PRICE OF SUGAR

Otago Daily Times, Issue 18007, 6 August 1920, Page 7

PRICE OF SUGAR

STATEMENT By BOARD OF TRADE. RECENT NEGOTIATIONS.

Pho Board of Trade lias issued the following" statement: —When tho board recently concluded negotiations on behalf of the Goverrmciit with tho Colonial Sugar Company for tho supply of sugar to New Zealand consumers, it was able to effect an advantageous bargain for the dominion generally, ev--n although tho prieo arranged was nearly double what had obtained, lost year, Pho basic price of £4? per ton f.o.b. Auckland is considerably below world's rxirity, and sugar of like quality cannot be obtained elsewhere under approximately £115 per ton main ports.

Phe board was particularly anxious, to keep tlio retail price as low as possible. It effected certain economies in tho method of .distribution, amounting to £29,000 per annum that enabled tho wholesale price to bo fixed at £47 per ton instead of £47 10s, as recommended by the company. Tho distribution costs are as follows: — WHOLESALER'S POSITION. Deliveries, ex ship—One ton IA, £47, less 3 per cent., 2£, and £, £1 8s 2d; net cost f.o.b. Auckland, £45 lis lOd; plus charges —freight £1 4s, insurance 2s 4d, cartage end wharfage Bs;—total £1 14s 4d ; warehouse oostj £47 6s 2d; net charge to retailer. £48 9s 8d; merchant's profit, £1 3s 6d. SALES EX STORE. The sales ex store show tho following margin:—Cost to merchant, £47 6s 2d; net charge to retailer, £50 8s 3d; £3 2s 7d; less outward cartage, ss; merchant's profit, £2 17s 7 . d - This wider margin allows for store charges and for interest on capital laying out longer than m the case of safes ex ship. Tho board has arranged that a suitable" loading for credit can be made to b'e rebated for prompt cash. THE RETAILER'S POSITION. Charges ex ship—One ton IA, £47; less 2i- per cent, cash discounters 8d; £45 15s 4d. Charges—Freight, £1 4s; insurance, 2s 4d; cartage and wharfage, 8s; commission, 5 per cent.. £2 7s; £4 Is 4d;—total £50 16s 8d; less 5 per cent, invoice cost for prompt cash,_ £2 7s; net cost to retailer,' £48 9s Bd. Prior to July 1 la«t the retailer obtained a gross margin of £7 6s 3d per ton, and it may be contended that if overhead expenses and a fan- return cc.-Jld be provided by this margin hitherto, that the balance of £7 10s 4d, which is the gi-oss profii by selling at 6d per lb, would do likewise under the new cor ditjons. The board, however, lias caused inquiries to Tie made, and lias examined the accounts of several leading Wellington grocers, and these disclose that for some time past the /retailer has not received an adequate return for his services. The accounts show that wages paper, ,-tring, delivery expenses, and other overhead items have so materially increased that tho margin of profit was exceedingly low, and in some cases the accounts actually showed a loss on the year's working. The following statement shows a ratio of expenses and profits to turnover. The names of the firm for obvious reasons axe omitted: —

These figures aro the results of two complete years' trading, hence the theoretical argument feibout sugar being a quick seller does not do justice to tho retailer, as even allowing for the number of times turned over during the year, the absolute results at the end of the year are comparatively small. , _By selling sugar at 6|d per pound, or £50 13s 4d per * ton, tho gross return would be 20.03 per cent., and after deducting, say, 16 per cent., for overhead, a net profit "of 4per cent, would not be more than a fair reward for tho retailer's services to the community.. The board, therefore, after carcfully reviewing the case, both from the consumer's and the retailer's point of viq\v, and after making full allowance for the increased turnover due to the increased cost of sugar, and the fact that overhead expenses have not immediately increased in the same ratio, has decided to approve of a. flat rate of 6id per pound for all sales, subject to the usual discounts. It is to be understood that the price is not fixed at 6id, and any retailer, for the purpose of competition, may sell at less than 6J.d, but anyone in the main centres selling at a price in cxcess of per pound, or its equivalent when transit charges are incurred, is liable to tho penalties imposed for a breach of regulations issued under "The Board of Trade Act, 1919."

1918. Gross Net Retailer. Expenses, profit. profit. A 17.03 18.87 1.84 B 16.86 15.86 Loss C 15.99 19.57 3.57 D 12.72 16.62 3.90 E 18.98 21.22 2.24 1919. ' A 16.99 19.20 2.21 B 16.76 16.71 Loss C 19.14 18.32 ' Loss D 12.127 15.69 3.42 E 19.39 20.51 1.12