WELLINGTON NEWS

Hokitika Guardian, 20 February 1926, Page 1

WELLINGTON NEWS

HOLDING I P SUPPLIES. (Special to “ Guardian.”) WELLINGTON, February 17. The Chairman (Mr Finery) of the Home and Colonial Stores, at the annual meeting repeated his protests in regard to New Zealand and Australia holding up their butter supplies. The same .gentlemen made a similar protest iast year. There can lie no justification for Mr Emery's complaint for the producers of New Zealand and Australia are well within their rights either by direct instructions to their consignees or through the Control Board lo hold up supplies if by so doing a better and a more stable price is realised. That is done in all markets and with practically all commodities. It was done in connection with wool in 1920, when the ILA.’NV.R.A. was formed I i handle the huge accumulations, the result of the war. Holding up supplies and forcing up the price cheeks consumption and eventually the weight of the aeeuinlntions breaks the market, for the commodity must sooner or later he converted into cash or it will deteriorate and lose in value. The wholesale buyers meet these tactics in their

own way. Knowing that the higher prices will check consumtpion, and that ' supplies are accumulating they buy from hand-to-mouth and hold the best of their trade together. When tiemarket breaks through heavy accuinu. lations thc\ will step in and buy large stocks to sell to advantage. Both sides are justified in their procedure, il it.lii- common tactics of every market. The lolly is in either party believing I ha! tie- one or the other fixes the price—that is fixed by the consumers, for the moment the demand contractsupplies begin to accumulate and a time arrives when supply exceeds the demand and prices drop. The consumers are attracted by the lower prices, consumption expands and supplies diminish. This game (if hattledoor" and shuttlecock continues. One reason put forward by the New Zealand authorities for holding up supplies was ilmt ho till New Zealand and Australia recognise the gravity of the growing competition of Latvia and Argentina, particularly the latter, where Mr O’C'allag'han, an ex-Australian expert, lias achieved remarkably high qualities of butter, although on a comparatively small scale. It is difficult to discover the connection between the holding up of supplies of New Zealand butter and Argentine competition. One would imagine that the host way of meeting this growing competition would he to popularise New Zealand butter and not to restrict its sale. Although there is not the least justification for Mr Finery's complaints the mere 1.-u-t that they are repeated must tend to create a had impression and cause consumers to believe tluil the object of the Control Board is to exploit the British consumer. WATCHING ROAR'D OPERATION!?. A London firm handling New Zealand and Australian dairy produce extensively writes:—“Wo shall watch closely the methods adopted as time goes on. for the improvement of selling, but cannot hell) feeling that the present mode, which lias stood the test ef time, and returned to producers realisations a liich have been satisfactory. should not lightly lie altered. On the question of more economic selling, we venture the opinion that a cheaper agent, than one who does everything for 21 per cent commission could hardly lie found. We certainly doubt whether a Control Board with its costly executive, could itself markel dairy produce lor such a remuneration. Tim effort to secure continuity of supplies is sound. Inn the withholding of '->ipplies we regard with grave doubt. Supplies continue to arrive from Europe. South America, etc., in increasing quantities, and it seems to us a far better policy in meet flic market at a'! times rather than to withhold butter, which, when released, mnv create a glut, thus defeating the object for which it was withheld—cold storage charges and extra insurance .are, of course, incurred, in addition to which buyers alwavs give preference to fresh

goods. The Board’s desire to control prices is, we. fear foredoomed to failure. The law of supply and demand will operate—cut off supplies and send up the price, and immediately the demand is killed. Any temporary rise engineered by artificial means is generally followed bv a severe slump. This has been proved inanv times of late years and probably the average price is lower than would have been the ease had the market been, allowed to Like its normal course.” ft is evident that the Control Boards set up by New Zealand and Australia are, by their methods, inviting the antagonism of London’s wholesale merchants, and whether this is a wise policy time alone can determine.