BASIC INDUSTRIES

Evening Post, Volume CXXVII, Issue 140, 16 June 1939, Page 16

BASIC INDUSTRIES

BANKER'S COMMENTS

LOSS BY GUARANTEE

DAIRY PRODUCE, MEAT, AND

WOOL

Reviewing the Dominion's exporting interests, especially as to dairy produce, meat, and wool, Mr. A. T. Donnelly, chairman of the Bank of New Zealand, made special reference to these basic industries. Addressing shareholders at the annual meeting today, he remarked that the actual deficit on account of dairy produce for the season 1936-37 under the guaranteed price system was £272,482 (estimated by the bank last year at £300,000). The Government has stated that this deficit, being the balance after the first year's working of the scheme, was their responsibility—not that of the dairy farmers. In accordance with that promise, the amount was paid by the Government to the credit of the Primary Products Marketing Account at the Reserve Bank of New Zealand. "The accounts of the Primary Products Marketing Department for the year 1937-38 have not yet been completed," said Mr. Donnelly, "bui it is estimated that the surplus would have been about £1,250,000. During the season, however, it was announced that the original guaranteed price payments would be increased by .41d per 'b for butter and by .21d per lb for cheese, retrospective to August 1, 1937. Accordingly, an amount of £696,000 in respect of these increases was paid to dairy farmers. This will leave an estimated surplus of £555,000 for the 1937-38 season. This adjustment was made 'in recognition of cost increases and by a desire to help overcome the difficulty of obtaining farm labour at the price offering.' " A SUBSTANTIAL DEFICIT. Mr. Donnelly then quoted the guaranteed prices fpr 1937-38 and 1938-39, showing a considerable advance for the current year. He also gave the London market prices (which have been published in the Press) for butter and cheese, and on those prices and the guaranteed prices, he remarked: "It is considered that there will be a substantial deficit at the close of this season's operations, but against that there will be placed, as a set-off, the estimated surplus of £555,000 for the 1937-38 season." Export returns of butter and cheese for 12 months were quoted to show a reduction in butter and a slight increase in cheese, by quantities; but dairy production, he said, ~ras expected to show a decrease of 10 per cent, on that of last season. WOOL AND MEAT. Wool was also dealt with in the chairman's review, showing that better, but low, returns were received for crossbreds than for fine wools. The total number of bales sold in the Dominion during the 1938-39 season was 706,77.6. The total value was £9,220,741, an increase of £426,868 compared with last season. Although the average price returns this season were lower than those for the previous season, an additional export of 92,167 bales accounted for the increase in this season's income. This increase was no doubt due to the realisation of wool carried over from the previous season, together with an increased weight of wool shorn per sheep, remarked Mr. Donnelly.. LIMITS ON MEAT. As to meat, the chairman stated that conditions in he country were generally good until February, 1939. The ensuing dry period lowered the quality, of the stock in a number of districts compared with that of the early part of the season. Compared with last season, the average prices paid by freezing companies have been lowered by a penny per lb. The first arrivals of new season's lamb met with only a fair demand and, as supplies increased, prices fell away until at the end of March quotations were at a low range. The market for mutton and beef followed the same course as that for lamb. "During the present year," Mr. Donnelly said, "the Government of Great Britain applied a ouota to meat, which in its original form would reduce our exports to England by 3 per cent, on both lamb and mutton, the cut to be based on the weight exported in 1938. The New Zealand Meat Producers' Board arranged, however, to avoid isstrictions on lamb exports by applying the total ut to mutton. The reduction in the export of mutton, herefore, represents a cut of 3 per cent, on the combined weight of lamb and mutton exported last year; that is, mutton exports will be cut, not only by 3 per cent, of their own total weight, but also by a percentage equivalent to 3 per cent, on the total weight of lamb."