DAIRY INDUSTRY

Nelson Evening Mail, Volume 76, 16 October 1941, Page 7

DAIRY INDUSTRY

CHANGE FROM BUTTER TO CHEESE MEETING EXTRA COSTS j Arrangements which have been made !lo recompense the dairy industry for the additional costs incurred in the j change-over from butter to cheese pro- : duction were announced last, evening by | the Minister of Marketing, Mr Barclay. I These are based on the reeommenda I lions of a special committee representa i live of the industry and the Government. Assistance toward meeting these extra costs is being given by the Unit 1 an increase in the purchase price of cheese for the present season, and from ! the proceeds of this increase there has i been established a special account, j The Minister who is chairman of the I committee, said that because over - seas shipping was not normal. and ! because of the necessity for conserving cool store space by close packing, the present guaranteed price procedure of ; payment on shipment could not be con - i tinned with equity to the industry. It was therefore necessary to determine a procedure for payment for butter and I cheese. The committee recommended, : and the Government had accepted, the following basis of payment: The Marketing Department will pay dairy eom- , panics for butter and cheese, at an average of two months after grading. | Dairy companies will bear two months’ interest and storage costs, but thc<e costs incurred beyond two months will be a charge to the special account. The 1 Marketing Department, in consultation with the Dairy Board is now determining the method by which such payments will be made. CAPITAL EXPENDITURE "The second recommendation of the i committee concerns the incurring of ! additional capital costs b.v suppliers who. on or after Ist June of this year, 1 have changed over from butter to cheese production,” said Mr Barclay. ; "The committee was of the opinion i that the basis adopted last year, namej ly. an immediate payment to each sup- ! plier concerned of lip to £2O in lieu or j loss by redundancy of milking-shed | equipment, should remain, but as most ; items of milking-shed equipment, and ; particularly milk cans, had risen in price, the amount of the payment this j season should be increased to a limit iof £27 10s to cover the extra cost of 1 these items, which would in fact have no more residual value than the same items purchased last year at a lower cost. This recommendation of the ; committee lias been accepted by the Government. “The third recommendation of the j committee related to the additional 'costs incurred by a producer who is ini volved in twice-daily delivery of milk i to the dairy factory. The Government accepted the committee’s recommendai lion that, where a producer is himself , delivering to the factory twice daily, he shall be paid the amount of id a lb butterfat in respect of milk so deI liveied. “In the case of suppliers who have I changed over to cheese manufacture ! since June, 1940. and who are using a cartage service, cartage costs in excess of id per lb butterfat are to be slurred 25 per cent, by the supplier and 75 per cent, as a charge against the spec—- ! ial account in respect of a total cartage rate not in excess of lid per ib butterfat. “It was further recommended and agreed to by the Government that, in any case where a supplier, whether changed-over from butter to cheese manufacture or not. delivers milk twice daily to a collection point for collection by a carrier, a payment of a lb butterfat will be made to such supplier by war of compensation for addition costs incurred and extra work involved. The committee, added Mr Barclay, also gave consideration to the possibility of special cases of hardship which might arise, and which would not be covered by the various payments ho had already outlined. To meet cases where a supplier considered that the was suffering real financial hardship through change-over to cheese for the war emergency period, he should have the right to appeal to the Minister, who should have the right to make an appropriate monetary grant. FACTORY CAPITAL COSTS Referring to dairy factory capital costs due to the change-over, the Minister said it was recommended by the j committee, and accepted by the Government, that the general basis operative last year should continue, subject only to minor adjustments such as the reduction of depreciation of extra plant from 10 per cent, to 7J per cent. The final item of cost affecting the dairy industry was the question of both butter and cheese factories incurring additional manufacturing costs directly as a result of the change-over. The Government had already provided a formula by which compensation will be payable to such factories where a rise in costs could be directly attributable to the change-over, but it was limited on the basis that no compensation would be paid to any factory whose costs remained below the guaranteed price standards of 2.25 d for butter factories and 3.5 c! for cheese factories. The committee recommended that in respect of the 1941-42 season, provision should be made for cases of butter companies excluded under the present formula. Accordingly, where such a butter company had lost supply through the change-over to cheese, it would be compensated for such loss on the basis of |d If butterfat on the quantity of butterfat produced and delivered to a cheese factory during the current season by the suppliers transferred, it being understood that this was subject to the principle that no company should make a profit out of the change-over. In cases where it was considered that th -* payment of id would place the butter company in an advantageous posi- ! lion, the amount may be reduced or withheld entirely, the decision in all cases to rest with the Minister on the recommendation of the Executive Commission of Agriculture. On the other hand, where an advantage accrued to : t’ne* cheese company through change- | over—it should be required to pay into the special account the amount of j the financial advantage so obtained, j this amount again to be determined by

the Minister on the recommendation of the Executive Commission of Agriculture. Costs incurred by the Government which wefe a charge on the special account were also examined by the committee,and the recommendation was made that at present the following costs should be a charge against the account: (1) Loss on account of the purchase of whey butter; (2) cost of stabilisation of the cost of cheese crates; (3) costs of storage. interest and insurance on butter and cheese remaining in store in New Zealand; <4) provision of emergency houses for cheese factory employees and for emergency cool stores; (5) cost of subsidy on bobby calves.