Grocery costs will rise by 15p.c., retailers say

Press, Volume CXV, Issue 33941, 6 September 1975, Page 1

Grocery costs will rise by 15p.c., retailers say

The Maximum Retail Price scheme, to be introduced on October 1, may increase the cost of many grocery items by up to 15 per cent.

Packaging will account for much of the extra cost—the M.R.P. will have to be printed four times on each carton for about 2000 items.

If the printing was 1 permanent, the cartons ! might be used only once, ) because of possible price t changes. c

The alternative to printing — stickers — would mean importing equipment worth about sl.2m for individual manufacturers. Shorter printing runs and increased handling would contribute to the increases. Estimates of increases in costs as a result of the M.R.P. scheme were made in Christchurch yesterday at a meeting between Mr R. W. Thomas, the general nanager of Foodstuffs Christchurch, Ltd, Mr E. G. Stonestreet, managing director of G.U.S.

Wholesalers, Ltd, Mr C. T. A. Rattray, general manager of J. Rattray and Son, Ltd, and Mr J. W. Holley, the secretary of the Wholesale Grocery Distributors’ Federation.

‘Nobody knows’ The Prime Minister (Mr Rowling) had conceded that there would be some increases in prices as a result of the M.R.P. scheme, but had also said that the extra costs would be outweighed by the cost savings to consumers, Mr Rattray said. “Where these savings are, nobody knows.” The grocery industry is already highly competitive. “I. is an industry in which only the most efficient survive,” Mr Thomas said. “Cost-cutting has been pos-

sible in the past because of bulk buying, efficient warehouse handling and retail distribution. The Government has said several times that it is aware of this, but is apparently determined to press ahead with a scheme that will increase our costs — which must be passed on to the customer.” M.R.P. will also mean much more processing by computers, sales staff, and retailers. More invoices will be needed and, when prices change, overprinting existing packages or discarding unused packages will also increase costs. Because a new M.R.P. price would, in effect, create a new product, Mr Thomas said, he expected at least 1000 additional lines to the 5000 already carried by wholesalers. Exports to stop Mr Holley said that four major manufacturers, with exports totalling about 10 per cent of their production, had] decided to stop exporting if the scheme went ahead. This was at a time when devaluation had made New Zealand goods much more attractive on overseas markets. Because of price differences between New Zealand and overseas, goods would have to be repacked, thus increasing handling costs. Mr D. McLellan, the export manager of T. J. Edmonds, Ltd. which exports a number of food products likely to be affected by M.R.P., said that the scheme could be detrimental to his company. If all goods showed the M.R.P., overprinting would be necessary, and the cost overseas would have to be subsidised by prices charged in New Zealand. Although the printing of labels for canned goods was not particularly expensive, the storage of goods for a market less predictable than the home one was expensive. Seasonal It is also possible that major food exporters would have to buy more plant, but a director of Wattie Industries, Ltd, Mr R. K. Wattie, said that until the schedule for M.R.P. was announced, he would not be prepared to estimate the outlay necessary. Watties’ exports were seasonal, and this would further complicate estimates without the schedule. Watties had been in close consultation with the Depart, ment of Trade and Industry for the last 18 months, he said. "Should the National Party

jecome the Government in November, the M.R.P. scheme will be discontinued, rendering the imported plant obsolete,” Mr Rattray said. “If the Labour Party stays in office, the loss to the country will be in the fall in export exchange, which may also affect prices to the consumer.” No legislation "It is inevitable that we will also become lawbreakers, although inadvertently,” Mr Stonestreet said, “Because it is impossible to keep a completely accurate check on stock, there is no way we can avoid selling some old stock at new prices. The alternative to this is to refuse to supply customers, or to take losses by selling new stock at old prices.” Although M.R.P. is expected to be introduced in less than a month, none of the wholesale firms has been approached by the Government, or officers of the Department of Trade and Industry. Neither has legislation been gazetted.