THE DAIRY INDUSTRY

Te Awamutu Courier, Volume 52, Issue 3750, 1 May 1936, Page 6

THE DAIRY INDUSTRY

DOUBT ABOUT GOVERNMENT’S MARKETING SCHEME. INFLUENCE OF PRODUCTION COSTS. Some aspects of the Primary Products Marketing Bill which did not appear to have received consideration were discussed by the manager of a large butter company in Hamilton on Thursday. The Prime Minister, the Rl. Hon. M. J. Savage, he said, had reiterated again and again that the guaranteed price would be based on the average price paid to primary producers for the last eight or ten year.'..

The manager said he could not understand why one or other of the two periods was not specifically given, for there was a marked difference between the average price paid for the last eight years and the average price paid for the last ten years. According to Government figures, the average price for the ten years from the 192526 season to the 1934-35 season, inclusive, worked out at 13.681 d per lb butter fat, while the average price for the eight years, from the 1927-28 season to the 1934-35 season, inclusive, was 12.811 d per lb, a difference of nearly Id per lb butter fat. DIFFICULTY POINTED OUT. To give the farmers Is IJd per lb butter fat, about the average price for the last ten years, the Government would have to pay 12id per lb f.0.b., for the butter. The speaker pointed out that the guaranteed price, according to the Government’s statements, was to be paid on the finished product and not on the butter fat. Now came the difficulty, he Bald. The Government had decided to reduce the hours and increase the pay of factory workers. This would mean an addition to the cost of manufacturing butter of id per lb butter fat and of manufacturing cheese of Id per lb butter fat. Then, increased wages were to be paid to farm workers, an additional cost, estimated by an accountant associated with the Farmers’ Union at 2-Jd per lb butter fat. These additional costs in the manufacture of butter would bring realisations down from Is IJd, the average price for the last 10 years, to lOjd per lb butter fat. If the guaranteed price was to cover all these additional costs it could not be less than Is 4jd per lb butter'fat, if it was to give the farmer a return equal to the average of the last 10,years. “CONSIDERABLE . INCREASE." The manager added that the pay out for butter for the season 1935-36, which had not yet ended, was estimated at Hid per lb butter fat. If the price under normal conditions was the same next year, the farmer would receive a considerable increase under the guaranteed price scheme. The actual difference was not readily ascertainable owing to the variation in basis between butter fat and butter. The speaker said he wondered i where the money would eventually come from. It was not difficult to guess what the farmer would say when, as might happen, realisations were considerably greater than the price paid out, and the difference was paid into the special dairy reserve accounts to liquidate debts that might accrue during the first few seasons.