UNREALISED COSTS

Waikato Times, Volume 121, Issue 20247, 16 July 1937, Page 9

UNREALISED COSTS

BOBBY CALF INDUSTRY. VALUE OF THE PRODUCT. MR PHILLIPS EXPLAINS. That the farming community generally did not realise the high costs to exporters involved in the bobby calf industry and that an entirely exaggerated view of the real value of the calves was held In many quarters were opinions expressed by Mr W A. Phillips, chairman of directors of the New Zealand Co-operative Pig Marketing Association, in a statement clarifying the misunderstanding that has arisen regarding the real value’of the product. Owing mainly to the competitive factors in the bobhy calf trade which at times—and which was recently the case in certain districts in the Waikato—passed beyond the control of the exporters themselves, it was not surprising that farmers were confused as to the real value of the bobby calf, said Mr Phillips. “The average live weight of calves slaughtered in the Auckland province approximates G2 lbs., of which, after skinning, boning and trimming, roughly only 25 per cent in weight is retained as exportable veal,” stated Mr Phillips. “The veal is exported frozen in bags, and is usually sold forward at an upset c-i.f.e. price, with delivery spread much beyond the normal season for collection. “The skin from an average weight calf would weigh approximately 4J lbs and Is usually sold green on r freezing works’ weight and grade. The offal, consisting of hearts, kidneys, livers, etc., is exported frozen In containers, and is sold accordingly. The veil, which is the only remaining by-product of value, is mainly used in New Zealand for the manufacture of rennet. Costs Involved. “The current export values delivered at port works of these products, from the average weight of calf, is approximately as follows: Boned veal ss, skin 5s 6d, offal Is 2d, exchango (on meat and offal) Is 4d; total gross value 13s. Out of this the following charges have to be met: Overseas freight on meat is 3d, killing and other works’ charges to f.o.b. 3s Id, marine Insurance and export selling commission 3d; a total of 4s 7d. “This leaves a net, all-sunk value to the exporter of approximately 8s sd. Therefore, to arrive at the price payable to the farmer it Is necessary to provide for all costs of handling the live product from farm gate to port works. These are: Cartage to rail, at present Is 3d; agent’s commission and railage, varying from 3d to Is 3d according to distance from works. “These are direct charges only, and make no allowance for indirect 'losses euoh as that on calves rejected for export, excessive railage costs which occur on both sides of the peak period, additional storage costs on veal to effect shipments which buyers require spread much beyond the currency of the slaughtering season. In consequence, yet another indirect loss Is occasioned by the abnormal shrinkage In weight of veal packed. All of these factors are common to the trade and must, therefore, be provided for. “Finally.” said Mr Phillips, “I wish to make It clear that my comments apply to current values only, which are based on the most favourable port works’ charges. In saying this, however, it is desirable to mention that although over the last two years the average export value of the veal ami offal has varied very little, this does not apply lo the skin market, in which substantial fluctuations have occurred. The demand for bobby veal ami offal is mainly from England w-lnlc that for skins is international' in scope, fashions playing a big part In the competition for the product and the resultant price offered."