No Agreement On Price For Butter Sold Locally

Press, Volume XCIX, Issue 29245, 1 July 1960, Page 12

No Agreement On Price For Butter Sold Locally

(New Zealand Press Association)

WELLINGTON, June 30. The Government and the Dairy Board have agreed on most ef the details for the future financing of the dairy industry, but the board still disagrees strongly with the Government’s method of paying for butter sold on the local market.

Mr A. Linton, chairman of Uie Dairy Board, told the Dominion dairy conference today that the industry believed—just as was the case with any other manufacturer in New Zealand—that they were entitled to cost of production for butter sold locally. “Actually, we think that if there wasn’t a consumer subsidy on butter, and if its local price were fixed in the ordinary way through the Price Tribunal, it would be impossible for the Government to do anything else but allow us cost of production." The industry representatives had suggested various alternatives to the Government, but they had achieved nothing.

Believing that all they were asking for was simple justice they could not, and would not. let go of their claims for fair treatment on the local market, either with this Government or with any future Government, said Mr Linton.

Mr Linton said that although the Government did not Accept the industry's proposals on locally-sold butter, the industry did not consider that a difference of opinion on this issue should prejudice agreement on the other points. He told the conference that the results of the industry’s talks with the Government could be summarised as follows:

(1) The Government agreed that the amalgamation of the Dairy Board and the Dairy Commission could proceed along the lines proposed. (2) The trading account of the industry would continue with the Reserve Bank, but a higher rate of interest would be charged on money required for capital purposes. (3) The industry would concede a credit for-interest saved on £5 million for the period the Government placed it in the Dairy Industry Account. (This £5 million came from the Consolidated Fund, but the industry held It In trust for the Government, but because it was in the account, the industry saved interest.) (4) The balance of the loss on

the 1957-58 season would be paid from the current season’s surplus. Price fixing would be carried out by an authority of seven members—three nominated by the industry, three by the Government. and a chairman appointed by the Government with the approval of the industry. Under normal conditions, and as decided at the end of each trading year, up to 50 per cent, of any annual surplus would be distributed by dairy companies. It was probable that agreement would lgter be reached that if the industry account is substantially in deficit, up to 75 per cent, of annual surpluses will go to repayment of the deficit. At present the wording of this section had not been completed. Mr Linton said that ever since 1958. the board had carried on negotiations with the Government and these, at times, had been difficult.

Far from retaining its previous philosophy on the guaranteed price, the Government had been quite insistent, not only that the industry must, over a period of years, live on realisations, but also that the formula for repayment of any deficits must be specified and must be written into the act.