DUNEDIN MILK SUPPLY

Otago Daily Times, Issue 22741, 29 November 1935, Page 10

DUNEDIN MILK SUPPLY

TO THE EDITOR. Sir, —There have been several letters in ycur columns relating to the complicated question of the supply of milk to the city. I have no axe to grind, nor am I representing any interested party. My sole purpose is to define clearly as far as possible the position of the farmer in relation to the price he receives ex farm gate and the price at which his milk is sold in the city. I can support all my facts, and I desire readers to realise the true position. First, examine the price ex farm gate. The farmer to-day is being offered 6d pet gallon. Please note that the farmer has absolutely no control over the price, and there is no controlling set of circumstances which will ensure that his price is a reasonable one. The law of supply and demand is not allowed to operate to give a satisfactory prise, and competition from the city for supply is so dominated by one large buyer that the price is not allowed to rise to a reasonable level. It therefore appears to be desirable to have buyers of more equal purchasing power so as to rationalise the price. A discussion of the price ex farm gate of 6cl per gallon brings in the butter companies. Dairy farmers have the choice between home separation and retaining the skim milk or selling the whole of their milk. By using the skim milk for feeding pigs, farmers can add up to as much as 3d per lb to their average return per lb butter-fat. Butter companies paid out an average of up to 9Jd per. lb fat for last season, and returns from pigs would return a total of approximately Is per lb fat. It is Generally accepted that there are too many butter companies operating in Otago, but it cannot be denied that each of these companies is giving a real service to the dairy farmer. The system of payment for fat by butter companies is an excellent one, as the known final pay-out by each company at the end of the season gives the dairy farmer an unfailing index as to the most efficiently run company. There is no monopoly by any one butter company, and the proprietary companies are not large enough to dominate the position. In other words, competition (provided it is heatlhy) will eliminate the inefficient butter company and automatically give the dairy farmer the fullest possible return. But what is the position with the seller of milk? He is in the dark all the time. The one organisation which could give him a true idea of the real value of his milk is so deeply concerned in homeseparated cream for butter manufacturing that this all-important comparison is lost. This indicates, to my mind, a serious weakness in the present system. It appears, then, that a previous correspondent's suggestion that the farmers should co-operate and form an organisation called, say, Otago Dairy Farmers, Ltd., would enable a competitive payout, and would solve the difficulty, but such a company would require to have a substantial measure of support. It is not necessary to upset any large distributing organisation atr present operating, as I recognise that an existing large capital outlay is giving a good service, but the many scattered and inefficient units should be coordinated so as to compete in purchasing power and test the efficiency of the present big organisation. I now come to the most important reason for this outline of the position, and the figures quoted hereunder will make astounding reading to dairy farmers. For the year ended March 31, 1935, the Wellington City Corporation Milk Department bought 1,847,698 gallons of milk at a price which returned 8.713 d per gallon to the producers for milk delivered at farm gate. This equalled 20.143 d per lb butter-fat. | The working expenses of the department averaged at 7.382 d per gallon (milk and cream), so it appears that, under a monopoly scheme, the expenses per gallon tend to equal the buying cost at farm gate. Under the wasteful system at present in vogue in Dunedin it would obviously be ridiculous to say that the working expenses are under 6d per gallon (our price ex farm) when in Wellington, and without competition, the cost is stated at 20 per cent. more. The answer, therefore, appears to be—pay the farmers 8d per gallon ex farm gate. The Wellington figures quoted, by the way, are based on an average retail price of milk of 20.533 d per gallon. My argument is not designed to make the public pay more than a fair and reasonable price for its milk. The note I wish to sound is that the milk distributing trade in Dunedin has to recognise that the fanner is entitled to more protection from the exploitation he has suffered in the past. All price cutting and high expense ratios fly back with unerring swiftness to the producer. In this dissertation of costs I have not emphasised the great gain to consumers, under municipal control, of healthful and sanitary distribution. The serious attention of farmers is asked for. Their opinions are invited. This letter is no idle effort. If the milk trade gives no sign of recognising that the farmer should receive more, then explanations, and possibly a solution, will be found in a different quarter. Milk suppliers to Oamaru receive 8d per gallon. It is now seriously asked that the trade in Dunedin does the same. Finally, if the milk trade does not cooperate, ' the writer can seriously promise that any concerted movement made by the farmers will not lack the necessary organisation and skilled assistance to bring pressure to bear where it will be most required.—l am, etc., Fair Plat.