BUTTER AND CHEESE.

Taranaki Daily News, 17 August 1921, Page 5

BUTTER AND CHEESE.

MOVEMENTS OF THE MARKET. SELLING METHODS DISCUSSED. MONTHLY CON'IRACT SYSTEM. The position in the butter and cheese market remains uncertain. The price of butter on the Louden market has improved, and is reported to stand now at 269 s to 270 s per cwt., or, roughly, 2s 5d per pound. This is equivalent to about 2s 2d at the factory in New Zealand, but it does not appear that any buyers are operating at that figure. The buyers are not anxious to commit themselves at present. It is stated that some buyers of cheese are still prepared to take factory outputs at MVsd per pound, but a Dominion reporter was informed that the larger buyers are still withholding offers pending advices from London.

i Selling methods have been the subject ] of much discussion lately in dairying circles, and several suggestions have been put forward. One of them is that the New Zealand factories should follow the example of the Canadian factories by selling outputs month by montn. The custom in the past has been for the factories either to sell the season’s output in advance, or to consign and 1 take the chances of the market. The 1 consigning system worked badly last year from the point of view of New Zealand cheese factories, which received a lower price than they could have commanded if they had sold in the Dominion. The full-season contract has the advantage of enabling the factory to know just what suppliers are going to receive, hut it requires buyers to speculate on the chances of the market for a year ahead, and in these conditions buyers are apt to be conservative In their estimate of values. The monthly contract system is not altogether new to New Zealand, and it is being adopted this year by a few factories. fts'TffL-'cites claim that it has the important advantage of the consignment system, since it gives the pro- | ducers the benefit of any advance in . values during the season, and that at thd same time it secures for them the 1 chief advantages of the contract system, Including prompt, payment and 1 well-defined values. It is stated that. buyers are quite willing to make monthly contracts if factory directors care to work under that system. It appears, indeed, that competition would be keener than it ?s under present conditions. ’ since the buyer would be relieved of .-ome of his anxiety regarding future movements of the market. He would.

| not require to protect himself against i adverse movements later in the season, and so would be able to offer the full ’ market price as revealed by current London quotations. lie would know when to expect delivery of his purchases, and so would be able to make his sales accordingly at the other end. The factory would be free at any time to consign nr to ship its cheese and sell it while afloat. “Lately we have hoard a lot of talk about ‘bulling’ and ‘bearing* on the London market, and to some extent this :s due to the fact that tfie bulk of the New Zealand output is bandied oji consignment at Homo” said one authority to whom this matter was mentioned by a Dominion reporter. “Imagine, ior instance, an agent handling 10,00* tons of Nejv Zealand butter and cheese on consignment, and having no real interest in the rise or fall of the market I beyond seeing that his clients get a fall 1 average price at the time when the consignment arrived. If instead of handling produce on consignment an agent owned all the shipments as they came along (having bought same from month to month in New Zealand) hit interest in holding the market up would be a very live one, and undoubtedly be more in the interests of the New Zealand producers than is at present the case. “It is a well-known fact that last year some very heavy shipments arrived on consignment, and most of the shipments were put through on sight draft. A financial crisis was being experienced, and as the drafts matured before the cheese was landed, the one anxiety of the consigning agents was to turn .the dairy produce into money as quickly as possible, irrespective of price. Under the present scheme buyers of a whole season’s output have got to take a long shot, and practitally sum up the tendency of the market during the ensuing twelve months, and gauge their prices accordingly. The same buyers and many others would welcome a monthly selling .scheme, and the competition for parcels from New’ Zealand would be soon keen that not only would the last farthing be obtained for produce, but npturally the result would be for buyers to strive to hold the market up in order to come out at a profit.”

A WELLINGTON OPINION. DEFECTS OF CONSIGNMENT' SYSTEM. Some interesting comment on the butter and cheese markets was made by Mr. J. T. Martin, of Messrs. Wright, Stephenson and Co. “I agree that the outlook for butter and cheese, as far as it is possible to gauge the position at this end, is very good,” said Mr. Martin, “but there is no gainsaying the fact that last season at this period the same optimistic feeling was in evidence, and many factories that could have sold easily at Is 2d to Is 2Ad refused to do so, as they had been led to believe that they would get at least Is 3d if they consigned. Consequently. 75 per cent, of the New Zealand factdries who consigned their cheese, struck a bad average market for the season, and. according to my figuring, lost over a million pounds; in fact, that is a conservative ' estimate. The price at which New Zea land cheese has opened up again this season, namely, lid to lljd, is an abnormal price, taking into account the whole history of cheese in this country Never since the coming into of insulated freight has lid be.r. tceedcd excepting hist year. Factories, therefore, in electing to consign instead of accepting these high prices, are shouldering heavy responsibilities. Last year several factories who had refused offers of over Is 2d elected to consign, and’paid out to their suppliers at such high advances on butter-fat that the consigning houses had ultimately to make reclamations. and, ip consequence, the factories had to either obtain refunds from the suppliers or adjust the payment* out of the new season’s supplies. “There is another aspect of the matter that dairy farmers must keep in mind, and that is the risk they are apt to incur through consigning practically the whole of \he New Zealand output to London to agents who. after all, have ho interest in keeping up the prices, but whose sole desire is to make such arrangements that they can lift the drafts on ma,turity and dispose of the output as quickly as possible and at the best price procurable. If Jhose same agents had bought a proportion of the cheese or butter at a high price it would be to their interest to keep the market price as high as possible or otherwise they themselves would be losers. In seasons, therefore, where New Zealand sells from 25 to 35 per eent. of her dairy produce outright the buyers become interested in maintaining prices for the proportion consigned, and incidentally it has the tendency of working to the advantage of the consigning factories.