Bakers Ask For Price Increase

Press, Volume CIV, Issue 30845, 2 September 1965, Page 3

Bakers Ask For Price Increase

.Vew Zealand Press Association)

WELLINGTON, September 1.

The Price Tribunal today reserved its decision on an application by the New Zealand Association of Bakers for an increase of Id a 21b loaf in the retail price of bread.

The association wants the price increase as compensation for increased wage costs.

The major wage increase cited was the 6 per cent general wage order. Drivers’ and bakers’ increases were included.

The association wants the maximum retail price for a 41b loaf to be Is 5d instead of Is 3d. It wants the price of a 21b loaf to be BJd and 44d for a lib loaf.

The application was opposed by the Department of Industries and Commerce.

The association's counsel, Mr R. E. Wylie, said the total increase in cost to the 180 bakers in the association was £238,000 over the last year. He said some bakeries were running at what was a loss by commercial standards, because of increased costs.

If this trend continued, smaller bakeries would be taken over by larger firms, and monopolies would develop. he said.

Mr Wylie produced statistics to show that ingredients used by bakers had increased by from 2 per cent to 63 per ' cent in price. Fewer Bakeries He said the number of independent bakery units had fallen from 476 to 180 in New Zealand in the last five years. Mr Wylie said the department could justify its view that the industry could absorb all costs only by a complete financial review. The department recommends that the industry should be given financial relief of 15s 5d a ton on flour, instead of the £1 10s asked for.

Mr J. W. Ruth, of the department’s prices division, said the association had asked for 8 per cent shareholders’ tax-paid return from bakeries in cities and large provincial

towns 10 per cent from country bakeries. This was asked for in 1953, and the annual return since had been 13.3 per cent profit. If the industry was asked to absorb the total cost rise, the profit would still be 9 per cent. Cost Increase Mr Wylie said the department had assessed the increased costs to the industry as £1 9s 6d a ton of flour, so there was only 6d difference from the industry’s assessment of £1 10s a ton. He said the industry submitted it had no absorbent capacity and should get full recompense for the increased wage costs.

The retail price increase asked for would return the industry more than its increased costs. This should be adjusted by a decrease in the flour subsidy, so that the industry would be left in the same position as before the wage increases.

Mr Wylie said if the department wanted to justify its view that the industry had a capacity to absorb some of the increased costs it would have to carry out a financial review of the whole industry. Mr Wylie said the industry was entitled to know where it was going. Equipment replacement was a costly item. There was general dissatisfaction with profitability of the industry, and many bakeries had gone out of existence, either from take-overs or from just dropping out, he said. He wondered whether centralisation of the industry was to the benefit of the consumer.

i He criticised the department’s method of investigating the industry’s application He said the department accepted without question figures favourable to its case, but scrutinised all figures un favourable. Retail Margin The president of the tribunal (Mr S. T. Barnett) said two applications for increase in the retail price margin of bread were pending, and would be considered later.

These applications were from the Federation of Restaurant and Milk Bar Owners, and the New Zealand Grocers’ Association. They would a?t be considered as part of the present hearing.