BELOW COST

Hokitika Guardian, 5 April 1930, Page 2

BELOW COST

POSITION OF DAIRY FARMER *

Mr J. G. Brechin, a prominent figure in the dairying industry in southern districts of the North Island, informed a representative of “The “Post” recently that at ISOs per cut in London butter was now well below the cost of its production. “The farmer,” he said, “must receive a minimum return of Is 3d per pound. Below that. figure he cannot supply except at a .very serious loss. As J know them, the majority of dairj farmers in the Dominion are hot in a position to stand the continuance of current prices this season. It is certain that unless the butter market improves the repercussions of theselow prices will he felt on New Zealand trade in general. .

“Cheese is quoted at prices much below anticipations, but cheese is not in such a bad way as butter. But taking the dairy export trade of the Dominion as a whole, and allowing for increased production and favourable exchange, it may be described as in a very serious condition at the moment with no indication of improvement.”

Mr Brechin deplored the lack of scientific statistical information as to the holding of quantities from sale. There were some four hundred dairy companies, but none of the directors of those companies, he said, really knows what policy is being adopted by the others —holding or consigning produce | what quantity is being held under factory limits. No one knows what the directors have done in cabling instructions to London. Some companies may be holding all or pArt of their produce, some nui) he selling., but nobody really knows except the individual company. “Supposing 50 per cent of them are holding their produce.” he went on, ' and then find that suddenly and under stress they are forced to dispose of it on to an already demoralised market. What is to happen in such a by lio moans improbable- contingency?” Mr, Brechin concluded his remarks by deploring the want of authentic statistical information on a matter so vitally important to the industry. ■•• , ■

“ PUZZLING AND WORRYING.”

, Mr J.' 8., Hine, acting*ehairman of the Dairy Board,tin his monthly review of the dairy industry,'; describes the nresent position of the butter.market as “ both puzzling and worrying to everyone concerned in the industry.” He remarks that the immediate cause of the ,present low level .in the price.oi butter (then down to 133 s to 188 s per cwt, but now at 128 s to 130 s) is attributable to lack of consumptive demand, together with big arrivals of butter in the United Kingdom from all sources, thus causing an accumulation of stocks. Despite the lower prices, deliveries from London stores of New Zealand butter from August to October, 1929, were about the same as in the previous year, and since these months they have been below the previous year.

The retail price, in London has been dropped to Is 6d, hut no great improvement in the rate of deliveries has yet come about. Until the public’s consumption of butter can be stimulated sufficiently to wipe off the accumulated stocks, little improvement in prices seems likely.. . / -

We are not pessimistic about the ultimate result, ,and believe, that; ,iri the long run a lower price for butter is the best counter to the margarine menace,',in that it creates a broader consumptive demand for butter. The United States is at present facing an exactly similar problem. We have said that the immediate cause of the present low prices lies in a.lack of consumptive demand. An unemployment roll for one and a half millions iri the United Kingdom, due to dull trading conditions has brought, this about, combined with the fact that tightened finance has climated the speculAive element. Cheese prices have declined in sympathy with butter. Demand is good, however, and stocks are in reasonable compass, and the return for the season should be quite a fair one. •

\ VALUE OF EXCHANGE.

Consolation for the present low prices of 'butter is found in the present exchange fu'ioa between New Zealand and the Unit' ' 1 Kingdom. These representet an afcNed return to the producer.