BUTTER SURPLUS

Evening Post, Volume CXV, Issue 24, 30 January 1933, Page 9

BUTTER SURPLUS

CRISIS IN AUSTRALIA

SOLUTION SOUGHT

UNIFORM PRICE PLAN

.From "The Post's" Representative.) SYDNEY, 19th January. Owing to the operation of the 1 famous Paterson plan, consumers of butter in .-, Australia pay 6d a lb abovo worifl parity. ' This evens up, the price for •the exporter, but it has not prevented a crisis from arising in. the industry. Australians already pay much more for their butter than New Zealanders, and i.t would not besurprising if the margin was increased, to the detriment of the. Australian consumer. Faced with expectation of a record year for ; butter production, and the lowest prico for _0 years, the Dairy Produce Control Board is, now* seeking..a solution of the problem. The elimination of ■ inter-State competition, and- tho crear .tion of a uniform price is understood 4 to be one ,of the objects of. the board. It is estimated by the board that the output from Ist, July, 1932, to 30th JUne, 1933, will aggregate 187,000 tons. The surplus for export is estimated at 117,000 tons, leaving 70,000 tons to be consumed iii Australia. Between Ist July and. 30th November last year—the first five'months of the current dairy, year—the production . was 7894 tons.greater than during tho corresponding period of 1931. The surplus is being exported to the London market, which is already heavily oversupplied with Australian, New Zealand, and'foreign butter. The enormous increase in butter ■ production is forcibly illustrated by the fact that last year, for the first time, the value of dairy production—£39,ooo,ooo—exceeded the value of'the Australian wool clip. ' However, tho value of butter-exported was not greater than the value of wool .exports, because a greater proportion of tho butter ■ is consumed within the- Commonwealth. Dairying is Tanked third among the export,industries, wool and wheat being ' at the top. l During" the last five years butter production has practically doubled, and in ten years exports' have increased from 32,000 tons a year to 91,000 tons. Calculated'on an average basis, the prices in Ivondon during1 the last ten years fell from 185s a cwt in 1923 to 106s a cwt (or a fraction under Is a lb) last year, The prices are "so low that Australia has not yet felt any beneficial effect of the l.d lb duty imposed on foreign butter by Britain under the Ottawa.^ agreement. All States have participated in the increased production, but Victoria- has : been outstandr ing. _ Under normal conditions the dairying industry was advancing rapidly, but during the.depression, strangely enough, production has accelerated at an astounding pace. . This is mainly due to the fact that when wheat prices fejl to an unprofitable level, many farmers turned to dairying, which was then giving a far better return. Wheat growers were encouraged into butter production, also because of the fact that at a-period when money was badly needed-they were assured of a quick financial, return instead of having to wait:months for the sale of their wheat. The Control Board) which; consists of inter-State representatives of the industry, met in Melbourne last week to discuss plans for improving the position of Australian dairymen. A committee was appointed to investigate methods for placing the industry on a better footing. With surplus butter in every State it is the aim of the board to prevent disturbance of the local markets by unnecessary competition and underselling. This can be eliminated by' creating a uniform price, and this is understood to be one of tho objects of the board. Reviewing the prospects of the industry, the chairman of the' board (Mr. T. Plunkett, of Queensland) said that any solution of dairymen's problems must be of an Australian-wide character. The industry had expanded to such an extent that it was a national industry. Every State had exported butter ■ since 1932. * ..'iTo-day we are exporting a great deal more-than we can consume in Australia," said Mr. Plunkett. "Tho surplus has to go to the London market for sale in competition with, butter from other countries where the staudard of, living' is - not as good as that enjoyed in Australia. But the outstanding fact is.that wo have to continue to send our surplus butter to a market where the supply has doubled during the last two years. London is now endeavouring to absorb 412,000 tons of butter a year from various sources. It can be assumed-that the absorption of such a huge quantity can only be achieved at a very low price—certainly at less than the cost of production in 'Australia. _ These figures indicate that if Australia allows the London prico to dominate the price here, as it has done in tho past, the prospect of better returns for Australian dairy farmers is a long way off. ' "They' are how getting some relief from a favourable exchange rate, and from the Paterson scheme, bnt it must be recognised that the exchange rate cannot be looked upon as a permanent benefit. Another factor that should be apparent to everybody is that a great extension of the dairying industry took place when land values wero high. With butter now at the lowest price for more than 40 years, many dairy farmers^ find themselves in financial difficulties. In Australia there are at least 120,000 dairy farmers with 600,000 people dependent upon them, and as dairying is a large export industry its welfare is of national importance."