PRICE OF BUTTER

Dominion, Volume 10, Issue 2904, 17 October 1916, Page 4

PRICE OF BUTTER

EXPORTER AND RETAILER

QUESTION OF FAIR PROFIT

Referring to the Board of Trade «j proposals for securing the supply of) butter to consumers within. New Zealand at a maximum fate of la. 7d. per pound, a prominent exporter told b, Dominion reporter yesterday that he thought more attention should iave> been given to tho question of retailers' profit*. "Tho retailer is taking far too big a share of the difference between, tho factory price and tho price charged the consumer," ho said. "Wo are exporting butter at a prico that.represents a return of about Is. sd. per pound, f.o.b. If the local retailer would be satisfied with a return of Id. on, each pound of butter handled by him. he could buy at the export price ana sell to the public at Is. 6d. per pound,, thus-making it unnecessary for tbe : Board of Trade to devise a scheme of levies and bonuses. But the retailer wants to - take about 3d. per pound—more than the total v oost of manufacturing tho butter—and so tho producer and the exporter have to! suffer." *

The exporter added that at one timg' the retailers had been content to add

Ud. per pound to the price of butter' for the trouble of handling it, bufc-the amount'had been increased in later years. "I see no reason at all why the grocer should not sell tetter over the counter, on a cash basis, at a return, of Id. per pound," he added. "Take the case of a grocer in Wellington, wha ; has his butter delivered to him daily' by the merchant and makes his pay-, ments monthly. He has no -capital invested in tho butter. He receives liis: money from his customers before he{ pays the merchant, and if he were satis-! fied to take a penny for each pound, the consumers would get the benefit of the other twopence. But the' grocer takes 3d. per pound, and the Government appears to hare given no attention to that point at all."

A city grocer to whom this point was mentioned by the reporter stated that butter was treated in exactly the same way as any other commodity. "A grocery business is worked on a percentage basis," he said, "and the rule is for all goods to be sold at a definite percentage above the wholesale price. This percentage has to cover rent, taxes, wages, bad debts, etc., as well as the firm's profit. I don't think that anybody will regard 12 per cent, as an unreasonably large addition to the wholesale prices. No grocer can work on a less percentage than 10 per cent., and very few. of them charge more than 15 per cent, above the wholesale prices. Well, 12 per cent, on .butter bought from,the merchant at Is. sd. per pound amounts .to something over 2d. per pound, and brings the price to over Is. 7d. ' It is all very' well to say that a.

return of Id. per pound for handling butter should be sufficient for the retailer, but the same argument might he applied to any other article, and to say that the grocer should be content

with a return of something under 6 per cent, over wholesale prices (or Id. on a Is. sd. pound of butter) is ridiculous. The retailer could not carry on for a month at such'a rate."

PRODUCERS' DIFFERING

.. OPINIONS. . The president of the Board' of Trad& (the Hon. W. D. S. Mao Donald) has received several communications from producers in different parts of New Zealand regarding the arrangement for. limiting the local price of butter. Some of his correspondents have declared that the scheme is unfair and that it will cause unrest and, dislocation in the trade, but others have said that it is equitable enough, and that when it is once established no one will object to it.

It is not yet clearly understood by everybody concerned that the levy of; 3d. per lb. butter-fat :is not to ba a permanent charge the whole' season, through. That is tho rate at present, because it happens that the fixed local price of Is. 7d. per lb. for butter is equivalent" to 3d. less than the ruling f .o.b. price for export. The amount of tho levy is subject to review every month, and in all probability the rate of levy'will he decreased or perhaps increased'at periods during the season. Already the wholesale traders in Wellington have reduced their priceto Is--5d., which, allows retailers to .sell at the price of Is. 7d. per lb.