Case For Increase In Price Of Bread

Chronicle (Levin), 30 September 1949, Page 7

Case For Increase In Price Of Bread

Press Assaciation)

Industry Facing Recurring Losses

(Per i

W ri 1 1 1 ■ i r ujluin, »ept. An increase of a halfpenny .in the price of bread is sought by the JSTew. zeaiand Federation oi . iBaicers. anq Pastrycooks in an applicafion' today before the Price Tribunal. The federa-. tion is asking fof a halfpenny increase on every loaf up- to two pounds in weight. A & in .the trade the 41b loaf •' is ffegarded as two 21b loves, 'the increase sought where the 41b loaf is sold . as ahr entity is ohe penny. ' v / The schedule submitted by the fedefation dealing with the' proht reSults oi 43 conipanies engaged in the bread industry showed that 18 of them, or approximately 42 per -cent., made an ac tuai loss on last year's trading. "If profit were calculated on a prudent and eorrect basis the pereentage of undertakings making an actua. loss would be much higher, " stated tne submissions. "We doubt if there is any industry in New Zealand whieii has been so undermined financialiy as tlie bread trade. It is perhaps ques tionable whether in some eases reliei may not now be too late." A second schedule, compiled from audited aceounts for the last three years of seven of the largest com panies througkout New Zealand, showed in every case a reduced net profit fpr , 1949 compared with the" profit for 1947. In very case but onc the decline has been progressive foi each of the three years. Araalgamateu turnover figures showed a fali from £618,000 in 1948 to £527,000 in 1949, representing a decline in turnover in one year of *14.7 per cent. Tlie reason for the general fall in gross turnover are given by the federa tion as follows: — 1. The high precentage of flour extracted from wheat, which tends to make the loaf less palatahle. 2. The 40-hour weeks, which results in Monday's bread being staler than would otherwise he the case. 3. Rigid and undue restriction oi profits, which prevented the manut'acturer from following the recognised practice of adding certain ingrealients in breadmaking over and above the statutory requirements. These additional ingredients made the loaf niOre nutritious and niore palatable and improved its keepiug qualities. Their omission is regretted as- much by the trade as by the eonflumer, but it is obvious that no improvement is possible until substautial relief is afl'orded iu the manner of price, stated the submissions. The federation said that no help could be asked of the Tribunal in the case of the first and second caus. but the trade looked confideutly to the Tfi'btmal^fOr-'Speed'y' 'relief 'Uhdei the third head. Mr Justice Hunter is presiding. With hiin are AIr P. N. ITolloway and Mrs D. A. Palmer. The greater part of thnmorning's hearing was occupied with submissions presented by Air H. AI. Ro gerson, Auckland, on behalf of the fed eration. Witnesses were cross-examined bv the Director of Price Control, Mr H. M. Wise. The first witness today was Charles Henry Thomas, the nianager of Walter Buchanan, Ltd., Auckland. Witness said that in his opinion the halfpenny increase per loaf would be insuflicient for the baking industry in general to nieet the high increased bakery plant and motor replacement costs which it inevitablv must face up to. This, he saici, had been accentuated by the fact that practicali\ no new plant was obtainable during the war years. George Rouald Burrowes, ehartereu accountant and secretary of the New Zealand Federation of Bakers and Pas trycooks, said tlie evidence given bi Thomas in regard to cost increases iu the bread trade between 1939 and 194! and' in regard to insufficiency of depre ciation f'uuds for replacement of plan and machinery, applied throughout tio trade. Unless substantial relief were given the trade by an increase in prict the trade' as a whole was faced with economic disaster. The halfpenny iu crease applied for was insufticient to enable the industry to provide for fu ture commitmeuts in respect of plarn replacement and at the same time give anything like a reasonable return to shareholders. Less Bread Eaten Alinost 15 per cent. less bread was eateu in New Zealand in the 1949 fin ancial ye.ar than in 1948, aecording te> figures presented by the federation Mr H. M. Rogerson, fof the federation said bread, for the reasons already out lined in the federation 's submissions, was less palatable and he quoted a rub liishman as saying there was a tremendous increase in the discarding oi bread. Mr Justice Hunter: I 'wonder what they are eating, Butchers tell us it is less meat. Can it be vegetables or are .

they eating less? Ari extra subsidy on llour to bakers was -suggested by the Director^- of tlie Price Control Division, Mr Wise. He also recommended an increase in the deLivered prfce of bread. For the 41b loai he suggested a one lenny increase and a halfpenny increase for 21b loaves. The delivery charge for a 11b loat would be half that for a 21b loaf. The increase in subsidy, he added, should bc set at 8s fid a ton for bak ers in scheduled city areas, and 15s per ton to- bakers in rural or non-schedul-ed areas. The division considered that a graded subsidy on, flour was the best means of aifording- relief where it was most need ed, said,.Mr Wise. There were two alternati.ves * for the granting of relief from the hardship under whieli some bakers were put. One was the retaii price increase of oue halfpenpy asked for by the'bakers. The other was an injrcase in the subsidy ou flour, thns ro- '

1 ducing tlie price to the b&teer. This iatter alternative" could be graded. Dill'erent subsidies could be paid to bakers in different areas. The division considered that the second alternative afforded the better means of giving any justified relief to bakers. ; An -increase of one. halfpenny per loaf vvould be a substantial one and would ■in.inany instances yield the bakers sutt sihntial profits, said. Mf Wise. The same charge on all loaves up to 21b would gu *. against the'baker making a maJorityi.oJ' iarge.* loaves. . A baker in a -rural areu wopld gain least. His position in rela tion to city bakers would be aggravai ed. A. humber of iarger propr.ietary businesses in larger centres were operated Ut a Satisxactory profit, said Mr Wise. On the other hand, bakeries in smaller centres were earning only modest proiits. The flour subsidy adjustment recently announced had taken care oi increased wages costs for eniployers but nad not neeessariiy provided adequatt adjustment for smaller working pro prietors. The division had not been able to agree to figures supplied by the trade, said Mr Wise. There "were some fundamental diiferences in the stateniem which the division could not . reconcile with its own figures. The hearing is to be continued tomor row.