GUARANTEED PRICES

Auckland Star, Volume LXVII, Issue 184, 5 August 1936, Page 11

GUARANTEED PRICES

RATES FIXED.

DAIRY PRODUCE

FINEST BUTTER 12 9-16 D

MINISTER GIVES DETAILS

GENEROUS INTERPRETATION"

(By Telegraph.—Parliamentary Reporter.

WELLINGTON, Tuesday.

Early in his Budget speech Mr. Nash announced the guaranteed prices for butter and cheese, awaited and conjectured for many weeks by the farmers of the Dominion. The prices have been fixed as follows:—(a) Finest grade

creamery butter, scoring 93 or 93

points, 117/3 per cwt, or 12 9-16 d per lb; (b) first grade wliey butter, scoring 88 points and over, 107/11 per cwt, or 11 9-16 d per lb; (c) first grade cheese, scoring 92 or 92i points. 63/7 per cwt, or 6 13-10 d per lb. These, Mr. Nash added, were the basic f.o.b. guaranteed prices for the current season, that is, for butter and cheese made between July 31, 1936, and August 1, 1937. "The passing of the Primary Products Marketing Act inaugurated one of the most important features in the history of the Dominion's primary production," said - Mr. Nash. "All butter and cheese made after August 1 of the present year becomes the property of the Government when placed on board the overseas steamer for export. At that point the dairy factory will be paid in full the guaranteed price for the dairy produce by means of a cheque drawn on the dairy industry account at the Reserve Bank—the Government bank.

"These guaranteed prices will remain constant throughout the season, and the differential price margins previously announced will apply in respect of produce to which higher or lower grading points are allotted. It is known that there is a wide variation in the costs of butter and cheese making at the various dairy factories throughout the Dominion, so that a fixed f.o.b. purchase price for all butter and cheese will yield a varying butterfat price to suppliers, as the pay-out is dependent on manufacturing results and factory costs, which in turn are dependent on the circumstances, location, standard of efficiency, nature and quality of raw material, and extent of output of individual factories.

Responsibility for Deficit. "The guaranteed price will be paid in full as soon as the produce is delivered to the overseas steamer," added Mr. Nash. "If the proceeds of the sale of this produce do not cover the guaranteed price paid out, then the deficit is not the responsibility of the dairy farmer, but of the Government. If, on the other hand, the proceeds of sale in the first year are greater than the amount guaranteed, this surplus will be used for the benefit of the dairy farmer and the industry after consultation with its representatives. The intention of the Government in regard to guaranteed prices to dairy farmers was expressed by the Prime Minister in his statement that guaranteed prices should commence at an average of, say, the last eight or ten years' prices. In reply to a • question put to me when I attended the National Dairy Association conference Hastings in June last, I said that the price was positively fixed on the butterfat basis of eight to ten years, and the generous interpretation of that promise. Prices have been fixed in fulfilment of those promises to ensure that dairy farmers supplying factories working under average factory conditions will receive the average butterfat return of the past eight to ten years. In addition, an allowance has been made for increased costs in the industry.

"The basic f.o.b. purchase prices of cheese and whey butter have been fixed to yield, under average factory conditions, a margin of lid per lb butterfat processed into cheese above the average price of butterfat processed into butter. In ascertaining the average prices, the most complete statistical information from the industry and Government Departments was made available to the Dairy Advisory Committee.

Formula For Future. For future years the cost of production, the standard of living of the farmer, as compared with other sections of the community, and the stability of the industry would be taken into account in fixing the guaranteed price, said Mr. Nash. The actual wording of the Act determining the . procedure was as follows: "(4) In fixing prices under this section in respect of dairy produce exported after July 31, 1937, regard shall be had to the prices fixed under this section in respect of dairy produce exported before that date, and to the following additional considerations, namely: (a) The necessity in the public interest of maintaining the stability and efficiency of the dairy industry; (b) the costs involved in the efficient production of dairy produce; (c) the general standard of living of persons engaged in the dairy industry in. comparison with the general standard of living throughout New Zealand; (d) the estimated cost to the Department of marketing the dairy produce concerned, and also the cost of the general administration of this Act; (e) any other matters deemed to be relevant. "(5) Due regard having been paid to the several matters mentioned in subsection (4) hereof, the prices fixed in respect of any dairy produce exported after July 31, 1937, shall be such that any efficient producer engaged in the dairy industry under usual conditions and in normal circumstances should be assured of a sufficient net return from his business to enable him to maintain himself and his family in a reasonable state of comfort." Advisers to Government. "For the purpose of givng effect to these principles," Mr. Na&h added, "the Government has asked Messrs. J. Dunlop, representative of the southern ward on the New Zealand Dairy Board, W. E. Hale, representative of the New Zealand Co-operative Dairy Company, Ltd., on the New Zealand Dairy Board, A. Morton, president of the National Dairy Association, N. H. Moss, barrisW and solicitor, Stratford, B. Roberts, M.P., director of the Parkvale Co-operative Dairy Company, Ltd., A. J. Sinclair, secretary-manager of the Te Awamutu Co-operative Dairy Company, Ltd., and D. O. Williams, economist at Massey Agricultural College, Palmerston North, 3

sL C °nf fe A wit V he Executive Commission of Agriculture and report to the be "SrT ° a , larketin S as to the price to farmntr llle elation of ! 1° « ualantee d prices is land L ? ffected T by ,nte rest and other out thp r \ Propose later to set adin.t Cy ° f the Government for i? niort S a S e Habili&s of the larmer to the guaranteed price. "The Government's Marketing De- ~ r iH ! " larket the dairy Produce kvill h advantage, and the proceeds accLit Tf, m i° the dairy industry years th Res l erv "e Bank. In some account oft be a deflcit in tlle account after the year's operations; in be nfr^t aiS - I' 6 may be a surplus to land rf - aSainSt , any dcficst - Xcw Zeathrm.cl - y Pl ;° dUCe is mainl y sold StrePt 0 T 11 " 1 ? 0 ' " g hous os in Tooley ' Lo,ldo »' most which have ? d connections with the distribuand tw r ±0 the British consumer, mentJ+ Gover »'" ent has made arrange"n L V ( ° n i " Ue t0 usc the efficient butor and to pay liim an performs." ,mSSIOn f ° r the S6rvice lle