BUTTER PRICES

Waikato Independent, Volume XXXVII, Issue 3272, 27 February 1937, Page 7

BUTTER PRICES

MINISTER'S STATEMENT

MARKETING SYSTEM

In a statement issued on Tuesday by the acting-Minister of Marketing, the Hon. \V. Lee Martin, he said that there was no cause for alarm over the recent price variations for butter and cheese on the London market. These variations are in no way due to the Government's marketing policy and the system of guaranteed prices. An assurance was also given that the relations between the Primary Products Marketing Department and its selling agents are entirely harmonious and satisfactory, and that the fullest co-operation in the sale of dairy produce exists between the London officers of the department and the individual selling agents. Points of Criticism "Points of criticism as I have noted them are as follows," said the Minister. "That the Government marketing policy is responsible for the loss of the price preference for our butter over Australian and certain foreign butters; that the price margin of Danish over New Zealand has widened; that the goodwill of the trade has been lost or impaired ; and that our butter is being neglected by buyers, particularly speculators, who have turned their attention to other butters. "Advices received from London since the Government marketing plan was inaugurated show that there is close co-operation between the merchants who act as selling agents for the Government and the London staff of the Marketing Department. It is known that almost all the leading firms welcomed the changed policy because it gave them continuity of supply and enabled them to develop the selling of New Zealand butter and cheese with more confidence than could possibly be the case under the system of the past in the working of which the merchants suddenly found their expected supplies curtailed.

Question of Speculation

"The attitude of the Government on the question of f.o.b. sales and speculation is that, having appointed selling agents for our produce on terms which, consistent with efficient service, secure to them regular supplies for sale on consignment, the Government is entitled as a condition of the agency to require that those appointed agents do not themselves speculate in the produce they sell. Leading agents have agreed 4hat this requirement of the Government is reasonable. "In reply to the critics who represent that the Government has been unwise to eliminate the outright selling on f.o.b. terms of our produce, I can say that when reporting to the New Zealand Dairy Board after nine years' experience in London as manager for the board Mr H. E. Davis said: 'The two systems of consignment and f.o.b. sales are difficult to reconcile even under present conditions. Those agents handling consignments only complain that butter sold on f.o.b. terms is frequently resold on arrival in competition with consignment goods. These resales of f.o.b. purchases influence lower prices for butter sold on consignment.'

Conflicting Interests

"While this view may be debatable," said the Minister, "it is evident that any contemplated system of adjusting the offerings of produce to the capacity of the market to absorb them would be seriously disturbed by the presence on the market of substantial quantities of produce, the ownership of which has passed to other hands. Thus the opinion by Mr Davis, which is -supported by many authorities, is that the policy of combining f.o.b. and consignment selling is inconsistent. It can fairly be said that the interests of the speculative f.o.b. buyer are not the interests of the producers or the Government. As seller, obviously, the f.o.b. buyer expects to beat the market. Furthermore, there must be general agreement that f.o.b. selling which leads to the storing of produce is a disruptive factor in any policy which aims at providing regular deliveries of butter and cheese in fresh condition. "The present marketing policy is different from the policy of the previous year only in regard to the elimination of f.o.b. sales and more strict supervision of 'spot' buying by agents. Australian Business "Suggestions have been made that f.o.b. buyers, being unable to purchase from New Zealand, have turned their attention to Australian but-.

ter. This suggestion is disproved by the fact that c.i.f. business in Australian butters is about in line with recent years and represents probably less than 15 per cent of the Australian shipments to date. "I can express the aim of the Government in regard to the marketing of dairy produce in these words," said Mr Martin, "that a system of shipment and marketing of our dairy produce should be developed which will ensure regular arrivals of butter and cheese of uniformly high quality, in fresh condition, delivered at the main distributing ports in the United Kingdom in quantities to meet market requirements, and the sale of this produce on a consignment basis through accredited agencies with distributive outlets, at a minimum cost to the consumer. The Government marketing plan inaugurated on August 1 last has already improved conditions toward this end."