BUTTER CONTROL

Evening Post, Volume CXIII, Issue 100, 30 April 1927, Page 6

BUTTER CONTROL

SOSIE SIDELIGHTS

BfIHISH- TRADE FEELWG

itei» GOODWILL

(FriMH'bitr pwh Corri«pond«nt)

' ; 23rd March. : It i^^infe' pbviois ;that' the. cabled can givg£b^fc;^an'inadequate idea of ■what has^been-happening in the butter trade here. The history of the Dairy Produce Board has much to do with these abstract subjects. First, let it be said that the board in New Zealand has acted very unwisely in. publishing to the world even before they had HotrfledT'tßeir agents', in London that ■tliey wert :givingr.up price- control...- Secondly, they have acted unwisely in publishing the fact that they want their agents to dispose of 90,000 boxes of lvutter per week till the end of June. Here was a ease in which the London ag.ejit^ahquld have been, left a free hand". Trie, cards have been laid on/the foble f acetiipwards, and no one is going to bay^heaVily when he knows there are 90,000 boxes available next week, and the week after. Once reveal the stock add—the,lif e~ goes-ont.of the^ market. I*'any case/between now and Ea3ter is the time to get rid of the greater proportion of,the available supplies. This matter doubtless will be put right, for the London agents and the importers (■or allottees, as they are called) are all convinced that the best way to lift the m.a*k-efc is to.throw a generous quantity onVfchß 'market straight away. A FOOLISH ATTITUDE... Agpiu, Jong messages' have been received ai(Ld published in this country giving Mr. W. Grounds's opinions regiarding intrigues, dissensions, and a stage-managed campaign, to restore, past qonditions. Just at the ..'present;; time s«eh statements are childish, and calculated to do a great, deal of harm. T&ere^is Vserious situation to be faced. of---'-th«~- producers,- the board, and the importers are the same a$ this junetsire. The importers who hawe advanced 13 to 1-s Sd alb on The batter which has arrived and which is on the water are*'just as anxious to sell at a good price as are the producers. Why, then, antagonise them at the preseut moment? Or if Mr. Grounds is referring to the wholesalers and the multiple retailers, who "if c"" really responsible for the present position, why sSH further antagonise them? '..... • It may be contended by a section of the board and a proportion of the producers that price-fixing should have been continued at.least.to.;,the- end of the season. It may be contended that sooner or latei 1, when* the butter had been stored for a long time, the trade would have to buy it at the price dictated. People must judge for themsetvea. The board were carrying out a great experiment at the expense of the producers and with the importers' iwouey. They are not able to foretell the future, though they may explain their principles. One must be guided by what has happened. This is the swry of the past few months: After the first slight reverse, when a largo quantity of butter slipped out of the allottees' hands at a low price before the board kne.w what was happening, everything was in their favour. TX«re was a drought in Australia. Batter wae being sold to Vancouver and Halifax. All seemed to be going weH. The allottees, were getting rid of their allotments at a good price. Then a, tiiH. came in the ordinary 'market prioe. She board kept their price up and continued to do so. Sales fell off. Stock began to accumulate, and continued to do so until the decision was made to give up price-fixing. J$ must be quite clearly understood $afc the board's policy was not affected by aoy internal dissensions. Although the dissentients on the boarfl have k%ut expression to their disapproval of Sompteta control they have not had tteSf way in the slightest degree. The ■y&die policy of the board has been put ijVfro operation. The importers (or allriKtee3) have givon unqualified support t» the whole of the instructions and -qraeltee of the board.- They ..have disIwed th« policy, but they have taken v»p the attitude: "Well, this produce liiaongs to the board. They must be avowed to do what they like with it." 'Jfifep -wtty Tooley street brought themajpraa dftwu to carry out .the inatruetfcjjjß trt the board h,as been a great surgr»»e to many. Th<e only trouble was tirtit they could :oot sell the butter. "WO BOYCOTT." There has been no boycott of New 7ipaJand batter ou the part of the -t&olSeatots and retailers, but a sustained paesiwi'.%i^atancei There are ijlppcwfcfajg firms ifibo ha,ve patiently rigSt IB) a trade in Wanohe&teT, LrverTJpp&i, MW»i»gtaan», STottiagham, and Staqgo-w, but during the first months of, this year thesr customers have refUiibit tßi'-piij .'JSow Sealand butter.: T]Seflr;'Jfe^i\Jlfl^"-i»!tile it has taken some of th«ia thirty years to build up this taoda Jtt the strongholds of the Panes it ijw bean, rained in six months. The <$jy safes of any importance that have Tftfa nutria in rt)« Worth, were the direct 'ffiPTT**Tij wwh ease the board had' top wifl<fom to 9©U at London prices. "WiTf iiiirßl'iiTiriii vrooML bay Danish, ifjpMSsh, AusrtcaAan, Argentine butter, lljtjk no* J*ew Zealand. The sentiment .against the system of control was too sfrojj* »o:'lon^:aß'.tliey could get their smna eteewbete. And Birmingham, ar the centre where tfi» bo**9-hiave been carrying' on. such £^vmgp9oaa pobKcity campaign. Another complaint is that the retailers hqws been, supplied with New Zeal&pd butter at' the ;same price as the wfrotesatere. Here is a ease.-;in. point: 'A iqpi »'Bristoij n«t anailottee, has wptied up a good wholesale trade in seffing many thousjaMS'.'cS^a^eg.: per"; season to the rekfpleis. \rHe isijipw faced with the posi-■\npn-^j4 gne firm of aftottees is selling Ifejar- ZeaJtfnd' butter to' his customers M '^c same prke as be has to pay for «. Ifatwally his whole trade has gone. l^pt,long ago the board put up their Psf«* »:;r Immediately after that it ■^ris p»t-'diwricßs;■- Why* it.was asked. Hnweyw-iunjustifiably, the board were accused'<)f making this move for the special benefit : of certain favoured allotteep. Some"wholesale people .may hjive bo«»gbt^whenv"th.e price went up.2s, fearing a' still' higher . price would bo asked. 'When the ptioe, instead of, go-ing-up'-BtSll'further; dropped 8s the people who had bought were angry. The p^estibil^* ■aßkea;;:;H<)W. long, are snch'^teiople-going'to stock New Zealand butter?" ;' .-■■"-'' •' Tien there are- the-great multiple shop .combinations who " are" frankly : a#d-^to6ieheattedry against control. Ime^-yrvn^to make money, and under control they cannot make money. They nil^tt^iuw-e 4o buy'JSTew Zealand butter sometimes, but while they can get other butter serves as well at a price that «mitß them tfiey are certainly going to do'-.-sKi.'.T'They:. ate (iotitent to. buy butter.,in large quantities at prices whiott-.;a'r^"ruijptl by Jaetors'they undorstandrßut'they are nervous of dealing in a, commodity the price of which is jodep.eiideht,3of Uie^ordinary, economic facibis:; ;-Tifß " board is an' unknown aaantity to them.-'A mere" caprice on tne^patt.'of the board, on the day after theyshacffr.p'urcnased their supplies' may ntoam; afTery.serious, loss. They are. not disposed to talte^.the .risk if they can p'osaibly avoid it. Thus while not actually boycotting Now Zealand butt^r they have avoided it if. they possiljiy eonld. A PBEVIO»S $-SP«B«»NeS.

resistance on the part of the wholesale and retail buyers. Only the allottees have come into personal contact with the board and its manager. As already stated, they have disguised their prejudices arid they have tried to carry ont the dictates of, this small group of men whom jthfey frankly, considered dangerous experimenters; The. wholesalers and retailers; however, have remained freer to think: and do as they like so long as there was other butter on the market. They had had several years of experience.', of the Anchor brand butter. They, have'liked the quality, but they disliked- intensely the privileges that were claiinedifor the brand. They had already experienced several years of TJriee-fixing in regard to Anchor brand, and their irritation, was directed against the manager of the New. Zealand Cooperative Dairy Company. When he became European manager of the New Zealand Board there was an aggravation of this irritation. The buyers had probably never seen him, but they had feK his influence, and they disliked it. They now felt that the influence of the dictator had spread to all New Zealand, butter, and the range of their prejudice and irritation accordingly expanded.. So when the agents who have built up a trade and a goodwill in the North of England and Scotland over a long period of years. approached their customers offering New Zealand butter they were treated not as old friends but as servants- of the enemy. It was as though they were told: s'Keep out of bad company and we?U deal with you again." It will thus be seen that even if the whole of the board and every importer had been absolutely agreed on the board's policy; if they had been a veritable band, of brothers working together in the utmost harmony, they could not have prevented the present situation. It has.been brought about by passive resistance, on the part of the wholesale arid retail and made possible because New Zealand butter is not the only butter on the market. If the board had been wise and followed the market prices, if they had cleared their stocks as they arrived, they might have been very successful traders and the preseut situation would not have arisen. A LESSON UNLEARNED. . Now the board had experience of what happened last year when the factories held up their butter, they denounced this as a mistaken policy. They had had the lesson. In spite of" it they have done exactly the same thing. If they knew anything about market conditions they, would never have allowed these 100,000 boxes to pile up at this season, of the year. According to Tooley street, men who would do such a'thing are not in their senses. December, January, February, and March shipments were still in store when the new; arrangements, were made. Not long ago the board wrote to the allottees and said: "Unless the December stocks are sold by the 16th of this month we shall put into operation the clause of the memorandum which gives i us the right to transfer" these goods to ! other people." Tooley street gasped. Who was going to take the goods, and what was he going to do with them wKen he got them?, >. . ' Although the attitude" and the feelings of the allottees have played no part in bringing about the present situation, it is well to know what they : are thinking. This is how one man sums up the situation: ""Two men, absolutely raw so far as the trade is concerned, are sent here. They support a manager who was never in the provision trade before the war. These I three undertake to manage a business which twenty-seven houses, in Great Britain have spent a generation in building up. These, houses are stopped from functioning. Some Tooley street houses have done their very best for the board, but what is tho use? They can do only what a doctor.can do for a dying patient. He can give him oxygen and strychnine, but in the end the patient will die." He added: "We have never been allowed to taste the real flavour of New Zealand butter for a long time. It is stale before it reaches the public.' 1' DICTATION AWD IRBITATION. At the beginning of control there were ■ some of the allottees who were taking the change philosophically. They found a certain amount of relief in not having, the constant wear and tear in trying to beat their neighbours. The responsibility of doing their very best for the factories they represented was taken off their shoulders and laid on the broad shoulders of three men across.the Thames in Adelaide House. There were one or two other good points about control from the allottees' point of view. Now a marked change has come over Tooley street. 'J^or one thing, they are sure their advances will not be oovered this season. - Some of them have lost their goodwill with c»istomeis they have been supplying wfth Hew Zealand butter for a generation. ¥heir business, built up with tremendous e»re and in the face of Danish opposition throughout the years, hog been lost in six months through tho fanatical schemes of amateurs. Further, they complain that a new and irritating element has come into their offices. The board's auditors are in and out at.-every, hour of the d«y, going thcough documents to see ii any of the board's regulations have been broken. Account sales have to be made up each' night and sent over to Adelaide House without fail, and sometimes the staff is'kept until 8 o'clock at night making up their accounts. They complain of pin-pricka in the shape of instructiorjs and. warnings which are con- r stantly-coming from • the board. The latest document of ..this sort made the request; to-state exactly at what hour of the day certain' produce was sold. It appears that a practice which does not meet with the approval of the board had developed. Telephone instructions are given to the allottees that the price is to be raised. Some allottees began the practice of letting a special customer have a quantity of butter at the lower price, warning him that the control price had gone up. One or two havihjg started this practice, the rest had to follow. Thus, a number of v last-moment sales were made. The board wanted to know exactly the time sales were made so that they could charge the allottees according to whether the sale was made one minute before the price was raised or two minutes afterwards. These things, of conrse, are reminiseonfc of the war period, ibut. they compare badly with that pleasant free trade which has always characterised the dealings bo-, tween the importers and the various sections of New Zealand sellers in the past. OBIT IK THE WHEELS. it goes without saying that nojie of the ipiporters like to be subject to the irritating dictations of a Mussolini, and if it were possible the great majority would be glad to drop out of the New Zealand butter trade. Even though they are not likely to do so, their distaste for the board and what it implies will always act as grit in the wheels of commerce. By dropping the price-'-, fixing principle the board may still continue to function, but if the goodwill of the trade is to be recovered the London agency must go, and the board must confine their attention to organising the trado ill Now Zealand and shipments. This is clear to the most unbiased onlooker. If there are still those in New . Zealand who believe that it is possible for the board to carry out the full policy of control, they are deceiving themselves. Those who have been looking for a remedy of the situation by removing tho Government": representative.-"-.-of the London agency have been talking so much childish rubbish. Those who have been pointing to the internal dissensions o-ii -■the board an a eaiise of: the present

their responsibility by deceiving the public. The damage has been'done by the producers allowing themselves to be led by extremists. The more revolutionary the measures taken to clean up the mess and re-establish the board on right lines—if it is : to continue to function at all—the better it will be for the producers and New Zealand generally. Tinkering and readjustments will do little good to re-establish the good name of the New Zealand dairying trade. - A CONSTRUCTIVE SUGGESTION. If a model is required it is not far to seek. No jiation knows more about co-operation than the Danes. Their policy is a simple one—to clear their stocks. They never hold on to their butter. If it won't sell afc 180s a ewt they let it go down to 170s, but at all costs they clear their stock and start the next week with clear boards. In the production of butter and cheese there are two essentials, quality and quantity. If you have quality you will sell it. If you have quantity you will keep it on the market all the time. Once having got it there you keep it there. It is along these lines that the New Zealand dairying trade could best be developed. One other point may be mentioned. Most traders hope to make money. Out' of every 100 boxes of butter bought, probably twenty are bought as the Tesult of the speculative and gambling element in human nature. It is those 20 out ofrthe 100 which keep the market active and make prices go up or down. It is the idea that, importers and others have been-making undue profits on New Zealand butter that has largely been responsible for bringing the board into being. Tooley street men will tell you, and they are probably correct, that they are always hoping to make .money, but taking oue year with another and averaging profits over a longJperiod, no man makes more than a fair and reasonable percentage on his trading. The board, by taking away this hope of profit, which is never realised in the long run, made the New ! Zealand trade flat and - unresilient. j They took away its- life blood. It is as though the board, said: "We in j Adelaide House will do all the gambling. You just do the work of distributing for which we shall pay you 2 j per cent." As it happens, the gamblers at Adelaide House have failed, and the producers have to pay. 1 "The present state of the butter market," says "The Grocer," leaves ! much to be desired .from various points of view. There appears to be a general lack of confidence in the situation. This, however, is not surprising, for buyers are nervous in consequence of the recent sudden drop iv quotations that was made by the New Zealand Control Board. That recent drop has seriously disturbed the equanimity of buyersy because many had bought at the top of the market just before prices were reduced suddenly without any ! warning. Such procedure naturally creates unrest among operators." Australian butter is commended by "The Grocer," partly because there is no control over the prices. "More activity characterises the demand for Australian butter," says the journal, "not only on account of home buyers, but also for export to Canada, to which country, a considerable quantity hasbeen booked during the last week or two, all for consumption ' in Canada. The intrinsic value of choicest new season's salted Australian creameries as compared with finest and first grade New Zealand butter is noticeable because of the lower values at which Australian is obtainable. The '' Glasgow Herald devotes a leading article to control. _Jn the course of this the writer says: "It is clear from the rather petulant manner in which the chairman of the Control Board has complained ot a sort of dark conspiracy on the part of traders !,against the board's scheme, that the chango of front has been forced by stress of market, circumstances. Having learned a lesson, the board will henceforth free importers from "named prices," nnd will release a given quantity of stocks of butter and cheese each week over a stated period until all -the New Zealand supplies are absorbed. . . . "The lesson of the I experience should be salutary to those who imagine that any organisation, no matter how powerful, can interfere arbitrarily with the law of supply and demand, particularly in tho ease of perishable commodities. It lias come opportunely. . . . The lesson also has its political application, because our own Socialist Party, aware of the existence of these oversoas producers' pools, is flirting with the idea of bulkpurchase of food supplies by the State and a system of fixed retail prices to our • consumers. Those who read the lesson aright will appreciate the fact that it is just as mischievous to nttempt to control prices at the trade consuming end as it is for organised producers to attempt to dictate terms to Consumers." '