THE BUTTER SUBSIDY.

Otago Daily Times, Issue 18420, 5 December 1921, Page 6

THE BUTTER SUBSIDY.

TO THE EDITOR. SlH,—Not having the advantage of seeing your paper regularly I may have missed a reply to a footnote you attached to a letter addressed to you by Mr W, D. Mason, of Midclleinarch, and published in yourcolumns on November 12. You must pardon me, therefore, it I am troubling you with a twice told tale. i Mr Mason’s letter was a protest against a statement which appeared in your leading columns, implying, as your correspondent thought, that the butter subsidy was paid lor tile benefit of the dairy farmers. “It will probably take the farmer some time,’’ you had said, “to live down the taunt that he has been subsidised in respect of bis production of both wheat and butter.” To this Mr Mas on retorted with some warmth. “The silly, mischievous, and totally false idea that the dairy farmers’ production of butter was subsidised by the Government still obtains currency,” he wrote, “but I am surprised to find in your leading article- that you, too, seem imbued with the same notion.” To this you replied in your footnote that the consumers did not receive the butter subsidy. “So far as they are concerned,” you said in emphasising your assertion, “the payment ot the subsidy was equivalent to the transference of money from one pocket to another.” I have no warrant to play the part of “amicus curiae” you and your correspondent, but having had occasion, without any personal interest in the payment, to make myself familiar with the effect of the butter subsidy, perhagg, you will allow me to suggest there really is no difference between yon, except in point of view.

Mr Mason is quite right in saying, as he does in another part of his letter, that the subsidy was given to the consumer, not to the producer. The producers had been guaranteed by the contract with the Imperial Government 's 6d a pound f.o.b. for their butter. They might have shipped away the whole of their output up to March 31 at that price had not the Government intervened and insisted -upon sufficient butter for local consumption being retained in the Dominion. ■ The Government ■ also determined to have the butter for local consumption sold retail at 2s, 3d a pound. Then it, became a matter of calculation as to what amount ©boil'd be paid the producers to bring, their return from the locally consumed butter up to that from the exported. butter. Patting, packing, delivery, and retailors’ profit all had to be taken into account and after the closest examination, the subsidy was fixed to bring the

producers’ return from locally consumed butter to an exact parity with their return from exported butter. By the time the Imperial contract expired on March 31 the price of butter had declined, but it still was high, and- a .new arrangement was made to assure a sufficient supply for local consumption- up Ito - August 31. For two or three weeks the subsidy was 3d a lb, one-half the former amount, and then was reduced to 2d- a lb, at iwhiohi figure it remained up to the end of ;the term. Perhaps in this arrangement/ as tilings turned out, the producers had rather the better of the bargain, > but it was • speculation in which the tide of fortune,not a very full one, turned their'way. It is perfectly true to say that the producers obtained no advantage from the subsidy which terminated on March 31, and that they received only the luck of‘-the market from the one that spanned the gap between that date and August 31. No doubt the subsidies were paid with the intention of helping the consumers—as they did help them at the time by assuring; supplies at a lower figure than the export price—but, economically speaking, you are' correct in saying that “so far as they are concerned the payment of - the subsidy was equivalent to the transference of money from,, one pocket to the other." That is the case," again speaking broadly, with all subsidies, but in this instance the poorer classes of the community got an immediate measure! of relief, and probably will ' not have to repay by way of additional taxation all the money they saved. i - I am not, as you will gather, advocating the system of subsidies, out I think it desirable your readers should- not be left to assume, from your statement that “the consumers did not receive the butter subsidy,'* that the producers did, in the sense of having it added to their legitimate profit.—l am. etc.. Consumer. Wellington, November- 30.