A BUTTER STABILISATION SCHEME

Manawatu Times, Volume XLIX, Issue 2308, 28 November 1925, Page 11

A BUTTER STABILISATION SCHEME

An Australian Venture

The niMCh-discußsoa “Paterson” Stabilisation scheme appears, at last, to become an established fact. The’ scheme as outlined below will no doubt prove of interest to N«w Zealand producers,: although such a scheme may not be applicable to New Zealand conditions. The immediate result will bo that the local price of Australian butter will appreciate by at -least 3d per lb. -

The serious variations in the price of butter used for Home consumption as ruling In the various Australian States, has always been a very contentious matter and & number of schemes have . been put forward at different times, to arrive at something like a unanimity in so important a matter. During the last nine minths, a scheme commonly known as the ’’Paterson” scheme, has been discussed throughout Australia and at a conference held the other day this scheme has been adopted by five of the six butter producing States. The agreement come to among Dairy companies is : fairly unanimous. About 9.9 per. cent of the Victorian and New South Wales producing interests,,- 98J par ,cent of “the Queensland, 70 per cent, of the South Australian and practically the whole of Tasmanian factories have signed up so far, while It Is fully anticipated that the outstanding factories will follow suit shortly. At first glance ,th e scheme appears very simple and a decided short-cut to a better price for producers. At the same time there is something of the "get rich quick Wallingford” method about it, that makes it very doubtful os to whether the system will endure and stand the test of time. The Paterson stabilisation scheme, in short, provides for a levy of Id. per lb. on all butter produced by factories signing the agreement. As the proportion of butter used for Home consumption and export are about S to 1, this levy of Id. per lb. on production enables the paying of a bonus of Bd. per lb. on all butter exported by the same factories. The result is. that tms bonus raises the London parity by Sd per lb., incident, ally raising local values by the same amount.

The scheme, quite ingenious in itself, can only be applied effectively of course, in countries where the local consumption exceeds the export and also where an import duty protects local manufacture. Whether the duty of 2d. on butter imported into Australia will prevent New Zealand producers from competition on the Australian market once this scheme is launched, remains to be seen. The name of the scheme is somewhat of a misnomer,, as It will certainly not have the effect of doing away with the Inter-State fluctuation. It will naturally raise the local values by 3d all-round, but the same fluctuations are liable to occur outside this higher level of values. This fact was fully acknowledged at the recent meeting. The chairman pointed out that the scheme contains no regulation providing for price fixing. Mr. Plunkett, a Queensland representative, as well as the Chairman of the Australian Dairy Control Board, accused Victorian producers of forcing prices down, and he maintained that under these conditions (not providing for inter-State price-fixing) the scheme must eventually crumble to pieces. In support of his contention ho pointed out that the Victorian price for butter was 178/- per cwt„ New South Wales 186/-, Queensland 196/- and New Zealand 205/-, and that Victoria was selling 30/- below London parity. However, the scheme was eventually adopted and a resolution to this effect also provided that it be handed over to the stabilisation committee for administration -when the opportunity presents itself. It might be mentioned that the Australian Dairy Control Board has no official connection with the scheme. It will certainly be Interesting to watch the progress of the scheme and also the effects it will have on the Home market and the consumer. That it will materially benefit the factories (if successful) goes without saying. In the case of a creamery putting out say, 300 tons Of butter, the one penny levy to be contributed would amount to £2BOO. If the same factory exported 100 tons, this same amount automatically would be refunded by way of the 3d Per lb. bonus. As the local price would automatically go up 3d per lb. the factory on Its 200 tons of locally sold butter would reap an enhanced price of £5600. This would practically represent a net gain to producers.

Whether consumers will be prepared to pay 3d per lb. above London parity, or with prefer to go without butter and eat margarine, remains, of course, to be seen.