DAIRY PROBLEMS

Otago Daily Times, Issue 23225, 24 June 1937, Page 3

DAIRY PROBLEMS

REMUS BEFORE CONFERENCE PAYMENT FOR BUTTER AND CHEESE MINISTER FAVOURS PRESENT SYSTEM (Per United Press Association) HAMILTON, June 23. Matters affecting the dairy industry in the Dominion were referred to by the Minister of Agriculture (Mr W. Lee Martin) in a speech at the opening of the National Dairy Association Conference to-day. The Minister dealt with various remits on the order paper, referring in particular to the association’s desire for a change in the present system of Government payment for butter and cheese, the question of dairy farm instruction, interest charges and storage costs.

Referring to the remit; ‘ That payment by the Government for butter and cheese be made at the factory door or at the time of grading, or at some other point before f.o.b. ocean steamer,” Mr Lbe Martin said that a similar remit had been considered at the recent South Island Dairy Association Conference. He could say, however, that very full consideration had been given to the most appropriate point at which payment for butter and cheese should be made, and the committee responsible for working out the details had finally come to the definite conclusion that the point of f.o.b. ocean steamer was the most suitable.

He would suggest to the conference that both from the point of view of the industry and the Government the present method was the most suitable. The point of f.o.b. ocean steamer had three advantages;—

First, the existing arrangements for transport and storage of produce were in the hands of the dairy industry through the dairy companies and their subsidiary cool storage companies. It therefore seemed desirable that that organisation and control by the industry should not be interfered with, unless there were very strong reasons to the contrary. In the second place quantities of butter and cheese were frequently withdrawn from the export allocations for local sale, and this would cause a complication if payment had already been made for this produce for export. Then, the grading stores throughout New Zealand were almost entirely co-operatively owned, That being the case, it seemed reasonable that the dairy .factory companies should have the responsibility of seeing to the proper transport and storage of the butter and cheese and that they should deliver the produce ready for export, free on board the ocean steamer.

INCREASED INTEREST CHARGES He had noticed that the representatives of some dairy companies had commented on their increased interest charges, and they had suggested that any additional cost under this heading arose from a longer period of storage than was formerly the case. He considered that any increase in interest charges arose mainly from the fact that this season with the certainty of the guaranteed price payments, dairy factory companies had been able to assist their suppliers by making relatively higher monthly advance payments than they were able to make under the old system. This had, in the case of companies working on an overdraft, led to a somewhat greater payment for bank interest. As they were aware, arrangements had been made for store warrant advances to be made by the banks at the best interest rate (4-J per cent.), the amount of the advance being about 90 per cent, of the ultimate value of the produce. STORAGE COSTS “ During the season,” the Minister continued, “there has been in some cases a slight increase in the period of storage compared with last year. The Government desires to spread shipments and arrivals of butter and cheese in England as evenly as possible, and in accordance with a programme worked out by the London officers of the department in collaboration with the selling agents It is felt that the industry will heartily approve of this policy. I think any extra cost of storage would be very slight indeed, and would be covered in the general allowance made for factory costs in the computation of the guaranteed price. The guaranteed price plan aims to provide a butter-fat payout for suppliers at an average figure. In order to carry out this policy, allowance is made in the calculation for the average ascertained butter factory and cheese factory costs. These costs will, of course, include the items interest and storage. If payment for the butter and cheese and ownership by the Government were to take place at a point before f.o.b ocean steamer, then the savings in interest and storage costs which dairy factory companies would make would be allowed for in the commutation of the guaranteed prices, which, as already stated, are designed to return an average butterfat payout to suppliers. PRICES FOR BUTTER A remit. “ That a premium be paid for butter manufactured during the winter months so that the winter supply of cream may be encouraged,” introduced a suggestion which was well worthy of consideration, the Minister said, and he was asking that the Guaranteed Price Committee consider the matter and make a recommendation.

Regarding a remit, “ That the guaranteed price be based on the costs of production of cheese factories manufacturing 150-200 tons annually,” the Minister said he thought the Guaranteed Price Committee would give very careful consideration to cheese factory costs. He would remind the conference that the guaranteed prices were not intended to equalise existing differences in the economic circumstances of butter and cheese factories throughout the Dominion. The aim was to pay prices which would enable cheese and butter factory companies working under average conditions to pay an ascertained orice DAIRY FARM INSTRUCTION “ I noticed in the annual report of your association,” Mr Lee Martin said, “ that emphasis is laid on the importance of a system of universal dairy farm instruction. The subject will shortly be placed before Cabinet, and I can assure you that

the Government will give careful consideration to the wishes of the industry.” The number of men engaged in the work had varied from time to time since the system had first been inaugurated in 1912, and at present there were 39 instructors of this type, and two further appointments had been approved. The amount of butter made for the year ended July 31, 1936, was 146,687 tons, and of that quantity 103,180 tons, or 70 per cent., was made by creameries having instructors, leaving 43,507 tons with out this service. The cheese manufacturers, however, were not so fortunate. There were 85,555 tons of cheese made in the same period, and of that volume 34,356 tons, or 40 per cent., were made under instruction, leaving a balance of 51,199 tons without supervision. In 1913, before the present system ol farm instruction was established, an inspection of 600 milking plants showed that 23 per cent were in good condition, 27 per cent, fair, and 50 per cent, were bad. In 1935, of the machines inspected, 50 per cent, were good, 41 per cent, fair, and 9 per cent bad. Those figures provided concrete evidence of the service which was being rendered by the instructors, who were tackling the problem at the root. The conditions under which the officers had been appointed in the past had been that the Government paid half their salaries and the dairy companies the other half, plus the cost of transport. The minimum number of suppliers required to qualify for the full subsidy was 500. It had been estimated that an additional 38 men would be required to cover those districts which were not fully served, and a total cost to the Dominion would be 0.0266 d per lb of butter-fat. In allocating the cost as between dairy companies, the practice followed in the past has been to base it on butter-fat in some cases and on the number of suppliers in others, as it has been recognised that circumstances vary. In some districts the number of suppliers per ton of butter or cheese is very much greater than in others, and the allocation is not always equitable when based on either fat or suppliers alone. It has been suggested that if the contribution from the dairy companies were based equally on the weight of butter-fat, and the number of suppliers to the company, this inequality would be reduced, and some consideration will be given to this point in the event of the Dominion scheme being established. “ It must be kept in mind that the farm dairy instruction service is primarily one of instruction, although it is necessary in exceptional cases to make it one of inspection. The number of cases in which this attitude must be taken is, fortunately, few. Combined with the milk and cream grading system, it has been responsible for a definite improvement in the standard of the raw material being delivered to our dairy factories.”