N.D.A. CONFERENCE

Hawera Star, Volume LIII, 10 June 1933, Page 7

N.D.A. CONFERENCE

Executive's Annual Report PRODUCTION FIGURES REVIEWED Factory Operating Costs STATISTICS FOE THEEE SEASONS •: ‘. .1 ' /■> ■ PRODUCTION.

..Under the impetus of the stringent economic position ana aided by phenomenally good:climatic conditions, production has increased^very rapidly, and <■'ive.il normal conditions for the remainder of the season, exports will show an approximate increase of -0 per cent, over last year, which in turn was a record for fhe Dominion, states the annual report of the N.D.A. executive to be presented at the conference at Hamilton on June 21. Both butter and cheese participate in the advance, the former to a greater extent than the latter, due primarily to the steady expansion of butter production in the north. The gradings for the nine months to the- end of April, with the corresponding figures for 1931/32, are as follow:-—. 1932-33 1931-32 . - . •• .... ■ -.' : tons.' tons. Butter ■ (salted) ... 113,392 92,056 Butter (uhsalted) . 4,327 4,159 : '• 117,719 96,215 Increase: 22.35 per cent. Cheese (coloured) . 25,685 27,328 ■Cheese (white) .. 65,259 52,640 . 90,944 79,968 Increase: 13.73 per cent. From the productive point of view one'of the most satisfactory features is the fact that the present season will show a substantial advance in the average production per cow. Following the peak season of 1929-30, during which it reached 'over 218 lbs fat, the average fell away rapidly, and for 1931-32 dropped slightly below 2001bs. per cow. This gave considerable cause for concern, and-though it was realised that the seasons had not been particularly favourable for good pasture growth, the main cause was the greatly lessened use of fertilisers for top dressing. Greater production per cow, tending as it does to lower overhead costs, is an important factor in economic but-ter-fat production, and any increase in production which disregards this fundamental principle cannot, be altogether regarded as an , Unmixed blessing. The good climatic conditions which have prevailed this season, combined with a more extended use of fertilisers (due to a readjustment of prices on a lower basis) are materially assisting towards restoring the higher level reached three years ago. QUALITY.

The terrific fall in> dairy produce values, coupled with intense competition from all parts of the world on the English market, have combined to focus attention more sharply than ever on the vital question of quality. Never has there been greater need for minute examination of every phase of the industry from fine pasture to consumer, in order that every possible avenue of further improvement may be fully explored. While there is no evidence of actual slip-in quality as compared with last season, and in fact reports from Home indicate a measure of improvement, which is borne out by the grading figures at this end, all will agree that much remains to be done if we are to retain and improve our position on an overcrowded market. It is pleasing to record that since, the passing of regulations providing for retention of the August and September make on factory curing room shelves for a minimum of 21 days, > a much bdtter reception has been accorded by the trade to our spring cheese, much favourable comment being made with regard to maturity. It is recognised, however, that the position regarding butter is much more satisfactory than cheese, and it is towards the latter that our main efforts for further improvement must be directed.

The action of the Minister of Agriculture in calling together representatives of all sections of the industry in conference to discuss measures for improving our position met with general approval, and the recommendations made by the committee and finally adopted by the Minister are a definite step in the direction of lifting cheese quality. The most important of the decisions are as follow: (1) That regulations be gazetted to prevent a supplier leaving one factory for another at will; (2) the establishment of milk ■grading. with differential payments; (3) the Dairy Division to take over a'n established cheese factory for research purposes.

The New Zealand Co-op. Dairy Company’s cheese factory at Rukuhia has been decided upon for research purposes, and arrangements are well in hand for giving effect to the foregoing decisions when the new season commences. While there may be room Lor differences of opinion on the methods of administration of the new regulations it is earnestly hoped that matters of detail will not be allowed to defiraqt from the value of this forward movement, and that all sections of the Industry will unite wholeheartedly to further the objects aimed at. General regret will be felt that i„ ■was not found possible to include universal farm dairy instruction in the hew regulations, as this has always been regarded as a very necessary adjunct to milk grading. While the expense of such a measure unfortunately makes it somewhat more difficult to bring it into operation at a time like 'the present, when every item of cx-

penditure must be carefully scrutinised, its introduction at the earliest possible moment must be regarded as an.urgent necessity. Sources of contamination on the farm are not always easily located, and even with the best will in the world a farmer is often unable to improve the quality of his product without expert assistance. The methods of yesterday are no longer applicable to-dav, and the advent oi mechanical milkers and other equip ment has created new problems with which the farmer has not been' able to keep .pace unaided. Adequate water supplies and efficient sterilising equipment arc paramount needs on many farms, but here again the financial stringency prevents farmers from installing these essentials.

PRICES

The following is the monthly average of prices realised on the London market for the twelve months ended May, with corresponding figures for last year:—

BUTTER

CHEESE

STATISTICS. The 'tables appended hereunder, have been computed from statistics furnished by the Government Statistician, and cover the three last completed seasons. The figures relate to the ordinary fiuan'cial year of the dairy companies, which ends 1 , in the majority of cases, in July. These will be of volue to dairymen as indicating the 'trend of manufacturing and' selling costs in relation to the market values of their produce.

“ Other Expenses of Manufacture” comprises cost of fuel and power; insurance, on plant, machinery and buildings; general office expenses, legal, interest and bank charges, repairs, rates and taxes, bad debts and travelling expenses. “Marketing Expenses” comprises all charges from factory door to time of sale, including transportation, grading, cool stores, insurance, levy, commission and exchange. The following table shows how each £IOO received by dairy factories is distributed. A comparison' has been made of the last three ■complete seasons —

100.00 100.00 100.00 The principal items of expenditure, together with value of products, computed per pound butter-fat., and representing the average for all factories engaged in the manufacture of butter or cheese, are as follow —

J ORDER'S ON CREAM CHEQUES

| It is regrettable that no finality can • yet be reported in connection with the industry’s request for legislative authority to make a reasonable charge for the work and expense involved in attending to orders on milk and cream cheques. The sub-committee appointed by conference to further th'is> object, submitted to the Hon. Minister of Agriculture a draft of the form which it was suggested the proposed legislation should take, and considerable time was devoted' by the association’s solicitor to consultations with the Minister of Crown Law Officers. A suitable clause was included in the Finance Bill submitted to Cabinet during the latter end of last session, but was deleted by Cabinet before the Bill reached Parliament. In view of the whole-hearted approval of the Minister of Agriculture, it is difficult to understand Cabinet’s rejection of this much needed measure. On account of the financial, stringency, dairy companies are now being oppressed more than ever by a flood' of orders on suppliers’ cheques, and relief from the burden and responsibility of what in many cases amounts to unpaid receiverships, is more imperative than ever. The Minister has promised to make further efforts to have the matter put through the House, but no oppor'tunity presented itself to do this before the session closed. Continued efforts will be made by your executive to bring the issue to a satisfactory conclusion. DAIRY BOARD CONFERENCE. Acting on the recommendation of vour last conference, which expressed the view that the Dairy Produce Board’s proposed conference was not warranted on the ground of expense, the board cancelled .the arrangements for the central meeting, which was to have been held in October. It was decided, however, that the district meetings in each ward should be held as previously arranged, and at these meetings delegates were appointed so that a central conference could be called with a 'minimum of delay should any matter of grave importance render this necessary. With regard to the recommendation that the board’s annual balance be synchronised with that of the National .Dairy Association, the board could not see its way to make the suggested alteration, as it considered it essential that its annual report and bal-ance-sheet should cover each complete dairying year. The question of future conferences is the subject of a further •remit on thtis year’s agenda paper, and •no doubt the whole subject will be fully considered at the June meeting. GRADING FEES.

The request of last conference for a reduction in grading fees was placed ■before the Minister of Agriculture with very satisfactory results. A reduction amounting to approximately 20 per cent eb.me into operation at the commencement of the season, butter being reduced from. 1.24 to Id per standard box, and cheese from 1.65 to 1.33 d perorate. In comparison with the old. rates this will mean a saving to the industry o± about £7OOO over the preesnt season, hut m view of the heavy increase m production the department's actual revenue from this source will not be appreciably affected. CONTROL OF STOCK REMEDIES

Following the remit passed at the last l conference, representations were made to the Government through the Hon. Minister of Agriculture, urging the necessAtv for closer supervision over the sale of stock medicines to ensure that they be suitable for the purposes claimed and to check excessive charges. Subsequently a Bill entitled the Stock Remedies Act” was placed before Parliament, but owing to the pressure of other urgent .business it did not reach the final stages, and in common with several other Bills considered of relatively minor importance, was shelved for the time being. The Minister and Departmental officers regard the Bill as a very essential measure for the protection of farmers against.exploitation, and it is understood that it will be reintroduced at the earliest opportunity after the House reassembles for the forthcoming session. The Bill as drafted provides for the establishment of a Stoc-K Remedies Registration Board, consisting of a registrar (who must be a veterinary surgeon in the employ oi the Department of Agriculture;, one member appointed on the recommendation of the Veterinary Association and one on the recommendation of the Pharmacy Board. Before any stock remedy is sold it must be registered and its composition, disclosed to the board. When the Act comes into operation it will amply safeguard the interests of the farming community and while not unduly hampering the operations of reputable dealers in stock medicines, will have the effect of eliminating the unscrupulous Itinerant vendor wnose methods, have proved so costly to the farmer in the past.

HERD TESTING. It is inde'ed pleasing to note that the number of cows tested during the past season by the Group Herd Testing Associations constitutes a record. Approximately 251,000 as against 234,02/ the previous season. This certainly cates that the help given in the 193031 season by the; industry, /through the N.2'. Dairy Produce Board, to assist the movement at a critical time was fully justified. That financial help indicated far more than words could have

done that the leaders of the industry throughout New Zealand were satisfied that herd testing was a sound, and indeed a necessary practice.. It is claimed, and who can refute it., that herd testing is the first fundamental in dairy farm management. Who arc our keenest dairy farmers to-day? "Undoubtedly the men who test their herds season by season. These men can inform one at any •time the return they are receiving for each cow in their herd and .the return obtained in previous seasons. These men arc working on business lines. They and tlreir families and employees have” a .real interest in the undertaking. It is from such farms that the raw article supplied to the factory is invariably of the highest qualitv.

It is indeed strange that so many of our farmers have, as yet, failed to recognise the vast possibilities in con si stent, herd testing. It is no longer an experiment for to-day herd testing is recognised in every dairying country as necessary for success. A rapid expansion in herd testing is vital to the industry and iro'one can assist this more than can th>e factory directorates. In advocating .the herd testing a director lays the foundation for an increased supply for his factory and a greater monetary return to the supplier. Two most commendable results.

The percentage of cows under test last year was approximately 16 per cent. ”It should be 40 per cent. Perhaps we are fortunate in having, in this avenue, such a reserve of potential wealth from which to draw. These times, however, demand maximum returns and the leaders in each district should therefore assist this valuable movement to the utmost.

DAIRY REGULATIONS. The decision of the Dairy Division to overhaul the existing regulations under the Dairy Industry Act, and .to issue them in revised form is heartily welcomed. The present general regulations were gazetted in November, 1926, and since then a number of amendments and addition* have been issued from time to time, making them in some respect rather complicated and difficult to follow. The. reyised issue is now in print and will shortly be available to the industry.

OVERLAPPING. The recently gazetted regulation prohibiting the transfer of a supplier from one factorv to another will do much to discourage the deplorable scramble for additional supply at the expense of neighbouring factories, which is still taking place in many districts. The further regulation designed to prevent the establishment of new factories in districts already adequately catered foi will be heartilv welcomed and is recognition of the fact, that many areas are already over-faetoried. This measure will pjtice <1 check o.n any extension o the overlapping problem, but does not assist in solving the troubles already m existence. Overlapping stands condemned not merely on the ground of unnecessary .expense, but because it must inevitably react on the quality, ot our produce. It is, therefore, pleasing to note the increasing number of factories that have entered into voluntary agreements with their neighbouis to eliminate the trouble in their particular districts.

SECOND GRADE AND WHEY

BUTTER

Frequent reports have been received that the sale of second grade and whey butter as carried' out oil the English market, isms detrimental to the reputation of New Zealand butter generally, and various suggestions have been made to overcome this problem. Total prohibition of export of these qualities has been advocated and while this method of dealing with the position nitty have been feasible.in respect of the comparatively small quantity of second grade creamery, serious loss would be inflicted on the cheese, industry if whey butter were included in the same category. A fair quantity of whey butter fs already consumed in New Zealand, but the domestic market is far too restriated to absorb the additional 1500 tons per annum at present exported. At last conference, it was suggested that the Dairy Board might undertake the marketing of these butters, and m this manner ensure that they would not conic into conflict with our finest grades through the ordinary trade channels. The board lias now taken the necessary’action to assume control of all grades other than finest and first grade creamery, and in future they will be disposed of through a separate channel with satisfactory safeguards that they will be used for manufacturing .purposes only and not retailed in their original form as New Zealand butter. The proceeds of each shipment will be pooled, allowances being made for the various grades.

HO CAL BUTTER MARKET The problem of controlling the local bultter market and stabilising prices at a reasonable level has cropped up from time to time and numerous district schemes have been put into' operation with It he object of terminating the ruinous competition between one factory and another. That the time has arrived when some definite action should be taken by the industry as a whole, to place the sale of butter for domestic consumption on an equitable basis, is very evident, and the fate of various district agreements makes it equally evident that schemes of a voluntary nature are quite inadequate to prevent severe losses being sustained through indiscriminate price cutting. Some form of compulsory control appears to be /the only alternative, although it is lamentable to 1 think that compulsion should have to be considered' to save a section of the industry from• the .reßqlts of its own folly. The general position however, is so unsatisfactory that producers cannot continue to' regard with equanimity the sacrifice of a large portion of their output to satisfy interdistrict and inter-factory jealousies. Tit may be argued that the adoption of a compulsory controlled marketing system could not be accomplished without a good deal of opposition from interested quarters, but provided producers themselves arc unanimous as to the need of orderly control, any difficulties and prejudices can be surmounted. Tt is quite certain that an equitable marketing scheme would meet with the hearty approval and co-operation of the grocery trade.

Particulars of what is known as the “Sinclair Stabilisation Scheme” have already been submitted to dairy companies, and while some of the details may be open to. criticism the proposals afford a sound basis for consideration of this important problem. A remit asking for endorsement of the principles of the scheme appears on the order paper of the conference, -when delegates'will have tm, opportunity of considering the matter iu all its aspects.'

' LONDON EXCHANGE, The decision to raise the rate of exchange—New Zealand on England—to 25 per cent, came into effect in January 20, and severe criticism has since been levelled at the Government for its action, by interests adversely affected by this movement. Most objectors have apparently overlooked 1 or ignored the underlying reason for the higher rate and failed to appreciate the full gravity of the farming collapse which threatened the country at the time the decision was made. The rapid slide. In produce values liad precipitated a crisis which involved not only the farmer but the community as a whole, and faced with the menacing shadow of a com plete rural collapse, the Government is to be commended for the prompt action it took to alleviate a situation which was becoming desperate in the extreme. OTTAWA C.ONFERENCE. As a result of the Ottawa Conference New Zealand in common with the other Dominion 3 received substantial prefe* - ences over foreign competitors for its primary products and in the case oi dairy produce this preference took the form of a duty on importations ..from foreign sources amounting to 15 per cent, on cheese and Ids per cwt. on butter. As approximately S 7 per cent, of Great Britain’s importations of Cheddar cheese is from Empire sources, and only 13 per cent, foreign, the duty is not likely to affect this commodity to any appreciable extent. The above arrangement is for a period of three years and in return for the valuable consideration, given by the British authorities our Government undertook to revise our Customs tariff with the object of permitting the entry of British goods into this country on the most favourable basis. In spite of constant urging there has been, a long delay on the part of the Government in setting up the promised commission to investigate and report on the tariff position. The personnel of the commission has now been announced and it is to be sincerely hoped l that no further delays will occur. and that prompt effect will be given to its recommendations. It is pleasing to record that Mr J. B. Gow, for many years a valued member of your executive, has been appointed a member of the commission. His long experience in public affairs and wide knowledge of the Dominion’s problems make him eminently fitted for this important position.

QUOTAS AND RESTRICTIONS. Following so soon after the Ottawa Conference, ait. which free access to the British market was assured for three years, the suggestion that restrictions should be placed on the export of our butter and cheese to Great Britain came as something of a bombshell. In the absence, under present world conditions, of other accessible markets, restrictions on the British market cannot be regarded with anything but the gravest concern, particularly as the position of New Zealand differs materially from that of our principal com petitor, Denmark, where maximum production has been . reached, o’r Australia, which with its larger population could probably absorb any potential surplus without much difficulty. It is true that there is room for considerably increased consumption of milk and milk products within the Dominion and even although this market is necessarily limited by our small population it must be explored to the utmost in order to relieve to some extent the pressure on our export trade. It will not, however, solve on* troubles.

The arguments in favour of restriction's have been ably presented in the Rt. Hon. J. G. Coates’ recently published memorandum, “A Butter Quota or a Free Market,” and thanks are due to the author for his concise summary of what is the biggest problem that has yet confronted the industry. Nevertheless, in view ol its far-reaching effect on the whole community, the principle of restriction cannot well be accepted until every alternative has been exhausted.

Mb nth. 1932-33 1931-32 Jun'e 96s- 98s 10Ss-112s JW 103 s-105 s .112s-114s August 107 s-11 Os llls-114s September llOs-ll-ls llls-114s October 101»-llls 115s-121s November 90s- 95s 107's-113s December 83 s- 85s 100s-104s January 80s- 82s 97‘s-lOOs February 73s- 76s 104s-107s March :... 72s- 75s 108s-110s April 67s- 69s 104s-107s May 78s- 81s 95s- 97s

White. Coloured. 1932-33 1931-32 ‘1932-33 1931-32 50s-57s 53s-55s 56s-57s SS's-SSs 5 8 s-5 9 s 59s-60s 57s-5Ss 61s-63s 60s-Gls 6 Is-63 s 56s-57s 63s-65s 63s-65s 6 Is-63 s 58s-60s 62 s-64s H5s-6()S 6 8 s-7 Os 59s-61s 6 8 s-7 Os 63s-643 G6s-68s 58s-60s 64s-66s 503-5 7 s G0s-62s 5Ss-60s 58s-60s 47s-4Ss 57is-59s 56s-57s 56s-58s 43s-44s 61s-63s 46s-48s 62s-64s 42s-43s 60s-61s 47s-49s 61s-63s 3Ss-39s 61s-62s 40s-46s 62s-63s 47s-49s 57s-58s 53s-55s’ 57s-58s

Operating Expenses— 1929-30 £ 957,438 1930-31 £ 914,396 330,297 794,328 955,128 1,470,167 1931-32 £ S30,179 Milk aiul cream cartage 320,142 794,189 l,O25,0S3 1,157.543 372^289 753,534 902,541 1,224,650 Materials ('boxes, salt, rennet, etc.) Other expenses of nranufac. & operation Marketing expenses 1 Total operating expenses 4,254,395 19,523,344 262,242 4,464,316 14,286,553' 37,861 4,083,193 Cost of butter-fat (pav-ou't) 14,137,972 260,417 Undistributed surplus £24,039,981 Total butterfat supplied factories (lbs) 288,462,650 No. of fnc'ttfrio's 491 £18,788,730 290,1S7,279 482 £18,481,582 307,487,024 480 No. of employees 4,2-28 60.067 £325 4,184 60,920 £235 3,991 63,951 £221 No: of suppliers Average pay-out per supplier Average pay-out per lb. butterfat 16.24d 11.58(1 11.03 d

1929-30 1930-1 1931-2 £ £ £ Salaries and wages 3.98 ■ 4.87 4.49 Milk and creamcartage 1.33 1.76 2.01 Material's 2.72 4.23 4.08 Other expenses of manufacture 4.26 o. 08 4.88 Marketing expenses 4.82 7.82 6.6.3 Total- operating costs 17.11 23.76 22.09 Pay-out 81.22 76.04 7 6.50 Undistributed surpius* 1.67 0.20 1.41 ■ —— • " ■ ■ ■ —

1929-30 1930-1 1931-2 d. d. d. Salaries and wages 0.80 0.74 0.05 Milk and cream cartage 0.27 0.27 0.29 Material's 0.00 0.04 0.59 Other expenses of manufacture 0.S5 0.77 0.70 Marketing expenses 0.9(5 1.19 0.90 Total operating expenses 3.54 • 3.01 3.19 Pay-out 10.24 11.58 11.03 Undistributed surplus 0.22 0.02 0.20 20.00 15.22 14.42