WELLINGTON NEWS

Hokitika Guardian, 3 April 1930, Page 2

WELLINGTON NEWS

SLUMP IN BUTTER. (Special Correspondent.) WELLINGTON, March 31. The price of New Zealand finest salted butter has declined to 128 s per cwt and London agents state that there is very little business while others say that the market is extremely quiet. This means, if it means anything at all, that prices will go lower. At the opening of the season in August last the London j average quotation was 183 s per cwt, but of course there was none of the new season s butter on. the market and probably none was- available in London till about the? middle of October. J.n midOctober the quotation was 180 s and now it is -'l2Bs, a fall of 525, equal to 28.9 per cent. A year ago the price was 1635: thus compared with 12 months ago tho.ro is a decline of 35s or about 21.5 per cent. In July 1914. New Zealand butter was realising 118 s, and the price to-day is only 19s above that level or not quite 12 per cent. How long can we depend- on even this small margin of difference?

Judging by the happenings in other commodity markets—wool for instance —we must not be surprised to see butter fal’l to the pre-war price level. The position is a serious one for the dairy farmers and indirectly to; : the, whole country. But the matter cannot be left at that and something must bo done. The first impulse will be to invite qr demand that the government should take action but it is difficult iio see .what jt could do in the matter for this is 1 aii economic and ‘mot &. political, .matter. ; Jt involves thf Government to the. extent that the jposiiion demands drastic, economy pn its/part with a view to reducing jtaxjytiom: The fundahVehtal cause of the recession in butter value is that supply is momentarily in excess of demand at current prices and it is an economic if,aq!) .that competition 'becomes dormant for a commodity that is'in excess supply and because of this the price sinks lower than is'really justified by the-conditions. Messrs. Samuel Page and Son in their Dairy Produce Circular of February 15 throw some light on-this. They;-;say; “The reduction (if . the retail ( price to. Is 7d for Empire buffer has .hardly produced -sufficient additional'.demand, to check jthe downward movement in prices; at' any rate jt has 'been altogether inadequate toPmalce a. really marked increase in • consumption, consequently; the available supplies instead of being less than the demand have in fact proved rather in excess of it.”

That appears to he the definite position, . simply is in excess of demand and to stimulate the demand the price' to the consumers must he reduced, but,., tlmt.means .lower J.-rices, for tlie producer. Already the price is below the cost of production and any further decline would he ruinous, yet the tone -of the market indicates that there.is a probability of prices going lower. There will 'be a multiplicity of suggestions for meeting the situation. Some like Amalgamated Dairies Ltd., will suggest co-operative marketing which would be no cure because we want the demand to increase while the co-operative marketing scheme of Mr Good fellow is to extract the highest price from the consumer by controlling the market and fixing price-.' The Canadian wheat policy is much the same and it has proved a failure.

Co-operative or orderly marketing would be all right if at the same time strenuous efforts are made to reduce costs of production. As a first step towards this the Control Boards, not alone the Dairy Control Board hut all the other control hoards also should he wiped out and a marketing; organisation to deal with all primary products take their place. This would save the farmers a good deal of money. Then there, are numerous trade union restrictions'/ and interferences that must be swept, away and preference to unionists jettisoned. The Arbitration system will be swamped by the weight of unemployment, but that will come later on when unemployment becomes unbearably acute. Economies ’ must be effected in every direction and the slogan must be “Make production pay.” When the rural population suffers from loss of income the whole country suffers, for the produce of the land is the basis of our prosperity'’ when produced at a profit.