PRICES AND FOOD.

Evening Post, Issue 154, 1 July 1936, Page 12

PRICES AND FOOD.

REVISING L CHARGES

.EFFECTS ON THE MENU

,: "Evening Post," July 1. ,•:". . "Kising costs of whatever kind .. : ,,must mean increased charges to ,-,; our customers."—Mr. Harry Sal- \ mon, managing director ■J. Lyons rand Co., Ltd., London.

c The name of the great catering firm, "or which Mr. Salmon spoke, is perhaps almost as well known to New Zealand visitors to London as it is to Londoners themselves. J. Lyons and Co., too, are important buyers of New Zealand dairy and other produce for their vast organisation. But they come into the closest contact with every class ■of the public, and that in the most intimate way as furnishers of food, from the humble cup of tea and roll to the big, not to say ostentatious, banquet. They know, too, no doubt, to what extent and by how much their hundreds of thousands of customers can meet rising prices. The chairman of J. £yons and Co., Mr. Isidore Salmon, in addressing shareholders in London recently, referred to the offsetting-of the ■continued improvement in. trade in the United Kingdom, by higher prices that must be paid for goods and services. He was gratified to observe "there are signs that the recovery from the years of depression is beingmaint'ained. Though money, was plentiful ahd.interest-rates correspondingly low, Lyons's customers haS not yet apparently fully recovered the spending power they had before the depression set in, nor can we expect them' to do so until world conditions generally improve. "The economists have assured Us that'a rise in world prices, particularly of primary products, and a resumption of international trade freed from restriction will bring a full return to prosperity here and elsewhere. If they are^righfc-i w.ev-may^perhaps, regard increa'sihg^cost'of'raw materials with a certain degree of equanimity. HIGHER COSTS, DEARER FOOD. . "There has been a tendency throughout the year to an increase in the cost of those articles which are the raw material- of our business This has. had its effect "ohitße 'manufacturing cost. of bakery.'goD.ds and, ithas caused us, during the;latter.part of the year, to raise our prices (for,"such goods here. and there. "This' increased cost to" us of what I haye called material has amounted ~<-io -no less 'a . sum than £150,000; and you will recognise from this that.there has had to be compensation in other directions to enable us to obtain the results, we have shown. :' ■ ■ ■ "Unfortunately these compensatory factors are showing signs of falling off and, from present appearances, it will- be necessary soon to extend the list of our products to be raised in price. "Here are a few of the things which have risen in price: Butter, eggs, lard, flour, niilkj pream; potatoes, sugar," and —to-< take :•' 6ne» section only ■of business—it is difficult to assess tßese costs in an equal manner over-the vari T ous items of a menu: Many items cannot be raised without disturbing their relation to others. The adjustment of these figures to cover increased costs is a mathematical operation, yet immediately any small change is made someone- who; presumably;* feels he knows much more about our business than swe do suggests it is iniquitous and accuses us of profiteering. PRICE OF A CUP OF TEA. '|Fbr example, if .we were to put Jd on a-cup. of tea, it: would at once be pointed out that a id on a cup of tea, withiso, many cups to a pound, means so many shillings, and that the only additional cost we have to pay is a few pence-in/the ..cost of tea, or, it may be a few pence additional duty oh tea, altogether overlooking the fact that there may be other reasons for the increase than the. mere duty or even, the cost of the tea itself. When prices are rising it is an.impossibility to raise every ifem>;b)fliithe tinehu even :iby-. so small a sum'-'as'idV—That- indeed would bring in a return, always assuming that we did the same volume .of business, out of all proportion to the required amount of cover. "One item may call for 1-16 th of a penny, another l-Bth, and so on, so the result is that some one item has to be increased to cover half a dozen others which remain at the old price and, as the cup of tea is.one of the readiest means of arriving at the balance we seek, it may be that item which is chosen in order that several others may continue unaltered. After this explanation' I 'hope it will be recognised that if the price of a cup of tea or any other item of a similar character were to be raised at a time which happened to coincide with an increase of duty, it;.would not: necessarily be for the:mere:purpose of recovering the 2d per pound or. other duty imposed,^ but that-there might be a nurhbertof■' qtherrcosts•the,recovery of whichJ-%as : being;, sought in this: manner. •';•'•■ ' • • > - DELAYED ADVANCES. "I need only, I think,' addtbis-^we do not view: the passing on of- increased xostsrflnd.charges to our cus-' tqmers Iwitb;;. equanimity, taking the view 'thatl.jthey^ are easily borne by them. We xdelay-! it. asjlbng as we can, until to, fact, it ..islineyitable; but I do ■want to stress the;point r that.sooner or later it must become'inevitable. There: is this consoling;; that if the general improvement,' in- the. country's trade contmues}{ : we v;inay ' reasonably' expect that our.-custbmers*-pursesi-will-expand to meetiany-increased demand we may have to rhakebn them." < Mr. Harry Salmon, who followed2 the chairman, said: "I wonder how manyof those people who talk so glibly about prices and profits realise how much is represented in the price they pay by the rates, taxes;:-duties, and charges levied on us by the Govern-ment-'and local authorities. .They amount in our case to an enormbiy(f sum annually and they seem to .be always increasing. I have had some, figures prepared which I think will interest you, ,■-.,■:■ TAXATION RAISES PRICES. "During the year under review," Mr. Salmon went on; "we paid in income tax, local rates, motor taxes, petrol duty, various Customs and excise duties, quotas, State insurance, etc, no less a sum than £1,600,000, and in the coming year. the recent Budget will add a very substantial figure to the bill.' There is,actually very little-in the incidence of taxation by Government and -.local authorities 'in this country that does not touch .us at some point'i.and, through us,"our .customers. This; process, of taxation goes further and-touches our "suppliers 'Who, have had-, to find all the charges made on them in their turn out 'of the price we have to pay them for our commodities. . "There-is, a : : general reluctance to admit that rising prices of commodities and other increases in costs must in due course become a charge to the consumer; froih mypoint of view this is inconceivable.. We have had of late such an organisation as the Milk Marketing Board stating that although they ;may be paying more to" the milk pfpducer • this should not raise prices toiithe consumer. ' Yet it should be obvious that, unless someone has been inakihg an abnormal-profit or is carryingron his business in a most inefficient manner, increased cost of commodities cannot be provided out of prpflts, and the supplier must recover the;:additipnal cost1 or be forced out' of

business; and who would benefit by that? Not labour, nor .capital, nor; I think,- the community.-■ In our case rising costs of - whatever kind must mean increased charges to our custonvrs. If business is carried on properly that must always be the cdse, and the sooner it is recognised by the public the better. .

'I am offering no argument, either for or against rising prices of commodities. That is a matter best left to the economists. I am merely stating what, in my opinion, is an obvious and undeniable fact."