SILVER LINING

Dominion, Volume 24, Issue 188, 7 May 1931, Page 9

SILVER LINING

Position in Dairy Industry

OPTIMISTIC NOTE

Consumption Increasing

An optimistic note was struck by an authority in the dairy industry in an interview yesterday. It was claimed that the industry was still earning money,’ that the market position was sound, with an increasing consumption that would react very materially to future benefit, and that, while readjustments are necessarily proceeding, the industry possessed an inherent capacity to surmount all troubles, and do more than its share in restoring prosperity to the Dominion.

“Too much notice,” he said, “must not be 1 taken of the actual prices current today on the London market for New Zealand butter and cheese, because as a matter of fact the great bulk of both butter and cheese for the past season has been sold, and these prices are therefore largely nominal in their immediate effect upon producers. The stock position, in fact, is remarkably healthy. “New Zealand butter in store in London on May 1 was only 5178 tons, comparing with 9950 tons on the same date last year—approximately half. As the average weekly consumption of butter is now 7000 tons, this stock represents about five days’ supply. Further, the quantity afloat is no higher than at the same time last year, while the proportion of the total last season’s production still to go forward is negligible. “Careful estimates that have been made show that on the run of prices ruling throughout the maj’or part of the season, together with, the premium received by producers in respect of exchange—which amounts to approximately 10/- a cwt or over Id a lb—the average well-run butter factory should be able to pay out from 1/0 J to 1/1 on home-separated cream. With advances throughout the season from lOd to IOJd, this leaves a substantial bonus still to come for distribution in August and September next. This bonus is estimated on a conservative basis to amount to from two millions to two and a half millions.

Still Room for Optimism.

“In addition, the industry will receive the benefit of production threfughout the autumn and winter months, in respect of which the returns will be at least another two millions; so that approximately four to four and a half millions of dairy money may be assessed as coming into the country throughout the relatively dead winter period. These figures show that there is still room for optimism in face of the actual facts.

In reality it. will be found that tile wlx»lo position of the New Zealand butter producer lias been immensely strengthened by the recent course of the market.

"Less than two years ago Britain’s weekly consumption was estimated at 5000 tons. To-day it is over 7000 tons a week. Tim expansion has been won at the expense of margarine, because of (1) the lower prices ruling, and (2) the publicity efforts initiated by the Empire Marketing Board and the New Zealand Dairy Produce Board. Britain’s consumption of butter per head of population is now 15ilb per annum, and of margarine 13ilb. New Zealand eats approximately 301 b of butter per head per annum. Britain’s consumption ot margarine represents over 300,000 tons annually, and if it can be diverted to butter, it would suffice to keep more than two New Zealands going. Two Objectives Achieved.

“The recent lowering of prices for butter has, in point of fact, achieved tyvo objectives which could only have been attained by an abnormally expensive campaign of propaganda. First, it enormously increased the consumption of butter in the United Kingdom at the expense of margarine, and it has given New Zealand an opportunity of entering territories where its butter was formerly unknown. 1 The Empire Marketing Board assisted materially in this. It Appointed six canvassers to work in their northern and midland territories —formerly t(ie stronghold of Danish butter. Official figures just available show that in four weeks these canvassers received 846 definite promises from grocers to stock Empire butter, thus doubling the selling points of such butter in the area covered.

Broadening Market.

“The importance of this work cannot be exaggerated. It involves a definite broadening of our market. The people in these industrial centres of the Midlands and North are becoming fully alive to the desirability of Empire trading, and untold good will come out of this entry of New Zealand’s butter into northern markets.

“The consumption of butter has been so stimulated that no accumulation exists”; if the present low level of prices is maintained over the next few months, consumption will prevent any accumulation of stocks from Baltic and European countries. Thus New Zealand butter of the next season’s make, when it reaches the United Kingdom in quantity about the beginning of November (when supplies from European countries are declining), will find a clear market with a prospective consumptive demand far higher than it has ever been before. 1 “It thus becomes in reality a contest between butter and margarine. Butter is the better article, and once users of margarine are attracted to it they wilt stay. It then remains for the New Zealand farmer to produce satisfactorily on the new levels. Here our mild climate, herdtesting progress, and liberal top-dressing policies are bound to win out. In the last five years' the average butter-fat production per cow has increased from 1801 b. to 2201 b. Denmark’s average to-day is 2701 b. Twenty years ago it was at 2201 b. —our figure to-day. Leaders in the dairy industry believe that we can bridge that gap of 501 b. in a much-less period than twenty years because of our superior conditions. “If we to-day were producing that extra 501 b. of fat per cow, it would mean another five millions income per annum. Many herds to-day are averaging 3001 b. of fat per cow, and it is believed the national average can be lifted to that figure. Thus the industry does possess within itself the possibility of restoring individual and national prosperity. ' “Finally I may say that a recent visitor to North Taranaki recorded his surprise at the optimism of farmers there. Thev all still have money to spend, though admittedly less than usual. Adjustments naturally have to be made with many who bought at relatively high .figures, but a really.surprising degree of consideration is being' shown by many mortgagees, with resultant benefit to farmers and the community. In spite of immediate difficulties, I therefore think it fair that the definite silver lining to the situation should be set out.”