THE BUTTER PROBLEM

New Zealand Times, Volume XLVII, Issue 10852, 18 March 1921, Page 4

THE BUTTER PROBLEM

QUESTION OF SUPPLIES

CONDITIONS OF FREE MARKET FNSATISF ACTORY.

WILL THERE BE A SHORTAGE?

There is considerable speculation at the present time as to the price of butter in the near future. It will be remembered that tile Government, in. order (it was said) that the consumers in tiie Dominion might purchase butter at what was considered a reasonable price, agreed to pay 6d per lb subsidy to the factories. The export Lo.b. price of butter is 2s 6d per lb. nnd by an Order-in-Council, which was gazetted on October 1-th. 1920, the price of butter for local consumption was fixed at Is llid per lb at the factory doors: the retail price, for cash over the counter, 2s 3d per lb; and the booking price 2s 5d per lb. BUTTER COMMITTEE'S RESOLUTIONS. The Government subsidy terminates on March 31st, and recently the Batter Committee met in Wellington to consider the position. At that meeting, after a prolonged discussion with Dr. Reakes (Director-General of Agriculture) and Mr -Singleton (Government butter expert), the committee decided to ask the Government to grant entire freedom on the local market or else continue tho present subsidy until July 31st. These alternate proposals were placed before the Prime Minister (tho Hon. W. F. Massey), who stated that the present subsidy could not continue nor could the local market be allowed entire freedom. Ml Massey also stated that he was prepared to put any reasonable, proposal before Cabinet. The Butter Committee met subsequently and it was unanimously decided to recommend that" after March 31st the wholesale price of bulk butter b« 2s ljd per lb f.0.b., or f.0.r., at buyer’s option; 2s 3d to grocers in pats: and 2s od retail; and that a subsidy of 3d per lb be paid out of the consolidated revenue to manufacturer® to enable butter to be sold at these prices. It was agreed that it would not be necessary to retain any of the March make of butter in New Zealand to provide for winter requirements, as the make from April Ist would be sufficient. It was also further agreed that export as from April Ist, except by special permit, be prohibited until July 31st, 1921. The committee also brought again before the Prime Minister the question of equalisation on butter sold to suppliers, and a reply was received that Cabinet had definitely refused to agree to this. FREE MARKET OFFERED. The National Dairy Association Is now in receipt of a letter from Dr. Reakes (Director-General of Agriculture), bearing on the butter question, and a copy has been forwarded to the factories throughout the Dominion. The letter reads a 3 follows: — “I duly received your letter of the 11th inst. covering copy of a resolution passed by tbe committee. This has been subnutted to the Government and carefully considered. Xam now directed to inform you that it is greatly regretted that the proposal as to the prices and subsidy contained in the resolution cannot be aqpepted as the Government considers that in view of the circumstances, especially the trend of overseas markets, the retail price to the consumer should not exceed the present price of 2s 3d per lb. lam directed to further state that, having regard to the circumstances at present existing a® sot out above, the Government would be willing to offer a free market for butter, within the Dominion, as from the 31st inst.” In a covering note to the circular letter the Dominion Butter Committee says: “Prohibition of export, except bv special permit, will continue until July 31st, but otherwise the local market is actually free. It is, of course, difficult to say how prices wijl go, but the committee’s recommendation to the Government, as per circular letter No. 14, indicated a price of 2s 4jd for bulk f.0.r., or f.0.b., and we believe that they still hold the same opinion.” DIFFICULTIES AHEAD. Yesterday a “Times” representative made inquiries as to what the offer of a free market meant to the manufacturers and produce merchants. “A free market in the accepted term ha® not been offered by the Government,” the head of a large produce house stated, “as the offer is bound bv a restriction. There are difficulties looming ahead, and unless something is done, and done quickly, by the Government, there is every probability of a shortage in the supply of butter next month. There is an Order-in-Council in existence fixing the price of butter, ana unless this is revoked there will be a conflict between the conditions contained therein and that of a free market. Of course it is only logical to conclude that the Order-in-Council will be cancelled. All the butter that is manufactured this month will be exported, and that ample supplies for the winter will be forthcoming is problematical. Should the factories 'demand 2b 4jc per lb for bulk butter as recommended to tile, Government by the Butter Committee it would mean that the retail price would be 2s 3d per lb. What action would the Government take it such circumstances? WINTER BUTTER MAY BE STORED.

“Another phase of the question i# that producers may, and probably will, dry off their herds, as they contend that they are entitled to some recompense for the higher cost of milk production. during the winter months. The prices at present ruling have been the means of dairymen milking their dairy stock to full capacity, and it is extremely likelv that m the circumstances the cows will be dried off and considerable expense in labour and cost of fodder saved. Again, there is no obligation on a factory to place its manufacture on the market, and many will, no doubt, elect to store it till next batter season. Much has been made_ of the suggestion that producers in New Zealand should be paid on a London summer parity, but it only requires a moment’s consideration to arrive at the conclusion that tile suggestion is absurd. New Zealand butter, which is recognised to be the best in tho world, was sold on the English and Canadian markets during the northern winter, and tho winter supplies in the Dominion wore stored and exported in the spring so a® not to reacn the markets in the summer months, when the local supplies were greater and prices consequently lower. W ith a reduction in freights farm requirements will be reduced in price, and it is fully pated that the price of butter will fc less when tbe new season’s supplied come to hand. During the winter a higher price is obtained for milk; why not butter? There ia also another aspect, and that is: Although the price j{ cheese is easing, its manufacture is a bettor proposition than butter, and it is extremely probable that many factories which are now manufacturing butter fill change to cheese.”