LOCAL BUTTER PRICES

Poverty Bay Herald, Volume LIX, Issue 17955, 6 December 1932, Page 6

LOCAL BUTTER PRICES

STABILISATION SCHEME PLAN POE GISBORNE AREA ONE LARGE ORGANISATION Proposals for the stabilisation of butter prices on the local market have brought forward some, interesting . suggestions, and one that concerns the Gisborne district is that the dairy companies, in the area should bo combined into one large organisation in an endeavor to cut down overhead costs in the purchasing of supplies, cream collection,, manufacture and marketing on both the local and Homo markets. , Discussion on this matter was opened up to-day on the receipt this morning of a circular from the To Awaiuutu Cooperative Dairy Company, Ltd., propounding- a scheme to stabilise the price, of butter sold in New Zealand. The proposals were drawn up by Mr A. J. Sinclair, secretary of the company and at one time manager for the New Zealand Cooperative Dairy Company, Limited. The Paterson stabilisation scheme, of -Australia, is not favored by Mr Sinclair for application in New Zealand, for it depended on its success on .the fact that consumption .of butter in Australia greatly exceeded, the quantity exported. The quantity of butter consumed in New Zealand. for the 12, months ended duly ij 1932, das 23,000 tons, and tip; quantity exported during the same period was 97,(W tpnjs, F. 0.8. PARITY Tile scheftte proposed by -Vr Sinclair was calculated to bring £400,0C0 per annum additional revenue to the butter manufacturing companies, all companies to participate. The suggestion is that the Dairy Produce Control Boa&l should set up a New Zealand Butter Stabilisation Committee and each fortnight adjust the retail price. The f.o.b. parity would, be. the .commencing basis of computation for the local market. ‘•With the.f.o.b. parity of export butter as the commencing basis of computation).,the circular adds, “the first charge on butter sold locally should he a premium of 2d. per. pom||j» The f.o.b. parity, nqpresepts i tim price realised. ,by the producer at the main ports of New Zealand for a butter which has been stored and frozen for three months or more. If it were possible to.place- New Zealand blitter, on the British market, possessing the bloom, and freshness which characterises .it. as,,it comes from the churn, it is reasonable to contend that it would realise a price on a parity, say, with Danish.butter.., ■ ,'VDISTRIBUTION OF FUNDS

j ‘.‘The Npw, Zealand, consumer gets lps butter straight froni the churn, and lio would,be asked under the scheme to pay a slightly higher price than that realised for a frozen butter. Allowing for a slight decrease in . consumption because of the slightly higher price, this premium of 2d a lb-, would represent approximately £400,000 per annum.. This sum would accrue Ip the butter industry as a whole. “Every dairy company supplying the local market must he given a fair and reasonable allowance to cover patting and distributing charges from factory to-storekeeper. This is suggested tentatively; at, I^l,per lb. This charge vyould be.permanent; it would be fixed by tile Butter Stabilisation Committee, apd would have to be observed by all dairy companies or their agents catering foil tlie local trade., With export bulk butter at 10d per lb. f.0.b.,, tlic wholesale' price charged, to. storekeepers under this scheme would he- 12d, loss jil discount for -cash, made up as follows: F.o.b. parity,, lOd ; premium, 2d; allotyaiice for patting and distribution, 2d less |d cash discount. The storekeeper’s profit of, say, 2d, would therefore make the- retail price Is 4d, with an f.o.b. parity at lOd.

“The accumulated fund would be distributed, at.the eqd pf.the season to all butter-making companies' in New Zealand in proportion to their, total output for the year., It ,is,, considered that a dairy company supplying the local market should he satisfied with the f.0.1i. parity, plus a, fair and reasonable, charge for patt,ing f and distribution. The premium of 2d Would represent an advantage in, which the whole industry, woul 1/ share became of the ability of any putter-making company tp place a fresh qrtiple (in, tire loyal market at short h'otice. Inis premium would represent approximately £3500, for pgch 1000 tons of butter made in New Zealand.” THE 01 .SHORN E IDEA The local marketing of butter lias been a, contentious, subject, among dairy companies,,,operating pi the Gisborne district, and as late as last Friday a meeting of dairy company representatives was held to.discuss, the position. At. that lime, Air. Sinclair’s circular ,\yas not to hand, but it is pointed out previous plans had been formulated byjprii. Mr J. 11. Sunderland, secretary of t{je Kia Ora. Co-operative, Dairy Company, Limited, bad an interesting proposal io make today. He agreed with any plan that do.uld stabilise the local retail price of butter, and said his own view was that local organisation should go further than this,. He, believed if. would bo possible to weld together four of the companies operating, in this district, including the two with factories at Gisborne, and also tlio tVairoa and Tolaga Bav companies. .ft these four, companies would coiiibineg ho said, the purchase of requirements could lie, made by .on© central organisation with greater economy than by each individual company. In addition, cream collection -costs could be greatly reduced by stopping the overlapping which existed to-day. One united concern could go further than this; :t could reduce the number of factories making, bqtter, and, if concentrated oii one convenient factory in Ibu Gisborne area, leaving the Wairoa factory, to. deal with cream supplies at that end. of, the district j a great mine I.ion of costs, should, bo the result. EIjUALITV BASIS

T'jider Mr. .Suudorlaml’ts proposal, il might' or miglit.no! bo desirable, to leave Ujjß Tdlaga Buy factory to cope, wit! i the manufacture of butter, lie did not believe it would be more costly to. .bring the cream from Tolaga. Hay, than to convey the manufactured butter to Gisborne. Til any case, that could bo a matter for further consideration if the broad principles of. the proposal were to be given serums attention., . In the marketing of butter locally, the one , big, organisation would have g .distinct advantage in •that there would i o no juice cutting between tho various individual concerns,— and price-cutting was disastrous to,fire producer,

, f*. It. flnmillpn, ,secretary of the Qkitu , (‘o-pppratiye airy X'pinpariy, Lim.ile(|, also >-as asked fur Ids view on Mr. Sinclair’s, plan. Mr, Hamilton said that t'Jie .marketing in New Zealand was not nu an even basis. In Wellington, retailers wei'Q at present), making no profit from the sales of butter, and when (lisbpriie profile heard of 'blitter in Wellington, reaching the consumer at lOd per lb., they naturally compared it with the higher fiisborue price, which was Is Id to-day. A scheme that would bring all plaices on up lupin 1 basis of selling should be Wplcpmed, and lie agreed that If anytlliiig, \Vpre attempted the Dairy Produce Board Slmuicl be asked to supervise it,

Often comparison was made between till! retail price in Mew Zealand and that, in. Engl a nd, but Mr. Hamilton pointed to the fact that in England the consumes bought New Zealand butter that , had been in cold store, for some months, whereas the New Zealand consumer received the butter almost straight from the churn, after being patted ancl wrapped, an operation which the factories did not perform far export butter.