PRODUCTION COSTS

Otago Daily Times, Issue 22397, 19 October 1934, Page 7

PRODUCTION COSTS

AVENUES OF ECONOMY INTERNAL AND EXTERNAL TRANSPORT Detailed consideration is given to the allied questions of effecting economies in the collection, distribution and transport of dairy produce. The commission recommends that the Dairy Produce Control Board be empowered to minimise overlapping in collection of milk and cream by zoning suppliers, by defining collection routes, by arranging for collection of cream from side roads by one lorry on behalf of all companies concerned, by arranging for contracts for collection, and by arranging for and effecting the amalgamation of dairy companies. A system of zoning is suitable in the case of factories situated in isolated and relatively compact areas, but cannot be universally applied. Further suggestions which might be helpful are—(a) Amendment of the Dairy Industry Act, requiring dairy farmers to supply to their respective factories for longer periods; and (b) Encouragement of the making of boundary agreements between companies. The commission recommends further that, if necessary, the Dairy Produce Control Board should confer with the Government with a view to having vehicles employed in the collection of cream brought under the jurisdiction of the transport licensing authorities. COLLECTION OF CREAM In the matter of cream collection the Transport Department submitted evidence secured as a result of exhaustive investigations in the Manawatuand Waikato ‘districts, showing percentages of savings possible under revised systems. Applying these percentages to tire total cost of transport of cream from farms to dairy factories for the whole Dominion, the approximate result would be as under: — f Cost under present system .. 411,000 Cost under rationalised system 323,000 Cost under system of zoning of supply .. . 261,000 That is, the saving under a rationalised system of transport would be approximately £BB,OOO, and under a system of zoned supply it would be approximately £150,000. AMALGAMATION OF COMPANIES There is opportunity in some districts, particularly in regard to butter-making, for the amalgamation of certain companies. Better means of transport, more

modern equipment, and better roads have made it possible for the cream-supply of a district to be concentrated at one factory. Savings in cost can be effected all round, and much overlapping and unsound competition for supply eliminated. In view of these facts and of the wide diversity of conditions under which factories operate, the commission recommends that the Dairy Produce Control Board undertake a survey of the economic position of, dairy factories with a view to determining to what extent factories are redundant or uneconomical and what policy should be adopted in particular cases. In regard to amalgamations of companies, it is considered by the commission that a useful purpose could he served by special committees set up under authority given to the Dairy Produce Control Board. If a case for amalgamation in any district were advanced, the special committee could investigate the matter fully and make a recommendation upon which the Dairy Produce Control Board could act. The committee could explore the possibilities of savings by amalgamation, and could determine the particular means by which amalgamation would be achieved. It is conceivable that the assistance of the committee might lead to adoption of an amalgamation proposal without the exercise of any compulsion by the Dairy Produce Control Board, and in any event no compulsory action would be taken unless there were an unanswerable case for amalgamation, INTERNAL TRANSPORT The commission was given an indication that if the Dairy Produce Control Board, on behalf of the industry, submitted a proposal to the Railways Department, whereby carriage of dairy produce from factory to cool store could be rationalised on the lines of concentration on rail transport, except where special circumstances made transport by road or sea definitely more economical, such a proposal would be welcomed, and would be carefully considered with a view to revising the system under which the rates are fixed, instituting a zoning system, and effecting a reduction in transport charges to the industry as a whole.

Accordingly, the commission has recommended that the Dairy Produce Control Board bo given power to make contracts with the Railways Department and other transport authorities for the transport within New Zealand of butter, cheese and other dairy produce. The commission considers, further, that the question of transport of cream to factories might very well be brought under the jurisdiction of the Transport Department.

IMPROVEMENT OF SHIPPING SERVICE The commission considers that with the guarantee of quantities to the shipping companies, a more centralised shipping service could be established which would give regular weekly arrivals at United Kingdom .ports. To this end, the Dairy Produce Control Board, or the Council of Production and Trade acting in its interests, should have authority to negotiate shipping contracts without being unduly subservient to meat or any other interests. The recommendations of the Dairy Produce Control Board in regard to improvements in the shipping service are as follows: 1. That a contract be made with the overseas shipping lines calling for a vessel to be despatched each week with a minimum of 50,000 hoses of butter and 10,000 crates of cheese for London from Auckland and Wellington combined, with the inclusion of New Plymouth whenever possible. Such vessels to complete the journey in <ls days and to arrive in London at weekly intervals. 2. That any vessel allotted to load the equivalent of 40,000 freight carcasses or more in dairy produce and meeting with delay at roadstead ports for 48 running hours through weather conditions other than rain shall, at the request of the board, proceed upon her voyage to the nest port of loading. Any dairy produce not loaded at any port through such circumstances shall, whenever possible, be replaced with other dairy produce from following ports of loading, and any dairy produce short shipped at the port where delay occurs shall be added to the nest available loading. - (In the event of failure on the part of the ship owner to agree to such a clause, then the board to reserve the right to , reduce quantities allotted in order to minimise any overloading of the market by arrivals, due to delays under the special circumstances mentioned.) 3. ,That the Dairy Produce Esport Control Act be amended in order that the dairying industry may negotiate its freight agreements to the best advantage of the industry. During the taking of evidence a representative of one of the roadstead port authorities indicated his approval of clause 2 above, which refers to the loading of dairy produce at roadstead ports. The commission recommends that an endeavour be made to effect the improvements which have been suggested by the Dairy Produce Control Board in clauses 1 and 2.