DAIRY INDUSTRY

Otago Daily Times, Issue 23353, 19 November 1937, Page 8

DAIRY INDUSTRY

THE GUARANTEED PRICE VARIOUS FACTORS CONSIDERED WIDE FIELD OF INQUIRY MARKETING DEPARTMENT’S REPORT (From Our Parliamentary Reporter) WELLINGTON, Nov. 18. The factors taken into consideration by the Government in fixing the guaranteed price for the current dairy season are recounted in the first annual report of the Primary Products Marketing Department, which was presented in the House of Representatives to-day. “The guaranteed price had to be such as would maintain both the stability and the efficiency of the dairy industry,” states the report. “ Both could be destroyed by a price that is either too high or too low. Some 21,500 return forms were sent to fanners under the direction of the Government Statistician. Based on 19.307 complete returns sent in by farmers the following information was derived;—Variation in the size of herds, the average butter-fat yield per cow and per acre, dairy farm population, the incidence of employment on dairy farms under the headings of male and female, family labour and hired labour, and the distribution of male labour according to the size of the herd. “ This was the first comprehensive view ever obtained of the New Zealand dairy industry. A more detailed and intensive investigation was made of dairy farms by the Department of Agriculture from the point of view of the cost of analysis. Of these, 75 per cent, consisted of farms investigated by the department on behalf of the Dairy Industry Commission* 1934. The information supplemented and confinned the broader survey of the Government Statistician,

“A detailed analysis was also made of dairy factory costs. The production per acre of from 1001 b to 1751 b of butter-fat was regarded as a standard which could readily be realised by an efficient producer operating under the usual conditidhs and in normal circumstances. On the basis of using adult male labour 12,5001 b of butter-fat was taken as the labour standard of efficiency for two units. The efficiency per cow was taken at 2581 b of butter-fat, and the capitalisation, including the unimproved value, improvements, stock and chattels, at £73 a cow. The standard rate of interest applied to determine the total interest charges was 4.} per cent. The standard allowance for working and maintenance costs was 5.07 d per lb butter-fat. The standard per pig returns was 1.54 d per lb butter-fat. “This figure,” the report continues, “ is probably below the average of efficient farmers, as the Dominion average was taken, including farms where no pigs are kept and farms supplying casein factories. The allowance for factory costs and ail other fcosts to an f.o.b. ocean steamer was 2.25 d per lb butter-fat for butter and 3.25 d per lb butter-fat for cheese. In the overrun of 21.75 per cent, and cheese yield of 2.45 d per lb there is a margin in favour of reasonably efficient factories working under average conditions. “ The allowance on a two-unit farm for housing and other requisites was 30s a week, and the labour reward for the farmer was fixed at £4 a week.

“ The history of the dairy industry shows clearly that high prices do not necessarily promote the stability of the industry because of the tendency to capitalise the benefits in inflated land and stock values. The guaranteed price should not be such as will induce persons to capitalise its benefits, especially as the trend of land and stock prices in 1936-37 was of a hardening nature. The standards of efficiency are greatly exceeded by the more efficient dairy farmers of New Zealand, and the allowances for working and maintenance costs are on such a scale that if they are expended for the purposes specified, only the inefficient farmer or the farmer working under unusual conditions or in abnormal circumstances could fail to attain the average standards mentioned. Any excess of efficiency above these standards and, say, an increase in the pig returns, represent an additional return to the farmer. “ It must also be remembered that the efficient farmer in usual circumstances and in normal conditions is fully protected from the vicissitudes of the external market. With the allowances for farm labour, there is no justification for any unpaid or sweated labour to be utilised on any efficient dairy farm in New Zealand, and if there is any unpaid labour employed the farmer is increasing his own personal income. It should, of course, be stressed that there is nothing essentially reprehensible in the utilisation within reasonable limits of the family labour units employed, whether male or female labour, members of family, or employees. The data collected shows that approximately only 20 per cent, of the labour employed in the industry is hired labour. “ New procedure has been organised for the purpose of inducing the average efficient farmer to work his holding and pay him for his knowledge and experience, and for the time worked, while freeing him from the menace of price fluctuations.”