THE DAIRY FARMER

Nelson Evening Mail, Volume 79, 25 January 1944, Page 3

THE DAIRY FARMER

DROP IN INCOME HEAVY LOSS TO INDUSTRY The financial position of the dairy farmer to-day on the basis of reduced yield and increased costs was the subject of comment by Mr J. L. Faulkner, secretary of the Morrinsville Co-operative Dairy Co., who claimed that to receive what the Government in 1939 contended was fair, the dairy farmer was entitled to a return of 19.5 d a lb butterfat, plus 1.54 d from pigs. Details of the production of dairy cows supplying milk to dairy factories in the 1942-43 season have been completed by the Dairy Board and circulated to factories. The effective average production for the Dominion was 207.21 bof butterfat, the figure for the North Island being 207.61 b and for the South Island 203.01 b. The Dominion average compares with 216.61 b in 1941-42 and 232.11 b in 1940-41. Commenting upon the results, Mr Faulkner stated that an examination of the figures encouraged a most sombre view, particularly when it was recalled that the basis of the guaranteed price—the foundation of the present price for butterfat—was 2501 b a cow, a difference of 431 b fat a cow between the theoretical and the actual for last season.

A recent Dairy Board survey, Mr Faulkner said, revealed that the dairy cow population of the Dominion was approximately 1,750.000 at the present time. Assuming that the total payment made by dairy companies for the 1942-43 season was 16£d a lb, and that the theoretical return of lid fat for pig meat would have been received, the total loss to the industry represented by the difference between the theoretical and actual production last season was £5,614,000. RETURNS ANALYSED The theoretical production of the average supplier with 48 cows at 2501 b fat set down in 1939 was 12,000 lb fat, which, at an estimated return of 15.88 d a lb, gave a gross yield of £794. With pigs at £77, the total amount was brought to £B7l. In 1941-42 this unit actually produced 10,3681 b fat. This at 15.88 d a lb gave a gross yield of £686, which, plus pigs at £66, brought the return to £752. In 1942-43 the production of the same number of cows was down to 99361 b, which at 16.49 d a lb gave £682, and from pigs £64, making the total return £746. The gross income per average dairy farmer measuring up to the guaranteed price was therefore no less than £ 125 per annum lower than that of 1939, in spite of the slightly-increased price. Examining the cost side and the effect of the lower production upon the farmers’ net income, Mr Faulkner pointed out that the Government said in 1938, in rejecting the industry’s contentions, that the cost of producing a pound of butterfat could be accepted as being 5.34 d for working costs and 3.24 d for capital charges, a total of 8.58 d a lb. That meant that the total cost to operate a two-unit farm producing 12,0001 b butterfat was £429. and that the labour reward should be £442. a total of £B7l.

In the past season the same producer obtained only £746, out of which he had to pay £429 for expenses, leaving a labour reward of £317. The cost, even on those figures, had increased from 8.58 d to 10.36 d a lb, and that made no allowance for increased unit prices nor the receipt by the farmer of his total labour reward. ENTITLED TO 19.5 d In actual fact, stated Mr Faulkner, to receive what the Government contended was fair in 1939 the dairy farmer would need still to be paid £B7l for the lower production, and to achieve that he was entitled, within the stabilisation regulations, to a return of 19.5 d a lb butterfat, plus 1.54 d from pigs. With the Land Sales Court operating to-day, added Mr Faulkner, there could be no fear, as was strongly emphasised during the past few £ears, that there might follow inflation of land values if the industry got justice in its claims. If the industry was to survive those claims must be met.