DAIRY PRODUCE PRICES

Southland Times, Issue 23992, 6 December 1939, Page 6

DAIRY PRODUCE PRICES

GUARANTEE SYSTEM REVIEWED

MORE PAID OUT THAN RECEIVED

MAJORITY OF FARMERS BELIEVED SATISFIED (Special to The Times) WELLINGTON, December 5. Referring to the recent discussion on the guaranteed price for 1938-39, the Minister of Marketing, the Hon. W. Nash, stated today that it appeared that the representatives of the dairy industry had not taken into account all the details which were relevant to the guaranteed price before and since its inception. There were one or two points in particular, said Mr Nash, which required emphasis. The first was that no dairy farmer really wanted to go back to the mercies of the open market over which he had no control. There was no argument about the principle of guaranteed oi stabilized prices. That had not been made clear in recent discussions, but a stable price in itself was a factor of some value and the working dairy farmer was very well aware of that. It would be remembered that for the first year the guaranteed price was assessed on an average of the previous ten years’ realizations. The average prices paid for butterfat, for the ten-year period prior to July 31, 1935, were:— Per lb. Butterfat for butter 12.73 d Butterfat for cheese 13.81 d The guaranteed price for the first year, the 1936-37 season, was in advance of that figure, making a pay-out for the 1936-37 season of approximately 13.6 d per lb for butter and 15.18 d per lb for -cheese. The first point to make was that the actual pay-outs were over |d on the average higher than the estimated guaranteed price. That meant that for the first year of the guaranteed price the dairy farmers of this country were actually getting much more than had been calculated on an average basis. FIGURES COMPARED Mr Nash then compared the above figures with those for the two preceding years. They were:— PAY-OUTS FOR BUTTER AND CHEESE 1934-35 1935-36 1936-37 (under guaranteed price)

The guaranteed price for 1936-37 not only included payment for butter and cheese carried over from the previous season, when there was no guaranteed price and farmers would otherwise have had to take market returns, but it also included an additional amount of |d per lb paid to cheese factories in order to make their pay-out IJd higher than that for butter factories as had been promised earlier. “Under the first year’s guaranteed price, then, the dairy farmer not only got more than he had received on the average of 10 years, but he also got more thap the two previous years and more than was estimated as a fair guaranteed price for that year,” said Mr Nash. “The same can be said of subsequent years. If we take the guaranteed price for the second year, 1937-38, and for the third year, 1938-39, we will find that again the average payout from dairy factories was much higher than was estimated as the fair guaranteed price.” .The figures, in pence per lb of butterfat, were:—

EXCESS PAY-OUT The exact figures showing the excess of average pay-out over the basic guaranteed price were as follows:— Excess payment Excess over payoui Butterfat Amount gm’tee d. Ib £ £

“What do these figures show?” asked Mr Nash. “They show that in 1937-38 suppliers of butter factories received almost Id more than was considered fair at the beginning of the seasoi., while suppliers of cheese factories received £d more. Last year, the guaranteed price was substantially increased, so much so liat the estimated pay-out was 2d higher than the estimated price for the previous year. But these estimates were exceeded, for in the case of both the suppliers of butter factories and suppliers of cheese factories the actual pay-out was much higher than the Government estimated as being a fair figure. That being the case, it. is very difficult to find any basis whatsoever for an increase in the guaranteed price for this year which has been fixed at the same level as last season. DAIRY INDUSTRY ACCOUNT “As far as the dairy industry account itself is concerned, it is well known that the payments out to dairy factories have exceeded materially the market realization over the period since the inception of the guaranteed price,” he said. “During the three complete years the guaranteed price system has' been in operation, the excess paid out by the Marketing Department to the farmer over the amount realized in London in two of these years is approximately £2,824,645; and for the year 1937-38 the realization was £576,724 over the amount paid out to farmers, making a net pay-out to the farmer for the three seasons of £2,247,921 in excess of realization by sale.” The details were as follows: 1936- Deficit £272,109 1937- Surplus £576,724 1938- Estimated deficit £2,552,536 STABILITY AND CONSISTENCY All the evidence that he had received from various sources in New Zealand was to the effect that dairy farmers on the whole were doing well and with few exceptions were quite satisfied with the guaranteed price. However, if the industry had some evidence relating to dairy farmers’ balance-sheets which it would like to submit to the Government, he was sure that the Government

would be very willing indeed to examine individual farmers’ returns.

“The Government believes the guaranteed price procedure has brought more benefits to the working farmer than any policy that has been introduced into the dairy industry for many years,” said Mr Nash. “It has brought stability. It has brought consistency, certainty with regard to market price, and relief from worry to a greater degree than ever before. The Government desires to continue the guaranteed price, and believes that the majority of working farmers also desire it continued, and that the statements in the Press do not represent the working farmers’ views.”

d. d. d. Butter 9.5 12.125 13.558 Cheese 10.125 13.125 15.176

1936-37 Estimated Actual Butter 13.04 13.558 Cheese ■ 14.54 1937-38 15.176 Estimated Actual Butter 13.880 14.812 Cheese .15.880 1938-39 16.389 Estimated Actual Butter 15.880 16.199 Cheese 17.88 18.060

193G-37— Butter .518 323,904,000 699,093 Cheese .636 80,172,000 212,456 911,549 1937-38— Butter .932 301,130,000 1,169,388 Cheese .509 78,632,000 166,765 1.336,153 1938-39— Butter .319 265,019,495 352,255 Cheese .18 75,173,372 56,380 408,635