BUTTER PRICES AND PROSPECTS

Nelson Evening Mail, Volume LXIV, 7 January 1931, Page 7

BUTTER PRICES AND PROSPECTS

ENQUIRIES IN LONDON

CONDITIONS REVIEWED DOMINION MUST FACE NEW POSITION (By _ T r C.L.) LONDON, 12th November. Blitter down as low as 108 s to 114 s per cwt! That was the intimation in the commercial columns of the morning papers this morning. The prices represented a pay-out to the New Zealand producers of between 9d and lOd, the same pay-out as ruled before the war, and one which spelt hardship and perhaps ruination, to many producers with their overhead charges substantially the same as they were when butter was making 180 s to"200s

So I went down to Tooley Street to make enquiries of some of the Tooley Street merchants handling our produce. I had seen them several time before when our butter was realising between 130 s and 140 s, and they were complaining then, that even at these comparatively low prices the buter was not moving into consumption as quickly as it had on former occasions when retail prices closely approximated those obtaining for margarine. Now they were frankly aprehensive and puzzled over the position. It was true that Danish was selling for from 136 sto 140 s, but then, there were special reasons for this difference in prices. Most of the Danish butter was sold under contract at rates determined by the price commanded for the “free” Danish article in the London market, and the quantity.of “free” was not large. Danish was “fresh,” and was sold as such. It was spreadable, and possessed a flavour favoured by the public for whom they catered, and who wero prepared to pay an extra 2d to 3d per lb for it.

CLEARING STOCKS Another factor in the fall of prices was that there had been, and still was, a larger quantity in store than usual, and the way had to be cleared for the now season’s make, or prices would sag more than ever at the height of the New Zealand season. A few months before prices had also gone down similarly, but not for Jong, recovering and remaining for some time at between 130 s and 1365.

“I know what these low prices mean to the New Zealand producer,” declared one merchant, “and lam genuinely sorry for him, but the fact has to be faced that we are living in abnormal times. Other staples have also gone down tremendously. Rubber, wheat, wool, cotton and the various minerals are now at levels much below the cost of production, and evidently the limit of their declination has not yet been reached. It can be said of butter and cheese that they have not dropped to anywhere near the same extent. At least they can be sold* which is more than can be said at present of most of the articles mentioned. That is a grain of comfort. It has also to be remembered that buter is pouring into England from nil quarters, whilst your tion is increasing substantially.” The merchant went on to exclaim that the markets for all staples had been artificially kept up since 1923 by reason of the juggling that had taken place on the chief stock exchanges of the world, principally in London and New York. Prices for stocks had risen higher a.nd higher, and a condition of speculation been engendered that had its climax in November of last year when the inevitable day of reckoning came. Instead of deflation being gradual, as it would have been had the natural economic agencies been allowed a free course, it had come over night, as it were, with disastrous consequences to all concerned. He did not suggest that the present markets foi dairy produce, or any of the other staples, would remain at the present low levels, nor would he say that the lowest point had yet been reached even, but the pendulum had now swung back, and any marked improvement must follow an improvement in the condition of tho people. And the present condition of the people in Britain, as well as m other European countries, could hardly bo worse.

ECONOMIC CONDITIONS One fully realised the truth of the observation. With more than a quarter of registered workers out of work, an 1 subsisting on. the dole, a position has been leached in the economic life of the English community that is without parallel in the last century, and signs of the lifting of the cloud of trade depression that hangs over the whole world as well as England are not yet discernible. "Wo have no means of gauging the future. All our previous standards have gone by the board, and we can only hope for the best,” was the opinion of the head of another concern as we 1 known m New Zealand as is in Tooley Street. “Buyers are buying from hand to mouth, even with prices as low as they are today. You see, when they bought at 140 s they felt they were buying well and stood to gain by what they considered must be an upward movement in the market, but a few weeks afterwards prices fell by 10s per cwt, and now they are down by another 15s to 20s. Now the retailer is taking no risks. All of this is most unsettling. What we want more than anything else is a restoration of confidence. So long as we have a Socialistic Government in power that confidence, I’m afraid, will not he forthcoming.”

STORING, A MISTAKE The lesson to be learned from the fall in dairy prices was, acording to another authority, the fallacy of storing our produce instead of accepting the ruling market price as it arrived. Ihe Danes never stored their produce, however unfavourable was the market. They got rid of it from week to week. They had been a long time in the English daily produce trade, and their judgment was as ripe as it was expert. Some of iNew Zealand’s factories placed reserves or other restrictions upon the sale of thenoutputs, and consequently their butter and cheese were often kept in store, incurring charges and deteriorating in quality, thereby prejudicing the whole Dominion produce. This was a matter which should, he felt, engage the close attention of the Produce Board. CHANGING CONDITIONS There is no doubt that marketing conditions in Great Britain are changing, and a course that might have been, advisable to follow a few years ago is no longer tenable. For one thing the free Enelish market is atracting increasing

quantities of produce from all parts of the world, especially from Northern Europe, and the quality is, for the most part, steadily improving. New Zealand butter is still very highly regarded by the housewife, at least when she can get it fresh, but it has by no means an exclusive field, but it has by no such thing as Empire preference in the mind of the domestic buyer who lias nowadays to mind her half-pennies. In the north —the Midlands, up to Edinburgh arid Glasgow—New Zealand butter is seen in only a small proportion of the shops, due to the preference shown for the “fresh” Danish article, also to the excellent service and organisation of the Danes, who leave absolutely nothing to chance. The Empire Marketing Board and the New Zealand Produce Board from time to time have conducted campaigns to place colonial produce on these markets, so far with little permanent success except in the case of isolated centres. In London and the south, however, New Zealand produce has a strong hold, many of the shops not having Danish butter on their shelves at all. These.shops do not always pass on the benefit of their cheap buying to their customers, for just now when New Zealand butter is being sold at about Is per lb wholesale the unfortunate customer is sometimes obliged to pay up to Is 5d for it. I pointed out this disparity to one retailer. “That is quite true,” he said, “but you must not forget that only a few months ago I paid 160 s for New Zealand butter that a few weeks after dropped to 1365, and I am now getting back what I lost.” In other shops, however, butter was purchasable at Is 3d. MASS PURCHASING

The tendency in England is towards the further merging'of chain stores, and this connotes an extension of mass purchase of dairy and other produce. The influence of such wholesale buying on the market is naturally very considerable. Just now the market is a buyers’ one; for many years it has been a producers’. Unfortunately the goodwill towards New Zealand produce that previously existed amongst wholesalers handling the produce has been largely destroyed by our ill-starred attempt to control the market in 1925 and by the campaign of misrepresentation and discrcditation that accompanied it and still unfortunately is in evidence. More than ever New Zealand produce has now to stand on its own merits, without the active support of “The Street,” and it is more than ever necessary to have the services of the ablest men available right in London, men who should be absolutely unfettered and have the complete confidence of tho producers to do what they consider right at the moment. It is impossible for any board, however capable arid experienced, to decide any c|uest’cns affecting the sale of produce in far away New Zealand. Prompt decisions have to be made from hour to hour, often from minute to minute, for upon them so much depends.

A NEW SITUATION A new situation has arisen and has to be faced. New Zealand’s one market now is Great Britain, which will absorb all New Zealand can produce in butter and cheese—at a price. That price depends upon the economic condition of the country, which is very bad at present, but cannot remain so far all time; upon the quality of the article we produce, which in the case of cheese leaves much to be desired; upon the means and methods of distribution, which can be greatly improved upon; upon systematic advertising and propaganda, which so far has been sporadic and limited in range and poor in quality; and, finally, upon the direction and judgment of the best brains at the command of the producers at the selling end of the industry.