BETTER PRICE

Taranaki Daily News, 18 September 1920, Page 5

BETTER PRICE

THE INQUIRY OPENS. HARD LOT OF THE DAIRYMAN. A LOSS ON PRODUCTION. (By Wire.—Parliamentary Reporter.) Wellington, Last Night. The committee appointed by the House of Representatives to consider the retail price of butter, in view of the increase in the export price, took some evidence to-day. The 'members of the committee present weres Mr. J. A. Nash (chairman), the Right Hon. W. F. Massey, and Messrs E, Kellett, J. R. Hamilton, F. F Hockly, W. D. Powdrell, H. Poland, 0. J. Hawken, and J, McCombs. The evidence taken bore chiefly on the question of the cost of producing butter. The chairman suggested that evidence should be taken in the following order: Departmental, the producers, the factories, the distributors, the retailers, and the consumers. The consumera, and specially the Labor organisations, would require to be heard. A letter was read from the Auckland Butter Merchants' Association suggesting the retail price should be not less than 2s lOd per pound. The packing and delivery costs of IJd per pound, aud the retailers' profit of 2d per pound, would require to be added to the export price of 2s 63 per pound. COST TO PRODUCER. Arthur R. Stone, of the Agricultural Department, said/ the department had gathered some information about the operations of typical The cases covered dairying districts throughout Now Zealand. He had taken the expenditure in 24 cases, and had deducted the price of all by-products to secure the actual cost of production. The land was reckoned at the present market value in most cases. Some men had valued the land at the prices paid for it—not more than one-third of the present value. The average of the.24 cases showed that the cost of producing butter was 2s 5d per pound, and that the gross income was 2s 2%d. There was a loss of, 2%d per pound. Interest had been taken at 0 per cent. Land that had been bought for £lO was valued for the purposes of these figures at • £35 and more. Mr. W. D. Powdrell: <: I suppose the labor of the family is allowed for?" Witness: "Yes; the rates vary from 6d per hour to 2s. Perhaps the average is Is Od per hour. Most of the farmers seem to have put their time in at 11 hours per day during the season. Some farmers have given no rate or hours. They have put down a sum which they think covers the labor of the family during the' year." The witness added that he had worked out the additional cost per pound of butter-fat due to increases in the value of the land. The difference between the price paid for the land and the present value of the land made a difference of from 5d to ll|d per pound in the cost of production. TARANAKI CASES. The witness quoted a typical case, in which a profit of about 3d per pound of butter-fat was shown on present prices. Labor had been charged at the rate of only fid per hour, and there was no chr.rge for cultivation or management. The total charge for labor, with 40 cows in milk, was £M7 for the season. Another farmer with 415 cows allowed £5 per cow for labor, and put down the cost of production at la Bd, and the revenue at Is lOd per lb. If interest were charged on the present value of the land in the second case the cost of production would be 2s 5d per pound. The land had been bought at £9 per acre in 1882, and was now worth £3O per acre. A Taranaki case showed the land at the 1911 purchase price of £35 per acre. Labor was charged at £llß for the season, roughly £4 per cow, and the cost of production was set down at Is 6y 2 d, while the revenue per lb was Is llVid. A second Taranaki case, with land valued at £l6O per acre and labor charged at £lO per cow, gave the cost of production as 2s M per pound, and the revenue as 2s OJd per pound. A Waikato case gave the value of the land at £55 per acre. Labor was charged at £!) per cow. The revenue per pound of nutter-fat was set down at 2s 3d, and the cost of production at 2s Id. Answering a question, the witness said that in most cases interest was charged at C per cent, against the whole capita] value of the land. Some of the fanners might have sources of revenue other than butter. The farmer charged 6 per cent, on the value of the home as well as of the farm.

CHEESE PAID BETTER. W. M. Singleton, Assistant Director of the Dairy Division of the Agricultural Department, presented some figures relating to butter produced. He estimated the butter production of the Dominion at 28,000 tons, and the home consumption at 11,000 tons. This was not all factory butter. The quantity available for export" last year had been about 17,000 tons, and the actual export bad been about 14,000 tons. Butter production had fallen during the last five years, owing to the price paid by the British Government for butter being less per pound of butter-fat than the price for cheese. While the quantity of butter graded had declined from 409,000 cwt. to 380,000 cwt. between 1816-17 and 1919-20, the quantity of cheese graded had risen from 1,011,00* cwt. to 1,208,000 cwt. The retail price of butter i'n Britain in June last was 3s to 3s Od per pound. The price in Sydney was 2s lOd per pound. Mr. Singleton told the committee that an American commission had held that the dairy farmer was entitled to interest on his investment, recompense for all costs, and a 10 per cent, profit on his costs. He had prepared somo fig. ures relating to the 1914 and 1920 seasons. The cost of labor, of" land, of cows, and of materials had increased in that period. Labor bad gone up 80 per cent, and land 00 per cent. Casual labor had gone up from Is per hour to 2s Od per hour. He estimated the 1920 cost of producing butter from a 180 lb cow at 2s 4d per pound, while the income was at the rate of Is 5Jd per pound. NOT WHAT IT SEEMS. Mr. MoOombs: "And land is increasing in value in spite of the loss. It is a remarkable phenomenon." Mr. Singleton: "The explanation is that the average dairy farmer is not an accountant. If you charge interest first the fanner is not making current wages. If you chfKga labor first he is pot making SntereeV* 1 m. ifom&' JU 2b».-t»BW. mi tfc

working members of the family arc not getting a fair wage. The farmer would often be better off if he put his money out at interest, and went to wor'fc himself at current wages." Mr. Powdrell remarked that the farmer often found this out after a year or two. Then he sold out. He made his profits that way. A man might be making a loss on a poor or undeveloped herd, while a neighbor with a better herd was making a profit. Mr. Singleton: "That is so." GROCERS* VIEWPOINT. David Haberfield, president of the Christchurch Master Grocers'" Association, said that before the war the grocers bought butter for Is Id and retailed it at Is 3d, subject to discounts to customers. The minimum wage to a shop assistant was then £2 10s. In 1916 the butter had coßt the grocer Is 6d, and the maximum retail price had been Is Bd. The percentage of profit had declined, while the minimum wage had risen to £4 7s Od. All handling costs had increased. The grocers considered their margin on butter sold wholesale at 2s 6d per pound Bhould be 4d per pound for cash sales, and 5d per pound for booked sales. Butter represented one-seventh of the turnover in the grocery business. The grocers' profit on farmers' butter was 2d to 3d per pound. He did not think the consumption per head in the average family exceeded half a pound per week. The price was sure to reduce consumption. , Mr. Singleton agreed that the consumption per head per week was about half a pound. Mr. Nash placed before the committee figures showing the following current retail prices of butter:—England 3s per pound (home-made 4s f>d), Canada 3s, Western Australia, Victoria,. Queensland, and New South Wales 2s lOd, New Zealand lis 9d. Mr. McCombs drew attention to the fact that one of the farmers quoted by Mr. Stone charged interest on his land at a value of £l6 per acre, and showed >a losa of £3OO a year at the present prico of butter-fat, yet he added that he could sell his land at £22 per acre. The discrepancies were extraordinary, and seemed to make the figures valueless. Mr. Hoekly: "If the dairy farmer* knew the real position few* of tWa would stay in the occupation. Wis i$P poorest game in the world." _ The committee adjourned until f&ics-