GUARANTEED PRICES

Te Awamutu Courier, Volume 53, Issue 3791, 5 August 1936, Page 5

GUARANTEED PRICES

GOVERNMENT’S ANNOUNCEMENT. BUTTER AND CHEESE PRICES FIXED. Practically every person interested in the country, so far as the primary industries are concerned, listened-in last night to the announcement by the Hon. W. Nash, Minister of Marketing, announce the Government’s intentions in respect to the guaranteed prices for butter and cheese. Reception was fairly good, and few listeners could mistinderstand the essentials of the decision. Mr Nash made his announcement to Parliament, and there was practically a. full House to listen, with the public galleries crowded. The reference to guaranteed prices was contained in the Budget proposals, from which we extract the following:—

All butter and cheese made after August Ist of the present year becomes the property of the Government when placed on board the overseas steamer for export. At that point the dairy factory will be paid in full the guaranteed price for the dairy produce; by means of a cheque drawn on the dairy industry account at ’the Reserve Bank;—the Government Bank—. The basic f.o.b. guarteed prices for the current season, that is for butter and cheese made between July 31st, 1936 and August Ist, 1937, have been fixed as follows: PRICES. (a) Finest grade creamery butter scoring 93 or, 931 points, 117 s 3d per cwt, or 12 9/16d per lb. (b) First grade whey butter scoring 88 points and over, 107 s lid per cwt, or 11 9/16d per lb. (c) First grade cheese scoring 92 or 924 points, 63s 7d per cwt, or 6 13/16d per lb. These prices will remain constant throughout the sdason and the differential price margins previously announced will apply in respect of produce to which higher or lower grading points are allotted. It is known that there is a wide variation in the costs of butter and cheese making at the various dairy factories throughout the Dominion, so that a fixed f.o.b. purchase price for all butter and cheese Will yield a Varying butterfat price to suppliers as the payout is dependant on manufacturing results and factory costs which in turn are dependent on the circumstances, location, standard of efficiency, nature and quality of raw material and extent of output of individual factories.

The guaranteed price will be. paid in full as soon as the produce is delivered to the overseas steamer. If the proceeds of the sale of this produce do not cover the guaranteed price paid oult then the deficit is not the responsibility of the dairy farmer, but of the Government. If on the other hand the proceeds of sales in the first year are greater than the amount guaranteed, this surplus will be used for the benefit of the dairy farmer and the industry after consultation with its representatives. The intention of the Government in regard to guaranteed prices to dairy farmers was expressed by the Prime Minister in his statement that “guaranteed prices should commence at an average of, say, the last eight or ten years’ prices.” In reply to a question put to me when I attended the National Dairy Association conference at. Hastings in June last, I said, “that the price was positively fixed on the buterfat basis of eight to ten years and the most generous interpretation of that premia .” Prices have been fixed in fulfilment of those promises to ensure that dairy farmers supplying factories working under average factory conditions will receive the average butterfat return of the past eight to ten years, in addition an allowance has been made for increased costs in the industry. The basic f.o.b. purchase prices of cheese and whey butter have been fixed to yield under average factory conditions a margin of Ud per lb of butterfat processed into cheese above the average price of butterfat processed into butter. In ascertaining the average prices the most comnlete statistical information from ‘the industry and Government Departments was made available to the Dairy Advisory Committee for future years. The cost of production, the standard of living of the farmer, is compared with other sections of the community and the sitability of the industry will be taken into account in fixing the guaranteed price.

In actual wording the Act determining the procedure is aS follows: (4) In fixing prices under this section in respect of dairy produce exported after the thirty-first day of July, nineteen hundred and thirtyseven regard Shall be had to the prices fixed under this section in respet of dairy produce exported- before that date and to the following additional considerations, namely (a) the necessity in the public interest of maintaining the stability and efficiency of the dairy industry; (b) the costs involved in the efficient production of dairy produce: (c) the general standard of the living of persons engaged in the dairy industry in comparison with the general standard of living throughout New Zealand; (d) the estimated cost to the Department of marketing the dairy produce concerned and also the cost of the general administration of this Act; (e) any other matters deemed to be relevant.

(h) Due regard having been paid to the several matters mentioned in sub-section 4 hereof the prices fixed in respect of any dairy produce exported after the 31st day of July, nineteen hundred and thirty-seven, shall be such that any efficient producer engaged in the dairy industry under usual conditions and in normal circumstances shall be assured of a sufficient net return from ilhs business to enable him to maintain himself and his family in a reasonable state of comfort. For the purpose of giving effect to these principles the Government has asked Messrs J. Dunlop, representative of the Southern Ward on the New Zealand Dairy Board; W. E. Hale, representative of the New Zealand Co-operative Dairy Company, Limited, on the New Zealand Dairy Board; A. Morton, president of the National Dairy Association; N. H. Moss, barrister and solicitor, Stratford; B. Roberts, M.P., director of Parkvale Co-operative Dairy Company, Ltd.; A. J. Sinclair, secretary-manager of the Te Awamutu Co-operative Dairy Company Ltd.; and D. O. Williams, economist at Massey Agricultural Col-

lege, Palmerston North, to confer with the Executive Commission of Agriculture and to report to the Minister of (Marketing as to the price to be paid next year. The relation of farming costs to guaranteed prices is largely affected by interest 'and other land costs, and I propose later to set out the policy of the Government for adjusting the mortgage liabilities of the farmer to the guaranteed price. The Government’s Marketing Department will market the dairy produce to the best advantage, and the nroceeds will be paid into the Dairy Industry Account at the Reserve Bank. In some years there may be a deficit in the account after the year’s operations; in other years there may be a surplus to be offset against any deficit.

New Zealand dairy produce is mainly sold through importing houses in Tooley Street, London, most of which have regular connections with the distributors of blitter to the British consumer, and the Government has made arrangements to continue to use the efficient genuine distributor and to pay him an adequate commission for the service he performs.