RAW MILK SUPPLY.

Auckland Star, Volume LXV, Issue 32, 7 February 1934, Page 9

RAW MILK SUPPLY.

PRICES TO FARMERS. WELLINGTON'S SYSTEM. PRESENT BASIS, 12.6 D PER LB. (By Telegraph.—Own Correspftndent.) WELLINGTON, this day. With butter and cheese prices at abnormally low levels the farmers who maintain the milk supply for the Wellington City Council's splendidly organised distribution scheme must be feeling quite satisfied in comparison with those who depend wholly on the results from butterfat turned into exportable products. Raw milk supply, properly organised, gives always a better return, though the outlet is limited, and low overseas prices have made the competition fierce in this .sphere, as Aucklanders weir know. The economic position has also affected Wellington, though prices are stabilised. Payment for milk supplied to the Wellington City Council is made on a butterfat basis in the main, though the council's administrative stall" has had to plan an elaborate method of maintaining supplies through the winter, and to give the farmer sufficient monetary encouragement to this end. The method of fixing the payment to milk producers has been on it's weight and butterfat content divided into two seasons, viz., a summer season of eight months, and a winter season of four months.

To determine the basic price for the summer season the factors considered are the following: (a) The parity of the London prices of finest New Zealand salted butter —one-fourth part; (b) the local wholesale price of finest salted butter in bulk as fixed from time to time by the association of local butter merchants —one-fourth part; (c) the parity of the London price of finest New Zealand cheese (coloured and white) — two-fourths part.

Additions to Basic Price. To this basic price, so ascertained monthly, is added a price to compensate producers for the loss of their byproducts, to meet the cost of licensing their dairies, and upkeep, and the extra expense involved in cooling milk and fulfilling the standards of quality required by the agreement. For some years 2ld per gallon has been added on this account. For many years the basic price to the milk farmer was about 1/6 per lb of btittcrfat content, but there have been successive arbitrations which have brought this price down until to-day it stands at 12.6 d per lb. For the four months of winter the price paid is the average of the summer plus 85 per cent. This is payable only in respect to first-grade milk. During the winter the council is losing on its"retail sales, having regard to the cost of handling and distribution, but it equalises the position by slightly higher profits in the summer.

As milk production in the peak point of the season may be as much as three times that of the lowest point in winter, the municipal scheme involves the collection of supplies within certain zones, and a pooling arrangement among the producers, who are organised for .this purpose. At the peak of production, it is only necessary to collect the milk from an area within 20 miles of the city, but in winter supplies may be drawn from up to <>0 miles. The producers turn their surplus milk into butter and cheese at their factories, while the City Council itself has a factory at Otaki to make profitable use of surplus milk from the Otaki area, turning it into butter, which is marketed to the best advantage on behalf of the suppliers' association.