A SAVING OF £250,000

Southland Times, Issue 23026, 21 October 1936, Page 4

A SAVING OF £250,000

. Dairy Companies’ Costs GUARANTEED PRICE PLAN COMMISSION, LEVY AND INTEREST (From Our Parliamentary Reporter.) Wellington, October 20 It is estimated that the savings in costs to dairy companies by way of interest, dairy levy and commission through the operation of the Government’s guaranteed price plan will amount to more than £250,000. This estimate is based on figures which have been supplied to Mr J. G. Barclay (Lab., Marsden), by the acting-Director of Marketing (Mr G. A. Duncan). Dealing with the savings which the scheme has effected in interest charges, Mr Duncan pointed out that when butter and cheese were shipped from New Zealand for sale on consignment in the United Kingdom, the dairy companies, as owners of the produce, had to borrow from some source to the value of the produce, pending the receipt of the sale moneys from the buyer. Therefore, the daily companies were involved in an interest charge on the value of the produce for the period from the time of shipment until receipt of the sale proceeds. The companies met this interest charge, either by Paying interest on a bank overdraft or through the medium of the interest factor in the exchange rate or by both of these processes. The interest period involved was approximately seven weeks. Board's Levy Reduced. When butter and cheese were sold under f.o.b. terms, as in the present Government plan, the dairy companies, as owners of the produce, were paid the full sale price on shipment, said Mr Duncan. Thus, apart from any considerations of the market return, compared with the return under the Government purchase plan, the saving in interest or its equivalent represented in the exchange rate accrued to the dairy companies. In general terms, it could be said that the saving in interest under the present plan, compared with the sale of produce on a consignment basis, was approximately £121,000, which represented the value of the produce at 41 per cent, for a period of seven weeks. Under the guaranteed price plan the Dairv Board levy was reduced and the saving to the dairy companies on that item was estimated to be £41,000. The reduction of the selling commission from 21 per cent, to 2 per cent, represented approximately £90,000, on the London selling value of the butter and cheese at approximately last season’s prices, said Mr Duncan. This saving was set off against the cost of the Marketing Department and represented a definite; benefit to producers. Commenting on the details supplied by Mr Duncan, Mr Barclay pointed out that the aggregate savings under the three headings covered would amount to £252,000.