THE GUARANTEED PRICES

Manawatu Standard, Volume LVII, Issue 232, 31 August 1937, Page 2

THE GUARANTEED PRICES

DIFFERENTIAL SCALE OF PAYMENTS

STATEMENT BY MINISTER

Per Press, Association

WELLINGTON, Aug. 30. Full details of the f.o.b. purchase prices fixed by the Government for butter and cheese exported during the current dairying season were announced by the Minister of Marketing, Hon. W. Nash, in a statement issued this evening. He said that very full consideration was given by Cabinet to all the relevant factors involved in the determination of fair prices in accordance with the formula set out in the Primary Products Marketing Act.

“In deciding upon the prices which have been announced,” said Mr Nash, “the Government’ has carried out to the full its undertaking that the prices would be so fixed that any efficient producer engaged in tire dairy industry under usual conditions and in normal circumstances should be assured of a sufficient net return from his business to enable him to maintain himself and his family in a reasonable standard of comfort.” The full range of f.o.b. purchase prices fixed in respect of butter and cheese exported during the current season is as follows:

Mr Nash said the premiums payable for butter and cheese of special typo manufactured or packed at the request of the department had been reviewedin accordance with the undertaking which was given, and had been determined as follows: Unsnltcd butter, 3s 4d per cwt. Parchfoil wrapping of unsnltcd butter packed in other than saranac butter boxes, ,0418 d per lb. Coloured cheese, 6d per crate. Waxed cheese, 4*d per crate. The amounts payable by dairy factory companies for insurance on butter and cheese up to f.o.b. ocean steamer

GUARANTEED F. 0.8. PURCHASE PRICES. CREAMERY BUTTER. 1037-38 1936-37 1937-38 1936-37 Per lb Per lb Per cwt Per ewt Finest— d d s. <1 s d 94pts and over .... 13.375 12.6875 124 10 118 5 93 to 93}pts basic . 13.25 12.5625 123 S 117 3 First--92 to 92* pts 13.1875 • 12.5 123 1 116 8 90 to 91ipts 13.00 12.3125 121 4 114 II Second 12.50 11.8125 116 8 110 3 WHEY 7 BUTTER. First 12.25 11.5625 114 4 107 11 Second 11.75 11.0625 109 8 103 3 CHEESE. Finest—94pts and over ... 7.69625. 6.96875 71 10 65 10* 93 to 93*pts 7.665 6.9372 71 61- 64 9 First—--92 to 92*pts basic . 7.54 6.8125 70 4* 63 7 91 to 91*pts 7.4775 6.75 69 9* 63 0 Second 7.29 6.5625 68 0* 61 3

“If tlie dairy-farmers will compare these prices with those which have applied for the season just closed,” continued Mr Nash, “they will see that the new basic i.o.b. purchase price for export creamery butter of 13Jd is 11-16 of a penny above the previous price, and tlie new basic f.o.b. purchase price for export cheese of 7.54 d is ,73d above the previous price. The basic f.o.b. purchase prices for the season just closed were calculated to return to farmers supplying dairy factories working under average conditions Is 1.0-td per lb blitterfat in the case of butter and Is 2.54 d per lb butterfat in the case of cheese. The new basic f.o.b. purchase prices are calculated to return 13.88 d per lb blitterfat in the case of butter, and lo.Bßd per lb butterfat in the case of cheese. Thus the basic butterfat payout increases are -,84d per lb in the case of butter and 1.34 d per lb in the ca6e of cheese.

were: Butter, ,69d per box, cheese, •815 d per crate.

“In finalising these figures,” concluded the Minister, “the Government has considered all factors that would ensure reaching its objective: that is ‘to so organise production and services in the Dominion that the farmer and other rural workers shall receive an income equal to that of the workers in other fields who render equal service.’ ”

RESULTS OF PAST SEASON

“The results for the season just closed, which are being revealed as the accounts and statements of the dairy factory- ’companies come to hand, .-'aretending to show that the actual average butterfat payout will be approximately Is l*d per lb butterfat in the case of butter and Is 2*d per lb butterfat in the case of cheese. These figures show that in the case of butter the actual results exceed the estimate by approximately \cl a lb butterfat, and in the case of cheese the actual results equal the estimate. The disparity in th© cas© of butter is due to an overgenerous allowance for factory costs, which had to be estimated, as there were no reliable cost data available. With more accurate information on factory costs provided from the standardised form of dairy factory accounts, it is expected that the calculations for the current season will more nearly approximate the actual results. “Representatives of cheese factory companies have urged that a further payment be made in respect or export cheese for the past season to bring the margin of cheese price over butter price up to the intended margin of ljtl a- lb of butterfat. It will be seen that the case for a further payment rests not on tne fact of any under-payment for cheese hut on the fact of an over-payment for butter having reduced the effective margin. Careful consideration will be given to the representations which have been made when all the cheese factory company statements are to hand, and the actual disparity can be more accurately determined.

CHEESE SUPPLIERS PROTECTED,

“Suppliers of cheese companies, and directors and officials concerned will he pleased,” said Mr Nash, “to observe the protection which is given to the cheese industry in the fixation of prices which aim at giving an effective margin under average conditions of 2d per lb butterfat, over the average butterfat payout for butter. It is expected that this margin will reassure the cheese industry and maintain the export output of cheese. • “The formulae for conversion of the basic f.o.b. prices of butter aud cheese into equivalent butterfat payouts to suppliers are as follow: In the case of butter the over-run figure is 21.75 per cent, and tbe factory and other costs to f.o.b. ocean steamer are allowed at 21 d per lb butterfat; in the ease of cheese the net yield figure is 2.451 b of cheese to lib of butterfat. the return from the manufacture of whey butter is .66d per lb butterfat, and tbe factory and other costs to f.o.b. ocean steamer are allowed at 3fd per lb butterfat. “It is considered that these conversion factors are fairly representative of tbe average factory conditions upon which the guaranteed prices are based. “It is pleasing to record an improvement in quality of butter and cheese submitted for grading during the season just closed and it is reasonable to conclude that this improvement results from the quality price differentials which were a feature of last season’s prices. These differentials will be continued for the current season. UNITED KINGDOM VALUES.

“Finally,” said Air Nash, “I give the approximate sterling United Kingdom market prices, which are equivalent to the basic f.o.b. purchase prices which have been fixed.” Tbe comparative figures in respect of the previous guaranteed prices were also shown by wav of comparison:—

BUTTER. United Kingdom equivalent to Basic f.o.b. purchase price. cover pay-out and cost of markctin^r. 1037 38 1936-37 1937-38. 1936-37. 13id per’lb. ... 12 9-16 d per lb 112 s per cwt. ... 106 s per cwt. CHEESE. United Kingdom equivalent to Basic f.o.b. purchase price., cover pay-out^ and cost of mar--1937-38. 1936-37. 1937-38. 1936-37. 7.54 d per lb. 6 'l3-lfld per lb 67s per cwt. ... 61s 3d per cwt.