The Dominion. THURSDAY, OCTOBER 12, 1916. THE BUTTER PROBLEM

Dominion, Volume 10, Issue 2900, 12 October 1916, Page 4

The Dominion. THURSDAY, OCTOBER 12, 1916. THE BUTTER PROBLEM

The difficulties to be encountered in any, attempt to artificially restrict the prices of articles or goods in common use may be seen from the report of the Board of Trade on its' investigations as to the price of butter. After months of inquiry the Board has arrived at certain conclusions, and has made definite recommendations, designed to prevent any increase in the local price- of butter. And yet,behind all its arguments, dnd all its figures, the weakness of its position is evident. It has done its best to arrive at a solution of the problem placed before it; its researches plainly haye been of a most thorough description; it has gathered together some most interesting and instructive information, but above all it has demonstrated once more the incvitableness of the law of supply and demand. The measure it recommends as < tho. means of paralysing, the local effects of economic Jaw. is not. without ingenuity. To understand what i.lr actually, means it may bo explained | that of the butter at present produced in New Zealand about 10,000 tons are used locally and 20,000 tons are exported. At the present time, with butter selling at Is. Bd. per lb. retail locally, it pays better to export than to sell locally. If, therefore,-the local'price of butter is maintained as at present, or is reduced, then obviously those who export (with London prices as they are) are having much the best of things. The problem set the Board of Trade might, therefore, bo stated as follows:—(1) To keep down the price of butter locally; (2) to maintain the'local-supply; (3) to interfere as little as possible with the export trade of dairy produce. The third condition is essential, because, however readily some reckless peoplo may talk about blocking export, tho simple fact that last year our exports of dairy produce totalled over six million pounds in value shows tho' foolishness of any such proposal. It would simply mean that' tho whole country would be that much the poorer if our dairy produce export trade were stopped. The greater, our freedom to export- at the present time the bigger the .harvest the Dominion is likely tu we may need it all before the bills for the\ present war aro finally met. The manner in whicli the Board of Trade proposes to meet the situation is first of all' to restrict the local price. The price which it at present regards as a fair one is Is. 7d. per lb. retail—that is one penny per lb. less than the ruling rato. This, of course, would mean loss to the local suppliers as compared with those who sell their butter abroad. To meet this difficulty it is proposed that those who secure the higher p-rice by exporting—whether butter or cheese—shall, out of their extra profits, make up the difference to the factories which supply the loear market. Thus theoretically all the factories, whether they sell for the local market or for export, will be placed on the same footing and secure the benefit of the ruling market rate abroad. It sounds like simplicity itself, but, unhappily, this, sort of tinkering has a habit of not turning out quite as expected. Not so very long ago the Government with most worthy intentions stepped in to control the wheat market, and whatever good it may have accomplished—if any at all—was at least counterbalanced by the unsettling effects of its action on the milling trade, and tho discouragement which tho_ course taken was liable to occasion the wheatgrowers of tho country. But, in considering the possible effects of interference of the nature now proposed by the Board of Trade, tho situation cannot be judged solely by local conditions. The position on the London market at the present time is so remarkable that it js surprising more attention has not been given to it. There appears to bo in progress in England quite a revolution in the habits of a large section of the British public in the matter of food consumption, and the change in attitude towards the use of margarine in place of butter is one of its most striking features. The Economist of August 10 discusses the matter at length, and arrives at the conclusion that tho old, and as it terms it unreasonable, prejudice against margarine- is rapidly breaking down. With butter in the neighbourhood of 2s. a pound the grocers and provision dealers found the demand for margarine at Is. a pound incrcas-

ing, and they, began to push the margarine trade. "Now," to quoto the Economist, "where you have oyer 200,000 grocers and grocers' assistants all over the Kingdom concentrating on such a policy and pushing such a 'line' for all it is worth you inay be sure something is going to come of it." And, according to the British Board of Trade Returns something has come of it. Imports of margarine jumped in one year, from £3,900,000 to £5,700,000, while the amount of raw material imported for the making of margarine for home use increased from £2,607,000 to £5,546,000. Tho consumption of butter, on the other hand, showed a marked downward tendency. The closing comments of the Economist on the situation are deserving of special attention:

Viewing this development, it remarks, from the national standpoint at thopresent time what is the verdict? These 4783,000 cwts. of margarine [imported and made in England in'l9ls], ( as we have seen above, were worth at the places of production and the ports of arrival Had they been of butter, they would have been worth ,£33,481,000, at tho average price of butter imports in. 1915. By its sensible use of margarine the nation may thus be said to have saved in one year more than £20,000,000 on its butter bill. Moreover, this large sum has been saved entirely at the expense of the (overseas iarmer (since it is from him that the butter would have had to bo procured), and maybe said to be tho woi-kingmun's hamlsoino contribution towards the reduction of imports, and the consequent correction of that adverse trade balance which has caused our Government so much thought. Nor should ; it bo forgotten that thero is plonty of scope for further well-doing in this direction. Our 1915 consumption of butter was 3,808,000 cwts., worth at ports d£26,700,000. Had its place been taken by margarine, its valuo would have been only ,fiIO,GOO,OOO-a further saving of over .£16,000,000. , .

Then the journal quoted goes on to urge this further economy by tho use of -high-grade margarine on the part of the well-to-do 'classes in England. The position hero disclosed is of particular interest at the present moment for two reasons. First of all because it shows' how our countrymen in tho mother Country adjust themselves to the pressure of war. prions, and secondly' because it throws light on influence's at work which may ultimately prejudice the position of our butter producers, and through them tho Dominion generally. It is indeed a. further evidence of the wisdom of making tho most of the open market rates for our dairy produce while the opportunity to do so continues. The main consideration at the moment should bo to export as much as can possibly be spared of our dairy produce. Whether, tho Government decides to tinker' with prices on tho lines suggested by the Board of Trade, or on some other basis, or not at all, it should at least endeavour to ensure as large an export trade as. possible. The Acbing-Minister of Finance in his remarks today on tho financial position generally makes it clear that no is aliveto tho necessity for keeping a sharp eye on the commitments that tho war is piling up for us. The less we interfere with the sources which we- must look to now arid in tho years ahead to enable us to meet those obligations, tho better it will be for everyone.