FIXING A RATE

New Zealand Herald, Volume LXXV, Issue 23145, 17 September 1938, Page 17

FIXING A RATE

MANY ISSUES INVOLVED WIDE RANGE OF EVIDENCE ) OUTLOOK FOR THE SEASON LOWER PRODUCTION LIKELY [BY TELEGRAPH—SPECIAL REPORTER] WELLINGTON, Friday In the determination of the prices required to he pjiid for butter and cheese in order to give the_ efficient producer a net return sufficient to ensure the state of comfort intended by the Government, regard must be had for the operation, during the past lew years, of factors beyond the farmers' control, states the Guaranteed Prices Advisory Committee in its report. Tlie report points to such factors as a substantial increase over the past two years in wages, accompanied by a reduction "in hours of work and a more liberal provision for holidays. This, it states, has affected costs of production generally ■ The general raising of standards, states the report, has meant that the farmer must be given a higher net return, after all his costs have been met, in order to ensure him a standard of living comparable with that of the rest of the community. All this must necessarily be covered by the prices to b<- fixed if the provisions of the Act were to be implemented. Retaining of Standards Because it had more complete .evidence available to it than was before the committee which advised the Government for l;« 7-38. the committee considered that it was at liberty to revise those standards where it seemed necessary. However, it considered that it was undesirable that in the absence [ of specially-cogent reasons standards of efficiency once definitely established should be altered from year to year. As a general rule these standards should remain constant for a term of years and only be revised when there was evidence of changed conditions. After pointing out that a wide range of extremes, varying from district to district and farm to farm, was disclosed by a survey of the butter-fat production per acre in all districts from North Auckland to Southland, the committee states that it had to choose those standards which .would approximate most closely to the requirements of the Act, and which would give to the efficient producer, working under usual conditions and normal circumstances. a net return sufficient to provide a reasonable state of comfort. Committee's Method

The method followed had been' to choose appropriate standards and to provide the equivalent of piece-rates lor production on pure dairy farjns, where the costs of dairy could be most effectively isolated,-rand then to apply those rates to duction on farms where dairying was associated with other activities, and in respect of which the effective separation of costs and returns for different^farming activities was impracticable.* After full consideration of all/.available data, the committee says,.that it accepted the range adopted - the former committee of 100 to 17ol)b© of butter-fat per acre as the standard of farm efficiency. t.

Dealing with butter-fat production and prospects, the report mentibnsifhat several well-informed witnesses} who appeared before it were concernechabout the trend and prospects of butteSfat production. The 1936-37 seasoq -T?as exceptionally favourable, and bothifcsfal production and production co^ achieved new high records. /, .il£

Trend of Production

" The 1937-38 season has beengless favourable," states the report.^-"The total production has declined somewhat and it is estimated that production per cow will .be less than inH'ihe preceding year. There is also evidence of some changerover from dairying to sheep-farming." r M The opinion had been expressed by a witness that production per cow \had now reached its maximum under present conditions, the report continues. The grounds for this view were that„the average butter-fat per cow supplied to factories from tested cows was how little higher than the New Zealand average from all cows, and that the production from average pedigree herds was little, if any, higher than that from grade herds. It would seem that to obtain a further increase methods would have to be devised for improving the butter-fat standard of herd sires. Price and_ Production

In reviewing the probable effect of price 011 Dominion production, the committee's report states that in the price of butter, the overseas market is extremely sensitive to variations in the volume of supplies. The opinion had been authoritatively expressed that , a variation of 2A- per cent in the total supplies from Empire countries affected the average returns by 7s 6d to 10s per cwt. The stability of the industry and the capacity of the Dairy Industry Account to bridge a widening gap between prices paid and prices realised by the Government' were therefore threatened if an over-generous price led to over-production. It was also difficujt to assess the effect oi; .world conditions oii the United Kingdom market. Regarding the standard of living of the dairy farmer as compared with that of other sections of the community, the committee says it desires to point out that the only evidence tendered as to the net income of the dairy farmer was that of the Deputy-Commissioner of Taxes, but that the figures submitted bv him included, under the heading of net income, the value of unpaid family labour and interest on the farmer's own capital, t Unanimous Report

The committee states that its report is unanimous 011 all points. The members realised the desirability of deciding on standards of efficiency and cost, measurements of which, although probably not applicable in detail to any particular farm, could nevertheless" "be reasonably applied as general standards to an efficiently-managed farm in any part of the Dominion.

Included in the evidence before the committee was a survey of 2487 dairy farms in the Waikrffo and surrounding districts, and a more detailed analysis of costs and returns for 156 dairv farms in the Waikato and Te Aroha districts. The Xew Zealand Dairy Board, New Zealand Farmers' Union, South Island Dairy Association, Southland - dairy farmers, dairy factory companies, the Valuer-General. Land and Tncome Tax Department, Government Statistician and the Department of Agriculture; assisted with the presentation of evidence. A number of industry witnesses questioned the representative nature of the farms covered bv of Agriculture's return. The*"cs>mmittee therefore recommended that in future! specially-appointed representatives of the dairy industry organisation should be associated with the department in the selection of farms, and the check* incr of dnta on the farms.