THE PRICE OF MILK

Evening Post, Volume CX, Issue 137, 6 December 1930, Page 10

THE PRICE OF MILK

CORRESPONDENTS ASK

SUMMER AND WINTER POLICY

Two correspondents, ."Observer" and "Consumer, "have written to "The Post" asking why the retail price of milk supplied by the City Council remains high, in view of the substantially reduced value of butter (the council buying its milk from the farmers on a butterfat content basis). Both suggest that in this regard the council may help those who are up against it, through loss of work or wages cuts, at the present. "Consumer" contends that the council's margin between buying and retail selling prices is too great, and also that there is too great a difference between its retail price (bottled), and that charged to large consumers (hotels, boarding houses, etc., supplied in cans). The position, as the correspondents suggest, has latterly developed through the great reduction in butterfat values, in. favour of the council, and that fact is fully recognised. The Milk Committee is at present giving .consideration to a jjossible reduction in the retail price, and the matter may be dealt with possibly in some detail, .at an early meeting of the council. It must be remembered, however, that it has been the fixed policy of the council not to reduce summer period retail prices to a bare working margin (i.e., sufficient to cover purchase price, factory expenses, interest, and sinking fund outgoings, and other overhead expenses), but to maintain the price at such a level as will result in the building up of a fund to operate as an offset against the higher price which the council must pay the farmers for milk during the winter months of shorter supply. That is, the policy has been to level up the price to consumers the ' year round-by using summer profits to meet a part of the extra cost of winter i period purchases from the farmers. ■ Were this policy not followed, there would of necessity be a big jump in price to the consumer when the summer ' t period ended, and the more difficult winter supply months came round. The ' circumstances this year are quite uni usual, in that the bottom has dropped i out of butterfat values, and a readjust- ' ment of the retail price for the. latter ; part of the summer period may be re- ; commended, as the general policy of r summer profits offsetting winter losses '■ may still bo applied. . The problem is not simple, for a frac- ; tioii of a penny per quart, multiplied . by many thousands of quarts daily, so ' many days per week,, may throw finances from a sound basis into a very unsatisfactory state. ; ANOTHER SUGGESTION. ' A third correspondent has suggested that the Milk Department is losing a. good opportunity of improving its finances —and so making possible a general reduction in prices—by not making any serious effort to place the verygood butter manufactured at its Bahui factory properly on the local market. He suggests also that the milk roundsmen could de-liver the butter along with the milk, upon a coupon payment system. The litter suggestion would meet with the hearty approval of housewives when butter rose a couple of pence above the price paid for the coupons on hand, but would be highly unpopular when the price fell. A cash payment arrangement would present considerable difficulties—except where the milk arrives well after breakfast. As regards the placing of council factory butter prominently on the local market, the position is difficult, as the very purpose of the Bahui factory makes against regularity of. butter manufacture. Notwithstanding all suggestions to the contrary, made ever so often by people wlio have no knowledge of the city milk supply system, no cream is extracted from the milk which is pasteurised and bottled in the city station, and in order to provide for its cream trade the- council first of all entered into an agreement with the management of the Bahui factory, near Otaki, and later purchased the factory, to ensure adequate cream supplies. The Bahui factory also balances up the ordinary milk supply. When the milk i is not required in the city it is used in butter making, and when the general farm supply to the city is short milk is brought in from Bahui. Thus, for certain periods, butter making ceases, or practically ceases, at Bahui, and on a number of occasions the Milk Department has had to purchase other brands of butter to supply people who are accustomed to buying it at the counter of the Dixon street factory. The bulk of Bahui butter is exported.