7

1T.—44

7. The local wholesale distributors were subsequently summoned before the Board and gave evidence upon oath. They stressed the fact that the factories at present catering for the local trade were receiving less than the average export value. This was an impossible position, as they were unable to return to their suppliers the same figure per pound for butter-fat as those factories which were exporting, or as cheese-factories were paying, and in consequence their supply of butter-fat was endangered. A study of the table given in paragraph 2 confirms this contention. They agreed, however, to make no advance until the Board had had time to thoroughly investigate the position. 8. To illustrate what this means to a factory doing a local instead of an export trade, the Board was advised that the monetary disadvantage to a particular co-operative factory was at the rate of ,£3,600 per year. The evidence adduced was sufficient to convince the Board thai (In- present conditions could not continue, that the factories producing for the local trade were placed at an unfair disadvantage and would be compelled in justice to themselves either (I) to bring the local price on a parity with the f.o.b. price, (2) to enter the export trade, or (3) go out of business, as their supplies would be diverted to the export factories and to the cheesefactories. 9. On the 22nd August the Board found that the f.o.b. offers for August and September were equivalent to Is. per pound, and that the September offers were Is. 6d., with a tendency to rise. The average cost of preparing the butter from bulk to pounds, including patting, wrappers, collection from railways, deliveries to grocers, booking, travellers' expenses, and bad debts, was |d. to fd. per pound. The local wholesale equivalent for August was therefore Is. 6d. per pound, and for September Is. 6fd. to Is. 7d. Allowing the grocer's present cost of distribution, the September retail price to be on a parity with the f.o.b equivalent should have been Is. 9d. 10. On the Board's return to Wellington from the South further interviews took place with the local distributors and grocers, and as a result a joint deputation of representative producers, distributors, and grocers waited upon the Board, the President (Hon. W. D. S. Mac Donald) in the chair. The Hon. Mr. Myers (Minister of Customs) was invited to attend, and was also present. The following questions were discussed :— (a.) Removal of the restrictions on the exportation of butter. (6.) Necessity of raising the price on the local market, to bring it into a, parity with the export value. (c.) Necessity of increasing the margin between wholesale and retail prices. 11. A, sub-committee was appointed, representing all interests, to discuss the matter in detail with the Board. The appointee! members of the Board have carefully considered the whole of the facts submitted, and are of opinion,— (a.) That the restrictions on export, whilst vexatious to traders, have not kept the price down in the local market. (b.) That the disparity on the Ist October between f.o.b. and local prices was from I'd. to 2d. per pound. (c.) That it is inequitable to expect factories supplying the local market to bear the whole of this difference, as it would represent a loss to these factories on the season's output equivalent to £186,000 on a disparity of 2d. per pound. (el.) That.unless Governmental action of some sort is taken an increase in the New Zealand retail price to Is. lOd, or Is. lid. per pound is unavoidable. 12. The position therefore appears to the Board to resolve itself into— (a.) Allowing values to adjust themselves in the ordinary course of trade; or (o.) Government action with a view to regulating local prices. 13. Is it desirable to allow values to adjust themselves in the ordinary course of trade? As shown above, this would mean that the retail price of butter would instantly rise to Is. lOd. or Is. lid., a position which the Board of Trade feels should be avoided if possible, in view of the fact that New Zealand produces butter greatly in excess of its requirements; that its surplus of butter and cheese is exportable at the present high prices only because of the exceedingly favourable conditions as to freight and space secured by the representations of the Government to the Imperial Board of Trade; and that the producers owe in return some consideration to the New Zealand consumer. It is fair to ask what the local price of butter and cheese would be without possibilities of shipments to London. 14. The Board has come to the conclusion that the retail price of butter should not be allowed to rise indefinitely, and for the following reasons recommend that the price should be in the vicinity of Is. 7d. throughout. New Zealand : — (a.) The retail selling-price in October, 1914, was Is. 3d., in 1915 Is. sd. (even these were high prices in comparison with previous summer prices). (b.) The increase of 2d. per pound in the retail price as compared with October, 1915, is more than sufficient, in the Board's opinion, to cover any extra cost of production that has accrued since. (c.) If Is. 7d. is exceeded difficulties will arise in connection with the summer supply of milk for domestic use throughout New Zealand. Already the price charged for milk is abnormally high for the flush of the season, and is creating a good deal of discontent. Economy, due to high price, in the use of milk for human consumption is not desirable, on the ground of public health. (d.) The price in the Commonwealth of Australia is fixed at Is. 6d. retail. (c.) If butter is retailed at Is. 7d. the grocers will be satisfied with the present distri-buting-charges. (/.) Medical men have informed the Board that butter is an absolute necessity in the home, and that many children are not receiving the quantities requisite for their proper and physical development.