THE BUTTER PROBLEM.

Otago Daily Times, Issue 18447, 7 January 1922, Page 6

THE BUTTER PROBLEM.

Sooner or later, certainly as soon as the laws of supply /and demand are permitted to hawe free play, the prices of the primary .products of the dominion will once more be regulated by ordinary trading conditions.lt must bo recognised that devices such as “Bawra” and the proposal of the dairy producers to buy back the stocks of butter sold on thefr account to the Imperial Government and at present held by it are

only in the nature of palliatives to relieve the stress caused by the transition from a period of artificially inflated values to an era id which the normal law of supply and demand will operate. In so far as the producers, by pooling their respective interests, are able to save themselves from undue loss, theirs is a perfectly legitimate effort. They are not, however, entitled to expect that the Government will, fix the protection of their interests, adopt measures that would injuriously affect the general body of the public. During the great part of the currency of the war, as a consequence of the inflation of values, exceptionally high prices prevailed for butter. A nominal concession to consumers in New Zealand was balanced by the payment out .of the public revenues of a butter equalisation fund. The argument which determined the payment of a butter subsidy was that the dairy farmer was entitled to a payment for his produce that was based on London parity. Now that the market has fallen rapidly at a time when an accumulation of stocks remains at the disposal of the Imperial Government, the producer finds himself faced with the parity argument from quite a different angle. In order to safeguard the market . from the risk of a still further drop a conference of representatives of the butter producers ha§~ adopted a proposal' to purchase back from the Imperial Government the stocks of New Zealand butter held by it with the idea of pooling them along with the new season’s output and thus of averting the collapse of the market which a sudden release of these stocks wotdd eventually bring about. The policy to be pursued in this matter may safely be left in the hands of the "butter producers. They are, it seems, not unanimous on the subject, for a minority believe that the scheme which has found favour will in the long run react unfavourably on the industry. There is a certain element of risk in the project. It is when' Government assistance in this scheme is sought that the interests of the general public are touched. It was actually suggested a few days ago that the Government should utilise public funds or employ the public credit to purchase the butter stocks. It is satisfactory to know that I no idea so singular as this seems to have been deemed to be worthy of consideration by the conference of producers. But they do want some’ Government guarantee behind their project. There is no objection to be taken to this as long as it is made plain that the taxpayers are not expected, to accept any risk of loss on the arrangements. To what extent, if any, the purchase of New Zealand butter by New Zealand producers is contingent upon similar action with respect to the Australian stocks being taken by the Australian producers is not clear. •It has been indicated that the Federal Prime Minister regards the project somewhat unfavourably—a circumstance which suggests that the Government is invited to incur some liability under the scheme.