Butter Market Control

Manawatu Times, Volume 62, Issue 31, 6 February 1937, Page 12 (Supplement)

Butter Market Control

Twice within a week messages from London have attributed the quiet tone of the market for New Zealand butter to the lack of speculative demand, a factor that the Government s marketing policy is designed to eliminate. On Monday morning a message categorically affirms that the market is affected by this cause, “which may delay the expected recovery.” A message published the previous Tuesday was less definite. “The butter market remains erratic,” it reported. “Although there is a steadier tone, there is a puzzling lack of flexibility about the market which some traders attribute to the lack of speculation in overseas varieties as the result of the New Zealand control. This control is exercised at both ends by the Government. In the Dominion buying and consignment for export has been prohibited, affecting about 20 per cent, of the trade; in Britain sales by the Government has been restricted to the larger buyers, who, to use Mr. Nash’s definition in an official statement, are to be “efficient, genuine distributors.” Thus a large number of former bidders have been shut out of the New Zealand butter market. One object is to reduce selling competition, but, unfortunately, buying competition is reduced in equal measure. Another object is to assure certainty and continuity of supply as a factor in price stability. But what is likely to be the effect on the reduced number of buyers when they know supplies of New Zealand butter are certain and continuous? They have no pressing motive to bestir themselves, and the stable market tends to become a stagnant market. There is no anticipation about it, no flexibility and no life. Meanwhile the speculative demand has been diverted to free produce, to Australian and Baltic butters, to their benefit and New Zealand’s detriment. New Zealand may have cause to rue its absence from her great dairy trade.