EOOM FOR REDUCTION

Evening Post, Volume CXI, Issue 94, 22 April 1931, Page 10

EOOM FOR REDUCTION

COST DISPARITIES

The opinion that while bakers are not in general securing a very high margin of profit for the bread they sell, there is some room for reduction in the price charged to the public, is expressed by the Secretary" of the Industries and Commerce Department in the report presented in the House of Bepresentatives on the subject.

Tho report states' that it certainly appears that retailers, who in many cases have a margin of lid or IJd per 41b loaf, could trade on a sum of not more than Id per 4ll> loaf.

Touching on the Parliamentary Wheat Committee's resolution last session, referring to "the disparity in the cost of baking and distribution of bread in various centres," the report points out that it is most difficult in Mio bakery business to point to any definite set of circumstances which would form an adequate and final explanation of the disparity referred to. In the first place, flour costs are an important factor, also the variation between flour costs in,the different cities. A disparity in cost arises from the varying degree in which fancy bread or short-weight bread is made and sold iii the several centres. Another, cause of variation is the extent to which individual bakers may use, for reasons of quality, the more expensive imported flour. ■•■'■' Notwithstanding a Dominion award of wages,, a variation exists between the centres regarding the wage cost per loaf. This difference is particularly noticeable in the Christehurch figures, and is probably due in large measure to the extensive use of up-to-date labour-saving machinery. a .. DELIVERY EXPENSES. "In the matter of delivery expenses, differences in cost-are again very evident," says the report. "Delivery expenses in Dunedin are distinctly lower than in the other centres, but comparisons in delivery costs, are difficult, having regard to the varying .degree in which delivery includes sales'to shops. The item of general expenses also shows considerable variation. Dunedin again appears lower 'than-.the other centres. The disparity under this heading is attributable - : to the following causes:— (a). Large, bakeries ■with high capital charges.not. working tq capacity; (b) heavy payments for office expenses in the larger units "of the industry; , (c) relatively expensive ' maintenance charges- in .the larger factories;: (d) variation in. coat of management and supervision as between" the smaller bakehouses and the larger companycontrolled units. '■]'.. , "

"While the capital required in the industry is low relative to turnover, thore' is nothing in the nature of a reasonably constant ratio between capital costs and sales.. Matters .such as those mentioned above explain the relatively low production cost in Duuedin, where, in addition, the public secures the benefit of keen competition and reduced selling margins. The Duncdin r.etailer appears to work normally on a.margin of ,id per 41b loaf, .which' is less than in any of the other main centres." : ( ■