THE BUTTER TRADE.

New Zealand Herald, Volume XLV, Issue 13722, 11 April 1908, Page 8

THE BUTTER TRADE.

ALLEGE?) SHARP PRACTICE

SHORTAGES ON CONTRACTS.

Tift New Zealand Produce Commissioner at Home, Mr. H. C. Cameron, together with the Chief Dairy J Commissioner, Mr. D, Cuddie, have been making the rounds of butter houses at Home, and, as a result, Mr.' Cameron cabled to the Prime Minister, and followed up the cable with a letter which made sonic rather startling allegations against those concerned in the industry at this end. Mr. Cameron wrote: —"I greatly regret having to report that serious charges were made to us by several merchants concerning the manner in which contracts entered into with them for the sale of New Zealand factory outputs of butter had been broken. There is a strong feeling that owing to the unexpected high price that has been ruling this season for butter, shippers have been diverting part of the factory outputs and have been either selling a quantity locally in the Dominion, or shipping it past the purchaser to whom they had contracted to supply it. Instances were given in which tiio -quantity of butter delivered to the purchaser here was not half that guaranteed."

Again, he says:—"The complaints, for which there appears to be good ground, are far too general, and the fact is doing a deal of injury to the good name of the dairy produce trade of New Zealand, owing to the suspicion that is cast on the business morality of those engaged in it. No satisfactory reason can be assigned for the great deficit in the quantity of the butter delivered from that contracted for. It is known that the season has not been so unusually dry as to account for- it, and no information has been received that the quantity produced in those factories making butter has shown any serious decline." These statements were referred by a Herald representative yesterday to a number of firms engaged in buying factory outputs on contract. One prominent buyer said there were undoubtedly shortages on contracts made with Home firms, but equally so there were great shortages on contracts made by factories with buyars here. He produced a list to show the shortage in the case of each factory he had contracted with, revealing an average deficiency of 20 per cent, over all the contracts. Asked to what he attributed the shortages, he replied that the butter business was really a gamble on the weather. The phenomenally good season in 1906-7 had resulted in big outputs, and for the contracts for 1907-8 the factories ere rather inclined to estimate the outputs on the basis of the previous season. With a fair average season it would have taken them all their time to come up to the estimates, and, of course, the drought came, and there was a big shortage in Auckland district. With regard to the factories he felt sure they were acting most fairly as a whole, but he had doubts in the case of one or two; and. was writing them for explanations. It might be that one or two factories had been tempted by higher local - prices latterly to push their local trade at a slightly reduced price, but still leaving a good margin of profit over the contract figure. The falling off was synonomous with the thy peridd, and the shortages on Auckland contracts were really due to the dry son. Another, buyer -offered his books for perusal, showing at a glance, almost, that his contracts with Home firms had been kept religiously as far as the factory contracts were kept with him. He also had experienced shortages on the part of factories, which he attributed to the dry weather, and he saw no reason to doubt the bona fides of the factories, except in one instance, where 'a factory which contracted to supply its total output to March 31, had, when prices rose locally, suddenly developed an enormous local trade, selling at under the ruling- wholesale rate, and yet reaping a margin of profit us, against the contract price. An instance Was related by a gentleman concerned in the industry of a contract to purchase all first grade butter and allow a percentage basis on second grade butter shipped on consignment. As events turned out it paid slightly better, to the factory, on the second than on the firstgrade, and the output of first grade fell away rapidly. There was strong suspicion that that factory had not tried"very* hard to make first grade butter. Another gentleman closely concerned in the trad?, said that, unfortunately, in some parts of New Zealand, the charges made by Mr. Cameron were "a true bill." Some operators on the market had adopted the " swinging over" dodge. They had bought outputs up to the end of March, and had closed contracts with Home firms at prices ranging from 102 d to 10i.-d. and then prices went up in the, Dominion to such amounts as 13£ d and lid and the operators lessened their exports and sold butter in New Zealand at these prices, taking the chances of meeting the claims of Home purchasers for shortages on contracts. The Home firms would claim for the shortages on contracts at the difference between the price the contract stipulated they should pay and what the produce was worth on the Home market: this would work out at from £d to I'd per lb, so that the operators reaped the balance of difference between this and the prices realised in New Zealand. Whatever had been done in that line had been done within the Dominion, and there had been no shipping past the Home firms. Of course, it was questionable practice, and would do harm to the industry. Undoubtedly there was shortage owing to the dry period, but the shortage on Home contracts was greater than the shortage on actual factory outputs. Hie dry season had caused the whole thing, it having resulted in short supplies and high prices on the local markets, and hence the temptation to ''swing over."