B. —6.

The basic f.o.b. guaranteed prices for the current season —that is, for butter and cheese made between 31st July, 1936, and Ist August of 1937 —have been fixed as follows — Per Cwt. Per Lb. s. d. d. (a) Finest grade creamery butter scoring 93 or 93| points . . . . . . .. 117 3 or 12ft (b) First grade whey butter scoring 88 points and over .. ■ • 107 11 or lift (c) First grade cheese scoring 92 or 92| points . . 63 7 or 6# These prices will remain constant throughout the season and the differential price-margins previously announced will apply in respect of produce to which higher or lower grading points are allotted. It is known that there is a wide variation in the costs of butter and cheese making at the various dairy factories throughout the Dominion, so that a fixed f.o.b. purchase price for all butter and cheese will yield a varying butterfat price to suppliers, as the pay-out is dependant on manufacturing results and factory costs, which in turn are dependant on the circumstances, location, standard of efficiency, nature and quality of raw material, and extent of output of individual factories. The guaranteed price will be paid in full as soon as the produce is delivered to the overseas steamer. If the proceeds of the sale of this produce do not cover the guaranteed price paid out, then the deficit is not the responsibility of the dairy-farmer but of the Government. If on the other hand the proceeds of sale in the first year are greater than the amount guaranteed, this surplus will be used for the benefit of the dairy-farmer and the industry after consultation with its representatives. The intention of the Government in regard to guaranteed prices to dairyfarmers was expressed by the Prime Minister in his statement, that " guaranteed prices should commence at an average of, say, the last eight or ten years' prices ". In reply to a question put to me when I attended the National Dairy Association Conference at Hastings in ,lune last I said, " that the price was positively fixed on the butterfat basis of eight to ten years, and the most generous interpretation of that promise ". Prices have been fixed in fulfilment of those promises to ensure that dairy-farmers supplying factories working under average factory conditions will receive the average butterfat return of the past eight to ten years. In addition, an allowance has been made for increased costs in the industry. The basic f.o.b. purchase prices of cheese and whey butter have been fixed to yield, under average factory conditions, a margin of Ud. per pound of butterfat processed into cheese above the average price of butterfat processed into butter. In ascertaining the average prices the most complete statistical information from the industry and Government Departments was made available to the Dairy Advisory Committee. For future years the cost of production, the standard of living of the farmer as compared with other sections of the community, and the stability of the industry will be taken into account in fixing the guaranteed price. The actual wording of the Act determining the procedure is as follows: — "(4) In fixing prices under this section in respect of dairy-produce exported after the thirty-first day of July, nineteen hundred and thirtyseven, regard shall be had to the prices fixed under this section in respect of dairy-produce exported before that date, and to the following additional considerations, namely:— "(a) The necessity in the public interest of maintaining the stability and efficiency of the dairy industry: "(b) The costs involved in the efficient production of dairy-produce: " (c) The general standard of living of persons engaged in the dairy industry in comparison with the general standard of living throughout New Zealand: "(d) The estimated cost to the Department of marketing the dairyproduce concerned, and also the cost of the general administration of this Act: "(e) Any other matters deemed to be relevant.

Guaranteed prices.

Price for future years.

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