DEARER MILK

Dominion, Volume 18, Issue 152, 21 March 1924, Page 6

DEARER MILK

WINTER PRICE FIXED AT B|d. PER QUART REASONS FOR THE INCREASE HOW THE BASIC PRICE HAS RISEN

The City Council has adopted the recommendation of its Milk Committee in the matter of winter retail prices. The new scale fixes the price of milk at Bld. per quart and cream at 2s. 6d. per pint.

The recommendation of the Milk Committee of the City Council regarding the winter retail price of milk and cream came before the council last night. In moving the adoption of the report of the Milk Committee, the chairman (Councillor W. H. Bennett) said that it was necessary to make some references to the facts that lea to the recommendation for the fixing of the retail winter prices for rhe uisuing six months. It would be remembered, he said, t?iat last winter the basic price of milk paid to the producer was 19.2 d. 'per lb. of butter-fat. plus 100 per cent, and 2Jd. per gallon added value, and the council fixed per quart as the selling price. They lost during the five months’ operations the sum of £B5OO. The committee. found that this loan had handicapped their operations during the summer period insomuch as it forced them to charge a high summer price to make up the loss, and also pay the extra cost or purchase this year. In addition, the committee’s .anxieties had been increased owing to the fact that the high price had led the nearby farmers to increase their output so as to take advantage of the high price ruling, for although they retailed direct from the farm, without any of the overhead cliaro-es naid by the council for the protection of the health of the people, they charged the same retail price, and. therefore, were in an exceptionally good position. Rise in Basic Price. The basic price paid to the producers had risen from 19.2 d. to 20d. per penna of butter-fat, with a further added value of 2Jd. per gallon over and above that ever paid before, and on investigation they found that the average prico paid for the current season to date was approximately 13d. per gallon ' The winter price having been fixed bv the arbitrator at 85 per cent, rise on' the summer price brought winter price to tho producer of 2i.2._id. por gallon, being an increase of 8 2od. per gallon over the summer period. At the proposed retail prico of 81a. per quart the increase over the summer price was lid. per quart (equal to 21.4 per cent.), whereas the cost to the corporation wap increased by 2.06 d. per quart (equal to 61.5 per cent.). Losses in Winter Season. One of the contributing factors to loss during the winter season was the :f»trplus milk and cream that had to be carried by the Department to meet the fluctuating trade conditions. Each delivery cart had to carry at least 7i per cent, extra to meet this demand, and provision had also to be made for extra supplies to large houses that catered for the travelling public. The same applied to the shipping in port. Another factor was that m their contract with the producers they were allowed to supply a margin of 140 gallons per day, either above or -below the contract quantity before surplus price or penalties for shortage operated. The provision of sufficient milk ■ daily to provide the demand for cream at week emit) was also a problem, as the milk department naturally had to convert a surplus in the early part of the week to other channels. If converted into butter it showed a large loss, as tho difference between, its butter-fat value and prico paid as winter milk was about 2s. 6d. per lb. of butter-fat. It was estimated that the daily average quantity separated out of the 4400 gallons purchased for tho whole milk supply was about 300 gallons, and the loss under tins head was about £450 mind that during this winter period per month. It must bo borne in mind that during this winter period they expected to reach out anything from 60 to 90 miles to get sufficient supplies which added to the heavy transport costs. Margin Between Cost and Selling Prices. The margin between cost and selling prices, based upon ruling winter prices, was not greater in Wellington than in other main cities of the Dominion, notwithstanding that the council did much in tho interests of the consumers that was not done in other centres, the bottling of tlie milk not being tho least. “In view of the facts I have endeavoured to set forth.” said Councillor Benmett, “the committee have no option but to recommend that tile retail prico of milk for the ■ ensuing six months from April 1 be S.Jd. per quart and 2s. Gd. per pint for cream. The estimated loss at these prices for the six months’ trading is £3091, and only by spreading the extra cost over the six months can this loss be kept down to this figure. This loss will nave io bo made up during the next summer period. If the price was fixed at Bd. pci quart the loss would be £lO,OOO. It is only fair to state that the aliove statement is based on au average price of 20d. per pound of butter-fat that has obtained when tiie above figures wore got out. The price of butter has fallen since then, and is still falling, which may help to wipe out the above estimated loss. If so, then so much tlie better for next summer’s operations. For general information I may say that the committee has reason to hope that at tho end of tho financial year, March 31, the department will <•01110 out al! square, notwithstanding tlie heavy financial handicap it had to face at tho commencement of tho year.”