DAIRYING PROSPECTS

Taranaki Daily News, 28 August 1930, Page 18

DAIRYING PROSPECTS

SUPPLY TO HOME MARKET DOMINION’S PRINCIPAL RIVALS LOW PRODUCTION COST FACTOR. (By Wire—Special to News.) Hamilton, Last Night. Marketing problems were dealt with very fully by Air. W. Goodfellow, managing director, at the annual meeting of -the New Zealand Go-operative Dairy Company to-day. The Civic Theatre was packed with shareholders. The company’s gross turnover was £6,612,845, an increase of over £lO,OO-6. The meeting was very enthusiastic and accorded Mr. Goodfellow and the other directors a hearty vote of thanks. Dealing with the past season, Mr. Goodfellow said from the marketing point of view it had been one of the moot difficult yet experienced, and the drop in prices had been greater than in any year other than 1921-22. The f.o'.b. sales had paid substantially better than consignments, which had had to meet the full force of. the fall on the London market. The company had received a premium of £172,000 over consignment values for produce sold f.o.b. and c.i.f. to countries other than the United Kingdom. The reasons for the fall in prices were mainly, a drop in the general price level of all commodities, unrestricted competition in selling and combined buyin< For 20 years prior to the war there had been’ a gradual increase in all ■prices, including those of dairying produce. This had been mainly due to an increased output of gold. Since the war and the return to the gold standard prices had declined rapidly, due to the scarcity of gold, caused by accumulations held mainly by the United States. ■Speaking of unrestricted competition in selling, Mr. Goodfellow stated that Tooley Street was not altogether to blame. The 'general practice of the industry was for the supplier tc demand competitive. payment for butter-fat. This in turn had the result of compelling directors to demand competitive returns per ship from Tooley Street. Upon a normal and active market this method of comparison was entirely satisfactory, but on a weak or declining market the result was ruinous. There was no incentive to get the maximum price for the goods, as all the agent was concerned about was to beat his competitors. This could be most easily attained by throwing the goods on the market and undercutting prices, which resulted in the obtaining of a lower figure by competitors. During the past season’it had been this insane competitive selling that had forced the market below 140 s. THE STATISTICAL POSITION. The total importations into the United Kingdom both of butter and cheese and also the stock position were fairly satisfactory, and despite the general drop in all prices it was his opinion that there was no justification for the market going down to such an extremely low figure as 1265. Referring to combined buying, Mr. Goodfellow stated that the multiple chop companies of the United Kingdom had greatly strengthened their hold on the distributive trade during the last 12 months. The Margarine Union had, for instance, amalgamated with Lever Bros., and had purchased a controlling interest in a large number of big concerns. It was reported that they controlled over 5060 shops and had an issued capital of £125,000,0'00. The co-op-erative societies were also making considerable headway and had centralised their buying. The small grocers of the United Kingdom as a matter of selfprotection were forming buying associates in order to get their supplies at bedrock figure. The multiple shops represented Capital and the co-operative shops were owned by Labour. Both these huge forces were struggling for the control of the distribution of foodstuffs in the United Kingdom. It was idle to suppose that the' co-operative societies could afford to pay a better price for Empire produce than the multiple shops, as they thereby would be at a disadvantage in selling to the public. The co-operative societies had a membership of 6,600,000 and controlled assets to the value of £230,009,060. This, of course, included a large number of plants for the manufacture of all classes of commodities. Dealing with imports of dairy produce into the United Kingdom,. Mr. Goodfellow quoted the following for the twelve months ended May 30: Russia, 1930 12,517, 1929 10,929; Finland, 11,333, 10,924; Sweden, 13,821, 10,097; Denmark, 109,539, .104,087; Netherlands, 5683, 7427; France, 1442, 3844; U.S.A., nil, 3; Argentina, 14,963, 16,075; Irish Free State! 28,1'90, 28,120; Australia, 40,612, 43,222; New Zealand, 64,916, 66,739; Canada, nil, 1; other countries, 19,032, 9912; totals, 320,048, 318,671. It should be noted that the imports from Russia and Argentina, two of New Zealand’s leading competitors, has declined, whereas the quantity of butter received from Denmark had shown a substantial increase. It should also be noted that the imports from the Baltic States Trad expanded considerably. DOMINION’S CHIEF COMPETITOR. Denmark must be regarded as one chief competitor, and the expansion of the industry in that country was truly remarkable considering the adverse conditions. During the past year Denmark had exported 159,000 tons of butter as compared with 91,000 tons berore the war. Of this quantity 108,006 tons was exported to England and 43,000 tons to Germany. Of the Danish butter shipped to the United Kingdom, 66 per cent, went to the central and northern counties, 124 per. cent. to. south, and 20 per cent, to Scotland. Danish butter was exported through three main channels. Eleven co-operative societies exported 40 per cent., 24 private concerns 30 per cent., and the remainder was sold direct to big wholesale distributors in the United Kingdom. . Referring to Siberia as a possible competitor Mr. Goodfellow said that in recent official publications in Denmark it was stated that no confidence whatever could be placed in the prophecy of Russia’s brilliant future as a butter exporting country. In Siberia there was a marked tendency to go in for the cultivat’ibii of grain instead of dairy farming. From what information was obtainable he believed the Danish statement to be substantially correct. Dealing with the Argentine, he remarked that there was little prospect 1 in the immediate future of any rapid

increase in the exports of that country. The .population was increasing rapidly, and quality.left a great deal to be desired. The main disability of the Argentine was the fact that the population was not particularly adapted to the dairy industry. TEN YEAR’S FIGHT FO'R MARKET. With regal'd to’ Australia he stated that prior to the war the cost of production was lower than in New Zealand for dairy produce, but owing to the policy of fostering local industries by abnormally increasing the duties on practically all imported goods the cost of production had increased to such an extent that Australia could not carry on without the Paterson scheme for artificially raising prices locally to provide a bonus for exporters. There would probably be a modification of tariffs and a sharp fall in wages in the Commonwealth, which would go a long way to correct the disabilities of the present position. If and when this -occurred the dairy industry of Australia would continue to expand almost indefinitely. For the immediate future the increased quantities of daily produce available for the United Kingdom would come mainly from- New Zealand, Denmark and the Baltic States, and during the next ten.years New Zealand would have to fight to retain and extend her market for butter in the United Kingdom. However, he had no doubt regarding the ultimate result, for the simple reason that New Zealand would continue to produce dairy produce at a lower figure than its competitors. The real difficulty they had to face in the future was the more* or less stationary population of. the United Kingdom, which was receiving increasing supplies of produce. There was only-one ultimate satisfactory solution—that was for the United Kingdom to grant preference to Empire products. The only alternative was a lower" standard of living.