BUTTER PROSPECTS

Evening Post, Volume CIV, Issue 48, 25 August 1922, Page 8

BUTTER PROSPECTS

DAIRY DISPOSAL PROBLEM

WHAT IS BUTTER WORTH?

COMPETITION OF MARGARINE.

;It is generally known that the exportable dairy produce of the Dominion is disposed "■ of by (1) consignment to overseas markets, and (2) sale of output, or .'(3)' part consignment and part sale.. Monthly auctions in the Dominion on. lines something like the Canadian cheese boards have been proposed as an alternative to a compulsory pool of\exDort produce. There is also the existing New Zealand Producers' Cooperative Marketing Association, Ltd., the annual meeting of which was held in Wellington on Wednesday. The association was specifically established to handle the exceedingly difficult problem of marketing dairy produce in Great Britain, and its functions and accomplishment were revealed at the meeting. The official report states that :• "Those present on behalf of the factories whose outputs of dairy produce had been handled in the United Kingdom by the London board expressed themselves more .than satisfied with the results attained during the second year's operations of the association. They recognised that good work had " been done in London by the board of directors in regard to prices realised, and that in the . reduction of the cost of. handling a.distinct advantage had been attained. The indirect gain and benefits to producers throughout the Dominion by the inauguration of the scheme had been very great, and with the control of a larger quantity of produce, better and more stable prices would be ultimately obtained. • ■ r'ln the first year of its operations, 56 dairy factories' outputs had been dealt with by the association, and in the' second year of its- existence, the number had increased to 66. The quantity of produce handled by the association from these 66 factories represented one-ninth part'of the total cheese ex-, ported : from New Zealand, and onefortieth part of the butter. This was taken by ' the meeting to be a clear indication that co-operative marketing was growing in favour. '.'The, most important question considered by the meeting was the appointment of an organiser in New Zealand, with the object of bringing before directors of dairy companies the benefits and advantages to be derived by linking up with the concern, and a recommendation was made to the directors that this matter should receive their serious and earnest 'consideration at an early date." A POLICY QUESTION. So much for one attempt l>y dairy farmers to solve the problem of disposal of their produce; but the policy question is still the subject of debate at co-opera-tive company meetings throughout the Dominion. Both sale ana consignment are attended with risks. All is a matter of speculation. It is something like horseracing in that the entirely unforeseen may happen, upsetting in the one case-carefully made deduction* from a study of pedigree anil performance, and in the other' exceedingly careful calculations on official information and data.

Instances were not uncommon last season of: directors of i co-operative companies, rejecting offers to sell their produce at prices, as it turned out, some pence per pound than that produce realised when sold on the companies' own account. This " might-have-been " has been construed by shareholders in such concerns as a "loss." It is really nothing of the sort; but it would have been a serious matter to intending buyers had their offers been accepted. The dairy farmer in such cases took the risk—and lost. Last season up to la • was. offered and paid for cheese and over 2s for butter early in the season By, these transactions, according to current talk in Tooley Street, a loss of over £1,000,000 was sustained by buyers of New Zealand butter and cheese at prices the market ultimately did not support. 'Those companies which sold avoided the risk, and reaped the benefit/ while other comuanies who consigned had to be content with the market as it went from day to day. Yet their directors acted as they thought in the beet interest* of their companies. '

It does not seem possible that the dairy fanner any more than anybody else can win all the time, no matter whether he sells or consigns. Possibly, to drop into sporting parlance, " stable information " is possessed by buyers and producers through their organisations here and in Great Britain, and they are kept as well informed as anybody else as to the course of events. . It does not appear that the National Dairy Association, for instance, is at any disadvantage in obtaining the material used as a basis by firms who are.prepared to buy outputs of butter or cheese.

. There is one very important factor, however, that has to be taken into account by all parties—producers^ commission' agents, merchants, and retailers— and it seems to receive rather small consideration; that is the purchasing'capacity of the consumer. It is really the dominant factor in the situation. AN ECONOMIC FACTOR. Under present conditions in the Old Country what is the economic purchasing price the public can afford to pay for butter? The . experience of those intimately connected with the provision trade is that at Is 6d retail it sells readily, at Is 9d it sells not so readily, at 2s it sells with difficulty, at 2s 6d with extreme difficulty, and at 3s it is '■'impossible".so far as the general buying public is concerned. When the.retail price came down with a crash on the liberation of British Government holdings ;of butter in December l&sfc, the consumptive demand was enormous; when the price of butter again rose, the margarine: manufacturer rejoiced.; He had been severely hit, for with butter selling at Is 6d it was difficult to sell margarine (highest grade) at Is 4d; besides he had been caught with heavy stocks of raw materials bought at high prices. No one expected the chute of the butter market brought about by the Government's action. During the war people became accustomed to do with little or no butter at all, and precious little margarine; but those scarce years, gave the substitute for butter its greatest chance, and.the.manufacturers improved on the occasion. They turned out an article of such a high grade—and they keep their formulas a very close secret—that it deceived the expert into thinking it was butter if the test of taste were all he had to go upon. Other tests, however, would at once disclose that it is not butter.

Margarine is a most formidable competitor of butter, more so than ever before, "The Post" was informed. It could only be kept in check by reasonable prices, i.e., prices consumers can pay for genuine butter. After all, butter was but a /at food, and when it reached prices beyond the purchasing .power of the.great majority of the people then- it was economically unsound to buy it, arid they would not buy it.

As tearing on these . remarks, comparison ' was' made between the High Commissioner's^ cabled prices for batter and an advertisement giving the retail prices for margarine by the great May-J

pole multiple shop concern as on 28th June to Ist July, inclusive:— I Per lb. Best Mayco margarine, blended with butter i 9d Second quality 8d Third-grade 6d N.Z. Butter, 228s to 230s per cwt 2Oid2soJd Australian 2s Oid 2s o£d Danish Is ll£d 2s Od The margarine prices above given are retail; the High Commissioner's prices are wholesale, and would require to carry an additional 2d to 3d per pound for retailing. REDUCED BUYING POWER. Unemployment is still a very serious | matter as affecting the British market for butter; and besides there is the generally reduced purchasing capacity of all classes, employed or otherwise, to be reckoned with in considering the market prospects. Everyone would of course prefer butter to margarine—if they could afford it. But taste has to give way to inexorable economic laws. ■ Already offers to buy butter outputs for export are reported at Is 8d per pound in Auckland, and business has been done at that figure, and also at Is 74d. This may be correct, but not necessarily an indication of the future of the market. The bntter may be required for blending, in which case at Is 7d or Is 8d it may be profitable to use it in bringing a low-grade article up a point or two; but if butter bought at Is 8d were sold out of the box over the counter it would not be retailed at less than 2s 2d or 2s 2sd, and its sale would therefore be limited, in the experience of those in the, trade.. At present, Irish supplies at the usual rate of 35,000cwt a week are probably not going to England; moreover, France, instead of selling bntter to England, ia an importer. But with peace restored to Ireland, and French consumption checked by the fall of the value of the franc, the whole aspect of the British ■butter market may change. The price problem confronting the New Zealand butter-maker is difficult, but its solution may be helped if a clear view is taken of the purchasing capacity of the consumer and the formidable competition of margarine.