PRICES OF BUTTER

Dominion, Volume 26, Issue 98, 19 January 1933, Page 7

PRICES OF BUTTER

Stabilisation Proposal VALUE OF FRESHNESS Sales for Local Consumption MR. A. J. SINCLAIR’S PLAN Entire support was lent yesterday by the Dominion Executive of the New Zealand Fanners’ Union to the principles of the scheme proposed by Mr. A. J. Sinclair, of the Te Awaniutu Dairy Co., for the stabilisation of the prices of butter consumed in this country. Mr. Sinclair, in an address to the meeting, outlined the plan which he has been working for and which has already met with considerable support from dairying interests, including the New Zealand Dairy Produce Control Board and a large number of dairy companies. At the end of his address the meeting carried unanimously a resolution approving the principles of the plan. Mr. Sinclair said that the scheme was not brought forward with the object of getting the dairy farmer out of his present difficulties, but merely with the view of eliminating a heavy annual loss caused by the price-cutting tactics of dairy companies catering for the local trade. Last year, he said, 97,060 tons of butter were exported and 23,000 tons sold on the local market. Mr. Sinclair said that the policy of price-cutting which had developed on the local market in recent years had gone to extraordinary lengths, and including the granting of secret rebates and commissions which was creating serious friction among dairy companies and retailers. While a “butter war” was in progress, he had observed butter retailing at 2d per lb. below f.o.b. parity, and one group of factories had informed him they were losing approximately £2OOO monthly owing to the price-cutting tactics of a few companies. A Stabilisation Committee. The scheme proposed that the local marketing of butter should be under the supervision of a central organisation in Wellington, to be known as the New Zealand Butter Stabilisation Committee, and to consist of five members selected from the personnel of the New Zealand Dairy Produce Board. The committee would be. given powers to draw up the terms and conditions to which all dairy companies must comply. Dairy companies violating these conditions would be liable to have their license to supply the local trade either suspended or cancelled. The committee would require to follow certain defined principles so that the interests of the consumers would be safeguarded. The scheme suggested that the commencing basis of computation for the local market should be the f.o.b. parity of export butter, and that fortnightly adjustments, should be made in the local price, based on the average realisations of New Zealand butter on the London market during the previous fortnight. “Strictly speaking,” said Mr. Sinclair, “there is no proposal to stabilise the price, for that would fluctuate as at present in sympathy with the rise or fall of prices on the Home market." A New Principle. The scheme proposed, however, to introduce a new factor on the local market, and he said that if this could be established it would give the butter producers an additional revenue of £400,000 per annum. He contended that the f.o.b. parity represented the price which the producer realised at the main ports of New Zealand for a butter sold in Great Britain after it had been frozen, stored for a period varying from four to six months, and then defrosted. “It goes without saying,” he added, “that if the butter producers of New Zealand could place a fresh butter on the Home market, they would get a much better price. Indeed, with greater regularity in shipments, and better continuity of supply, there would be no reason why they should not get very close to Danish parity for a fresh butter. The people of New Zealand buy their butter straight from the churn. Why should they, expect to buy it at a price based on a frozen parity? The butter producer is entitled to ask the New Zealand consumers to give him the equivalent of Danish parity for the fresh butter sold on the local market.” That difference was estimated in the scheme at 2d per lb, and it was from this source that the additional revenue of £400.000 would be obtained annually. There was no suggestion of any bounty or subsidy in the scheme. It was merely an attempt to get for the butter producer something to which he was justly entitled. The only other factor in the scheme, said Mr. Sinclair, was the allowance to be made to factories for patting, wrapping and distributing butter to storekeepers, and this was fixed at the amount usually obtained at the present time _Ud per lb. It would therefore be observed that the wholesale price of pat butter would always be 3Jd per lb in excess of the f.o.b. parity of bulk butter. The scheme did not propose to go beyond the wholesale price, and no supervision would be exercised over retailers. A Stabilisation Fund. “It is not proposed under the scheme,” said Mr. Sinclair, “that the dairy companies selling butter on the local market should participate in the whole or this additional revenue. They would get, as at present, the f.o.b. parity, plus the cost of patting and distribution. It is claimed that the premium of 2d. belongs to the industry as a whole, because ot the ability possessed by any butter-mak-ing company to place a fresh butter on the local market within a few hours. It is therefore proposed that the whole industry should participate in the additional revenue of £400,OOO.” . He stated that this would be obtained by establishing a fund on lines similar to the I’aterson stabilisation scheme in Aus W'lia. Each dairy company, he said, would pay into a stabilisation account monthly the sum of 2d. per lb. which it had collected on its local market sales for the previous month. This fund would be distributed at the end of the season to every butter-making company in New Zealand in proportion to its total output. From the consumer’s point of view. Mr. Sinclair said that the average cnsumption of butter per head of population in New Zealand was.34lb. per annum, and the average consumption of each household was just over 31b. per week, so that the scheme would involve the average household in an additional expenditure of 6d. per week. “By eliminating price-cutting, and by establishing the local-butter .market on a more efficient basis,” concluded Mr. Sinclair, “the butter producers, without asking for any bounties or subsidies, can secure an additional revenue of £500,000 per annum.”

The heaviest snowfall this winter occurred on Tuesday in Yorkshire, Derbyshire, and Wales. Snow was a foot deep on the high Yorkshire wolds, and snow ploughs had to be used.