BREAD PRODUCTION

Evening Post, Volume CXI, Issue 93, 21 April 1931, Page 10

BREAD PRODUCTION

LOW MARGIN OF PROFIT

. The report furnished on bread production and distribution was based on a careful scrutiny of the profit and loss trading accounts of eleven bakers operating in the four chief centres. Tho selling prices of bread in relation to tho average cost of New Zealand flour are presented in an interesting table sotting out the price of flour, the prices of bread over the counter and to the store, and the price delivered, in tho four main centres. ■ The table was as follows: —

Tho investigations into the cost _of production' of bread were most difficult, -the records in tho majority of cases were meagre, and any attempt ;o construct cost accounts was a matter of estimate and conjecture. The cost of Hour per 41b loaf, based on tho average price of flour, in each centre, is shown as follows: —Auckland, 6.346 d; Wellington, 6.34 d; Christchurch, 5.851 d; Dunedin, 6.031 d. A variation of £1 7s Id per ton in the price of flour is equivalent to a rise or fall of id in the 41b loaf. Owing to the limitations of the coinage system,' there aro considerable .difficulties in practice in' reducing or increasing the price of the 41b loaf to the consumer by .lessor modifications than Id. The average delivery costs-are shown as 1.679 din Auckland, 1.684 din Wellington, 1.753 din Ohristchurch, and .613 din Dunedin. It was not found possible or practicable to ascertain separate cost of delivery to shops and to private households. The average cost .in Wellington, Auckland, and Christchurch is about l?d per 41b loaf. ADJUSTMENT NEEDED. The Secretary of the Department states that it would appear that an adjustment between tho cash-over-counter price and the delivered price is necessary. The cost of delivery is approximately lid' per loaf. The householder who receives the additional service of delivery obtains it at an advance of Id over the purchaser who calls at the shop for his supply. It was reasonable to suggest that the householder who had the bread delivered to his home should bear the full cost of tho service. An adjustment of that position would result in a reduced price cash over the counter and an increase in tho delivered price. In the event of a more equitable price adjustment between those two classes of customers a percentage of uneconomic and unprofitable delivery would no doubt be eliminated. . A' schedule attached to the report shows that in.only two instances was a profit, of Id'per'loaf obtained.. In two cases an actual loss was shown, and other accounts showed that profits per loaf ranged from .14d to .799 d. , AUSTRALIAN COMPARISONS. The report points out the relation of the cost of bread in Melbourne and Sydney to the cost of flour. Tho price. of flour in Sydney to-day is £9 ss, and on the basis of 660 loaves to the ton of flour the cost per loaf would be 3.363 d. The cost of delivered loaf is estimated at 8.198 d. Bread prices in Sydney on 9th September last were:—Cash over counter, lOd; delivered, lid. Tho gross margin on the cash price is thus 1.802 d. Maintaining the present margins of profit, bread could be sold in the four main. centres of New Zealand, . based on flour at £9 5s per ton, as follows: Wellington, 9d; Auckland, 9^d; Christchurch, 9|d; and Dunedin, SJd. ! FINAL CONCLUSIONS. ' "I am of the opinion," Mr.' Clinkard states in conclusion, "that the present prices, of bread,-considered in relation- to existing costs of production and distribution, do not, as a whole, return an excessive margin of profit to bakers. There is, however, some reason for suggesting that if a -proper and adequate charge were made to cover the cost of retail delivery to householders some reduction might be: made'in-tho price charged for cash over the counter. . In this- connection, however, it niusfc bo remembered that the baker is forced to consider his trade as a whole, and, no' doubt, in many instances is bound to adopt the policy of minimising the charge for bread delivered in order that he may secure as wide and, extensive a distribution as possible."

Flour, Bread •■ To DcllvAucliland ... i:IT 2 0 J/l lid to 11 >/ = d net 1/2 Wellington . £1T 3 5 1/1 1/-less ■ • 5 p.L'. !/■! Christchurch. £15 16 11 V- 1 Id less 2'/= P.c. 1/1 Dutiedin .... £16 US lid lOdnet 1/-