The Daily News MONDAY, NOVEMBER 24, 1930. THE PRICE OF BUTTER.

Taranaki Daily News, 24 November 1930, Page 6

The Daily News MONDAY, NOVEMBER 24, 1930. THE PRICE OF BUTTER.

The proposal to stabilise the price of butter which was considered (last week by representatives of the dairy industry in South Auckland will nowhere be discussed more keenly than in Taranaki, though the result of the discussions may be less favourable than it was at. the meetings held at Hamilton and Matamata. The basis of the scheme of stabilisation propounded by the secretarymanager of the Te Awamutu Cooperative Dairy Company is the raising of the price at which butter is sold iii New Zealand for local consumption. At 1 present the local price is based upon the Jjondon parity, from' which the f.o.b. value' of export butter in New Zealand is ascertained. To that value is added a small sum to cover the cost of extra packing for the local market and of distribution, and thus the charge made by the manufacturers is arrived at. The retailers are free to fix their own price, and in many parts of the country there are two retail prices, some grocers seeking a larger profit than others. The South Auckland idea is, in effect, that a very substantial addition should be made to the price at which New Zealanders buy butter for their own use. The illustration given at the Hamilton meeting presupposed the export parity of butter at lid a pound, and the addition of Hd for- factory work and distribution. It was suggested that the wholesale price should be fixed at Is sd, and the retail price at Is 6d. Dairy companies supplying the local market would collect Is 5d from the retailer, and would pay 41d out of that amount to the stabilisation account. Prices would be fixed .each month. At the end of the season the funds of the stabilisation account would be distributed as a bounty among all the butter-making companies in proportion to their total output.. Under the conditions obtaining at present the proceeds of the stabilisation fund would amount 1o about £500,000 a year. This would mean an addition of about 7s to the annual butter bill of each man, woman and child in the Dominion, including, of course, those engaged in the / dairy industry, and to the family man this would mean a substantial tax. That is a practical aspect ■of the schemo that needs more careful consideration than it seems to have receiv. ed in South Auckland. Another very practical question is what attitude the public would adopt if compelled to pay what wduld be regarded-as a “fancy” price for butter. The effect of the Patterson system in Australia has been to reduce , the consumption of butter, and the result in this country would probably 1A similar. The originator' of the Te Awamutu scheme implied as much when he attributed the practice of basing the local price on the London parity to the “lack t of cohesion’-’ among manufacturers of butter. Any attempt to increase the local price to any appreciable extent, he is reported to have said, caused local factories to flood the market, so that the price speedily reverted to its former level. That surely is'evidence of the consumers’ very strong disinclination to pay an artificial price. But the certainty that compulsory high prices would restrict consumption is by no means the most important ground upon which objection can be taken to the stabilisation scheme. Its dependence on compulsion and its economic unsoundness are its worst evils. In the light of the recent history of the dairy industry in this country it is surely unthinkable that a majority of those associated with it could support the application of compulsion to the manufacturers, the retail sellers of their produce and the consumers. The dairy farmers know as well as anyone the dangers that underlie compulsion, and they, along with everyone else who thinks' dispassionately and intelligently, must realise quite clearly that experiments in bolstering up prices can only lead to trouble. In this country the present price of wheat is evidence of the evil of a species of price fixation. In the United States, it was reported on Saturday, the Farm Board, which has been trying to stabilise wheat prices, is controlling grain which is w.orth nearly £9,000,000 less than it cost. Artificial schemes of stabilisation generally reveal the characteristic of the boomerang. Admittedly the dairy farmers in New Zealand are facing difficulties and need help. But the help that would be most serviceable would be reduction of the levies made upon them and of the cost of commodities they have to buy and services they have to pay for. An artificial increase in the price, of a staple article of food would still further delay the necessary readjustment of living costs.