DAIRYING COSTS

Ashburton Guardian, Volume 63, Issue 247, 29 July 1943, Page 5

DAIRYING COSTS

COMPENSATION FOR INCREASES. THE GOVERNMENT’S DECISION. (PA.) WELLINGTON, July 28. The intention of the Government to reimburse the dairy industry for the additional cost incurred since the 1938-39 seaspn up to the time stabilisation was introduced, was announced, by the Minister of Marketing (the Hon. J. G. Barclay) in the House tonight. To. meet price increases of items of dairy farm requisites and costs it had been decided to pay .7G7d per lb of butter-fat to dairy farmers, and to contain the increase of items of dairy factory requisites and costs, payment is to be made to butter companies of .187 d per lb of butter-fat, and to cheese companies, a further .055 d per lb of butter-fat. The Government has also decided to increase wage rates fixed for agriculture workers by 2s 6d a week. This agreement has been accepted as full settlement of the dairy industry’s claims within the stabilisation policy. The Minister's statement is as follows; — “On May 19 last I had the oppor-/ tunity, for the first time since the announcement of the Government’s economic stabilisation plan, of meeting the representatives of the dairy industry at the Dominion Dairy Conference. In my address to the delegates present I stated that the Government considered that the successful implementation of its stabilisation policy was a matter of paramount importance, and while the Government was anxious to meet the reasonable requests of the industry, all future agreements would have to be determined within the plan of economic stabilisation. Stabilisation Approved. , “On May 21 last the chairman of the New Zealand Dairy Board advised me by letter that, subject to an agreement with the industry to bring farm and factory requisites and other agreed costs back to the level' of those operating in the 1938-39 season, the industry approved and supsported the Government’s stabilisation proposals. Upon receipt of this letter the Government replied with an offer to investigate the position for the purjbbse of ascertaining the measure of the price and cost Increases sustained by the industry during this period, and the proposal was to provide a special compensation payment to reimburse the dairy farmer and dairy companies for the actual increased costs associated with the production of butter and cheese. “In accordance with the principle followed by the Price Investigation Tribunal, and in connection with the Government’s policy of economic stabilisation, investigations have been proceeding for some considerable time with a view of ascertaining the increase in prices of farm and factory requisites, and other agreed costs necessary in the- production of butter and cheese from the 1938-39 season, on which the present guaranteed prices are based, up to the time of the introduction of the Government’s economic stabilisation plan. A committee comprising three representatives nominated by the Dairy Industry Council, and three Government representatives was then appointed by me to examine this problem, and advise the Government regarding the measure of the cost adjustments necessary, and of the method by which such adjustments could be made to the dairy industry within the stabilisation plan. Unanimous Report. .“I now advise this House that- the committee, having concluded its deliberations, has presented a unanimous report to the Government. The measure of the price and cost increases has been ascertained in relation to dairy farm and factory requisites and other agreed costs, and methods have been recommended by which these can be reimbursed #o the farmer in accordance with the -policy of economic stnbjiiisation. The committee’s findings include directly reducing tho prices to dairy companies of certain dairy factory requisites to the level existing in 1938-39. They also include a factory cost allowance and a farm cost- allowance to offset increases in prices and other costs that it is impracticable directly to reduce to the 1938-39 level, mainly because the items concerned are not exclusive to the dairy industry. “The committee finds that it- is impossible directly to reduce to the 193839 level any of the items of dairy farm requisites and costs; but has ascertained that the measure of the increases in this respect is equal to .767(1 per lb of butter-fat, and it is recommended that this payment he made to dairy farmers to give the equivalent of taking back such prices, and fur- , ther that such allowance be distributed through dairy companies. Payments to Companies. “There are also certain items related to dairy factory requisites and costs which cannot he directly reduced to the 1938-39 level. The committee lias ascertained that the price increases in relation to those items are tho equivalent, in the case of butter companies, of .187 d per lb of butter-fat, and in the case of cheese companies of .20od per lb of butter-fat, and it also recommends that these cost allowances be paid to dairy companies on a butterfat basis. In the case of cheese companies, however, against this costequivalent of . 20(h1 must, be offset the additional allowance of .lbd per lb of butter-fat for manufacturing costs paid to choose companies at tho beginning of the 1942-43 season. This leaves a not additional payment to cheese companies of .Good per lb of butter-fat for the coming season.

“These special cost adjustment payments of .7G7d per lb of butter-fat to dairy farmers, . 187 d per lb of butter-

fat to butter companies, and O.ood per lb of butter-fat to cheese companies, are to be paid quarterly on certified returns of output. The funds necessary for payment will be provided out of a special dairy industry stabilisation pool account. Into this pool account will be paid, when available, the surplus at the end of each season in the dairy industry account. “It is also recommended that, having regard to other consequential adjustments, the wage rates prescribed by the agricultural workers’ wage fixation order, 1942, ho increased by 2s Cd a week. This order prescribes minimum rates only, and it was represented by tho industry and the eommitteo. and the Government agrees, that these rates were anomalously low, and that it would he in conformity with the spirit of tho stabilisation policy for the anomaly to ho removed. It should he noticed, however, that the present minimum rates are generally exceeded in the actual rates of pay being received by dairy farm workers “In submitting these recommendations to the Government, the committee has reported that it§ unanimous view is that these recommendations, based on the findings of the committee, constitute a complete settlement of all dairy industry claims referred to this committee lor examination and report. “I am now pleased to he able to announce, on behalf of tho Government, that after careful examination the recommendations contained in this report are acceptable to tho Government as constituting within the plan of economic stabilisation a- just settlement of tho dairy industry’s claim for the reimbursement of additional costs incurred since the 1938-39 season up to the time when the stabilisation plan was introduced. “In conclusion, may T express my thanks to the dairy industry, and. in particular, to the persons representing the industry and the Government on this committee, who have so meticulously and carefully worked out the details to enable the Government to place the dairy industry in like position to all other manufacturers of commodities who, iff accord with tire standard, procedure, have had provision made to cover added costs, of production. Tho agreement will not in any way affect the guaranteed price for butter and cheese, which will remain the same as for last season. Neither will the price of cheese sold locally be affected. “In view of the fact that an agreement has now been: reached which constitutes a complete settlement of all the dairy industry claims referred to the committee for examination. I wish to make an appeal to all dairy farmers to maintain their production, and increase it to the greatest extent possible. The Government will give immediate attention to the manpower problem as it affects the dairy industry, so that nothing will hinder the industry in making its maximum productive effort. Because butter and cheese are so essential to the war effort- of tho United Nations, I fool that in the present circumstances the industry will respond to this appeal in the same way as they have so magnificently responded in the past.”