GUARANTEED PRICE

Poverty Bay Herald, Volume LXIII, Issue 19099, 21 August 1936, Page 2

GUARANTEED PRICE

THE WEIGHTED AVERAGE

load to the Farmer.

£1,800,000 DIFFERENCE

Mr. A. J. Sinclair, secretary-manager of the To Awnmutu Co-op. Dairy Company. Limited, writes as follows:

Dairy companies in the South Auckland Province have asked the Minister of Marketing to furnish a detailed statement to tho industry showing how tho basis of 117 s 3d per cwt., f.0.b., or U 9-16 d per lb., was arrived at. it is obvious that the. Government used a weighted average in calculating this price, and the following tables show the serious effect this has had upon the industry.

Section 20, sub-section 3 of the Primary Products Marketing Act states that the price for the first .12 months shall be fixed “after taking into consideration tho prices received in New Zealand in respect of produce of the some or approximately tho same kino and quality, exported from New Zealand during a period of from eight- to 10 years immediately prior to July 31, 1335.” It. should he, noted, that this clearly refers to f.o.b. realisations, of butter dfid cheese, add makes no TeferonCe to butter-fat. EXPORTS OF BUTfER. The following table, compiled froth the Official Year Books, allows the quantities of blitter exported, and the prices realised f.o.b. New Zealand, during the period covered by the above section oi the Act;

Total ... 18,913.489 109,202,130

These are the figures which must have formed tho basis of the Government’s calculations.

There are two methods of determining the average price realised during the above period. The first, is to ascertain the average f.o.b. realisation each year, per cwt. or per lb. ’fhpso figures are shown in the following table:

When these figures aYe added up and divided by 10, the average* Realisation pci' cwt. is 123 s lOfd, or 13.24 d per lb., f.o.b. In this method the. quantity of butter produced in tiny one year affects only that year’s calculation, and is not used to bolster up, or push down, the prifce received in any other year. A “generous interpretation” of this figure would iiavo fixed tho Government’s price at Is l|d f.o.b. This would have enabled butter factories to pay out approximately Is 2jd per lb. butterfat, and would" have given general satisfaction to' the industry. AVERAGE REALISATION Tho Government's price of 117 s 3d, or 12.56 d per lb., has been stated officially to bo a “generous interpretation.’’ It is clear that the method used by the Government was to take the total quantity of produce exported in the 10-year period—lß,9l3,4B9cwt. and divide this into the total realisations —£109,203,130. This gives an average realisation of 115 s 6d per cwt., or 12.37 d per lb. f.o.b. This method, known as the weighted average, makes the dairy farmer pay for the depression all over again. A reference to the first table shows the determined effort lie made to secure a compensating return at the low price levels by a, huge increase in the production of butterfat. The greatly increased l export of dairy produce during the depression went a long way in the direction of enabling the Dominion lo weather the storm, and the reward which the farmer receives is to be. penalised for his industry. Had he employed "goslow" tactics during the depression, he would be. getting a much better price to-day. It is difficult to see how the Government can claim that it has placed the most favourable interpretation oil the Act. Had it, adopted tho only fair method—the price* average instead of the weighted average—the difference in the f.o.b. realisations for butter and cheese, when converted into butterfat, would have represented an increase of approximately £1,800,00Q to butter and cheese suppliers this season, assuming that production will be the same as last venr.

Year pikIoiI .June Cwf. .c 1926 ... 1,090.946 8,958,036 1927 ... 1.360,761 9,761,537 1928 ... 1,467,954 11,015,756 1929 ... 1,567,393 12,744,992 1930 ... 1.317.739 13.022,957 1931 1,808.232 9,918,260 1932 ... 1,968,686 10,127,507 1933 ... 2.430.234 10,897.894 1934 . . 2.825,889 11.830.070 1935 ... 2,575,595 10,625,121

Yrar Milled ’ Per cwt. Per lb. Juno s. d. d. 1926 ... 164 3 17.59 .192? ... 143 4 15.36 1928 ... 164 2 16.52 1929 ... 162 7 17.42 1930 ... 143 3 15.35 1931 ... 109 8 11.75 1932 ... 102 io 11.02 1933 ... 89 8 9,61 1*34 ... 83 9 8.9? 1935 ... 82 5 8.83