BUTTER & CHEESE

Wairarapa Times-Age, 23 December 1938, Page 7

BUTTER & CHEESE

EFFECT OF' DIFFERENTIAL , PRICE MARGIN DECLARED TO BE EFFECTIVE. STATE OF OVERSEA MARKETS. The relationship between butter manufacture and cheese manufacture is referred to in the annual report of the Primary Products Marketing Department. After pointing out that the differential marginal payment in favour of butterfat supplied for cheesemaking is intended to compensate suppliers to cheese factory companies for the comparatively lower returns from by-products and for the costs of delivery of milk, the report states there is evidence to support the contention that the price margin has been effective in arresting the steady decline in cheese production during 'the past five years. Figures are given showing that in the two seasons immediately preceding the introduction of the guaranteed price procedure the decreases in cheese production were respectively 10.62 per cent and 7.68 per cent. In the 1936-37 and the 1937-38 seasons the position is shown to be relatively more favourable. For the 1936-37 season the increase in cheese production is 3.12 per cent, and for the 1937-38 season the decrease is 3.12 per cent. “When.it is considered'that in respect of butter the decrease for the 1937-38 season is 7.59 per cent, it canfairly be claimed that the present price margin of 2d a pound butterfat in favour of cheese has assisted to maintain cheese production," says the report. “On the general question of cheese production the position is that imports of cheese into the main importing countries have shown a steady decline since 1930. It is important to note that, with the increasing higher standard of living in the United Kingdom and in other countries, consumption! of cheese has tended to fall, while consumption of butter has risen. “The London manager of the department points out that the substantial drop in the production of cheese in the United Kingdom in 1937 from the level of previous years is the principal factor contributing to the comparatively satisfactory price level for New Zealand cheese which has ruled during the 1937-38 season. It is considered by no means improbable that this reduction or the greater part of it might be rapidly recovered, in which case returns from New Zealand cheese would be lower, unless a corresponding reduction takes place in supplies from New Zealand or Canada. There is the further consideration that Australian supplies of cheese have increased during the 1937-38, season. “It is to be noted that the reaction on effective consumer demand of available supplies applies also to butter, but butter consumption responds more quickly and effectively to retail price adjustment.' Thus, an additional 5000 tons of butter is unlikely to affect the season’s average price to any great extent, but the equivalent in cheese —say 10,000 tons —is likely to make a substantial difference to the price, return for cheese. For the reasons stated, the London manager .of the department considers that about 90,000 tons export for the Dominion should be kept in mind as the maximum."

Referring to the marketing of butter the report states that further evidence of the benefits of the present marketing policy is to be found in the steady narrowing of the price margin for Danish butter over New Zealand butter. A table in the report shows the margins to be: For the 1935-36 season. 20s 5d a cwt.; for the 1936-37 season, 15s 2d a cwt.; and for the 1937-38 season. 11s 7d a cwt.