is put forward in excessive quantities the price declines, and this continues till the lower price stimulates the demand sufficiently to absorb the additional supply. If New Zealand butter is to establish itself alongside Danish butter, and be sold to the public as New Zealand butter, then it must be on the market the whole year round to maintain an uninterrupted demand.

The Pressing Need. This brings up again the question of the regulation of supplies. The Meat Board has met this problem successfully by regulating the quantity of meat that "leaves the Dominion each month. The board does not fix the shipments in even monthly quantities throughout the year, because New Zealand lamb, to a certain extent, is a seasonal commodity. While it is consumed the whole year round, the demand for it is much greater in the months of May, June, July and August than it is in the cooler months of the year. In regulating shipments provision is made for this tendency. I'hc board’s system of adjusting supplies to the needs of the market involves tne holding of meat at this end, there being no question that New Zealand, ana not London, is the proper place for the retrigerated storage of both meat and dairy produce. Storage is much cheaper and better in New Zealand than it is in Great Britain, and ex; perience has shown that meat and butter retain their freshness longer at this end than thev do at the other. In addition to this, the presence of large quantities of either meat or dairy produce in cold storage in London has a deDressing influence upon the market, as the trade never knows wnen supplies may be suddenly released. If the produce is held in New Zealand it mav not be altogether out of sight, but it does not constitute tne daily menace of a flooded market. For these reasons, it is’’ submitted that if anv regulation of the market is attempted, both meat and dairy produce, when necessary, should be stored in New Zealand. A Practical System.

What the Meat Board has done the Dairy Board certainly could do. It has been suggested that a good plan would be to ship butter from New Zealand in equal monthly quantities throughout the year, with, say, 1500 tons extra to arrive each month during the five slack Danish months from December to April. A table throwing some light on this suggestion has been prepaied showing—(l) The approximate quantities that have been shipped each month on the average of the three years ended December 31, 1924. (2) The quantities it is suggested should have been shipped. (3) The quantities that would have remained in store after such shipments. (4) The number of days’ maxc the quantities remaining in store would have represented. The following aie the figures:— Day's Quan- Should Bal’ce make titles have in in sh’pd. sh'pd. Store. Store.

August 1262 4000 — — Under an arrangement of this kind New Zealand butter would be on the market during the twelve months of the vear, in sufficient quantity and never over-supplied, establishing a demand for itself just as Danish butter has done. According to the above table the quantity held back in store would never exceed 66 days’ make ami for much the greater part of the year it would be considerably less than half that quantity. Storage for this time in properlv regulated stores, such as there are 'in plenty in the Dominion, would not mean anv deterioration whatever in appearance or quality. All this could be done, as the Meat Board has demonstrated, without interfering with the existing marketing arrangements, and without burdening the Dairy Board with grave financial responsibilites. The shipment of cheese could be regulated in a similar way, but the process would have to be somewhat different, since the supplies of cheese from Canada would have to be taken into account. The principle involved, however, would be precisely the same, and a working basis could be easily arranged. F.o.b. Sales.

The contention that f.o.b. sales ’’must be stopped because they are frequently employed in breaking down the market” is'a sweeping assertion which its authors would find difficulty in supporting with facts. Years ago a number of factories sold their outputs for the whole season at a price free ou board at the shipping port. In recent years, however, the general practice for factories has been to sell their outputs for a month or two months ahead, and some of them from shipment to shipment. These sales usually are made to firms engaged in the dairy business who purchase for their own distributive trade. It is stated by some of the supporters of “Absolute Control” that these f.o.b. purchases are made for the purpose of “knocking the market about,” and bringing prices down so that the speculators may step in and reap illegitimate profits. The man that contemplates knocking the market about does not buy first and begin the knocking about process later on. He starts as a “bear,” selling forward what he does not possess, and calculating upon a depressed market, enabling him to buy at a lower rate and so cover his forward sales at a profit. The f.o.b. buyers, as a matter ox fact,

are amongst the strongest supporters of the New Zealand dairy produce market. When a large section, of the trade in Great Britain is interested in keeping prices up the dairy’ farmei has a very powerful ally.. A concluding article will sum up the whole position.

?<fonth. • Tong. Tons. Tons. Days. September ... ... 4410 4000 410 3 October ... 5639 5500 549 3 November ... 5500 2004 9 December ••• ... 7464 5500 3968 16 January ... 6738 5500 53)6 24 February ... ... 5665 5500 5371 27 March ... 7149 40C0 3520 38 April ... 4123 4000 8643 51 May ... 3050 41X0 7693 63 Juno ... 1938 4X0 5631 July ... 952 4CC0 2583 56