FARMERS AND EXCHANGE

New Zealand Herald, Volume LXX, Issue 21562, 5 August 1933, Page 15

FARMERS AND EXCHANGE

Sir,—ln the Herald of July 25 "Another Small Farmer" writes purporting to show that the dairy farmer does not benefit by high exchange. May I endeavour to gently lead him out of the mental fog which evidently surrounds him. The idea that the over-run should be sufficient to cover expenses may have been reasonably correct with butter selling at Is 6d per lb. or over, wholesale in London, but no intelligent farmer would expect costs to be so reduced that when butter sells as low as 66s per cwt. the over-run should still pay all costs. Let us take an example in the figures for April as shown in tho Dairy Board's statement: Average price, 67s 9d per cwt.; add to this price the increment accruing from a reasonable over-run of 21.333 per cent. This brings price per cwt. to 82s 3a; now add exchange of 24 per cent, 19s 9d, which gives a total of 102s. I am given to understand that the average cost of a ton of butter-fat, farm to London market, averages about £3O, equal to 3.22 d per lb„ fat, which makes the net return 725, or a payment of about 7jd per lb. I should perhaps have stated that the figures for April previously referred to would be mainly sales of February output, for which 1 notice one large company's payment, with bonus, will be slightly over Bjd, under the circumstances a very satisfactory achievement. Analysis ofr the figures relating to this month, based on an average payment of 7|d, show the payment could only have been 5.66 d without the exchange benefit, so that we have an appreciation in price of about 37 per cent due to exchange. Payments made* to suppliers during the "autumn months have, no doubt, been disappointingly low, and are generally considered due to the over optimistic outlook of the directorates of the various dairy companies, in making unduly high advances in the early spring months, necessitating much lower payments during the late autumn than would otherwise have been paid. At all of "Another Small Farmer's" statements appear to be based on wrong premises, it seems unnecessary to comment further upon them. I do not think that in a time of economic stress like the present, it will be possible to find many dairy farmers who deny the obvious benefit of a high exchange. Waiuku. E. S. Coleman.