BUTTER MARKETING

New Zealand Herald, Volume LXXI, Issue 21893, 31 August 1934, Page 15

BUTTER MARKETING

AUSTRALIAN CONDITIONS CONTINUITY OF SUPPLY FORWARD SELLING CONDEMNED The abolition of forward selling and the adoption of a system of shipment tinder which a more uniform supply of butter to the London market can be maintained are reforms in the marketing of Australian butter urged by Mr. G. Stening, dairy expert of the Producers' Co-operative Distributing Society, Limited, Victoria, who has reported to the industry after a visit to London. Mr. Stening was elected, at a conference of delegates from Australian co-operative butter factories in Sydney in May, to proceed to England to supervise the establishment of a patting factory in London, and to inaugurate the sale of Australian butter in that form. While in London he made a close investigation of marketing conditions generally in the distribution of Australian butter, and although his report is directed to Australian producers particularly, many of the general issues raised are closely akin to those under consideration m the New Zealand industry. Quality the Keynote "There aro several contributory fan tors operating against our general position and the orderly marketing of Australian butter in London," Mr. Stening states. ".In order of importance these are:—(l) Quality; (2) continuity of supply; (3) forward sales; (4) number of agents. It is incontrovertible_ that quality of a product is the keystone to successful marketing. The consensus of opinion among importers and buyers is that, although Australian butter has improved in quality in recent years, there is still much room for further improvement." After urging the necessity of attacking "the mediocre border line quality" butters and to this end the need for strict and scrupulous cleanliness in all details of production and handling, Mr. Stening proceeded to deal with the various flavours and taints which affected the sale of both New Zealand and Australian butters on the London market. Neutraliser flavour or "mousey flavour," as it was known in London, caused by inefficient neutralisation, and "feedy" butters, the product of the prolific herbage growth experienced by New Zealand and Australia, were two types which were generally overlooked by buyers. Uniformity in Grading A plea for uniformity in grading to overcome the possibility of the poorer sorts being used to "bear" the better qualities from their price position, and for continuity of supply, was next voiced by Mr. Stening. "By continuity of supply," he said, "is not meant, as is so generally accepted, the mere providing of the market with butter all the year around, but rather the regular and uniform supplying of the market every month and at all period* throughout the year. This factor, which is of most vital importance in improving our marketing position, stability and price position, should be considered without delay, and arrangements made for the full adoption of this principle and alteration of our present policy of uncontrolled and spasmodic and irregular export. The position is so desperate that drastic action is required, so that the be uniformly supplied throughout the year according to our production. This may impose hardship on producers, manufacturers and exporters; but no burden is too great m°Jrr y th,S evil - which is doi "g so position™ ° Ur PrrSGnt mark *ting

Co-operation With Dominion "General opinion is that shipments from either Australia or New Zealand should not exceed 12,000 tons of butter month, and that this maximum should be shipped during our summer producnrsLPer * od i W . hen . the Northern Hemisphere production is at its lowest, Then sav after March, shipments should be reduced so that it will be the lower IT I iF^ at Britain which will meet the full blast of competition from the fresh arrivals from Continental countries. It seems expedient, theretore, to ensure flie best results that a full co-ordination with New Zealand should be established, and as the matter is of such importance to New Zealand there should be no difficulty in securing this."

In regard to forward sales, Mr. Stoning reported that he had given that aspect careful investigation, not only because of its importance as a possible tactor m affecting market stability, but also because of the strong and varied opinions among exporters and manufacturers. After dealing with market fluctuations during the season, Mr. Stoning stated:—"Experience has very clearly sho»vn that at certain periods or the year, the time of high production, constantly fnlliug c.i.f. prices, as quoted from Australia and New Zealand, have beer particularly harmful to the spot market. It is impossible to hold the market under conditions where the c.i.f. price is quoted under the current spot price. When there are 110 forward sales, buyers must operate on the spot, which naturally tends to film the market, but when butter is sold to arrive or quoted c.i.f. at lower rates, they 'bear* the market to suit themselves.

Saturation Point "It is my considered and firm opinion that forward sales under any system should at once be prohibited in the very best interests. Any justification there may have been for this policy of export in the past is now entirely obliterated bocause of the changed condtions o): this market, which to-day is fed to saturation point." Another obvious factor which JVIr. Stening stated was militating against the orderly atid efficient marketing of Australian butter was the large number of agents licensed by the board. At the present time there were 34, some of whom never handled any butter at all, others spasmodically, while some only handled c.i.f. butter. Of the 34 agents, eight handled 90 to 95 per cent of consignment butter. Mr. Stening strongly urged the limitation of the number of licensed agents to about 12, and if that reduction was accompanied by the elimination of c.i.f. sales it would probably be found that the 12 would compass all agents who were definitely and legitimately marketing to the consumptive trade. In reference to those conditions Mr. Stening mentioned the step the New Zealand Board had taken in assuming a full measure of control over tin 1 produce and exporters.