MARKETING PROPOSALS

New Zealand Herald, Volume LXX, Issue 21546, 18 July 1933, Page 5

MARKETING PROPOSALS

BUTTER AND CHEESE "CRITICISM OF SYSTEM THE GAMBLING FACTOR ' It is generally believed that behind the proposals of the Importers' Association in London for more orderly marketing of New Zealand butter and cheeso is a determined effort to place the industry on a footing where both producing and 1 distributing interests will profit. The proposals are now* being widely discussed and the industry is waiting for a lead from the New Zealand Dairy Produce Board.

From private information received by Auckland agents it would appear that consigning agencies in New Zealand wilf be retained by London merchants. The future of f.o.b. agencies is doubtful and it is felt restriction on tho rights of factories to sell f.o.b. how and when they wish will bo tho logical outcome of tho proposals. Apparently the proposals contemplate tho discontinuances of straight-out f.o.b. sales to agents, but point to agents acting purely as agents in trying to obtain a price for factories. It is highly probable that the dairy board will go u stop further thaa this.

The Danish System "The present system of marketing is fast becoming chaotic," said an exporter yesterday. "There is danger of the industry being unable to carry on at the present low prices and agents are just as perturbed. Owing to the methods adopted in the industry New Zealand butter has become *one of the best gambling commodities in the produce world. With no attempt to introduce orderly marketing, the way is open for anyone to dabble in butter. It is astonishing tho nuipber of London speculators having a flutter in butter as though they were on tho race;, course." It was stated the essential difference between Danish and New Zealand marketing methods was that Danish butter went to the same agents and customers year in and year out. Danish butter sold on the "open order" basis, under which orders were booked by retailers for various brands and the price was tho ruling price on the day of delivery. Danish butter sold to a regular trade, whereas New Zealand butter was really auctioned. New Zealand had not secured that continuity of supply which helped to keep Danish prices steady. It was questionable whether there was room for both f.o.b. and consignment selling if New Zealand was to improve its marketing methods, the exporter said. At times the two interests came into conflict and the harmful effects were seen on a falling market. On a rising market there was little to induce the factories to sell f.o.b. While some factories nought by a better return to suppliers to justify an f.o.b. policy, other sections of the industry considered this was done at the expense of the industry as /a whole. The best policy appeared to be one of consignment solely, the butter to be disposed of when landed. Room lot 00-operation

"Apparently one of the most difficult things for the co-operative factories to do is to co-operate," said the exporter.: "It seems impossible to get them to work in unity and this lack of. Co-opera/- • tion in the producing section has contributed to an undesirable situation in the distributing section. There are about 30 firms in the Importers' Asso- ; ciafion, and about 25 others, who are not members, also must be operating, on the New Zealand market. Many factories split up their output among several firms'and the result is that merchants find the cost of getting New Zealand butter higher than the cost of selling it." 1 " An instance of the factories' policy of distributing output among more than ' one agent was quoted. It was stated one factory with an out lut of a-bout 900 tons dealt through three consigning agents, who expected to secure about 300 tons apiece. Actually the fao-, _ tory sold 700 tons f.o.b. and the three consigning agents shared the remaining 200 tons. This state of affairs was most unsuitable to the agents, who could not ' depend upon regular supply of one brand of butter and were often forced to disappoint customers in England. "There is at present too much competition for a factory's output and the changing policy of the individual factories only aggravates the position," said the exporter. "When more than one agent ,is holding the produce of ona factory the weakest holder sets the' price for the others."