GUARANTEED PRICES

Wanganui Chronicle, Volume 79, Issue 185, 6 August 1936, Page 6

GUARANTEED PRICES

REACTIONS OF DAIRYMEN SOME GLOOMY; OTHERS PLEASED OVER-RUN AN IMPORTANT MATTER INCREASED COSTS THE PROBLEM Yesterday was “Guaranteecd Price Day,” one of the most important days in the history of New Zealand. Two schools of thought were in evidence — one bitterly disappointed, the other still cheerfully alive with hope. Taken generally, the dairy farmer was disappointed at the range of guaranteed prices. He expected more because the outlook at the marketing end of the industry is bright and, because of new legislation, he is faced with increasing costSj Reduced to a matter of a sentence the problem he is trying to work out at the moment is: “Can the factory over-run | be disposed of to the Government under the guaranteed price in such a way as to more than cover increased costs in respect to collection of cream manufacture of butter and delivery free on board ship? It is admitted that costs are rising. Evidence of that is found very easily. One factory operating near Wanganui, and it is generally agreed that the Wanganui factories, largely because of size, are run very economically, estimates that costs will increase by a half-penny per lb. Wages, in one instance, will mean an additional £1 per ton, but collection of cream and supply of butter boxes, in face of a ban on imports, cannot be assessed in figures per ton as yet. One factory adjacent to Wanganui sets the increase in cost of cream collection at 50 per cent, and supply of butter boxes at 33 per cent. Wages are expected to be nearly double what they are. Exact figures cannot be framed at the moment. The nearest reliable information on the point comes from Mr. A. J. Sinclair, secretary to the Te Awamutu Dairy Company, who sets the increase at id per lb of butterfat on last year. Mr. A. Haworth, secretary to the Okoia and Wangaehu Dairy Companies, supports that figure from independent working and without knowledge of what conclusion Mr. Sinclair arrived at; so it may be taken that a half-penny increase in costs on last year is a fairly reliable basis to work upon. Mr. Kaworth surmises that if costs do rise to that extent the over-run will permit the payment to suppliers of Is Id per lb of butterfat over the whole season. The matter of over-run deserves some explanation. The term defines the difference in weight of manufactured butter compared with that of butterfat. It is important, in that while the Government’s price of 12 9-16 d is paid on the weight of finest butter manufactured the factory pays suppliers for butter fat. A great many dairy farmers when they read the guaranteed price forget that it was based on butter and not on butterfat, and they visioned factory costs, which are so steadily rising, having to be taken from the guaranteed figure before the supplier was paid. Those farmers forgot the over-run. Suppliers who have factory balancesheets in their hands may ascertain the over-run under the provisions of the Dairy Industry Amendment Act of 1922. In the case of the Okoia factory, for instance, the auditor shows that the weight of butter made from each pound of butterfat was 1.2396 lbs. last year. In other words, it was about 24 per cent.—24 more pounds of butter made out of every lOOlbs. of butterfat. In Wangaehu’s case the amount of butter manufactured from each pound of butterfat was 1.22521b5. Questions were asked by the reporter in an endeavour to ascertain what the Wanganui factories are likely to pay out immediately. Elevenpence was suggested, the argument against a higher figure being that, like the Government, factory administration will “play safe” in the meantime. There is no certainty yet as to what costs will be. Demands are being made for certain scales of pay, shorter hours are to apply, and until the industry gets down to a normal working basis some reserve will be necessary in case of contingencies. It was pointed out by the more hopeful section of the industry, however, that lid was not a bad payout, seeing that it was “guaranteed.” “But having arrived at that conclusion, what is going to happen to the farm?” a farmer of the opposite school of thought wanted to know. “Increased costs apply to the running of the farm as much as they do to the administration of the factory. Wages for milking a herd of 50 to 70 cows have gone up 45 to 50 per cent. Trying to make two ends meet on 1936 rates of pay against 1935 conditions might be worth the candle. Trying to do that on 1936 guaranteed prices against 1936 conditions is a different thing altogether. I think Mr. Haworth’s estimate of a halfpenny per pound increase in costs is conservative. It will be more like a ; penny.” “The dairy-farmers are dense and I ignorant if they cannot feel pleased 1 at the guaranteed price,” stated a I spokesman for the opposite school ol thought, producing a factory balancesheet. “I think the factories could easily pay out a shilling now and be quite safe.” He added that the cost of storage of Duller, for instance, would be lowered. “To put it clearly,” he said, the need for a factory to hold I butter on its own account to speculate with, meet the market, whatever you like to call it, has disappeared. The object will be to get the produce on board ship as quickly as possible.” That point was mentioned to Mr. Haworth, who replied that the Dairy Board would continue to regulate shipments as in the past. Shipment of butter would be made to suit the marketing conditions at the other end. “Does that mean the good old 20th of the month will disappear?” asked a gloomy voice—another dairy farmer who, like them all, has come to look upon the 20th day of every month in the dairy season as the best days of the year. It was stated that sucn matters had not been gone into, but if regulation of export went ahead as it did in past seasons the payouts would be as regular as they always had been notwithstanding the vagaries of ships.