PRICE ISSUE.

Auckland Star, Volume LXVIII, Issue 100, 29 April 1937, Page 10

PRICE ISSUE.

LIMIT TO PROFIT.

MAXIMUM OF 33 1-3 P.C.

COMMITTEE'S PROPOSALS.

IJCENSING OF RETAINERS.

The recommendation that the maximum retail profit on the wholesale price of New Zealand-grown fruit be limited to 33 1-3 per cent is contained in the report of the Committee of Inquiry, whose general recommendations were published yesterday.

The committee says that one salient feature of the fruit marketing industry in New Zealand obtruded itself repeatedly. It constituted,, apart - from the matter of effecting actual improvemnets in the quality or the' fruit; the outstanding problem to be solved by the .•ommittee. The constituting the nroblem, referred to are these, viz.: — The growers are receiving too low prices for their produce and are finding it increasingly difficult to carry on. The balance-sheets of the wholesale and retail distributors do not suggest that excessive profits are being made by these individuals. The public are paying too high a price for the fruit they consume. In the solution of the problem constituted by these three facts naturally lies the explanation of the paradox they create, and in such solution will also be found the guiding principles that must be adopted in order to remedy the hardships both producer and consumer suffer. In making recommendations calculated to improve the position of our horticultural industries, the committee has given first consideration to the welfare and interests of the producer and consumer, looking upon everything which comes between these two, such as t£spsportation and wholesale and retail distribution and sale, as machinery adjuncts that, important as they may be, cffljiot be allowed to dominate the main isnye. ,4« Municipal Fruit Markets? t 'sny solution, to be satisfactory, must achieve two apparently opposed results; \t n must increase the price paid to the gfdfrer and simultaneously reduce the price paid by the consumer. In the large cities at least there are far too many wholesalers, and a reduction in number and the establishment of up-to-date municipal central fruit markets, equipped with modern appliances, should enable wholesalers to operate on a lower selling commission. Aa matters stand, however, the committee does not think that any .reduction in their charges, except the abolition of the receiving and ilelivery charge, is possible. As regards the their rate of. profit on the bulk of the New Zealandgrown fruit is excessive, but nevertheless, as individuals, /the majority cannot be said to be making large<<4iet profits, and a considerable tan barely make ends meet. There are 119 retail fruit shops in Dunedinand,suburbs, 300 in Christchurch', 350 in Wellington, and 30G in Auckland, a total 6f 1075 in the four principal cities and their suburbs alone. Many of these shops occupy sites in the highest rental areas. '- rj , v Individual Tarmorers Too Small. The committee was forced to the conclusion that th*. explanation of the riddle' largely lay in the fact that there was too much subdivision of the retail trade, and that individual turnovers were too small to allow fruit to be retailed at a reasonably low margin of profit to the retailer in view of the high rents and the wages and other charges payable in respect of each shop. If it were possible to reduce the number of retailers by, say, 25 per cent, and, assuming that the average weekly 'outgoing for rent, wages, light, etc., was £8 peV week, there would be, on that account alone, a saving of over £100,000 per annum in overhead as regards the four main centres. Further, the added trade would enable the remaining 75 per cent to sell at lower rates of profit without injury to themselves. Ihe committee is of the opinion that all retail fruiterers should be licensed annually and that such licenses should be both personal and in respect to definite business premises. The committee further considers that a maximum percentage of profit on wholesale cost should be fixed in respect of fruit retailed to. the public upon the lines above-mentioned and that it be made an offence, punishable, inter alia, by cancellation of license, to sell at prices in excess of the prescribed rates. It further suggests that, in the meantime, a strictly limited number of street barrows or stalls be licensed for the sale of fruit in the four principal cities In order to operate as a check against any tendency on the part of retailers to pay unduly high prices for their requirements. Recommendations Summarised. The recommendations on the retail trade are summarised as follows:— 1. That the maximum retail profit on the wholesale price of all New Zealand-grown apples, pears and citrus fruits be limited to 33 1-3 per TE6nt, and that the rate of retail profits on the wholesale price on imported bananas and others, citrus fruits be limited to the same percentage except in the case of the Cook Island oranges in respect of'which the retail profit be limited to 40 per cent. 2. That a limited number of retail fruit barrows and street retail fruit stalls be permitted to operate in the cities of Auckland, Wellington,church and Dunedin, and that such system of fruit and vegetable distribution be extended from time to time if and when considered desirable by the Primary Products Marketing Department. 3. That all retailers of frait and vegetables, including thdse operating shops, barrows, stalls, and hawkers, together with the premises or vehicles used by them, be licensed, and that tlie primary Products Marketing Department be established by legislation as the licensing authority. The matter of experience in the business, or a knowledge of fruit and its uses and seasons, should be taken into account in connection with the issue of fruit retailers' licenses to applicants , not already established' in (he business*. 4. That the proceeds of licensing feeia in respect of the retail sale of fruit and .vegetables applied towairito idefroyhig tlrc-ccrstr of-'fruit-and IpS; frnit shop inspection.