New Charges Cover Only Part Of Higher Costs

Press, Volume CIX, Issue 32274, 17 April 1970, Page 7

New Charges Cover Only Part Of Higher Costs

Wages have not been the only costs that have gone up in freezing works this season but they are unquestionably the overriding reason for the recent increase in processing charges, according to meat industry sources.

On average, works wage bills have gone up by about 12} per cent as a result of the recent increases, with the range being from about 17,4 per cent for slaughtermen down to 8.8 per cent for the lowest paid worker on an hourly basis. The increase in slaughtermen’s pay alone, according to one company spokesman, has added 3.7 c to the cost of processing a 281 b lamb, which is more than half of the 7.28 c received in additional killing charges for this lamb. And slaughtermen constitute less than 25 per cent of the total team handling lambs and sheep at some works, all of whom have had increases in wages, and this does not take account of tradesmen, fitters and maintenance people. Shift engineers have, for instance, received an increase of $615 a year and companies have been morally bound to make increased payments to supervisory staff also. Bearing out the contention that the increase in charges nowhere near covers the total extra.costs being faced by works, it is said that to restore works processing accounts to where they were before the recent wage rises—that is to cover wage increases alone—the lamb charge would have had to increase by just over 0.4 c per lb. In this context it is also worth noting that wage increases to slaughtermen came into force on March

5 and to workers on hourly rates on March 16, but it was not until April 6 that local processing rates were raised.

The rise in the charges of 0.26 c per lb for lambs, 0.27 c for wethers and hoggets and 0.29 c for ewes are on figures introduced at the beginning of the season, which in each case was o.lc per lb lower than in the previous season. The reduction in rates at the opening of the season was in expectation of a buoyant market for byproducts, which by and large has been realised, although some commodities are now realising Somewhat less than expected and others—tallow in particu-lar-more than was anticipated.

Certainly the fairly favourable by - products situation has been a factor in keeping charges from rising more. At the same time when the processing rates were set at the beginning of the season the expectations were for a bigger kill than has eventuated and also for weights to be greater than they have been. This is a consequence of drought.

At the end of March the five works in North and Mid-Canterbury were running more than 550,000 head or nearly 15 per cent behind the kill at the same time last season. Further south in South Canterbury and North Otago the three works in this area were more than 700,000 or nearly 26 per cent behind last season's tally. At April 4 the figures for three Canterbury works were running about 20 per cent behind last season for sheep and lambs, but by the end of the season it is anticipated that the result will be somewhat better but still down by 74 to 10 per cent. Already' considerable numbers of ewes from Southland are coming' to Canterbury to be killed. At the same time weights of stock killed are down drastically on last year. For three works up to April 4 the average lamb weight for the season was down 14 lb on last season and the average for sheep and wethers was lower by almost 51b. A reduction of 141 b per lamb means a loss in killing charges of about sc, but according to one industry spokesman this loss in weight and volume would not in itself have caused an increase in charges, but it is a consideration. There has also been a loss in the volume of offals recovered. Whereas normally 10, or 11 or 12 lamb livers go to a 101 b pail, at one stage this season at a South Canterbury works the same pail was taking 18 livers.

The slaughter of Southland ewes in Canterbury could have some slight effect in lifting the average weight of sheep handled. The continuing story of rising hygiene standards in works to meet requirements of particularly the American market has also added to costs again this season. With changes in dressing procedures extra men have had to be added to chains. One meat company representative said recently that these changes bad meant at least an extra two men on chains and on the basis of extra manning another company said that its costs had

increased between 3 per cent and 8 per cent In addition there has been some slight loss of throughput as personnel have had to familiarise themselves with new procedures and there has, of course, been a capital expenditure involved and it seems that the process of uplifting hygiene standards is still going on.. An industry spokesman said that instructions had now been given for alteration of carcase washing procedures. Trading prospects in meat, wool and pelts do not come into the processing charge story, according to industry representatives. These are matters taken into account in setting schedules against which the processing charges are a debit. Strictly speaking when the processing charges go up the schedule should be adjusted downwards. In this particular case the lamb schedule has actually been raised since the charges were increased, but it might be suggested that it would have been raised further had the increase in charges not been introduced. Producers beset on all sides by rising prices may get some crumb of comfort from the remark heard this week that it would be very unlikely indeed that charges will be raised again next season it is very likely that the charges now fixed will apply next season too.