POULTRY LOSSES

Evening Post, Volume CIX, Issue 54, 5 March 1930, Page 16

POULTRY LOSSES

NOT ECONOMIC

EGG EXPORT IS NO REMEDY

GRADING AND A GRANT

"The study of farm accounts proves that . conditions during 1925-29 were uneconomic on commercial poultry farms. The surplus, after food costs were met, was barely sufficient to cover overhead expenses. Labour reward of the owner was small or non-existent. During the present season (1929-30) the position is likely to be so bad that side-line flocks will be reduced, in addition to reduction in total flocks caused by commercial farmers selling their plant." The condition of the poultry industry is sufficiently indicated, by the above extract from the report of a survey of the New Zealand poultry industry .... by ...the .Farm Economies Section of the Department of Agriculture. The report has been compiled by the Farm Economist (Mr. E. J. Fawcett, M.A.), with the assistance of Mr. "W. N. Paton, of the Farm Economics Section. The poultry- industry is depressed and the cure lies at home, not oversea. In fact, the Farm Economist recommends discontinuance of the Government subsidy on exported eggs. He recommends better organisation of the trade within New Zealand, a standardised grading scheme, regulations governing sale of fresh eggs, an annual census or stock-taking, and an annal grant of £5000 tapering off over a. limited period of years. In the poultry industry there are several classes of producer. There is at one end of the chain the commercial farmer who is a specialist giving all his time to the business: At the other j "end of the chain is the side-line or backyard producer, who has it in his power to suddenly increase quantity and decrease quality. Between these two are "those producers who do not wholly depend on poultry products for their living, but \vho rely on poultry to such' a degree that great care is taken iii/management and in the class of product put on the market." The specialist group "is of great importance in maintenance of stock standards, and, although small in numbers, 'should be encouraged." But the middle group described above is the "most important group of producers." As to the third group, "it appears desirable that egg-production be continued as a staple industry on side-line farms. ,To safeguard the industry for this class and for the commercial owner, certain regulations are urgently needed." From the evidence of the report it is evident that the small-men —backyarders and side-liners—can come in and go out very rapidly. "As birds begin to produce at six months of age, it is possible to procure a greatly increased output in a short space of time." ■ One result is that small men are liable, when times look good, to rush in, inflate supply, and perhaps lower quality, rushing out again, with some sacrifice, when times look bad. iThis is demoralising. As later quotations from the report show, the grocer finds "the doubtful egg a great handicap in building up the trade. In fact,' the grocer ' makes no profit oh eggs. ' The Grocers' Federation has demanded compulsory grading. It may be surprising to learn that ■■ poultry are kept by about half the householders of New Zealand. ; The wheat industry hardly recognises the importance and claims of the poultry industry. The analysis in the report throws a good deal of light on over-production. STANDARDISED GRADING. U,nder this head the Farm Economist reports as follows:— The importance of the poultry industry in the economic life of ~ the farming community is undisputed. Any development which can be made on sound lines is to the advantage of the country as a whole. As an item of staple diet eggs stand very high, and rank close to bread or milk in the family budget. Despite its importance, the egg trade has in the past been the most haphazard and unsatisfactory of any commodity of daily use. If production and distribution is to be placed on a sound footing and the interests of consumers safeguarded, a standard system of grading is the first essential. In discussing grading it must be understood to cover both size and quality. At the present time eggs are sold as "fresh" irrespective of age, condition, and, in most cases, size. Because they are sold in a sealed container (i.e., the shell), it is impossible for the wholesaler, the grocer, or the consumer to buy and sell with any degree of confidence; especially during certain periods of the year. The fault, may lie with the grocer, the wholesaler, or the producer. In any case, it is the' grocer and producer who suffer, and undoubtedly the latter are to a great extent responsible for tho state in which eggs are placed on the market. A great deal of the trouble arises through what are known as " grocers' collections'' from out-lying country districts, where a. few dozen are collected and forwarded to central markets when sufficient have been obtained to make a consignment, the article finally arriving in the main markets/in a!very doubtful condition. This will .always be difficult to overcome, and has,7led to the statement so often heard that egg-prices are controlled at certain times of the year by the inferior product. The doubtful condition in which many eggs reach the market directly affects the grocer, and 'it has been proved from records made available in the course of this investigation that grocers show practically no profits %h>thefeggs they handle. They must be kept for the convenience of customers, but are generally considered to be a non-paying line. At the present time a small proportion of eggs are graded for the local market; but it is not- fair that careful poultry farmers should pay for the improvement in marketing, enabling outside producers to profit. If the commercial and semi-commercial poultry-keep-er adjacent to heavy consuming centres is tOj be encouraged—and it is to the advantage of consumers that he should be—then a more equable' and satisfactory method must be devised to meet the situation. The advantages of a standard grading system in New Zealand would be — (1) The consumer would bo guaranteed the quality of tho article bought, and would pay a price according to the weight of eggs purchased. . (2) The grocer would be handling a uniform and satisfactory article, which would ensure him against loss, and en- . able him to feature eggs with the same confidence as other produce. (3) Distributing merchants, agents, ■ and co-operative concerns would operate on equal terms, and bo able to give satisfaction to retailers aud bona fide producers. (4) Producers who aim to make a living or at least supplement their living by producing a high-grade article would be safeguarded against the detrimental effect of inferior eggs, and a gradual increase in flocks of this nature would result. , : (5) The pulping, preserving, and cool storage of .eggs would be facilitated, especially the pulping of eggs of other- . wise good quality, but which affect tho samplo of fresh eggs if mixed indiscriminately, as at present, owing to' their poor appearance. (6) In the event of export, grading tad packings of suitable eggs in propor-

tion to 'local production would be simXilifled and the cost reduced. CONCLUSIONS.

The conclusions of the Farm Economics Branch on the questions raised by the survey are: — (1) The poultry industry is of considerable importance in the economic life-of New, Zealand: — (a) Tho products are a necessity in the family menu and rank very highly in food value. (b) Eggs represent a considerable item of expense in the household budget where they have to bo purchased. (c) Poultry can he housed in a confined space, and'are therefore kept by approximately 50 per cent, of the householders of the Dominion. In the majority of cases fowls are run primarily to supply the family, and,, as scraps constitute the major portion'of the- feed of small flocks, eggs are produced at a minimum cost. (d) The surplus eggs from side-line and backyard flocks combined with the output from specialised , and semispecialised farms represent a valuable article of commerce. (c) Poultry flocks and plant represents a large capital outlay. (f) Approximately 2,000,000 bushels of wheat, besides large quantities of other grain, pollard, bran, etc., are consumed annually by the poultry of New Zealand, and this has a very important bearing on the wheat-growing industry. The poultry industry affords an outlet for the bulk of the 25 per cent, of the total wheat crops which is classed as other than milling quality, and if this outlet were not available the position of wheat-farmers would be immediately- affected. (g) As a side-line to fruit farming, dairying, and other small-farm enterprises, poultry contributes largely to the net income. (2.) The industry is difficult to organise because — (a) It is carried on by a large number of people who use city markets .as an outlet for their surplus production. (b) As birds begin to produce at six months of age, it is possible to procure a greatly increased output in a short space of time. (c) The poultry census is taken every five years, and it is therefore impossible: to gauge accurately flock-move-1 ments and possible production. . (d) Owing to established commercial practice, it is difficult to obtain mer-chants'..co-operation in marketing reform. (3) The present position_ of the industry- is unsatisfactory owing to (a) Overproduction, caused through ,—(i) .prohibition of the importation of foreign pulp and imposition of duty; (ii) a consequent and cyclic period of, high and low prices; (iii) Government guarantee oil exported eggs during the 1928 season. (b) Consequent on overproduction, prices declined on the local market in 1928, the price-level in the flush period being influenced by pulp contracts and carry-over from previous seasons. (c) Despite the drop in price, food costs are maintained at a high level owing to (i) protection afforded the wheat industry; (ii) lack of producers' organisations with financial backing, thus preventing the purchase of food in bulk direct from wheat producers' organisations; (iii) therefore, when wheat, etc., is, bought in small lots the poultry farmer pays all the" cost of transport, handling, insurance, storage, and shrinkage, plus the profits of all middlemen, which at every handling is computed on an increasing value. (d) Owing to lack of organised marketing, the reduction in price is accentuated by the condition' in which eggs are delivered to the local trade, especially, from small country flocks, where eggs are collected and held for some time before the dispatch to city markets. (c) The combination of low prices and high feed costs is forcing farmers to reduce flocks during 1929 or go out of the business altogether. Thus capital is being directly lost. The movement of food and egg prices closely correspond. Owing to the reluctance of farmers to lose capital, overproduction has taken place. The price, of eggs has dropped more rapidly than wheat prices/giving the impression that it is food costs which are responsible for instability. The present movement of floek-reductioii will continue until, owing to restricted production, the price realised on the local market rises to an economic level to meet the costs of production. Thus, another cycle will be completed. (f) Owing to this typical price and production cycle the industry must always remain unstable if not-properly organised. EXPORT NO RELIEF. '-' The position, (continues the report) cannot be relieved by exporting the surplus, as conditions on the London market are not sufficiently bright to offer a remunerative return. In addition to comparatively low prices in London, the costs of handling and shipping are heavj^ leaving a net balance below the cost of production. This loss cannot, under present conditions, be distributed, over all eggs sold locally, as export is undertaken by a small proportion of producers only. JSo make large-scale export possible it is essential that all producers stand their percentage of loss. If a small quantity only are shipped, no stabilisation, of the local market can be expected. Preserving, pulping, and chilling of eggs in large quantities may have an immediate effect on the price of fresh eggs, and must react detrimentally during tho following season. According to the report, the cyclic movement of prices, and consequent prosperity -and depression experienced over the last. twelve years, is not a new feature, and will be repeated if present methods are allowed to continue. With every depression a direct loss is made on capital and a disorganisation takes place in production. The producer loses directly, but the State loses indirectly. If the industry is thought of sufficient importance to warrant stabilisation, then the.following suggestions must receive serious, consideration:— (1) Export Subsidy.—The ' Government subsidy granted for export eggs has not had the desired effect. Prices on the local market have not been stabilised, and, owing to the price -received in London, little hope can be entertained that future shipments may be made on a self-supporting basis.' Therefore this form of help should not be continued after the current season. I (2) Poultry Census.—Owing to the possible rapid 'movement in poultry flocks, the present system of taking a census every five years is quite inadequate. It is imperative for the stabilisation of the industry that an annual stocktaking be made, so that reliable figures are available. It would then bo possible to gauge production and forecast movement of supply and prices from year to year. This would prevent violent, dislocation of the industry, and consequent loss of capital. It would also tend to maintain prices at a more uniform level. The method 'considered most practicable for the collection of data is "that it be made compulsory for all poultry-keepers to submit an annual return as at 30th April, such returns to be made on a prescribed form issued by the Department of Agriculture and available at all post-offices or on application to local officers of the Department. The responsibility of making tho return to rest on the individual, a penalty to bo imposed for failure to comply. Annual tabulation to be made by the. Statistics Office." (3) Regulations Governing Sa\e of Fresh Eggs.—Regulations governing the sale of fresh eggs need to be framed i for the definite object of ensuring the uniform grading of all eggs offered for sale, both on a size and quality basis. I The case for a scheme of grading is de-

tailed in the section of this survey headed "Standardised Grading." The question of .compulsion is one which.requires careful consideration. The optional scheme in England and Wales is giving excellent results. Undoubtedly a compulsory clause would ensure success, arid would be fairer to all producers. A voluntary scheme, with the backing of the Government, merchants, grocers, and producers, would have every chance of success, but it would be slower in operation, and full control of pulp-manufaeturo and other methods of storage may not be possible at first. It may also be difficult to carry out a sound export scheme to relieve the local market unless all eggs are forced through a grading store. As an indication of the feeling among grocers in the Dominion, the following resolution, passed at the annual conference of the New Zealand Master Grocers' Federation in February, 1929, is illuminating: "That this conference urges the desirability of the compulsory grading of eggs, and suggests that, if this cannot be done by regulation, the necessary legislative action be taken to enforce same." GRADING ON VOLUNTARY LINES. ■ Suggestions for the establishment of a standard grading scheme on voluntary lines; are as'follow: — (1) A committee to be :et up to organise and control all matters pertaining to the scheme; such committee to be representative of producers, wholesalers, and, retailers, with a Government nominee. (2) The grading of eggs by weight and quality need not be compulsory to commence with. To encourage voluntary grading, regulations as follow should be . enforced: (a) All graded eggs, to be sold in cartons or from boxes clearly marked with grade and quality and the date such grading took place; (b) all ungraded eggs to be advertised and sold as such, and clearly marked in retail shops as ungraded and carrying no guarantee; (c) in the case of graded eggs sold from bulk boxes, or of ungraded eggs, a notice to be enclosed in all packets, stating the nature of the article sold. (3) Grading- depots to be registered, as in England, but every endeavour to be made to establish central depots in each main centre, such depots to be common to all wholesalers or agents, who would have their own employee to receive, supervise grading, etc., and distribute produce. This would reduce overhead expenses, guarantee efficiency of staff, and reduce costs to a minimum.; All grading should be under Government supervision. (4) Grading depots should bo central, and, if possible, adjoin cool stores and embrace pulping plant. (5) Chilled and preserved eggs should be stamped and sold as such. (G) Grades, both for weight and quality, to be as simple as possible compatible with efficiency, and as a basis of discussion those adopted by the British National Egg-mark Committee are suggested. ■ Funds. —To initiate the scheme a certain amount of expense would bo entailed in propaganda, etc., which would necessitate a Government grant. This could be considered in lieu of any export guarantee which may otherwise be given. Money spent on the organisation of local trade would eventually be of greater value to the industry than a guarantee on export of surplus without internal organisation. The question %f a levy on all eggs graded should be considered, and such levy come into operation as soon as possible. .Whilst suggesting an endeavour to establish a voluntary system, it is considered that compulsion should be resorted to if voluntary co-operation is not forthcoming. • PULP. At the present time pulp-manufac-ture undoubtedly exercises considerable influence on egg prices both'during the flush and short-producing periods. Its manufacture on contract at low prices or for speculation demands a low eggprice level. Thus the tendency is for egg prices during the flush period to be depressed. The holding of large quantities through the winter months teuds to decrease the use of fresh eggs by pastrycooks during the late summer and early spring. A carry-over from one year to another constitutes a menace to the industry, and during normal production seasons becomes difficult to remove. Some form of control in pulpmanufaeture and disposal is essentiql for the stabilisation of the industry. Eventually any export of surplus should be.in the form of pulp rather than eggs in shell. The establishment of a committee as suggested above should be the first step in organising the industry. The duties of such a committee would cmbraee — (1) Advising the Government on any matter pertaining to the industry; (2) drafting of rules and regulations to govern grading; (3) propaganda to_ ensure success of any scheme brought into operation; (4) control of pulp-manufac-ture,-and, if occasion demanded, control of export of surplus products; (5) registration of grading stores; (6) arrangement of.finance as advance _ on eggs or for purchase of food supplies; (7) any other consideration which may be. expected to stabilise the industry. It has already been suggested that a Guarantee on export should not be continued With its withdrawal the only assistance afforded tho industry is. the duty on foreign eggs. As this applies mainly to Chinese produce, it is reasonable to continue such protection, as conditions of living in the two countries are not to be compared. In view oi the protection afforded the wheat and flour industries, both of which depend largely on poultry as an avenue of consumption of their produets,-some financial assistance should be given to enable the poultry industry to organise. .An annual grant of £5000 for a period of three or four years would probably cover organisation expenses connected with marketing. This grant might be tapered off as the proceeds of the levy on eggs graded became sufficient to meet .requirements. To ensure valued-being . derived, however, , Government Support niusfr : be given in framing tho' necessary1 regulations. .