GUARANTEED PRICE

Otago Daily Times, Issue 23200, 26 May 1937, Page 7

GUARANTEED PRICE

,«. RATES FOR COMING SEASON BASIS OF COMPUTATION INCREASED MARGIN FOR CHEESE (Per United Press Association) WELLINGTON, May 25. The interim report of the Guaranteed Prices Investigation Committee, which was released tonifijht ststcsi— — In working out the basic guaranteed price of butter for the 1936-37 export season the committee based its calculations on an average overrun of 21.75 per cent, and average factory costs of 2.25 d pet lb of butterfat, the estimate of factory costs appeared to have been on the generous side by approximately .25d a lb It may be necessary, in view of the increases in factory costs, to adopt the figure of .25d a lb of butter-fat as the measure of increase fpr the complete 1936-37 season. On this basis the basic guaranteed price of butter for the 1937-38 season should make allowance for factory costs at .25d a lb of butter-fat. For an ascertained average run the basic guaranteed prices of cheese for the 1936-37 export season was calculated on an average cheese yield of 2.51 d gross and 2.45 d net and average factory costs of 2.75 d per lb of butter-fat.' The estimate of factory costs was accurate, but in view of the low yields shown bv a large number Of companies it may be necessary to revise the yield figure in fixing the basic guaranteed price for the 1937-38 season. In view of the increases in factory costs, the basic guaranteed price of cheese for the 1937-38 season should make allowance for factory costs at 3.25 d per lb of butter-fat, and, possibly, for a cheese vield lower than 9.5 M gross and 2.45 d net. The committee considered that as all the data it required would not be available before July it should make an interim report and recommendation regarding a marginal price for cheese compared with butter The committee, after veviewing the various factors concerning the industrv. recommended that the basic guaranteed price of cheese for the 1937-38 season should be fixed at a level that should enable a cheese manufacturing company that shows a yield not markedly below the standard to make an effective marginal butter-fat return to its suppliers of not less than twopence a lb over the butter-fat return made by a butter manufacturing company of comparable efficiency operating under comparable conditions. On the assumption that the effective butter-fat margin that will be realised by the suppliers of whole milk tc cheese manufacturing companies for the current season will be approximately one penny, the effect of the adootion of the recommended level will be to. increase the effective butter-fat margin realised by such suppliers for the 1937-38 season by at least a penny a lb. OBJECT OF INCREASE STABILISATION OF PRODUCTION STATEMENT BY ACTING PRIME MINISTER __— / (Per United Press Association) HAWERA, May 25. " The intention of the Government is to fix the prices of butter and cheese on a basis which will enable a cheese manufacturing company conducted with average efficiency and economy to pay its suppliers such an amount per lb of butter-fat in excess of the rate paid to a butter manufacturing company conducted with average efficiency and economy as will stabilise the production of both cheese and butter." said the Acting Prime Minister (Mr P. Fraser) at the opening of the Winter Show to-night. "The marginal payment in favour of cheese aimed at for this season was Hd per lb of butter-fat. In view of the urgency of the matter, the Government requested the committee appointed to make recommendations in regard tc prices to give consideration to an appropriate marginal payment in favour of cheese for the coming season. The committee has made a recommendation which has been approved by the Government." The Government realised the necessity for maintaining the cheese exports of the Dominion, Mr Fraser said, and knew that the cheese interests were aoprehensive that there might be a change-over of supply from cheese factories to butter factories. The Government agreed with the committee in stressing the necessity for the stabilisation of the production of cheese in the Dominion, and it considered that in order to achieve that object the basic guaranteed price of cheese in relation to that of butter should be so fixed as '■ to provide a marginal payment in favour of cheese of 2d per pound' of butter-fat. "This marginal price ot 2d a pound," the Minister said, " is expected to be realised by those cheese manufacturing companies showing a cheese yield and cost figures which, taken together, give at least the average manufacturing results of cheese factories throughout the Dominion Thus a cheese manufacturing company showing cost figures higher than the average or a cheese yield lower than the average may not realise the full marginal payment of 2d a pound."