MARKETING OF BUTTER.

New Zealand Herald, Volume LIX, Issue 18224, 18 October 1922, Page 10

MARKETING OF BUTTER.

SYSTEM IN DENMARK.

EXPORT SOCIETIES FORMED.

METHOD OF QUOTATION.

Interesting information relating to the methods of marketing Danish butter has been received by the Farmers' Union from the Minister for Agriculture, the Hon. W. Nosworthy. The Dominion conference of the union adopted a resolution urging that action be taken to extend the pool system of marketing to dairy produce,

The Minister, replying to the representations of the union, stated that the Government would bo in full sympathy with any carefully thought-out scheme based on sound business principles and calculated to improve tha marketing conditions of dairy produce That the Government's interest in the matter was of an active character, added the Minister, was indicated by the fact that some time ago it had secured authentic information relating to the sal© of Danish butter in Great Britain. A memorandum on the subject had been received by the High Commissioner from Mr. Harold Faber, agricultural commissioner in London for the Danish Government. The memorandum, a copy of which was enclosed, states that Danish butter is made in about 1400 dairies —creameries or jjttctoiies— of which the greater number are co-operative. Sales to British Agents. A few of these sell or used to sell their produce weekly to firms in Great Britain. A large proportion of the butter is bought at the dairies by buying agencies in Denmark of British firms and paid for weekly. This butter is, therefore, sold in our country to or on behalf of the retail distributors in this country,. Another part is bought from the dairies by Danish exporting firms. These sell to British firms, either wholesalers or retail dealers, often to standing orders, week after week, mostly f.o.b. Danish port. What butter remains unordered is generally consigned to wholesale houses in this country to be sold for a commission.

Other dairies ha*e formed " butter export societies," generally co-operative. These trade in just the same way as the private exporters. There are 11 such butter export societies, comprising 548 dairies, three of them, with 57 dairies, being in the district of Slesvig, retm-ned to Denmark after the Great War. Eight of these butter export societies, that is, all except the Slesvig societies, have formed an association for the purpose of securing the best possible prices, to improve the quality and generally to further the interest of the societies. There is no central association of dairies for the purpose of dealing in butter, continues Mr. Faber. In my book on co-operation in Danish agriculture I have explained the formation of the " Central Organisation of Danish Dairy Associations," but this central organisation does not interfere in the saje of the produce.

Copenhagen Butter Quotations. To explain to you the Copenhagen Butter Quotation, adds Mr. Faber, is a much more difficult task. It began as a private notice inserted weekly in a Copenhagen newspaper by a butter broker and soon was found so reliable that both the butter exporters buying from the large estates, who in the seventies and eighties mad? the export butter, and also the large farmers, found it convenient to regulate the price to be paid weekly by exporter to farmer according to this quotation. The Merchants' Quild found it then, in the eighties, preferable, because of the extensive use made of this quotation, to fix it by a Quotation Committee, consisting of butter exporters with a member of the guild, not being a butter merchant, as its chairman. Boon the farmers obtained permission to elect a representative, who was present at the deliberations, but without a vote. Influence of Farmers. Later on. as the farming interest increased in importance and influence, commercially and politically, the farmers were given two votes. Gradually their influence increased, then they failed to agree with tho merchants, there were two quotations, one of the Merchants' Guild's Quotation Committee, one by a Quotation Committee aTinointed by the above named "Central Organisation of Danish Dairy Associations.' I believe this is the case at present—after the long interval during the time when the sale of butter was iu the hands of the Governments.

The Quotation Committee or Committees meet on Thursday afternoon. The basis for its (their) deliberation is formed by reports from the various butter markets and very largely by the number or sizes of the orders received from customers at these markets. If the demand is above average the quotation is increased; if fewer orders have come in it is lowered. It used to be so that orders coming in during Tuesday and Wednesday, by let ters or telegrams, specified number of casks required and the word "subject," meaning price N to be subject, to the alteration in th» quotation. Therefore the sellers fixed the price after receiving the orders. The butter is shipped on Thursday evening, after the quotation has been fixed. If the demand is great some buyers may get less butter than ordered; on the other handy some butter may have to be sent on consignment, if the demand is small. Origin and Theory of Method. The quotation was originally, and theoretically is still, fixed for the purpose of regulating prices as between producers and Danish merchants. British merchants or even retail dealers hav© found it to suit their convenience to let their purchases for f.o.b. shipment be regu lated by it. The quotation is to be considered as an attempt to give, weekly, expression to the average price or value of Danish burtter in the British markets. An error one week is made good tho next. If, for instance, the price be fixed too high orders fall off and the quotation must be lowered next week; or vice versa, too low a price results in too large orderß to be filled and the price goes up. The influence of the quotation is not now quite 60 great as in former years, but it is still found to'be a convenient help to the trade.

At my suggestion, in 1894 or 1895, a most useful arrangement has been made voluntarily by a number of the dairies which exercises a considerable influence on the fixing of the quotation. The reason of the suggestion was that the competition led some merchants to pay "overprices," so many kroner per cwt. above the quotation, and these overprices had a tendency to gradually increase to those "in tho know," while the aotual level of the quoted prices, measured by the market price in Great Britain, gradually receded. The remedv consists in this that some hundreds of dairies weekly report confidentially to their dairy associations the price actually received that week. The weekly average of these reported prices is the week's actual price and is a measure of the correctness of the quotation.