PAYMENTS FOR BUTTER-FAT

Press, Volume LXXII, Issue 21714, 22 February 1936, Page 25

PAYMENTS FOR BUTTER-FAT

INFLUENCE OF OVERRUN FICTITIOUS VALUES Great interest has been aroused by the proposal to pay a guaranteed price for butter-fat. The payment for this product, whether guaranteed or not, is, at present, inseparably connected with the over-run obtained in making the butter; The subject is' a somewhat difficult one to most people, but of vital importance to everyone connected with the dairying industry, says a writer in the New Zealand "Herald."

It is necessary to recall that, as set out in an official publication, the normal over-run in butter-making, under average conditions, is 17.07 per cent; When" whole milk is delivered to the factories, and 19.51 per cent, under the home separation system. Over-runs appreciably higher than these figures are due to butter-fat received, but not paid for. The making of unsalted butter will still further reduce the normal over-run. High over-runs inflate the published pay-out for butter^fat, because of the unrecorded and unpaid-for fat. "Disturbing Records" .

Records of last season show the declared over-run of one home separation company to be nearly 23£ per cent. A fair quantity of unsalted bnU ter was also made during the season. Other records -are equally disturbing and indicate that the published payouts are of a fictitious nature, and must be discounted accordingly. The amount of the reduction will vary with the conditions under which the companies operate, and the exact figure cannot be ascertained unless the over-runs are reduced to nominal figures and the correct price calculated upon that basis. If this is done, it will be found that many of the pay-outs are inflated to an unexpected extent, and must be reduced by amounts ranging up to possibly three farthings a pound of fat.

As there is only a certain amount of money to go round, suppliers collectively receive as much as they are entitled to. but individually some receive more and others less than they should' be paid. This is obviously unfair and other disadvantages will be noted as we proceed. The same inflation will apply also to monthly advance payments when the butter-fat delivered but not paid for is taken into account These are only some of the evil effects of the present keen and wasteful competition among dairy companies. Ethical Aspects It must be admitted that competition undex right conditions is good for trade. ItTmakes for efficiency in the management and operation of the competing companies, and if entirely eliminated would undoubtedly lead to slackness and inefficient manufacturing methods. The competition.- however, must be upon a uniform and fair'basis and no inflated or fictitious prices should be allowed to be quoted. When high over-runs are obtained, and all the fat delivered is not recorded, correct comparisons cannot be drawn with other dairying activities such as herdtesting. This is a serious factor. Nor must the ethical aspect of this problem be overlooked. Representatives of dairy companies are active in securing suppliers—mainly from other companies—and for this purpose, quite unknowingly, make statements regarding payouts which are untrue in substance and in fact. Surely such a reproach to our leading primary industry must be removed by So improving the basis of payment for butter-fat that the published payouts will be correct and the price paid for butter-fat is influenced by the price received for butter and the cost of manufacture only Faulty Basis It will be conceded that no business Or manufacturing concern can prosper if its financial basis is a faulty one. Raw materials must be paid for to thelast half pound. To omit an appreciable quantity in order to increase the price paid for the remainder is questionable business ethics. i The Government asks for the cooperation of the people in carrying out tfie works to which it pledged itI self. Guaranteed .prices occupy a proIminent place. Enough has been writ-' ten to show the difficulties which will arise in operating such a 1 scheme when the factory payouts are largely of a fictitious nature. Now is the time to build up a strong body of opinion within the industry that will insist upon the payment for butter-fat being placed upon a more stable and satisfactory basis. Records dated 1912. now I before me, show the superior status of the industry then as compared with the present time, Over-runs were normal, all fat delivered was paid for, and each supplier received his just return. Similar conditions are urgently required to-day. ! Vi; ' HIGH PRICES AT STUD FARM SALE SYDNEY, February 21. i At a clearing! sale at Mr Roy Rogers's stud farm at Ariah Park, 60 Clydesdales brought 4200 guineas, with 249 guineas as the top price.