Prices Paid By Dairyman

Press, Volume CVII, Issue 31500, 14 October 1967, Page 8

Prices Paid By Dairyman

Since 1949 there has been a 70.4 per eent increase in a range “of prices paid by dairy farmers for goods and services. The average annual increase between 1949 and 1967 has been 3.01 per cent and between 1966 and 1967 the actual increase was 3.40 per cent.

These figures are based on the index of prices paid by dairy farmers just issued by the farm economics section, supply division, of the Dairy Board.

The prices at a range Of items covering goods* and services used by dairy farmers are ascertained generally in May of each year. The information is collected from merchants and other sources in all dairying regions, according to the relative scale of dairying there, mostly through' the board’s consulting officers. This is brought together in Wellington along with data collected centrally, some of which is provided through the courtesy of the Government Statistician.. Over the period covered, the index shows a rising trend with some sharp annual increases in the early years when price control and subsidies were removed from a number of items. In the late fifties and early sixties, the rate of increase slowed down—between 1958 and 1964, the average rise was 1.05 per cent. Since 1964, however, ' there have been more noticeable movements in prices paid by dairy farmers for a number of items. This has been reflected in the annual increases in the “all groups” index—in 1965 up 1.57 per cent, 1966 up 1.98 per cent and 1967 up 3.40 per cent

Between 1966 and 1967 the index of prices paid rose by 3.40 per cent. There was an increase in prices paid for all items, but considerable variations in the share of individual items in the overall increase. Fertiliser and seeds had the largest share, more than 28 per cent, due mainly to increases in the prices of fertilisers, particularly superphosphate. Prides for seeds actually dropped. Expenditure on fertiliser and seeds accounted for more than 12 per cent of total farm expenditure, so that the rise of 7.38 per cent in prices paid' for this item had a major effect on the overall increase in prices paid. Stock food and veterinary charges and wages also had significant shares in the overall increase, with 18.01 per cent and 13.74 per cent respectively. Together with the fertiliser and seeds item they accounted for 60 per cent of the overall weighted Increase in prices paid. Over the period since 1949, of all the items in the index rates have shown the biggest increase, having risen by 224 per cent from a base of 1000 in 1949 t0t3240 in 1967. However, the relative share of rates payments in total farm expenditure has been low, averaging 3.18 per cent since 1949? Thus while the share of rates increases in the overall weighted increase is fairly high at 10.05 per cent, its effect has been only one third as great as that of the wages item. Wages over the period accounted for more than one quarter of the average farmer’s bill for goods and services, and because of this his overall level of expenses has

been greatly influenced by movements in prices paid for this item.

Further price rises for dairy farmers’ goods and services havq been announced since the figures for 1967 were prepared, and these, coupled with the effect of the 5 per cent cut in the basic price of butterfat announced in June, mean a further closing of the gap between prices paid and prices received by the dairy farmer.