EFFECT OK SUPPLIERS

Taranaki Daily News, 21 January 1933, Page 9

EFFECT OK SUPPLIERS

NOT BE FELT IMMEDIATELY HOW NEW RATE WILL OPERATE. RESULTS IN PRICES PER POUND. FREIGHT INCREASE BY 15 PER CENT The effect of the higher exchange rate on dairy companies and their suppliers was explained to a reporter at New Plymouth yesterday. The benefits will not' be felt by the producer immediately. For the past two seasons the supplier has not been receiving the benefit of exchange on his advance, a rule having been made by the Importers’ Association that anything accruing in that way should be held until the produce is sold. “Thus we will not get any additional exchange until the stuff is sold, in about three months,” said the reporter’s informant. “The companies will not receive the benefit in the monthly pay-out but on the ultimate price when it comes to hand on the account sales.”

The operation of the new exchange rate on current prices was explained. Up till Thursday the exchange rate on London was £8 10s per cent. Yesterday it was raised to £24 per cent. ■at sight. The advance against drafts for butter on London yesterday was 7}d. The practice is for the exchange to be deducted from the advance, and for the bank to enter the amount to the credit of the dairy company in its pass book. This will have the effect of increasing the surplus on the original invoice cost by £l5 10s per £lOO (the difference between £8 10s and £24) when the produce is eventually sold in London, and means that with butter at the present value of 81s a cwt there will be an increase of about Ijd a lb above the return when the exchange was at £8 10s per cent. The increment on butter at 81s when the exchange was £8 10s was about 2-3 d per lb. The market for cheese yesterday was: White 47s and coloured 565. Assuming that the present production is two-thirds white and one-third coloured, the average market price for cheese is 50s a cwt. The new rate, of exchange will mean that the price returned to the companies will be enhanced by about per lb of cheese, or nearly 2d per lb butterfat, compared with the returns when the exchange was £8 10s per. cent. SHIPPING FREIGHTS INCREASED. It was pointed out that freights on shipments of dairy produce will be increased from now on. The rate for butter was previously 4s a box, less 15 per cent., equal to 3s 3?d a box. This rate will be raised by 15 per cent., thus making it 3s lid per box. The freight rate for cheese was 7-8 d per lb, less 15 per cent., equal to 6s ll{d per cwt. Fifteen per cent, has now been added to this, bringing it approximately to 8s a cwt.

The reason for these increases in freight were explained in a circular from the New Zealand Dairy Board dated July 19, 1932. It said: “When this board, in conjunction with the Meat Board, negotiated the present overseas freight contract it was arranged that freight should be payable by the board in New Zealand. It will have been obvious to all exporters that this has been of distinct advantage to the industry in view of the fact that the telegraphic rate for remitting money to London has risen to 10 per cent. Up to the present the cost of this has been borne by the shipping companies. The total amount paid for ocean freight by this board is in the neighbourhood of £1,250,000, and as by far the bigger proportion of this has to be remitted to London by the shipping companies the exchange has been a very heavy charge upon them. “They have indicated to the board that they could not continue indefinitely to absorb this charge, and in view of the possibility of an increase in the rate of exchange, they have asked that this board, along with the Meat Board, consider the whole position with a view to giving them some relief. A combined meeting of committees of ‘the two boards has been held, and this was followed by a conference with the representatives of the overseas shipping companies. As a result a final agreement; has been reached on the following basis:— “(1) For all shipments after September 1, 1932, there shall be paid in addition to the contract price of freight a rati of exchange on the freight itself equal to airy increase in the telegraphic. rate of exchange over and above the present telegraphic rate of ten per cent. That is to say, the shipping companies will continue to absorb the present rate of 10 per cent. “(2) Where a steamer is loading at August 31 at any particular port and portion of the produce is loaded prior to the end of August and portion after that date, any increased rate of freight by reason of an increase in exchange taking place in August, which becomes chargeable on that portion loaded after August 31 shall be spread over the whole of the shipment from that particular port on that steamer. This is by reason of the fact that it is impossible to ascertain the exact number of packages of each brand loaded until the whole consignment has been placed on board. Block stacking in cool stores accounts for this. Cheese and butter on any such boats shall be treated as separate loadings.

“(3) On all shipments other than those referred to in paragraph (2) the rate of exchange applicable shall be the rate ruling on the date on which a steamer commences loading refrigerated cargo at any one port.

“(4) The rate of exchange for the purpose of assessing the freight shall be that published by the Associated Banks from time to time.”

It is understood that the increased exchange rate will affect butter and cheese made from about December 1 shipments already made having carried the make prior to that date.”