THE BETTER SLUMP

Hokitika Guardian, 9 April 1930, Page 7

THE BETTER SLUMP

MR, GOODFEI,LOW’S VIEWS

LONDON ‘‘BEAR” MOVEMENT

In the view of Mr Win. Goodfollow,. managing-director of Amalgamated Dairies, Ltd., it will be some time before prices of butter and cheese recover to a figure satisfactory to the New Zealand producer. In his monthly report to suppliers of the New Zealand Co-operative Dairy Co., under date March 20th. Mr Goodfellow says:— “V.i-e period under review, mid-Fe'-bruary to March 211th, has witnessed a, further decline in quotations of butter on the London market. On February 22nd our London manager .reported that,, after activity, the market closed steady at 148 s. This price warranted a reduction in the retail price to Is 6d, which it was anticipated would bring about a large increases in the consumption tout the improvement has been negligible. Meantime, the big buying groups have forced prices down to 136 s (to-day’s cable) for New Zealand finest. The buyers nominated 141 s as their price for last week’s deliveries, and 140 s for the current week. We believe that the buyers did not anticipate prices going lower than 148 s, and some of them incurred heavy losses when the market dropped to 1365. They have now realised their strength, and meantime, are only buying their immediate requirements. As a matter of fact, there is no reason why the market should not fall to 130 s or less, if the big buying group desire it.

“A few factories a.re evidently taking their butter off the market, aapproxirnately 2-;00 tons have been withheld. Whether this action is advisable generally is problematical, as a general hold up of supplies might reach too, large dimensions and, without sales continue, possibly cause a disastrous reaction. The fact must not bo overlooked that there is a very large increase in production both in New Zealand and Australia, and, further, the general world stock position is very heavy. For example, stocks in the U.S.A. on January Ist, 1930. were over 40,000 tons, and 17,000 tens heavier than last year. PRICES TOO LOW.

"There is evidence of & strong ‘bear’ movement in London at present, and undoubtedly prices are far too low, but, in view of all the circumstances, we are of the opinion that it will be some time before prices will recover to a figure that might be regarded as satisfactory from a. New Zealand point of view. "During the past two years drought conditions in Australia and the Argentine created a temporary world shortage, and the factories received abnormal prices. Now the London market is well supplied, and, little or no competitive buying, the big multiple shops name the pries which they will pay. The present, competitive method of selling colonial dairy produce in London is the main cause of the present extremely lon prices. Excessive competition in selling any class of goods, to a. limited number of well-organised buyers, must result in lower prices. The only way to obtain fair value is to meet combined buying with group selling. MAItKET.I NG PROBLEM.S.

“The question lias been repeatedly asked, what can New Zealand dc anyway, with only 20 per cent of 11k butter imported into the Tinted Kingdom? This statement entirely misleading for the very simple reason that New Zealand does not sell its butter in equal quantities throughout the year. The flush months production is sold in the Unitec Kingdom from January to April inclusive, and during these months it represents approximately' 50 per •cent., not 20 per cent, of the total butter imported .into Great Britain. b either. such butter is sold in London and the South of England, whereas Danish has a virtual monopoly in the Midlands and the North of England. It is, therefore, fairly safe to say that approximately 80 per cent of the butter used in London and the South of England during January to April is imported from Australia and Aev Zealand! These are the months when the major portion of our production has to he disposed of in the I lilted Kingdom. To say that New Zealand and Australia, doing 80 per cent oi the butter business in a definite area, cannot do anything to market the it produce in a businesslike manner, is. to put it mildly, an absurdity, and tc continue the present extremely competitive selling system is little shorl of stupidity.”