BUTTER PRICE.

Taranaki Daily News, 20 August 1920, Page 5

BUTTER PRICE.

ON PARITY WITH CHEESE.

NO HOPE OF FREE MARKET.

"CONSIDERABLE LOCAL RISE." Several topics of interest to the dairying community were touched on by Mr. Arthur Morton, chairman of the Mangorci Dairy Co., and president of the National Dairy Association, at the annual meeting of the Mangorei Dairy Co. yesterday afternoon. Mr. Morton referred to the fact that the Imperial Government had given a free market as regarded cheese, wool, and meat, hut atill held butter controlled, and he considered that it was most unfair that butter should be singled out for control. To their < repeated representations, the reply was 'that butter was so scarce at Home that if it were de-controlled it would reach such a price that only the wealthy would be able to purchase it, and the poor would have no > chance. At present butter was rationed, the allowance having been increased from loz. per head per week to ljoz., so <hat there might be aome reason in their contention as to its scarcity. The Imperial Department also pointed out that the cost of production to the English and Irish producer was exceedingly high—very much higher than in New Zealand—and therefore they were allowed a free market. He had not seen the latest quotation, but the last quotation that he saw showed Irish buter at 420s per cwt., or equivalent to 3s 9d or 3s lOd per pound. It was probably in short supply, as fhe indications some time ago were that the output of Irish butter would show a decrease as compared with the previous year. Although', he said, the reasons given might •be good ones, it did not appear to them as producers that they had had a fair deal, in that butter alone should be singled out of all produce for control.

IMPORTANT STATEMENT. The position at present was that the control price of butter was 3s. This had been reduced to 2s Bd, but was raised again later to 3s. 8horl!y after it had been reduced to 2s Sd. The Imperial authorities purchased Australia's exportable surplus at 2405, or barely 2s 2d, and allowing that the sair.o oompars■tive difference "would exist as had existed in previous sales, they assuiflod tuat the New Zealand producer would »ro>bably not get more than 2405. He was pleased, however, to intimate thfit tho indications were that they wmild g»t considerably more. FinaJ representations were made by the butter producers to the Imperial Government, through Mr. Massey, a fortnight ago, when they again pointed out 'their desire to be plarpd oh the same basis as the English and Irish producer. To this the Premier had received a reply from the Hign Commissioner as follows: — "With reference to your telegram of 29th July, have again approached Ministry of Food and placed before them request of producers for free markets. Food Controller reiterate? , impossibility of granting free and uncontrolled market before next spring, but states that Ministry of Food j would contemplate payment of price for butter on parity with price now being obtained for New Zealand cheese on free market." $

Continuing, Mr. Morton said 'that New Zealand cheese was now realising Is 2id pbr pound on the free market, a price that would return to cheese factory suppliers at least 2s 9d, and, is exceptional cases, up to 3s per pound butter-fat. Therefore, to put butter on a parity of value, allowing for the difference in value between skim milk as compared with whey, butter factories would require to pay out 2s 7d per pound butterfat and would need to get a price from the Imperial Government equivalent to 2s Bid. Probably during the next few weeks' negotiations it would be made on that basis, and they could be assured of a price equal to cheese, subject to the difference in value of the by-product.

' ARRANGEMENT SATISFACTORY. That, Mr. Morton said, was a satisfactory arrangement as compared with the last few years, when cheese returned a much higher value. Conditions now were opposed to that, and if allowed a free market, the price received for the butter would enable butter factories to pay,out more than cheese. Any contract, if made with the Imperial Government, would terminate on March 31st, when the indications were that there was a strong probability tlmf. they would be able to export to a free market. If the conditions then were the same as to-day—and he thought there wa3 no probability of any alteration for at least the next five years—'butter would return a much higher price than cheese.

During the past two or three years 'the butter producer had not only had to be content to receive a lower price for the butter exported, but had also to supply the local market at a fixed maximum price, the difference being made up by a pool. Mr. Morton detailed the'steps taken by the producers, Which had ultimately resulted in tlm equalisation fund being made a charge on tile consolidated fund. On July .11. howeves the fixing of the maximum price for local consumption had ceased, so far as the factories were the contract with the Imperial Government had ceased on that date. The New Zealand Government, in order to maintain the price of local butter at somewhere near Hip same level, had decided to fake over the whole of the Imperial Government supply in the cool stores here, which would be placed on the local market. The equalisation fund had disappeared, as no provision .was made to subsidise fac< tories who supplied the local trade, the intention being that all purchases of lflitt.e.r should be made solely from the butter taken over from the Imperial Government.

I QUESTION' OF HIGHER PRICK. It was estimated that this would prove sufficient to meet the needs of the country for another two months When that butter was all done it would be necessary for the Dominion Government to coHie to some decision as regarded ■the future. In order to meet storage, etc., the Government had raised the price by Id per pound, and butter was now being sold locally at Is 9d, If the negotiations result in the sale to ithe Imperial Government at a price equivalent to 2s 6d or 2s 7d f.o.b. there is bound to be a considerable rise in the local price. The Prime Minister has stated clearly that the producer is entitled to the full market value of all produce sold on the local market, and as far M hj« wtw oonctrnti would «ndwyor

to see that- tliey got it. Whether lie proposed to make up the whole or part of the difference out of the consolidated fund, lie did not know, but, in any case, there was bound to be a considerable rise.

They would find, said Mr. Mortbn, that during the past few years the one thing in general use in which the rise in price waa less marked than any other was butter, As far as the farmer waa cencerned, everything used in the working of the farm had gone up from 200 per cent to 500 per cent in tile last six years, but the price of •butter had not increased SO per cent. The farmer, too, had to bear the increased cost of living, as well as the increased cost of production. He was doubly penalised, and yet 'was looked upon as fair game. If he received a higher price than in pre-war times, he was acclaimed as a profiteer, and was said to be making money at the expense of the other portions of the" community, whereas no section of the community found its expenses so heavy as did the dairy farmer. When they took into account the high price of land and of stock, he would venture to say that there was not one present making more than he was five years ago. A Voice: No chance.

DRIED MILK QUESTION; In the past few years they had heard a good deal about dried milje, and at a special meeting of the Marigorei Company, resolutions had been passed, authorising the directors to equip two plants, one for the manufacture of dried skim milk, and one for the manufacture of dried butter milk. The directors, however, after giving the matter fullest consideration, decided that as. the amount required to equip the plants was so large, and the probable returns so indefinite, it would be in the best interests of the Company to take no further steps. That decision, in view of tie big fall in the price of dried ekim inilk, was a wise one. Twelve months ago this was £l2O on the London market, whilst six months ago it was £6O, and two months ago it had further dropped to> £4O. That would leave about 4d per pound butterfait, and there was the possibility of a still further fall. Some of those factories that. It ad been equipped with dried milk plants during the past twelve months had found themseves in very considerable financial difficulties. He instanced odo company which had obtained authority from its shareholders to put up a factory at a cost of £60,000, but icior J;ad to obtain an authority of £120,000. It was then found (hat £150.000 <rould be necessaTy, and as a result tbat company had co amal*' gamate witli another company Unfortunately one result of this boom of the sc -called dried milk industry had bw.n thst the price of dairying land as a whola had advanced lately, and in those districts where dried m -, lk factories are erected had gone up to #n enormous figure. One of the results was that the banks had become frightened and had informed dairy farmers that they could not obtain money so freely as in 'the past.

CASEIN COMPANY. The directors, he said, had been authorised eighteen months ago to join in with other dairy companies in the establishment of a co-operative casein company. They had been doing their best to induce the other companies to embark in the venture, but so far had not met with much success. Now the difficulty presented itself that if they did get others to embark i» the proposal, the restrictions at the bank made it necessary that the capital would have to be found by the shareholders of the companies who embarked on the venture. There was a good deal of dissatisfaction among the companies at present manufacturing casein over the price received, and it was a matter of considerable doubt whether all would be manufacturing casein or not. They were now endeavoring to make an arrangement regarding the price to be given for next season. There was a good market at Home for the best quality rennet casein, but only a medium market for lactic acid casein. The probability was that lirst-class rennet easein would net 4d to 5d per pound but-ter-fat, but here again there was no reason to assume that these high values would continue. Casein had never yet been produced in very large quantities, and until new markets were found, the probability was that increased production would reduce tlie price, as had been the caae with dried milk powder. The directors had gone so far as to have plans prepared and had empowered a committee to erect the buildings, but nothing had been done, mainly on account of the uncertainty of being able to form the co-operative drying company in Taranftki.

OUTSIDE COMPETITION. - They were faced, proceeded Mr. Mor'ton, with tho competition of proprietary concerns, who were lifting home separated cream from the district, and carrying it some distance by rail at chsap rates, though probably that would not. continue, as a new freight tariff would be brought, down in a few days. The question of proprietary interests coming in was a very serious one. Besides the main factory they hod six skimming stations. At practically every one a certain amount of home separated cream was received, but that reduced very little the cost of running the creamery itself. The question liad arisen as to whether it would not pay to close the creamery altogether and revert to home separation entirely. If they were going in for casein it would pay to continue to deliver the milk to the factory, but if not they should go in for home separation as early as possible, At present It was costing £I6OO per annum to run the creameries without tak- | ing into consideration depreciation and up-keep. and it was always on the increase." If the supply was also on the increase the cost would not be so high proportionately, but unfortunately, in an old settled district such as Mangorei, and with t!ie heavy cost the farmer was put to if he wished to increase the productive quality of his land by manures, there was not likely to he such a large increase, though this year there would probably be an increase owing to returned soldiers having, he was to see, taken up land in tho district. Conditions in the dairying industry appeared .to be very satisfactory. The shipping position was getting,back to normal, and he anticipated no difficulty in shipping their produce during the next year or two, as a sufficent volume of shipping was offering to remove any fear of congestion.