DAIRY INDUSTRY

Southland Times, Issue 21429, 25 June 1931, Page 5

DAIRY INDUSTRY

INCREASE IN PRODUCTION SERIOUS DECLINE IN PRICES. NATIONAL DAIRY ASSOCIATION’S REVIEW. An interesting review of the past dairying season is contained in the annual report of the National Dairy Association which was presented at the annual conference of deelgates which commenced at New Plymouth yesterday. The report states, inter alia Production has' continued on an exceedingly high plane and the figures to April 30 show that a new record has been established. For the nine months to that date butter fat production shows an increase of 2.07 per cent, over the corresponding period of 1929-30, which in turn was 11.35 per cent, greater than the year preceding. The increase has almost entirely gone into the manufacture of cheese, butter remaining at practically the same level as the preceding season. The gradings for the nine months showing the corresponding figures for 1929-30 are as follows:—Butter (salted) 86,755 tons (88,571 tons), (unsalted) 3,510 tons (£1,536 tons). A total of 90,265 tons (90,108 tons), an increase of 0.17 per cent. Cheese (coloured) 26,979 tons (26,187 tons), (white) 56,385 tons (52,872 tons). A total of 83,364 tons (79,059 tons). Increase of 5.44 per cent. Quality.

The quality of our butter has been well maintained, the average gradings being slightly better than last season, and complaints from the marketing end have been comparatively few. The new regulation gazetted at the commencement of the season limiting the salt content of salted butter appears to have been justified in view of previous Tbmplaints regarding inequality in this respect. The general getup and appearance of containers should be closely watched by butter manufacturers to ensure their product reaching the prospective buyer in as attractive form as possible. The cheese industry has been confronted by a number of serious problems in regard to quality, and these have been the subject of exhaustive investigation by the scientific research authorities and others concerned. As the whole question is at present under consideration by a committee convened by the Minister of Agriculture, and comprising leaders of all branches of the industry, it is not our intention to make any comment on the situation in this report. The matter will be fully discussed at the conference, and the findings of the committee appointed by the Minister will be placed before delegates at that time. While it was generally recognized that a lower level of prices must be expected for the season under review’, the industry was not prepared for- the disastrous slump in butter and cheese prices which actually occurred. The downward trend of the world market values was not confined to dairy produce alone, but applied equally to practically all commodity prices, being accentuated by the universal trade depression, unemployment and financial stringency. The butter season opened with the market in the neighbourhood of 136/138/-, but a steady decline took place immediately with a continuous drop until November, when after a further sharp decline, the disastrous figures of 98/- was reached. This is the lowest price recorded on the London market since the 1908-09 season. There was a slight recovery from middle December onward, prices rising from 110/- and reaching. 120/124/- at the end of February. Then followed another downward movement, the market touching 103/- in early May.

Compared with butter, our cheese prices were even more unsatisfactory. The season opened at 78/83/. with a downward movement commencing at once, and this was not relieved by the middle of season rise which characterized butter. By December, the market was down to 58/60/and continued to slump until the record low level of 44/- was reached in May, a price which is without parallel since, the 1904-05 season.

The following table shows the monthly average of prices realized on the London market for the nine months period ending April 30, with corresponding figures for the previous year:—

Waxing of Cheese. The rapid expansion of cheese waxing over the. last three years has made it posisblo for factory directors to weigh the re.lative advantages and disadvantages of this practice and the subject has been given close consideration by the industry during the past year. From reports to hand, the opinion of the Home trade is apparently fairly evenly divided, a certain section preferring waxed, anothed unwaxed, and a third, with no decided preference. Prices for waxed and unwaxed show no noticeable difference, and from this point of view there has been no appreciable advantage accruing to producers. Cheesemakers have watched very closely the effect of waxing in relation to quality, and the matter has also been the subject of study at the Massey College. Procided the cheese is well made, not carrying excessive moisture, and is not waxed too soon after manufacture, it does not have any ill effects, but at the same time, it cannot be said that it actually improves the maturing and keeping quality of the article. On the other hand, if the cheese is not well made, or is waxed too early, the effect is frequently detrimental, often resulting in soft crowns and a distinct sliminess between the cheese and the wax which is most objectionable, and these defects are naturally reflected in the prices returned.

The hope which was entertained by the industry that waxing would prevent the formation of mould has not been sustained, and experience has shown that mould is still liable to form under the wax coating. The saving of 1 per cent, shrinkage has been the main factor in deciding dairy com, panies to wax their products, and provided the practice was not attended by any ill effects at the marketing end, the saying to producers well warrants consideration. In the present season (based on returns to March 31), 85 per cent, of the cheese sent to the grading stores has been waxed, and on this basis the season will show- a gain of £35,000 to the industry based on present market values, and after allowing for the cost of wax, etc. This matter is the subject of a remit for discussion at the forthcoming Conference when all aspects will, no doubt, receive full consideration from delegates. Statistics. , The tables appended hereunder have been computed from statistics furnished by the Government Statistician, and cover the two last completed seasons. The figures relate to the ordinary financial year of the dairy companies which ends in the majority of cases in July. These will be of value to dairymen as indicating the trend of

manufacturing and selling costs in relation to the market values of their produce. Operating Expenses—--1928-29 1929-30. ’ £ £ Salaries and Wages 945,005 957,438 Milk and Cream Cartage 297,693 320,142 Materials (boxes, salt, rennet, etc.) ’759,068 654,189 Other Expenses of Manufacture and Operation 954,548 1,025,083 Marketing Expenses 1,087,248 1,157,543 Total Operating Expenses 1 4,043,562 4,114,395 Cost of Butter-fat (pay-out) 19,957,426 19,523,344 Undistributed Surplus . 361,145 402,242 £24,362,133 24,039,981 Total butter-fat supplied to factories (lbs.) 257,996,539 288,462,650 No. of factories . 490 491 No. of factory ,-employees 4,288 4,228 No. of suppliers 57,823 60,067 Average pay-out per supplier £345 £325 Average pay-out per lb. butter-fat 18.57 d. 16.24 d. “Other Expenses of Manufacture” comprises cost of fuel and power; insurances on plant, machinery and buildings; general office expenses, legal, interest and bank charges, repairs, rates and taxes, bad debts, and travelling expenses. “Marketing Expenses” comprises all charges from factory door to time of sale, including transportation, grading, cool stores, insurance, levy, commission and exchange. ' Herd Testing. This movement has held its position during the past season with approximately 20 per cent, of our dairy cattle under test. The lower prices for butterfat must assuredly give fresh impetus to this most important work. Our chief competitor, Denmark, tests no less than 33.1-3 per cent, of their cows each year, and their average production is now 2701 b. a cow. The average in this Dominion is barely 2201 b. Climatic conditions give us an overwhelming advantage, an advantage which few fanners in the past have fully exploited. Now that production costs have become so vital, it is imperative that the industry should concentrate more on herd testing than it has done in the past. Increased production per cow and per acre automatically reduces production costs. Factory directors can give their suppliers a strong lead by .testing their own herds, as well as actively ■ supporting the herd testing movement in other ways.' Fertilizers. ■■ -■ One of the outstanding recommendations: of the Railway Royal Commission which was set up to report to. the Government on railway matters, was a heavy • increase in railage on agricultural lime, artificial manures and raw materials for the manufacture of artificial manures. In the case of agricultural lime, the’ additional charges would have amounted to £53,000 per annum, and in the case of artificial manures and raw materials to £122,000.

The executive protested very strongly to the Government against this proposed additional burden on the producer, and urged that the time was most inopportune to increase cost of production in any form. It is pleasing to record that the commission’s recommendation was not put into effect. In face of the prevailing financial stringency, the problem of financing adequate supplies of fertilizer in order to maintain and increase the productive capacity of their farms, is proving a very difficult one for number of farmers. The urgency of the problem has been recognized by the Government which has assisted to the extent of making available through the Rural Intermediate Credit Board, a special fund of £lOO,OOO for advance in sums not exceeding £75. Numbers of farmers in urgent need of fertilizers had been unable to secure assistance through the Rural Intermediate Credit Board owing to inability to offer the class of security in accord with the board’s normal requirements. In order to meet this position, the Government has authorized the board to relax its security requirements in respect to the special fund of £lOO,OOO with a view to making it more readily accessible to those who, under ordinary conditions, would have been debarred.

One of the conditions attaching to this fund was that the dairy company or other body interested in the individual farmer should quarantee the repayment of his loan to the extent of 50 per cent. This was considered by the executive to be an impossible condition as far as dairy companies were concerned, owing to the fact that most of them had already pledged their resources and credit to the utmost to assist their suppliers, and could not accept any further contingent liabilities. The Prime Minister was accordingly waited upon by the executive and the position placed before him with a request that the condition relating to the dairy company quarantee be removed. The Prime Minister undertook to confer with the Rural Intermediate Credit Board to see what could be done to comply with our request.

Butter, August 1930/31 1929/30. 170/-173/-September 125/-127/- ’ 175/-179/-October 112/-115A 174/-177/-November 102/-105A 171/-176A December 160/-166/-January 114/416/-154/-156A February 147/449/March 134/438/April 125/428/May 108/410/Cheese. 126/-130/-White. Coloured. 1930/31. 1929-30. 1930/31. 1929/30. 75/-76A 86/-88A 90/-92/-73/-74A 92/-94A 73/-75A 93/-94Z-73/-75A 94/-96A 70/-72/-93/-94A "bl-TLl-94/-96A 60/-62/-90/-92/- 58/-60/-89/-91A 56/-58/-87/-89/- 56/-58A 85/-87Z-54/-56A 88/-90/- ' 54/-55/-80/-82A 81/-82/-50/-51A 76A77/- 52/-54A 79/-82Z-48/-50/ 80/-81/- 51/-53/-85/-86A