COSTS AND PRICES

Waikato Times, Volume 127, Issue 21184, 6 August 1940, Page 4

COSTS AND PRICES

Besides providing for the greatest possible increase in production to meet the war situation, the policy required in the dairy industry today should look beyond the war into the conditions that will prevail when the world returns to peace. In this connection the observations of the chairman of the Te Awamutu Dairy Company in his annual report are of particular interest. Mr Rhodes said a reduction in the cost of production was preferable to an advance in the prices for produce, because the industry would have to face an impoverished market after the war, with strong competition from margarine.

In the conditions thus anticipated the ability to produce butter and cheese at lower costs will be far more important to the industry than any temporary advantage gained now from an inflation of prices. Of course it is difficult to reduce costs in present conditions. Every fresh imposition of taxation, every advance in the price of material reauired on the farm, or any other expenditure brought about by the war and other circumstances is eventually reflected in the cost of production. But even though it may be difficult and the opportunities be few, the Government and the industry must always be watchful for any chance that will tend to ease overhead costs. If that is done the adjustment after the war will be less painful.

In view of war-time demands the dairying industry has decided not to press for increased prices providing it is assured that costs will be kept within reason. It is entitled to the utmost care on the part of the Government to ensure that costs are not allowed to press too heavily. Although, as usual, the price to be paid for this season’s produce will be announced belatedly, it is generally expected that prices will be the same as last season, and most farmers are planning on that assumption. Negotiations with the British Government are proceeding and it is expected that an announcement will be made soon. Actually, of course, the return to the farmer is reduced with each advance in taxes or other costs. Increased production on economic lines should have the effect of reducing the cost per pound of produce