Evening Post. THURSDAY, MARCH 28, 1929. BUTTER MANIPULATION

Evening Post, Volume CVII, Issue 72, 28 March 1929, Page 8

Evening Post. THURSDAY, MARCH 28, 1929. BUTTER MANIPULATION

Price-regulation ideas do not stand still. Once a start is made along, that road, the adventurer goes farther and farther, treading highway and byway, and sometimes ending up in a maze. Consider, for instance, 'the idea of regulating home and export prices, as applied to Australian butter. In the beginning, by means of the Paterson Plan, a levy made on all Australian butter provided a bonus on butter exported from Australia, and thus the Australian consumer paid world parity plus levy and the Australian exp.orter received world parity plus bonus. But then arose the question of home and export prices in relation not only to the Commonwealth as a unit but to the States as units. Queensland, New South Wales, and Victoria

—each an empire within an empire —developed their home and export problems, just as did Australia; and the solution of the inter-State complex has led to a more complicated system involving regulation not only of prices but of supplies. Early in this month Queensland, New South Wales, and Victoria (the last State to join up) came into line in an agreement not to sell butter to another State unless a shortage prevailed therein. Under that arrangement, it seems that at the moment the only State to which butter can be exported is Western Australia. If there were no agreement, Queensland, having a surplus, might, ship butter to Western Australia, causing a rise in Queensland home prices, whereupon Queensland butter-sellers would draw on New South Wales, Queensland home prices would drop again, and Queensland producing and selling interests would be annoyed at unfavourable fluctuations. But the new agreement of the three States, prohibiting the sale of butter to a State where there is no shortage, brakes the above process by preventing New South Wales or Victorian butter from entering 'Queensland. What is actually''happening under the agreement is that the Australian Butter Stabilisation Committee (or the Queensland branch thereof) permits the export of Queensland butter to Western Australia at a minimum price, which has been agreed on at 3s a cwt beiow the prices quoted in Victoria at the time of the sale, the three shillings being the estimated difference between the freight from Queensland to Western Australia! and the freight from Victoria to Western Australia.

If, as the next move, somebody in Queensland tries to bring in New South Wales butter, in conformity with the normal process of cause and effect as outlined above, the Australian Butter Stabilisation Committee (or the New South Wales branch thereof) imposes its veto; and thus the Queensland butter interests find themselves able to export to a shortage State without being" exposed to a counter-attack from a surplus State. How is it working out? Well, the Western Australian demand is not as good as Queensland producing interests would like, because the minimum price referred to puts Queensland^ butter on the same level as New South Wales and Victorian butter, so far as the Western Australian importer is concerned; and he is not very willing to procure supplies from such a distant market as Queensland (which is really as far away from Western Australia as is tariff-prohi-bited New Zealand) when butter is available at the same price, and on shorter order, in Victoria and New South Wales. But it is probable that any loss of trade that the new regulation system imposes on the Queensland producer, so far as the export to Western Australia is concerned, is more than made up by his protected position in his home (Queensland) market. About the middle of this month the price of butter in Queensland was 214s 8d a cwt, compared with 196s in Victoria and New South Wales. Such a margin surely compensates for any diminution in the Western Australian demand, although the Queensland consumer may not be as enthusiastic about it as the producer is. But if the system'of fixing minimum prices, and of regulating supplies of butter to the export and to the home markets respectively, is applicable to the Commonwealth as a unit, and to each State as a unit, where shall a limit of size of units be set? Logically, why should not each butler producing district claim, with equal justice, its own home market sphere? '

Translated into New Zealand terms,, the inter-State control would mean the appropriation of the Auckland market to Waikato butter, of the Wellington market to somebody else's'butter, and so on ad infinitum. Each factory group, down to the smallest, might claim its own local marketing preserve. To a certain extent this may happen now, but subject in New Zealand to the regulation of competition. Once that regulation is vested in one authority, then any competitive safeguard of the consumer disappears, and to such domination the small town as well as the large would be equally liable. Yet there was a time when the Paterson Plan nearly caught on in New Zealand. With such an object lesson as butter stabilisation in Australia presents, the wisdom of wailing and watching the course ,of Australian developments before experimenting in a similar direction seems to be sufficiently evident.