FACTORY OVER-RUN

Manawatu Standard, Volume LII, Issue 227, 25 August 1932, Page 7

FACTORY OVER-RUN

explanation of principle. pus JIT ON OF CHELTENHAM CO. Tin' principles obtaining in regard to •f ho contentious question of factory over-run wore expounded by Mr J. M. IMcOomild, manager of the Cheltenham Hairy Co., at to-day’s annual meeting of t lie company at Feilding. "Tho question of over-run in butter factories has received a great deal of publicity lately,” said Mr McDonald, "and I would take this opportunity of briefly explaining to this meeting some ,-t the fundamental principles in regard to the over-run’s connection with tho manufacture of butter and its effect on the actual returns to the suppliers. Over-run is the difference between the buiterfat the suplier is paid for and the amount of the commercial butter made. Wlum the supplier delivers to tho factory a definite amount of butterfat, that butterfat will make, under recognised factory practice, a definite amount of butter, and it will make no difference to the amount of butter made whether the suppliers are paid for all of the butterfat or only half of it, or for that matter, nono of it. Tho fact remains that a given amount of butterfat was delivered whether credited to the supplier or not, and under tho best recognised practice and legal standards set, a pound of butterfat cannot, when made into butter, carry with it any more than the regulations allow of water and salt. Therefore, the over-run is not increased through more butter being made from a given quantity of butterfat paid for, but can only be increased beyond the recognised normal point by using butterfat that is not paid for. VVe could, if shareholders wanted it, have increased our over-run last season so that we could show a payout of Is 3d, or for that matter Is Cd per lb butterfat. You would, of course, have been no better off financially. There would have been no more butter made, end therefore no more cash could have been received by the company for tho butter. It would simply mean dividing the same amount of money over fewer pounds of butterfat. It can be seen what this would mean if high over-runs are the order of the day—purely and simply, inflated currency, as butterfat or the rated value thereof is the dairy farmer’s currency. You would be advertising to the world that von are getting a price per pound butterfat that to the world looks good and hiding the fact that it is not being paid on all tho fat delivered, and that the actual money received by the fanner is not any greater. I consider that during the present crisis it is going to make matters infinitely worse for tho dairy farmer himself if the dairy company inflates tho over-run. to mako it appear that the dairy farmers are receiving more than they actually do. It has been proved in some cases that more butterfat was exported in tho finished butter than was paid for by the factory. This on the face of it clearly shows something is at fault, as no matter how carefully your manufacture is watched it is considered that 2 per cent, of the fat delivered to the factory is a minimum loss in manufacture. Therefore, again the available cash to he divided was paid out on fewer pounds of butterfat than was received, and thereby inflating tiie value of the butterfat per pound. “There is a considerable number of adjustments on the capital value of land being made to-day on the basis of the present low ruling price for butterfat, and tho nearer we can keep to the true yield per pound butterfat tho more correct will be these adjustments. It appears to me that a gieat danger to-day lies in the efforts of some dairv companies, and also many individual" farmers, in trying to make their returns appear greater than they actually are; evidently trying to impress the other fellow, and only succeeding in deluding themselves. “In times sucli as these, the closer we can keep to facts the sooner will we return to happier times.”