PAYMENT FOR CHEESE

Wanganui Chronicle, Volume 79, Issue 202, 27 August 1936, Page 11

PAYMENT FOR CHEESE

SHRINKAGE DEDUCTION REPLY TO TARANAKI CRITICISM. [ Per Frees Association. J WELLINGTON, Aug. 26. A reply to Taranaki criticism of the shrinkage deduction of 24 per cent, on both waxed and unwaxed cheese is made by the acting-Director I of Marketing, Mr. G. A. Duncan. I “The Taranaki criticism seems io arise from a misunderstanding of the position,” said Mr. Duncan. “The intention of the Government under the guaranteed price plan was to secure for the dairy farmers a payout based on the average of the past eight to ten years. When Cabinet decided what the payout for butter-fat in I milk supplied for cheese-making should be, it became necessary to convert this payout figure into the f.o.b. purchase price for cheese. Directors and officials of dairy companies know that one factor in this conversion formula is the yield of cheese pel pound of butter-fat and they know also that in determining the yield allowance is made for cheese shrinkage. Thus 24 per cent, shrinkage results in a lower net cheese yield than is the case if 1 per cent, or 14 per cent, shrinkage is allowed. Consequently, to secure a given payout per pound butter-fat the f.o.b. purchase price of cheese will be higher when a cheese shrinkage of 24 per cent, is allowed than will be the c|se when the shrinkage allowance is 14. “I think,” continued Mr. Duncan, “that the foregoing explanation and assurance that the payout conversion formula included a 24 per cent, shrinkage allowance should convince the Taranaki cheese producers that they suffer no injustice through the deduction of a uniform shrinkage on : all cheese. If a 14 per cent, shrinkage allowance on waxed cheese had , been taken the basic purchase price of | cheese would have been lower than 6 13-16 d a pound, but the resulting 1 payout to dairy farmers would have 1 been unaltered. It is not desired that i all the cheese exported should be waxed, so the position is considered to be fairly met when the marketing department defrays the cost of waxing by an allowance of 44d a crate. This allowance was fixed after consultation with the secretaries of several large cheese manufacturing companies and it adequately covers the cost of waxing for the season just closed.”