GUARANTEED PRICES

Evening Star, Issue 22671, 10 June 1937, Page 8

GUARANTEED PRICES

“FIIED OH BIGHT LIES” POINT GF OWNERSHIP UNALTERED PAYMENTS TO ALMOST FULL EXTENT In a full defence of the guaranteed prices plan, the Minister of Agriculture and Acting Minister of Marketing (Hon. W. Lee Martin) gave a comprehensive explanation of the Government’s policy to the South Island Dairy Association to-day. He quoted figures to contradict criticism that many dairy factories had not obtained the amount of the guaranteed price for their produce. The Minister gave little hone of the differential payment for cheese being increased to 3d per lb and did not anticipate that the f.o.b. ocean steamer policy as the point at which the Government assumes ownership of the produce would be changed, . The Minister said it would be recognised that the marketing side of the industry was on a better footing than ever be'fore. Some months ago an attempt was made to show that the fall in prices of dairy produce on the London market was attributable to the Government’s policy, but they could compliment themselves on the position to-day. He offered his congratulations to the dairy industry and the Dairy Control Board for the measure of cooperation given the Government. He would not claim a 100 per cent, success in obtaining support, but the Government’s policy was framed on the right lines. Some farmers in the north felt that the guaranteed price was not sufficient. (Applause.) Whether the Government could satisfy all, he was doubtful, but as a producer ho was among the many who were satisfied. Since the guaranteed price was brought into operation ho know, from his balance sheet, the state of his improved position. The price was fixed on the average basis of prices in the past eight to ten years; everybody knew of the system which the Government proposed to introduce for computing tho price, which was fixed by Cabinet after a report was made by a committee. GENEROUS INTERPRETATION CLAIMED. “ We claim that we gave a generous interpretation of the rule by which the price was to be fixed,” said the Minister, “ and I believe, with all sincerity, that by fixing the price we have stabilised the position of the dairy farmers, stopped the drift off tho land, made it possible for the farmers to budget, and provided security not enjoyed previously.” The investigations which would lead to the fixation of tho price for the coming year were being carried out by the committee, only ouo member of which (Mr Ben. Roberts) was a Labour man. The committee was representative of the industry, and its duty was to consider, in the public interest, the maintenance of stability of the industry. The Minister elaborated the_ points to be considered by the committee. All the effects of the Government’s legislation would bo taken into account in fixing the price. The obligations'in the Act covered all the points raised in a remit on tho association’s agenda, and he suggested that they should wait till the committee’s report was released. The Government was more desirous of helping the farmers than any previous Government. The committee, representative of the industry, should be given credit for anxiety to do tho right thing. POINT OF PAYMENT. Ono of the remits before tho association was—“ That payment of tho guaranteed price should be advanced to companies fourteen days after produce is received into cool stores and that tho Government take full responsibility for same thereafter.” When the details of tho guaranteed price plan were being workfed out by the special committee set up by tho Government for the purpose, very careful consideration was given to the particular point at winch ownership of butter and cheese should pass from tho dairy factory companies to the Government. Finally it was thought that the f.o.b. ocean steamer was the point at which Government ownership could best be acquired. “ There are difficulties in any contemplation of the Government acquiring ownership of the produce either at factory door or in tho grading stores,” said the Minister. “It is known that frequently supplies of butter and cheese are withdrawn from the grading stores for local sale, and there are possibilities of complications if such produce had already been purchased oxadvanced on by the Government. There is this further point that tho grading stoics throughout Nexv Zealand are almost entirely co-operatively owned. This being the case it seems reasonable that the dairy factory companies should have the responibility for seeing to the proper transport and storage of tho butter and cheese and that they should deliver the produce ready for export, free on hoard the ocean steamer.” The Minister considered that the remits urging that Government payment or ownership should take place at a point before f.o.b. ocean steamer arose from the fact that in some cases there had been a slight increase in the period of storage compared with last year. The Government desired to spread shipments and arrivals of butter and cheese in England as evenly as possible, and in accordance with a programme worked out by the London officers of tho department in collaboration with the selling agents. It was felt that the industry would heartily approve of this policy. Ho thought any extra cost of storage would bo very slight indeed, and that any increase in interest charges arose mainly from the fact that this season, with the certainty of the guaranteed price payments, dairy factory companies had been chip to assist their suppliers by picking relatively higher monthly advance payments than they wore able to npl-e under the old system. This had. in tho cas° of companies working on an overdraft. W 1 to n Fomw’mt greater Tv-vp-mpt Tor hank jn+prost.

TMR ,P n "nT!('E, The guaranteed m-ico plan aimed to provide a butter-fat payout tor suppliers at an avera"e figure. Tl-: s bchi.r tho eas/’. al’owarco was made in the c-Vnlation for the a'-oertaiued butter factory and ehee'e f m*orv costs. 'T'hos-' rests would uatura I 'v Include the items j.it-pt-est and storage; therefore he considered that the payment for butter and ehe“se at f.o.b. nneau steamer was the best practice. If payment for tho butte' - ami choose and ownership by the Government were to take place at a point before f.o.b. ocean steamer, then tho savings in interest and storage costs which dairy factory companies would make would bo allowed for in the computation of tho guaranteed prices, which, ns already stated, were designed to return a buttarfat payout to suppliers at an average ascertained figure.

“ I do not anticipate that there wil ,o a. change, but at the same time w, re prepared to have tho position inves -igated,” said the Minister. “If i ■an bo shown that hardship has been ■routed and the factories arc bchi;. placed in an undesirable position, wx :ro prepared to look into the mattei :nd soo it some better method canno, jo found. But all our experience leach is to the belief that the system xvc tavc adopted is tho one most advantageous to the whole of the industry.’' (Applause ) HIGHER PRICE FOR CHEESE. Another remit was “ That the margin ,»f checso over butler be 3d per lb butterfat.” A differential payment of IJcl was first fixed, hut it was appreciated that tho increased costs fell heavier on tho cheese factories. At the request of the Government tho Guaranteed Prices Committee gave special consideration to tho margin which should be provided for cheese over butter. Tho Government realised the necessity of stabilising cheese production and adopted the unanimous recommendation of the committee, which was to tho effect that the margin should be 2d per lb butterfat. An announcement to this effect had already been made. Ho was sorry that a differential of 3d could not bo paid. Probably that increase would moot the position, but perhaps they would have to look further afield, and ho was arranging for representatives of the industry, Massey College, and departmental officers to confer on tho subject of improving tho conditions of the factories working on a low yield. SURPLUS FROM CHEESE. Dealing with a remit “ That any surplus from the sale of cheese under the guaranteed price scheme bo paid to cheese companies irrespective of butter sales,” tho Minister said various representations had been made to tho Government in regard to the disposal of any surplus in the dairy industry account, and in regard to tho keeping of separate pools for cheese sales and tho butter sales. Some men connected with the industry had prophesied a deficit of over £2,000,000, but tho Dominion president of the dairy industry (Mr Morton) did not agree with them and considered that tho Government would break somewhere about even. However, it appeared that there would bo a surplus in the cheese account. He could only say that these matters were dealt with by tho Hon. W. Nash in his speech on the 1936 Budget. Mr Nash explained that if over the current year sales of exported dairy products during the present year (August 1, 1936, to July 31, 1937) produced any sum in excess of the amount paid out by the New Zealand Government, tho excess would be expended for the benefit of the dairy industry. If tho proceeds of sales were less than the sum paid out by tho New Zealand Government, then the deficit was shown in tho dairy industry account as an overdraft. Mr Nash would be back in New Zealand within six weeks or two months, and would be able to give the industry the information which he could not give them at the moment, said Mr Lee Martin. A CRITIC ANSWERED. The result of payment of basic guaranteed price for butter and cheese and for quality premiums for butter and cheese of higher grade was discussed by Mr Lee Martin. In an address recently, Mr Bodkin, M.P., criticised tho Government’s guaranteed price plan, and asserted that the actual guaranteed price was being paid only for a certain grade of butter and cheese, and that in consequence many dairy factories had not actually obtained the amount of the guaranteed price for their produce. The facts of the matter were as follows :—Tho basic guaranteed price of 12 9-16 d per lb for butter is paid for butter scoring 93 to 931 points. The basic guaranteed price of 6 13-16 d per lb for cheese is paid for cheese scoring 92 to 92J points. Of tho total shipments up to May 31, 1937:—0f the creamery butter: 38.85 per cent, received a premium of Is 2d per cxvb over the guaranteed price; 43.5 per cent. received tho guaranteed price; 9.7 per cent. received 7d per cwt bcloxv the guaranteed price; 7.6 per cent, received 2s 4d per cxvt below the guaranteed price; .35 per cent were second grade. In fact, 82;35 per cent, received the guaranteed price and over, and 17.65 per cent, received below tho guaranteed price. Of tho cheese: 2.53 per cent, received Is 5Jd per cxvt above the guaranteed price; 19.25 per cent, received Is 2d pei' cwt abovo the guaranteed price; 56.15 per cent, received tho guaranteed price; 19.85 per cent, received 7d per cxvt beloxv tho guaranteed price; 2.2 per cent, recoiled 2s 4d per cxvt below tho guaranteed price. The summary xvas that 77.95 per cent, received the guaranteed price and over, and 22.05 per cent, received heloxx' the guaranteed price. “That shows quite clearly that the guaranteed price has been paid to practically the full extent in comparison xvith tho grading.” "LITTLE BETTER OFF”

IMFDDVED MARKET!EIG ADMITTED VIEWS OF ASSOCIATION'S CHAIRMAN The chairman (Mr H. H. Meredith), iu his address, said that it would soon bo a year since the Government applied its policy of guaranteed prices io the dairy industry and took over the marketing of all butter and cheese exported from the Dominion. He was satisfied that the system of marketing the produce which was now followed was a big improvement on the past methods, and thiit in the interests of the industrv it should be continued. The payment of a fixed price for the season was also an advantage, in so far as it let the dairy farmer know the sum that he might expect to receive from his factory for his year’s supply of milk or cream, said the chairman. The question as to whether the prices fixed for the present season had improved his position was another matter. With the increased costs which had occurred, largely as a result of legislation, his opinion' was that the dairy farmer was very little, if any, better off than before —(applause!—and if as the Government claimed, the object of the guaranteed price scheme was to ra : se the standard of living of the dairy farmer to a point wide)' would/ place him on an equality with other sections of the community rendering equal service, all ho could say was that there was a long way to go yet before that object was attained. (Applause.) He hoped that when the prices for the coming season were declared they could say that some progress had been made in the direction desired. There were good grounds, he thought, for the contention that the differential price for odieese should be substantially increased. The market prices this season would certainly justify an advance in the premium, and the higher production costs of the cheese factories was another strong argument in its favour.