PENNY INCREASE

Auckland Star, Volume LXVIII, Issue 200, 24 August 1937, Page 8

PENNY INCREASE

BUTTER PRICE. SAME FOR CHEESE. WELLINGTON FORECAST. ANNOUNCEMENT AWAITED. (By Telejrraph.—Special to "Star."*) WELLINGTON', this day. The new guaranteed price for butter, shortly to be announced by the Minister of Finance, the Hon. W. Nash, is expected here to be a fraction over 1/1 i a lb, an increase of about Id a lb over the basic price for finest grade last year. That price was 12 9-16 d a lb.

However, if the Government acts upon a section of tHe report of the Guaranteed Price Committee, dealing with the delayed effect of price rises and their effect on production, the guaranteed price may be set at 1/2 per lb. Interim Report. In the case of cheese, an interim report of the committee, released three months ago, recommended that the price of cheese should be fixed at a level which would enable eheeee-manufacturing companies, showing a yield not" markedly below the .standard, to make a butterfat return to suppliers of not lees than 2d per lb over the return made by a buttermanufacturing company of comparable efficiency. The committee takes the etand point that factor}- costs have increased by about id. per lb and that other production costs are not likely to be less than an equivalent sum. The increase in the guaranteed price of cheese will also be about Id, rt is, reported. The loss on the first season's trading under the guaranteed price scheme is stated to be £400,000, of which practically all was on butter, cheese just about paying its way. This fact has had its influence on the recommendations for next season, but to-day it is felt that London values are much sounder than they were at the time when the price wag first fixed. This, and the belief that prices are not likely to go anywhere near the low figure of S6/ which butter touched last February, has led to some conflict of views on the committee. However, it is pointed out that the best way to end the guaranteed price scheme is to set the price at too high a level, and for that reason moderate views prevailed. Improved Technique. Against the loss of £400.000 it is claimed that improved marketing technique has saved the dairv industry from £250,000 to £300,000. One significant side of the report is not likely to be published. It concerns the effect of the guaranteed price on the total production. In its first report the Guaranteed Price Committee warned the Government against the danger which would result if the price were set at such a figure as to stimulate production to levels which would create problems of disposing of an oversupply of butter and cheese. In the past season of operation of the guaranteed price there was a general increase in shipments to all British ports, butter shipments being higher by 7555 tons and cheese by 1241 tons.- The butter increase represented a gain of about 5 per rent on the 1935-36 figures. There t reason to believe that this year the committee has repeated that warning and has used it a« a further argument for a moderate guaranteed price.