FREEZING COSTS

Evening Post, Volume CXII, Issue 7, 8 July 1931, Page 12

FREEZING COSTS

FARMERS WANT. BELIEF

COMPANIES' REPLY

Reference to possible reduced costs as a consequence of tho recent wages reduction was made at the conference of the New Zealand. Farmers' Union today. ' . The following remit from North Canterbury was on tho order paper:— That as charges for killing, freczr ing, transport, storage, selling, etc., • will bo affected by any reduction in wage rates by the Arbitration Court, it is desirable'that-firms'carrying on this class of business should be asked to what extent they arc prepared to pass on to farmers the benefits they will derive from reduced wages, iv order that farmers should obtain some relief in this direction. A letter was read from, the South Island Freezing Companies' Association, stating that, with regard, to the charges made, internal transport was almost entirely in tho hands of the Railway Department, and no doubt the Farmers' Union would consider approaching that Department. Overseas transport was a matter for the shipping companies,' and the freight contracts with the shipping companies ivcre negotiated by the New Zealand Meat Producers' Board, and no doubt the Farmers' Union would, if they considered it desirable,, discuss.those particular charges with the Meat Producers' Board. Selling charges were, in tho main, a matter for the London selling brokers. The charges which came within the scope of all the freezing companies wore those referred to as killing, freezing, and storage. Those were consolidated under what was usually called the "freezing charge," and there was, for tho reasons stated below, gravo doubt as to the possibility of any immediate relief; indeed, there was every reason to believe- that the present rate was not remunerative. The "ffeezing charge" was only part of the return to the companies f or_ their services in connection with the killing, dressing, freezing, storing, and handling the carcasses to f.0.b.; the other part consisted of, certain of the byproducts. The drop in value of these by-products in the past two years was about five times as much as the. relief obtained from the reduction in wages. The drop in tallow values alone, taken as between the year 1929 and the year 1931, was over 48 per cent., while the drop in the values of tho other offals for the same period averaged considerably more, namely, 64. per cent. The freezing companies had lost so considerably owing to the drop in world values that, so far from being "in a position to reduce charges, they were forced,to consider iv what way they could maintain sufficient revenue to meet their costs, and it seemed doubtful whether sufficient economics /in other directions could be made to breach the gap. Taking the Dominion killings of sheep and lamb for export at four million freight, carcasses, it was calculated that the net loss in revenue compared with 1929 would still be over £250,000, notwithstanding the 10 per cent, reduction in wages costs. The conference decided to ask the freezing companies to review' their costs with the "object of ascertaining whether it was possible to make any reduction. :,,/■