PAYMENT FOR QUALITY.

Horowhenua Chronicle, 14 July 1936, Page 3

PAYMENT FOR QUALITY.

WIDER RANGE OF PRICES FOR DAIRY PRODUCE. UNDER GUARANTEED PRICE SCHEME (By Telegraph—Press Association.) WELLINGTON, Last Night. An announcement was made today by Mr. G. A. Duncan, actingDirector of Marketing, regarding the mice margins lixed hy the Government in respect of the different grades of nutter and cheese purchased by it for export under the guaranteed prices plan. ‘‘The Government. ’’ said Air. Dun-

can. “is desirous of maintaining and improving the quality of Now Zealand butter and cheese and it has decided by means of a system of differential price margins based on quality to encourage the production of the best types of both commodities. At the present time creamery butter is classed for export under three grades: Finest, first and second. Whey butter is clashed under two grades: First and second. Cheese is classed under three grades: finest, first and second. “When butter ami cheese are marketed in England the prices realised vary according to the grades assigned. Price variations occur a’lso within the respective grades. The range of points for the three grades o’ creamery butter is: Finest, 1)3 and ever; first, 90 to 0-t; second, SO to 89i. The langc for whey butter is: First, 88 and over; second, 80 to 87'.. The range for cheese is: Finest, 93 and over; first, 91 to 921; second, SO to 90i. it was realised that if under the guaranteed prices plan differential payments for quality were based simply on grades dairy factory companies would have no incentive to strive to secure higher pointings within the respective grades. In some cases there would be a tendency to save costs by making \jss frequent collections of cream and by less efficient methods of manufacture with a resultant failing off in the quality of the product.

“ Under the existing marketing system the margins received for quality provide some incentive though these margins are by no means constant. The Government by fixing constant, margins aims at providing a more distinct and tangible incentive to quality production. At the same time it is obvious that the margins must bear a reasonably close relation to the expected market realisations. It was recognised that the industry was divided in opinion regarding the basis on which differential price margins should bo ■fixed. One section adopted the view that no distinction in price should be made between the different qualities in the same grade. Another section held that the price differentials should be made on halt points throughout the grades and that the differential margins should be well marked with the sole object of encouraging quality and without regard to market realisations.

“The Executive Commission of Agriculture had a series of discussions with the officers of the Dairy Division of the Department of Agriculture and the Department of Scientific and industrial .Research and members of the Dairy Board. The matter of grades and margins was carefully considered from all angles and a recommendation was made tc the Minister of Marketing that the grades should remain as at present, but that in addition to tiie fixation of price margins for the different grades differential grades should bo fixed fo r higher and lower scoring for cheese and creamery butter in the finest and first grades. Those grades represent by lar the greater part of our output, the volume of second grade being practically negligible.

“There is a range of (if points for first grade crcammy butter and of 44 points for first grade cheese, while for both creamery butter and cheese tinrange in the finest grade is from 93 points upwards. Though it was agreed that it would be inadvisable to alter the present number of grades it was considered that the range of half points was sufficiently wide to justify the provision of two prices for each of the finest and first grades. “The prices and margins recommended to the Minister and appro', ed by him,” continued Mr. Duncan, “are as follows: — Creamery butter, finest grade 94 and upwards plus Is 2d per cwt.; 93 to 934, basic guaranteed price for firs' grade; 92 to 921, minus 7d per cm.; 90 to 914, minus 2s 4d; second grade, minus 7s per cwt. Whey butter: First grade, minus 9s -Id per cwt.; second grade, imnus 14s per cwt. Cheese: Finest grade, 94 upwards, plus Is SUI per cwt.; 93 1o 934, plus Is 2d per cwt.; lirs f grade, 02 to 924, basic guaranteed price; 92 to 914, minus 7d per cwt.; second grade, minus 2s -Id per cwt. “The margins decided upon arc thought to be .sufficient to provide the 1 recessary stimulus to quality production, but at the same time regard has been had to the necessity of maintaining due relation to market on dairy produce sold on consignment and to the grade differential prices re cognised in the past in f.o.b. and o.i.t sale contracts.

“It should be made clear,” concluded Mr. Duncan, “that what has been decided upon does not. alter the present grading system in any way. The number of grades, allocation of points to grades and methods and standards of grading rvill remain the same, Butter boxes and cheese crates will bo marked with the same grade marks aa . .

at present and no added marks will be affixed to’indicate anything in tinnature of subdivision of grades. These facts arc stressed in order to remove the impression that the grading system is to be altered in some way. All that has been done is to recognise that umlei' the present marketing system the market realisations show that price variations exist within the grades and that under the system of guaranteed prices provision must be made for similar price variations in order to maintain and stimulate production of butter and cheese of highest possible quality.” Asked if he could indicate the guaranteed prices for butter and cheese for the ensuing season, Mr. Duncan said the Minister would make an announcement in due cQurac. What Inhad stated related only to margin? above and below the guaranteed prices. He could, however, say that in the case of both cheese and creamery butter thtrange of grading points in respect of which the basic guaranteed price would be paid included a considerably largei percentage of our exports than any other similar range.