DISPOSAL OF BUTTER AND CHEESE.

Lyttelton Times, Volume CXXI, Issue 15334, 17 June 1910, Page 3

DISPOSAL OF BUTTER AND CHEESE.

(“'Canterbury Times.”) TO THE EDITOR. Sir, —My attention has been drawn to a report of the South Island Dairy Association, from which I gather that it is the intention of the executive of the Association to formulate a scheme whereby fortnightly sales of butter and cheese are to be carried out in the dominion, in preference to consigning the season’s output to the English market. For many years past I have been an advocate for the principle of consignment, that is, for each factory to send its butter or cheese to its destination and carry the risk itself. My experience during the last few months in Tooley Street has led mo to the belief that a very much improved condition of things could bo brought about at this end if the factory system of cooperation was carried a little further; but so long as 50 per cent of our New Zealand produce is sold right Out to speculators, just so long will the New Zealand dairy farmers’ produce be subject to the hundred and one influences which “ bull ” and “ bear ” this market.

If it be contended that fortnightly sales will get nearer to the value,. I contend that selling on consignment gets still nearer the actual value. A factory sells its output for a season, the purchaser lias made his one deal, and stands to it; if he is purchasing every fortnight ho ivt.ll have so many more chances of getting oven on his purchases during the season. The time was in the history of tlio industry when factory directors were not justified, nor were tho companies financially strong enough, to take the risk of the market for six months, and under these conditions they had but one choice, and that was to sell on the best torms they could. But surely this state of affairs has long since passed away, and to-day our dairy companies are, comparatively speaking, strong financial concerns, with up-to-date plant and management, and are perfectly justified in keeping control of their produce just ns long as they possibly can : the longer the factories retain an interest in their produce tho nearer they got to the British consumer, and therefore the nearer they approach to the value of their goods.

I feel satisfied that there is no factory director who wishes his company to get more than tho actual value of his produce, or, in other words, to feel that someone at this end is losing to meet his gain ; nor should ho place himself in tho position of feeling that-, through selling his factory’s output before it is manufactured, lie is running the tremendous risk of losing for his company hundreds, if not thousands, of pounds on the season's make. Take, for instance, the position this season with a market for butter such as we have had. What English firm could have afforded to buy butter with prices as they have been? It would have been impossible to sell on the proposed fortnightly system, except, probably, for a few weeks in tho season. If it had been possible to find purchasers for butter at 110 s to 113 s c.i.t. for December shipment, the factory selling at this figure would have experienced a heavy loss as compared with consigning; tho loss to the factory being between 10s and 12s per cwt. This same condition of things has applied right through the season. For instance, take the period when our butter reached 128 s to 130 s. It would bo an impossibility to get a price bid on fortnightly selling, that would bring business, the factories would absolutely refuse to listen to prices based on the possibility of the market six weeks ahead, which, ns a matter of fact, would he somewhere about 108 s to 110 s c.i.f., or possibly less. The factory would have no other alternative but to consign, with what result? The produce would go into the hands of some firm who would simply sell tho shipment and have done with it, knowing full well that it would possibly got no fnoro of tho same brand for months. No attempt could be made to create a demand or specialise with it, no matter how good tlio quality. One of tho secrets of handling butter outputs is to placo them in the same channel and work up a connection. To sell one week and consign the next would rob a factory of the benefit which is derived from the policy of creating a demand for the special brand. Much has been said in support of tho contention, to sell by citing Canada, Siberia and Denmark, and tho fact that a quantity of these countries’ butter and cheese is sold, and not consigned, does not effect the position. As we in New Zealand are six weeks from the English market, Canada and Siberia are only a few days, and Denmark forty-eight hours, the difference in the situation will be instantly scon.

Now, as regards Australia and Argentine. Australian butter to tho extent of CO per cent or 70 per cent is handled on consignment; all the Argentine butters arc handled on the same system; our distance from the market places Now Zealand along with Australia and Argentine on quite, a different footing when compared with tho countries who soil their produce; they are, relatively, no further away from the English market than Dunedin is from Taranaki; this is why they sell. There is not a man in. England who can say what tho market is going to bo in a month’s time; if this was possible there would be a continual procession of produce merchants retiring from business.

There is quite sufficient gambling going on here in connection with rubbor and oil and the Stock Exchange in general; we do not require any further stimulus to tho gambling in butter. It is quite bad enough as it is, and to initiate fortnightly sales would only accentuate instead of lessen the difficulties under which tho business is now carried on. My unbiassed advice to tho producers of our butter and cheese is this: Send it along to London on open consignment without reservation of any kind,

to a firm in whom you have faith, and make a name for your brand. If you are not satisfied to place your trust in any particular commission house,- appoint or send someone to keep an oversight at this end. To commence the proposed selling fortnightly is tending towards the reduction of the number of competitors for New Zealand butter and cheese. Those who consigned their produce this season have had magnificent returns, and it is more than likely that the conditions which have governed the market this year are going to repeat themselves next season. The consignment factory gets the benefit of years such as the one just ended; the selling factory misses it. There is a fino future for our dairy industry, but 1 hope all factory directors will back up their own interests and resolutely refuse to adopt any such system of soiling as now proposed. 1 view l - it as an unnecessary and a retrograde movement'. Apologising for the length of my lettor, which is only measured by the interest I have in the well-being of a hard-working- portion of our colonists. ~] am, etc."; R. ELLISON. Colonial House, Tcoley Street, London, April 28, 1910.