PRICE FOR BUTTER

Taranaki Daily News, 22 November 1930, Page 9

PRICE FOR BUTTER

SALES IN NEW ZEALAND i FAIR RETURN TO FARMERSCHEME FOR STABILISATION, A scheme designed to secure for the dairy farmer a price for his butter sold in -New Zealand, based on New Zealand standards, was propounded by Mr. A. J., Sinclair, secretary-manager of the Te Awamutu Co-operative Dairy Company, at a conference of directors of 18 companies connected with the South Auckland Dairy Companies’ Association, at Hamilton on Thursday. Mr. Sinclair said the price received, by dairy companies for butter sold in New Zealand, was based somewhat loosely on the f.o.b. parity of export butter. For instance, if the London price of bulk butter was equivalent to Is a pound, f.0.b., Auckland, the price charged by dairy companies to retailers would be Is lid, the extra 1-Jd being charged to cover the cost of patting and distribution. The retailers’ usual profit was twopence a pound, although some were satisfied with a penny. I ' ' AN INDEFENSIBLE PRACTICE. Mr. Sinclair contended that the practice of basing the local price on the f.o.b. parity was indefensible, but, owing to lack of cohesion among dairy companies, an attempt to increase the local price to any appreciable extent above the f.o.b. parity caused factories with no standing connection in the local trade to flood the market with butter, so that the price speedily reverted to its former level. If there were no exportable surplus of butter —it .was estimated the local consumption varied, from 12 to 15 per cent, of the. total production—-and the farmer produced only sufficient butter to satisfy New Zealand requirements, Mr. Sinclair said there would be no difficulty in. securing a fair New Zealand price, based on the New Zealand standard of living. Under present conditions, the farmer was asked to take for butter sold locally twopence less than the same product realised in th'j world’s cheapest market in competition with countries where the standards of wages and living .conditions generally were on a much lower level. ' INQUIRY BY DEPARTMENT. Outlining his scheme for stabilising the selling price in Naw Zealand, Mr. Sinclair said the first step would undoubtedly be an inquiry by the Department of Industries and Commerce, which already had the necessary statutory power. Evidence would be tendered by all of the producers and consumers to enable the department to determine a fair and reasonable price for butter sold in New Zealand, based on New Zealand standards and irrespective of the f.o.b. parity. In the course of its the department would inquire into two other problems, namely, whether a profit of. twopence a pound was fair and reasonable as a charge by a retailer on a commodity with so rapid a turnover, and what would constitute a fair and reasonable allowance for the patting and distribution of bulk butter.

With these pointe determined, a New Zealand butter stabilisation committee would be set up to function on lines ■similar to those of the Australian stabilisation committee. The most suitable body to administer the scheme would be a sub-committee of the Dairy Produce Board, the powers of which would require to be enlarged by legislation. The committee would have powre to fix the retailer's’ margin of profit, and the allowance to dairy companies for patting and distribution. The members would meet in the first week of each month to determine the f.o.b. parity for the previous month on the basis of the High Commissioner’s cables, and dairy companies would be notified of the amount of levy to be paid on the 15th of each iponth into a butter stabilisation account. Any improvement in the export parity would automatically mean a reduction in the amount of the monthly levy.'

BOUNTY AT END OF THE SEASON.

X’ Z ' K Illustrating, how the scheme would operate, Mr. Sinclair assumed that the export parity of butter one ’month was Hd a pound, that the cost of patting and distribution had been fixed at 1-Jd a pound; that the retail price to the public had been fixed at Is 6d a pound; and the wholesale price at Is 5d a pound. Dairy companies supplying the local market would collect Is 5d a pound from the retailer; they would retain Is Old and the balance of 4Jd would be paid in on the 15th' of each month to- the stabilisation account. At the end of each season a practice similar to that in Australia would be adopted, and the amount at the credit of the stabilisation 'account would be distributed. as a bounty to every butter-mak-ing company in New Zealand in proportion to the quantity of butter made. The scheme would be inexpensive to operate, and, under the conditions obtaining at present, would bring in an additional revenue to the butter producer of approximately £500,000 a year without inflicting hardship on any section of the community. “If the people of New Zealand deny the dairy farmer a fair New Zealand price for butter sold in New ..Zealand,” concluded Mr. Sinclair, “then the dairyman has a good case for demanding an all-round reduction in wages.’’ The scheme was discussed in detail by the meeting. A resolution was passed recommending it to a meeting of dairy factory representatives and farmers to be held at Matamata.

DOMINION CONFERENCE URGED(By Wire —Special to News.) Hamilton, Last Night. The Matamata meeting to-day was attended, by 400 co-operative company representatives. It unanimously approved Mr, Sinclair’s scheme and decided to forward a copy to every co-operative dairy company in the Dominion and also to request the National Dairy Association to call a conference of all co-operative companies to consider it at Wellington within a mouth. The following resolutions were also carried:—That in view of the extremely low prices for butter and the great disparity between New Zealand and Danish butter, the directors of co-operative dairy companies throughout the Dominion be urged to get together and reorganise their marketing methods with the object of reducing the ruinous competition which exists between the various agents handling New Zealand butter on overseas markets; that in view of the high cost of production and maintaining Government and national services and in consideration of the extremely grave economic position confronting the primary producers, rendering it impossible to carry on other than at a loss, this meeting urges the Government to take immediate steps to review and to relieve the situation in order to avert ultimate national disaster.