BUTTER PRICES

Dominion, Volume 14, Issue 149, 19 March 1921, Page 10

BUTTER PRICES

FREE MARKET AND NO SUBSIDY A SLIGHT INCREASE FORECASTED “ WHAT WILL THE GOVERNMENT DO?” Matters in connection with the fixing of the price of the new season’s butter in the Dominion have now reached an interesting stage Yesterday a Dominion reporter made inquiries in well-informed circles with the object of gauging the future movements of the local market, and ascertained that the Government have advised the Butter Committee that the market will be free as from March 31. Recently the committee asked tho Prime Minister for an entirely free market or a continuance of the present arrangement by which the Government subsidises those companies which supply the New Zealand market to the extent of 6d. per lb. By means of this subsidy a retail price of 2s. 3d. has been made possible. Mr. Massey informed the committee that they could not have an entirely free market, and that the subsidy as at present constituted must cease. At the same time Mr. Massey intimated that he was prepared to consider any reasonable proposal put before him. The committee met again later, and unanimously decided to recommend that after March 31 the wholesale price of bulk butter be 2s. ljd. per lb., f.0.b., or f.0.r., at buyers’ option; 2s. 3d. to grocers in pate, and 2s. sd. retail, and that a subsidy of 3d. per lb. be paid to manufacturers from, the Consolidated Revenue, to enable butter to be sold at these prices.

The Government's Offer. In reply, the committee has received the following letter from Dr. Raakes, Director-General of Agriculture I duly received your letter of 11th inst. covering a copy of a resolution passed by the committee. . This has been submitted to the Government, and carefully considered. lam now directed to inform you that it is greatly regretted that, tho proposal as to prices and subsidy contained in the resolution cannot be accepted, as the Government considers that, in view of all the circumstances, especially the trend of the overseas markets, the retail price to the consumer should not exceed the present price of 2a. 3d. per lb. lam directed to further state that, having regard to the circumstances at present existing, as set out above, the Government would be willing to offer a free market for butter within the

Dominion as from March 31. The Butter Committee, after consultation with the Government, agreed that it would not be necessary to withhold shipment of any butter made prior to March 31, as the make after that date would be sufficient for local requirements. It was agreed, also, that it would be necessary to prohibit shipment of butter made ns from April 1 to July 31, but otherwise the local market will bo entirely free. Fixing the Retail Price.

Much speculation ie being indulged in as to what the retail price of butter will be after March 31, when the Government discontinues its subsidy, and a free market is at the disposal of the factories. From inquiries made yesterday it would appear that there is not much likelihoodof the price of the commodity being reduced to the New Zealand consumer. As a matter of fact, those closely in touch with tho industry predict a slight increase in the retail price. "The position in a nutshell is this,’’ remarked a representative of one distributing house to a Dominion reporter. "The present ideas of the factories on the subject are such that it will mean a retail price of about 2s. Bd. The present maximum retail cash price -that may be charged is 2s. 3d. What attitude will the Government take up if the factories put their price up to 2s. Bd. ? What will the Government do? They have yet to make the position clear.” Plight of the Producer. In justification for the suggested price of 2s. Bd. it was pointed out that the summer price for export has been 2s. 6d. f.o.b. The equivalent on the local market was 2s. 9d. retail, but the Government, to enable the consumer to get butter at 2s. 3d., paid a subsidy, of sixpence. In the natural course of events —it was explained—it would be expected that producers would be entitled to higher prices for winter manufacture. As a matter of fact, if the retail price were made 3s. Bd. they would get Id. per lb. less for button made in the winter than they secured for butter made in the summer time.

"It hae been suggested,” remarked one official, "that the factories should get an export parity on the local market, when, as a matter of fact, there is no such thing as export parity, as from April 1. ‘lf butter were shipped in April it would be delivered in England in the middle of summer, whereas, under ordinary trading conditions, any surplus for export in April would be held until July, to enable such shipment to secure the best market in England. To speak, therefore, of export parity during our winter and the English summer is out of the question. In. pre-war times the price of butter in winter in New Zealand was always very much higher than the price ruling in. England during their (the English) summer.” Meanwhile furth<i" developments will be awaited with interest.