The Press FRIDAY, JUNE 30, 1967. The Butterfat Price

Press, Volume CVII, Issue 31409, 30 June 1967, Page 10

The Press FRIDAY, JUNE 30, 1967. The Butterfat Price

Disappointing though the cut in the basic butterfat price is to the dairy farmers, they must have been expecting it. Some farmers had expected the price to be reduced last year as the Dairy Board has been losing money on its butter sales in the United Kingdom for more than two years. In the year ended May, 1966, the loss on exports of butter to all markets—of which the United Kingdom accounted for more than 80 per cent—totalled £5.6 million. United Kingdom prices fell during the year from 322 s per cwt to 300 s per cwt to average 314 s compared with the “ break-even ” price of some 337 s per cwt. The board’s 1966-67 accounts, not yet published, will show a bigger loss, for the London price has remained 37s per cwt below the “ break-even price throughout the trading year. Depending on prices fetched in other markets and on some other factors, the loss for the latest year must have been slightly more or less than £7 million. The 1965-66 loss on butter was offset by profits of £3 million on the sales of other products, mainly cheese. As cheese prices have been steady at 256 s per cwt for crated and 268 s to 271 s for cartoned rindless cheese since April, 1965, the board should again have made about £3 million on exports other than butter. The board’s trading loss in its latest year must therefore have been nearer £4| million than the £2} million it lost in 1965-66. Unless prices improve the board again faces the prospect of a loss on butter in the 1967-68 season. The 5 per cent cut in the price to be paid for butterfat used for butter-making has reduced the “break-even” price from 337 s per cwt to about 323 s per cwt ex store London. If the same quantity is sold in London this year as last, and the price remains at 300 s per cwt, the board should be able to reduce its loss on this trade to £2 million; if there is no change in prices realised for butter in other markets, and for cheese and other products, the board should show an over-all trading profit of about £1 million.

Although conditions and provisos implicit in such calculations may all be invalidated by changes in market conditions, only the optimistic would at this stage predict a better outcome than a small profit on this year’s operations. The legislation governing the board’s operations requires it to use at least half of its profits each year to pay off any accumulated deficit Now standing at £6 million or £7 million, this deficit may take several years to pay off. If there is any further fall in overseas prices, dairy farmers will again face the prospect of reduced payouts next year. The present basis of payments to individual producers is soundly based on today’s market conditions, and gives the board a reasonable chance of climbing “out of the red” in the next few years.