Apple And Pear Board Explains Aims And Policies

Press, Volume C, Issue 29510, 11 May 1961, Page 20

Apple And Pear Board Explains Aims And Policies

Press" Special Service

WELLINGTON, May 10.

To sell the fruit available, and over the season to clear about 6d a case profit, is the aim of the pricing policy of the New Zealand Apple and Pear Marketing Board. If the volume of fruit is such that it cannot be cleared -profitably, then the board sets prices lower to clear supplies. This policy was described in the board’s submissions today to the Government-appoin-ted Committee of Inquiry into apple and pear marketing.

The board said that this year it set low prices for Gravenstein and William's Bon Chretien pears—which cannot be stored for any length of time—knowing this would involve selling about 250.000 cases at a loss.

But, as a result, the fruit was sold quickly while in good condition.

Over-all, the board normally lost money cn the localmarket until the end of the Jonathan season. It then had to recoup its losses over the cool-storage varieties. “On the other hand the board has neyeMendeavoured to exploit the market on scarce cool-stored fruit,” its submissions said. “Whereas at times it has received as high as £3 a box for fruit on the London market, the top price a case fixed in Newj Zealand for any localjy-grown fruit has not been more than 355. Average wholesale prices last year were: Apples 25s 10.03 d, pears 28s 5 68d. Profits From Export

“The board’s profits have been quite substantial, but have come mainly from export. The average profit a case made by the board from the sale of fruit since its inception has been: Exports market: 19.86 d a case; Local market: 2.08 d a case. Although individual cases of overcharging by retailers were not infrequent, the board suggested that the average did not appear to be excessive compared with the agreed price formula. This meant in most centres consumers could buy on a reasonable basis —“provided they are prepared to shop around and encourage the man whose prices are reasonable.” On sales to chain stores, the " board said that some chain stores had not handled apples or had minimised their turnover, because their wholesale organisation had to begin to operate after the wholesaling charges had already been paid to a fruit merchant. “In order to widen its

retail distribution outlets,” the submission continued, “the board decided that from 1961 it would be prepared to give a 5 per cent, discount and sell direct in bulk lots to organisations, so that they could cover wholesaling costs and compete at the retail level." As the wholesale fruit merchants fought this decision strenuously, the board submitted to the committee the correspondence between the Merchants’ Federation and the board on the question.

The essence of the merchants’ claim was that they felt they should have a traditional right to a monopoly

of the wholesale business in apples and pears. The board, however, submitted that no such privilege was provided in the act. Moreover, when, in 1955, the board finally agreed to pay the universal charge of 10 per cent, commission, the merchants accepted the condition that the board would have the full rights of any other supplier. Retail Prices While feeling concern at the high level of retail prices for apples and pears, the board did not favour price control to limit prices. It indicated, however, that a reduction in retailers’ markups might be desirable in the interests of consumers. “The board is particularly concerned," the submission said, “about the unreasonably high prices that prevail when a variety is just rereleased, or when fruit is scarce, or when retailers fail to reflect in their prices the lower wholesale rates for the larger or smaller sizes and commercial grade fruit.” After a trial marketing period in Palmerston North with canned apple juices, apple pie filler and apple sauce, the board was satisfied that a potential market existed for ' these products and had already started the erection of a modem plant at Stoke, in the Nelson province.