DAIRY PRICES

Auckland Star, Volume LXXV, Issue 213, 8 September 1944, Page 3

DAIRY PRICES

DISPOSAL OF FUNDS

THE POSITION CLARIFIED

Partly due to the manner in which it has been presented by leaders of the Government, some confusion has arisen in regard to the recent trade agreement with Britain and its relation to the increased price granted dairy farmers and announced to the House of Representatives on Wednesday. The arrangements, apart from the return for meat, which has apparently not been finalised, can best be summarised under the following five headings:— (1) As compensation to meet the* abnormal increase in prices of New Zealand imports from the United Kingdom since 1939 the United Kingdom Government agreed to pay a lump sum of £12,000,000. (2) In addition, the United Kingdom Government has agreed to pay New Zealand a lump sum of £4,000,000 per annum for the period of four years to cover the disparity in prices. (3) In addition, the United Kingdom Government has agreed to pay 143/2 a cwt for butter and 85/3 for cheese, for the period April 1, 1943, to July 31, 1944, the increase in prices being calculated to bring in an additional £4,500,000. (4) For the new four-year contracts it has been agreed that for the first two years the return will be based on butter at 150/6 a cwt and cheese at 89/ a cwt. (5) For the third and fourth years prices are to be reviewed in the light of cost factors then existing. A portion of the increase will be paid in the form of lump sums periodically, but how much is still under discussion with the British Ministry of Food. Lump Slims Separate It is clear that the lump sums of £12,000,000 and £4,000,000 annually for four years will go into the Stabilisation Account for the benefit of the nation, and therefore they are outside the discussion so far as the return to the dairy farmers is concerned. In view of the prices provided under the four-year contracts referred to in clause 4 above, it appears that the £4,000,000 annually allowed is retrospective and refers to the past four years. If this is so, since both the £12,000,000 and the £4,000,000 annually were both provided as compensation for disparity in prices, it is surprising they were not totalled, making one lump sum of £28,000,000. The additional 2.12 d per lb in the price announced on Wednesday includes the 1.21 d per lb previously fixed by the Government tQ operate from August 1, 1944, and these additional payments will evidently be covered by the increased price under the new contracts and referred to in clause 4 above. It is believed that the cost allowances which have gone to the industry in the past year will be debited to the payment of £4,500,000 granted by the British Government and noted in clause 3 above. Credits and Debits It is important to separate the Dairy Industry Account and the Dairy Industry Stabilisation Account to view the position clearly. The Dairy Industry Account was credited with the prices of produce received from Britain at the levels existing on December 15, 1942, and jt had been agreed when the cost adjustments were arranged the previous year that any credits in the Dairy Industry Account could be used towards the cost allowances granted to the industry during the past year. It has been estimated that the credit in that account is approximately £100,000. For the past year the .769 d and the .269 d and the .022 d given for factory wages has been a charge against the Dairy Industry Stabilisation Account. Payments into this account had come from the War Expenses Account and presumably repayments to that account will now be made from the Dairy Industry Account, supplemented as it is by the retrospective sum specified above. The whole question of debits and credits in the Dairy Industry Account is one on which dairy farmers would appreciate further enlightenment, especially in view of the latest adjustments.