THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, SEPTEMBER 17, 1938 DAIRY PRICE BELOW COST

New Zealand Herald, Volume LXXV, Issue 23145, 17 September 1938, Page 14

THE New Zealand Herald AND DAILY SOUTHERN CROSS SATURDAY, SEPTEMBER 17, 1938 DAIRY PRICE BELOW COST

Dairy farmers will be fully justified in protesting that the Government lias not kept faith with them in fixing the guaranteed price for the current season at the figure named by Mr. Nash yesterday. His figure is substantially lower than that unanimously recommended by the advisory committee, to which the Government appointed four out of the seven members, and lower again j than would be justified on the careI fully compiled evidence of several ! responsible dairying organisations. All this evidence has been virtually ignored, and the proper application of the statutory formula, as set out in the Act and worked to by the advisory committee, has been avoided. Instead Mr. Nash has dictated a, price undercutting the committee's recommendation by .87d per lb. butterfat. In other words the price has been set .87d below cost of production as determined by the committee, involving dairy farmers in a loss this season officially estimated at £1,289,000. The farmers are receiving short payment by at least that amount from the Government, although on their own evidence j they will come shorter still—let alone any further rise in costs since their and the committee's figures were taken out. How these cost allowances were made per lb. butterfat for butter in the Dairy Board's evidence, in the committee's recommendations and the Government's announced price, can be gathered from the following table, showing the amount allowed for working expenses and maintenance, for interest on capital, and for labour on the farm

Board Comm. Govt. Costs— <1 il il "Working ~ 0.51 5.095 5.121 Interest , i 3.C1 3.375 3.214 Labour .. 10.90' 9.220 5.7.52 21.05 18.290 17.120 Less pigs .. 1.52 1.510 "J .510 19.53 10.750 15.880 From the above it will be seen that the severest deduction made by Mr. Nash is in the allowance for labour on the farm. The farmer's chief difficulty has been to pay competitive wages and so obtain sufficient | labour, yet the deepest cut by the | Government is made into wages for | the farmer and his helpers. After examining the above statements of production costs, people may wonder at the wide variation and how the Government pared down its estimate to the price awarded. The fact is that Mr. Nash has set a very high standard of efficiency on the dairy farm, one that is not being reached by the vast majority of farmers. If .they cannot reach it, then they must draw less for their wages, although all that Mr. Nash allows them at his superlative scale of efficiency is'£4 a week and a roof over their heads. This becomes clearer when the standards of production set by Mr. Nash are compared with ascertained and estimated standards. The Governi ment Statistician sets out in the Official Year Book the average i annual production per cow and per adult male unit of labour as actually ascertained from the returns of 19,307 farms, or almost half the total of dairy farms in New Zealand. Working on the evidence before them, the Dairy Board and the advisory committee also arrived at averages somewhat higher. Finally Mr. Nash sets his averages higher still and expects the farmer to work to them by basing his price on them. The averages accepted by the four authorities are as follows:— Per cow Per man Statistician .. 2271b. 45401b. Dairy Board .. 2311b. 51351b. Committee .. 2101b. 57501b. Government .. 2501b. GOOOIb. Dairy farmers, who are working on the piece-work system, could be excused if they described the Government's standards as sweating rates. ,Mr. Nash expects every man and every cow to do their duty by I producing more' on the average than j they have ever done in the past. : He has fixed his price on results i only achieved by the very best herds j on large farms. No more than seven | out of every 100 farms reach Mr. j Nash's average of 2501b. per cow, | farms producing 23,0001b. or more | butterfat a year. Labour efficiency j of GOOOIb. is achieved only on farms j milking 70 or more cows. ! Why docs Mr. Nash countenance this and why has he gone back on the evidence, the Act, and the committee's advice, and fixed a price fielow cost? In effect he says that he cajpnot afford to pay a price based on full production costs because that would break the finances of the scheme. As it is, Mr. Nash reckons to pay the farmers £1,535,000 more for their produce than he expects it to realise. But the Act does not take market realisations into consideration. It is concerned with the farmer's costs and his needs, undertaking to meet them both, regardless of markets or finance or deficits. All-things were possible to Mr. Nash, but they are so no longer. Another of his theories has been abandoned. He first took power to vary the price, then he deserted the stabilising idea by paying out a bonus, now he rejects most of his price-fixing formula because he shrinks at the cost of fulfilling it. As it is, after undercutting the farmer, he expects a deficit but will cover a large part of it out of the farmer's own earnings—out of last season's surplus. But farmers will remember that at this stage last year Mr. Nash was forecasting a deficit of £2,000,000 on the original guarantee; whereas the surplus now estimated by Mr. Nash oij that price is £1,400,000, of which £815,349 is being paid out as a bonus. Last year's estimated result was thus £3,400,000 better than Mr. Nash anticipated. Is there any .guarantee that this year's lesult has not also been under-! estimated, with the effect that the price has been kept below cost?, j