ABUSE OF BUTTER SUBSIDY

Evening Post, Volume CI, Issue 14, 17 January 1921, Page 8

ABUSE OF BUTTER SUBSIDY

■TO THE EDITOR,

Sir, —In an article headed "Dairy Pro-/ duoe," published in The Post on Saturday, you refer to an attempt made by dairy iactories supplying butter to their own shareholders to participate in the subsidy paid by the Government on butter. You state : "In other words, the farmer should bo j;aid_3d per pound bonus on the butter he sells to himself." This statement is incorrect as to the amount, which is 6<J; but it is the first appearance, in print, so far as I am aware, of the attempted exaction by butter factories of a toll of 6d per pound. You have merely hinted at the position in the article referred, to. The facts are these, and they ought to have been made public by the Government :— When the Imperial Government concluded arrangements for the purchase of the exportable surplus of butter made in New Zealand for the current season, the basis price agreed upon was 280s per cwt, f.0.b., that is 2s 6d per pound, or. about 10£ d per pound increase on the price paid for butter by the Imperial Government iast season. The increase, mark you, was within a few pence of the equivalent of the full return that farmors had been receiving for their butter before the privations artd sufferings, consequent on the war, had put such a high premium on this important, 1 will ,say, absolutely necessary article of food. As' 4 purchaser in the Imperial Government had been found willing to pay 2s 6d per pound for New Zealand butter, it followed that that was the market price for it. It is arguable, but I will concede the point that the dairy factories supplying the New Zealand market should receive the same price for their butter, quality and other things being equal, as those,, which exported their butter instead of supplying local requirements. . The Government realised that as the people of New Zealand had been paying Is 8d per pound for butter they would resent paying 2s lOd or"ss for it, because it was worth 2s 6d per pound for export. No doubt the fact that, while Great Britain was in desperate straits for butter, New Zealand was producing thousands of tons of it in excess of our requirements, influenced the Government iv keeping the price of butter lower hare, in the land of abundance, than it was likely > to be in Great Britain, the land of great scarcity. Besides, tho people- of the Old Country have margarine to fall back upon, while we have no margarine made in New Zealand that is suitable for table use. The Government then decided to pay a subsidy of 6d per pound to" all producers of factory butter in New Zealand who sold any of their make to wholesale or retail customers. This put all the butter factories on an equal footing. The factory that exported or sold to the Imperial Government received 2s 6d per pound, the factory that sold received the equivalent by payment of Is HAd in bulk at the factory plus 6d Government subsidy, of which 5d was paid down and Id subsequently on completion of accounts. The Government thought, and I hold rightly so, that inasmuch as the dairy farmer was getting 10|d per pound more for his butter-fat than last year he could very well stand out of the subsidy scheme. He had ample milk in his own place from which he could make butter enough for his own household; - and if he were too busy to "do so he could obtain his supplies, as he may have been, in the habit of doing, from his own factory.. After all, it was His own butter. He supplied his own factory, for he was a shareholder, and he had the benefit of the greatly increased price for what he supplied. _ But this did not suit him. Dairy factory directors are admittedly keen men, and they saw a way of getting a; little more out of their milk. In some cases .they had been supplying butter to their shareholders (dairy farmers all) at Is 7<l per pound out of stocks, and that at the very time those farmers were receiving 2s 3d per pound advance on their but-ter-fat. ■'■ Buying butter at Is 7d, selling butter-fat at 2s 3d. It was a. good deal for them. But they were not satisfied with that. The directors of some of the dairy companies, knowing that they would not be permitted 'by the Government to collect the subsidy of 6d per pound on their, own butter sold to themselves as shareholders or suppliers, sought how they could evade the regulation. They suggested that one way would be for the factory to'refuse- to sell butter to its suppliers and shareholders, but to direct them to buy of retailers. This would defeat tho Government's object, and at the same time give the dairy farmer a clear bonus of 6d per pound on every pat of butter he bought. In the case of one large factory, it was suggested that lorry-drivers collecting cream should be constituted but-ter-retailers buying butter from the I factory and selling it to persons from whom they collected cream for turning into butter. This would have enabled the supplier to buy back such quantity of his own butter, and fat as he required for h'.s household at 6d per pound less than ho was obtaining for the remainder sold to the Imperial Government. This procedure .was quite contrary to the regulation which provided that no supplier or shareholder should participate in tho subsidy. Ir^order to defeat it, however, factory shareholders and suppliers Were urged by directors and others in authority to buy butter—their own manufactured butter it might be—at the local store or anywhere else. And here is another way by which, evasion of the regulation is being . attempted :—Butter factories, instead of selling, as before, to shareholders, who are suppliers, are selling to merchants or retailers just sufficient for those shareholders or suppliers' requirements, and directing them to buy of such merchants or retailers In -effect, it is, as ,you say in your article, the farmer who makes butter is obtaining a bonus from the Government for the butter he sells fo himself for, say, a bonus of 3d per pound. It v is 6d per pound. I must apologise for the great length, of this letter, but you did not fully set out the facts in your article on Saturday. They should be known. What will the Government subsidy of 6d per pound on butter amount to at the end of March? I do not know. I doubb whether th« Government knows now, if it based its estimate upon the exclusion of shareholders, who are suppliers, from the benefits of the subsidy, fr-r these are creeping in by the devious ways above referred to. This thing ought to be' widely known, and the Government should make it widely and definitely known that suppliers of milk for butter making are entitled to this gift of 6d per pound on every pound of butter they consume, or pay away to factory workers and others in the form of wages—l am, etc., RE-LEASER,