HOW ARE LOCAL PRICES FIXED?

Evening Post, Volume CIV, Issue 2, 3 July 1922, Page 8

HOW ARE LOCAL PRICES FIXED?

LOSSES CLAIMED FOR PRODUCERS.

'_ Apparently the local price for butter is not to be based on the cost of its production, but what the overseas consumers are prepared to pay for it. Mr. H. C. Aickin, speaking to the New Zealand Herald, on bohalf of the Opitiki Dairy Company, said loss to producers could be arrested by the Butter Producers' Committee. With enormously increased production, the export season was extended, and butter was still being exported from Auckland, consequently export values must govern the local price practically during the whole year round. Had this policy been adopted in its entirety recently, dairying companies throughout Auckland- Province could have viewed the magnificent values now being realised in London with far greater complacency; but the failure of companies operating on the local market to regulate the price in accordance with changes on the London market,- resulted in factories disposing of their butter to speculators, instead of holding it for winter use, and present high values. . It took approximately three months to market in London butter manufactured in New Zealand, threfore butter made in January, under normal conditions, would be sold during April in London. Laßt January the.average local price upon!an f.o.b. basis was Is ljjd per lb, based on an average f.o.b. London price of Is per lb. January-made butter, reached London in April, and actually realised an average of Is s£d f.0.b., so the loss upon local sales for the month amounted to ojfd per lb. Local sales during February also averaged Is ljjd f.0.b. ; but butter, manufactured at the same time averaged.ls 4^d f.o.b. in London, a loss of 2j.d per lb. The local average price during March fell to Is lid f.0.b., but March butter actually realised in London during June Is 6|d f.o.b i, an ascertained loss of s£d per lb. The average local price during April, May, and June worked out at Is 4jd per lb, and should the present price of 236s per cwt in London, equal to Is lid per lb f.0.b., hold during July, August, and September, the loss upon butter sold on the Auckland mackek during the last threT! lionths would amount to 6jd per'lb.

What Mr. Aickin ueseribes above as a" "loss"., does .not... mean that, .the pro-, ducer/was that,lnuclf^but of.'pocket, be-' cause' it had never been inS his pocket; It was what he thought hei was entitled to receive, and, what he would have received if he had not sold his foi- ( ward. Had he sold at less * than the butter cost to produce, plus a reasonable-percentage-of profit, then he would have sustained a loss, but there is no evidence that he sold at leas.. The purchasers■'of the produce took all risks of the market,1 and won.; The producer played for safety, .but it did not follow that he sold at a loss in dome so.