BUTTER MARKET.

Franklin Times, Volume XXI, Issue 67, 10 June 1931, Page 2

BUTTER MARKET.

DIFFICULTIES TO BE FACED.

THE NATIONAL CONFERENCE

SOME IMPORTANT VIEW’S

“A question of far-reaching importance, ” states the current issue of the New Zealand Dairyman, “will come before the conference of the National Dairy Association at New Plymouth next month—viz., the stabilisation of butter prices in New Zealand. Although the Association is without jurisdiction in matters of fhis hind, the.conference will afford an opportunity of discussing the scheme put forward by Mr A. J. Sinclair, of Te Awamutu Co-operative Dairy Co., Ltd We already dealt with the original proposal a few months ago, and although Mr Sinclair was good enough to supply us with further details, we cannot say that we are more enthusiastic concerning his scheme now than we were then, nor are we more optimistic as to its realisation. As every additional penny per lb for butter consumed in New Zealand represents an additional £t 00,000 to the dairy-farmers of fhis country,*we would certainly welcome any sound scheme, be it voluntary or compulsory, that would increase the producers’ revenue. We doubt, however, whether Mr Sinclair’s scheme is sufficiently sound to withstand the severe opposition and criticism it is bound to meet with. To compel creameries to sell their butter at a certain prices is one thing; to compel the grocer to sell it at a fixed price is another. There are at least four different grades of butter on the local market, and there is bulk butter and patted butter; there is also the unscrupulous factory and the unscrupulous retailer, and nothing but a cast-iron, foolproof scheme stands any hope of success.

Legislation Required. “The greatest drawback we see, however, in Mr Sinclair’s stabilisation scheme is the fact that it requires special legislation, and we have the most doubt whether any Government could be found with sufficient courage to pass a measure which would undoubtedly be interpreted as a direct food tax. We have, years ago, strongly advocated the adoption of a modified Paterson Plan for the New Zealand pig and bacon industry, as the proportions of export and local consumption lend themselves splendidly to such a scheme. Unfortunately, it is.not adaptable to our butter and cheese. The Paterson Plan, however, constitutes a purely voluntary combination of the whole of the dairy-farmers. Why not such a spirit of co-operation of Australian combination in New Zealand? What is to prevent the whole of our creameries standing shoulder to shoulder, and undertaking not to supply the local market below the price fixed by the New Zealand Dairy Produce Board from time to time? To prevent undercutting by middlemen, all f.o.b. contracts could be given a clause.that the butter is for export only. Such a scheme is simple, inexpensive and requires no legislation, as we do not see. any good reason why a special committee of the Dairy Produce Board should not be able to act in this capacity. We submit a scheme on this line for Ihe serious consideration of the National Dairy Conference next month.” Mr Sinclair’s Reply. I

In a reply to the above article, Mr Sinclair states: “There is no dispute among dairy companies concerning the anomalous position of the local market. When we meet in conference, we all bemoan a state of affairs so deplorable, turning up our eyes to heaven like a wet hen in a thunderstorm; having washed a little dirty linen, we then return to our- respective districts, and the culprits ingeniously divert the attention of their irate suppliers by blaming “the other fellow,” but the same reprehensible tactics continue. Why should I be able to buy butter to-day in a Hamilton store, packed by a Wellington firm, at a lower price than I have to pay for standard Waikato brands? The position is becoming so glaring that dairy companies are adopting anonymous brands which

conceal their identity, and enable them to cut prices without the knowledge of their suppliers. We have also an experience new to the industry, in which organisations interested in both

export and local trade solicit outputs on consignment, promising, fn exchange, for a fair portion of the output., that they will not encroach upon

the dairy company’s preserves on the

local market. Is the industry so disorganised that, with one hundred per cent control of a market, it cannot evolve a scheme which will be fair and equitable to the consumers, and will at the same time end the huge losses incurred annually by dairymen in marketing butter in this country?

I believe it can be done, and that the New Plymouth conference next month is the place to do it. Objections Answered.

“You raise difficulties which arc real, but not insuperable,” states Mr Sinclair. “Let me take them seriatim: (1) You state that creameries might be compelled to sell at a certain price, but that it would be another thing to compel grocers to do so. The great majority of grocers would welcome a stabilisation scheme. At Wanganui in February last, I explained the scheme in detail at the annual conference of the New Zealand Federation of Master Grocers, when a resolution in favour of the scheme was passed without a single dissentient. (2) You refer to the numerous grades of butter on the local market.

Under I lie scheme, there would be only two grades—first and second quality. If it were possible, I should like to see no butter placed on the local market as second-grade unless it had been classified as such at a Government grade store; but should this not be feasible, the difference in price between the two grades must be sufficient to make it unprofitable for a dairy company to pack the higher-grade butter in the lowergrade wrapper. The practice would soon cease if it did not pay. (3) Admittedly, the unscrupulous factory and the unscruplous retailer present a real difficulty; but, just as it is an offence against the regulations, punishable at law, for a dairy company to place over-moisture butter on the market, it would also be an offence for any dairy company, wholesaler, or retailer to vary the price fixed by the Stabilisation Committee. (4) You regard the necessity of legislation as a drawback, but the answer just given explains why Government regulations are essential. If the industry places a unanimous request before Parliament for a scheme which is fair and equitable, both to consumer and producer, it should receive favourable consideration. (5) You ask what there is to prevent the whole of our creameries coming together in a voluntary scheme. lam sorry to say so, but the principal objection is that some of the factories supplying the local market have no sense of honour, and fulfil all the requirements of the definition which states that “a gentlemen’s agreement is a document drawn up by two people who regard each other as scoundrels.” A scheme without legislation is possible only if every dairy company in New Zealand can be persuaded to sign a legal agreement containing a heavy penalty clause. Who would undertake this herculean task, knowing that if only five per cent of the factories refused to sign, that small minority could wreck any voluntary scheme? Sooner or later, you will admit the validity of my contention that any scheme to stabilise the price of butter must be national in its scope and compulsory in its character.”