DAIRY PRODUCE

Dominion, Volume 31, Issue 207, 30 May 1938, Page 10

DAIRY PRODUCE

Guaranteed Price Plan

Attacked

COSTS LEVEL TOO HIGH

South Island Criticism

As was"stated in a Special Service message from Dunedin published in “The Dominion” on Saturday, the annual report of the South Island Dairy Association contains much adverse criticism of the guaranteed price scheme. “The 1936-37 prices were increaseci for the present season by .6875 d. a pound in the case of butter, and by 7275 d a pound in the case of cheese, . says the report. "The Minister of Mar- ’ keting advised that the increased prices were estimated to return to suppliers of butter factories -84 d. a pound of butterfat, and to suppliers of cheese factories 1.34 d. a pound of butter-fat more than they had received the previous season. “When the Minister, in August last, announced the prices decided upon, general dissatisfaction therewith was expressed by the industry throughout the Dominion. It was understood that in determining the prices to be paid for the current season due allowance would be made for the increased costs, of production that had taken place, and it was clear that this had not been "The allowance made for factory costs to f.0.b., the Minister advised, was for butter 2.25 d. a pound pf butterfat and for cheese 3.25 d. a pound of butterfat; and he stated that this allowance shows a margin in favour of ‘reasonably efficient factories working under average conditions.’ In the South Island the average factory costs to f.o.b. for 1936-37 were much in excess of the figures named, and we cannot accept the inference that our factories are below the standard of ‘reasonably efficient factories.’ The balance-sheets of quite a number of cheese factories show their costs to f.o.b. for 1936-37 as more than 4d, Legislation passed since then has raised the costs very much further. Promises Unfulfilled. “We have no hesitation in now stating that the Government has entirely failed 'to implement its promises to improve the dairy-farmers’ economic position, and we are emphatically of the opinion that the policy it is pursuing affords no evidence that any consideration is being given to the interests of the primary producers. Because of the tremendous increase in his costs, brought about by legislation'enacted by the present Government, the dairyfarmer is denied the full benefits of the advance that has taken place in the market; value of his products overseas since the Government came into office, and for that reason we assert that its policy is directly opposed to his interests.

“The prices fixed for the current year are equivalent to a London market price of 112/- per cwt. for butter and 67/- per cwt. for cheese, that is, after allowing for costs of marketing. If a comparison is made with the average market prices realised since September last, when this season’s produce would commence to arrive in the United Kingdom, and should prices not recede greatly from their present levels, it will be realised that a considerable surplus in excess of the ‘guaranteed’ price must accrue from the sales of the produce. In this event the Government will no doubt distribute the surplus to 1 the industry about the beginning of November, by which time it should be possible for the department to finalise the season’s accounts. It is,hoped that an additional payment will be made at the same time on account of interest on the surpluses that would have accrued to the factory companies if the produce had been disposed of on an open market free of Government control.

“Costs Altogether Too High.”

“The Minister of Finance contends that the Primary Products Marketing Bill was enacted for the purpose of removing the economic disadvantages suffered by the farmers and ensuring for them fair treatment. If that is correct we have failed to see any evidence yet that the Government was making any endeavour to carry out its principles. To the contrary the heavy increase in costs that the Government lias imposed by raising import tariffs and by numerous other measures has added considerably to the already inequitable burden that the farmers were carrying. The view we get is that the farmer is being made the buffer as between the manufacturing interests and the labour unions, and it does not matter what happens to him so long as they are placated. "The costs of production in this country are altogether too high., and bear no relationship whatever to the market value of our exports. What will happen when the inevitable slump in our overseas market occurs is a matter that calls for the most serious consideration. Whatever may be said to the . contrary, New Zealand is essentially a primary producing country, and the welfare of the people of the Dominion depends wholly on the success of the farming industries. If a position is created that will render those industries uneconomic (and that is the present trend) the whole financial structure of the country is bound to collapse, no matter what palliatives may be resorted to by politicians to meet the situation.

“We are apprehensive as to the possible reaction that may ensue as the result of the increased tariffs that were imposed by the Government recently on imports of certain goods from the United Kingdom. It would be a most serious matter for this industry, and for the Dominion, should any restrictions be imposed on the importations of our butter and cheese into the United Kingdom, and we sincerely trust that the Government fully recognises how important it is" that we should continue to receive free access to the British market for our exports.” Notices of motion from the executive of the .South Island Dairy Association to the annual meeting at Dunedin on June !) are as follows: — “This conference of delegates representing the dairy factory companies in the South Island (excluding Nelson and Marlborough), respectfully requests the Government that, when fixing the guaranteed prices for 1938-1939, the principles defined in the Primary Products Marketing Act be applied, and particularly that due allowance be made for the additional costs which have been imposed on the industry since August 1, 1930, when the guaranteed prices scheme commenced to operate.” “That' this conference, being emphatically of the opinion that the price for butter marketed within New Zealand should not be based on the guaranteed price for export, respectfully suggests to the Government that to do

Justice to the industry the same measure of protection against economic loss as is afforded to other industries manufacturing commodities for sale in the Dominion should be made to apply in the case of butter sold on the local market.”