Reply To Farmer On Processing Charges

Press, Volume CIII, Issue 30602, 19 November 1964, Page 10

Reply To Farmer On Processing Charges

“In response to the very reasonably stated request in ‘The Press’ by Mr W. N. Dunlop, chairman of the North Canterbury meat and wool section of Federated Farmers, I shall endeavour to clarify the subject of freezing charges,” said Mr H. A. Seifert, spokesman for the New Zealand-owned meat export and freezing companies.

“The first point to be clarified is that the term ‘freezing charge’ is an absolute misnomer,” Mr Seifert said. “This charge is only a balancing one, and services only about half of the cost of a freezing works’ year-round operations. The balance of cost provision comes from realisations at market risk of offals, casings, and tallow, together with charges for processing pelts, hides, and wool. “The second point is that farmers appear to be mesmerised by relatively inconsequent differences of tenths of a penny, and fail to see the over-all picture, which is the earning capacity of a works.

“Mr Dunlop quoted figures from the Meat Board’s last annual report which tended to suggest an injustice to Canterbury compared with Auckland. The point raised here is that the figures published by the board were quoted for a particular purpose—to illustrate the costprice squeeze on the producer; they were not to be taken as an evaluation of the fairness of charges between provinces, as Mr Dunlop’s quotation might suggest,” Mr Seifert said. A Little In Error “Incidentally, Mr Dunlop was a little in error in stating it cost 2s more to kill a lamb in Canterbury than in Auckland. On my reckoning, it is 14|d fbr a 301 b lamb. This is really insignificant when compared with the 24s 4d given by the board as last season’s cost of freezing, shipping, and selling a lamb ex Smithfield. However, it is deserving of notice.

“The next point I would make is that no sound case can be presented by taking alone the lamb carcase processing rate, as between one province and another, or one year and another. Account must also be taken of charges for pelts and wool, and, more important still, for other meats. “A South Island works must live four-fifths from lamb and one-fifth from ewe mutton. In the North Island, beef, bobby calves and pig meats bring large revenues. Mr Dunlop might well again study the board’s report to observe that, although the Auckland lamb rate looks so good, its charge has risen for ewe mutton over the last 10 years by 68 per cent compared with 62 per cent in Canterbury, and its beef charge 48 per cent com-

pared with 47 per cent here. When account is taken of these major items in the North Island the comparison shrinks completely. “Furthermore, when it is recognised that the so-called ‘freezing charge’ provides only half of the works revenue, the difference becomes inconsequent, “Mr Seifert said. Charge on Lamb “Mr Dunlbp mildly commented on this season’s |d per lb rise in the charge on lamb. This, together with pelt and wool charge increases, just covers the 6 per cent general wage order, and provides nothing towards the improved hygiene requirements in the works. These will involve an average meat works in a capital expenditure of some £150,000. I suggest the companies have held the cost line remarkably well in the circumstances,” Mr Seifert said. “It is not unreasonable to observe here that this season the farmer is being paid 3d per lb more for lamb than in the opening schedule last year, while the companies are charging only id per lb more. “As a fellow farmer, 1 share Mr Dunlop’s concern and that of the board over the cost-price squeeze as applying to the primary industries. It is a very real and grave problem. It is one, however, not of the companies’ making, but of which they are the victims.

“Finally, I must reiterate that processing charges are set throughout the Dominion by knowledgeable farmers who know the facts and must themselves bear the cost they levy. What better investigation of accounts have you than theirs?” Mr Seifert concluded.