PRICE OF SUGAR

Dominion, Volume 13, Issue 263, 31 July 1920, Page 8

PRICE OF SUGAR

■ STATEMENT BY BOARD OP ; TRADE 'RECENT NEGOTIATIONS The Board of Trade Ims issued the fol- ■ lowing statement:—When the board rc- > cently concluded negotiations on behalf i of the Government with the Colonial I Sugar Company for the supply of sugar • to New Zealand consumers it was able ■ to effect an advantageous bargain for | the Dominion generally, even although I tho price arranged was nearly doublo i what had obtained la6t year. The basic price of per ton, f.o.b. Auckland, is considerably below world's parity, and > sugar of like quality cannot bo obtained ■ elsewhere under approximately =Clls per ' ton main ports. The board was particularly anxious to keep the retail price as low as possible It effected certain economies in tho method of distribution, amounting to £39,000 per annum, that enabled the wholesalo price to bo fixed at £47 per ton instead of £47 10s., ns recommended by tho company. The distribution costs are as follows:— Wholesaler's Position, Dolivorips, ex ship—One ton 1A £47, less 3 per cent. Z\ and \. £1 Bs.--2d.: net cost f.o.b. Auckland, .£45 lis. 10d.; plus charges—freight £1 45., insurance 2?. 4d., cartage and wharfage Bs.: total £1 Us. 4d.; warehouse cost, £47 6s. 2d.*, net charge to retailer, ,£4B 9s, Bd.; merchant's profit, £1 3s. 6d. . Sales Ex Store. The sales ex store show the following margin:—Cost to merchant, £47 6s. 2d.; net charge- to retailer, Bs. 9d.: £3 2?. 7d.; less outward cartage, 55.; merchant's profit, £2 17s. 7d. . This wider margin allows for store ohargos and for interest on capital laying out longer than in the oase of sales ex ship. The board has arranged that a suitable loading for credit can bo made to be rebated for prompt case. The Retailer's Position. Charges ex ship.—One ton.lA, ,£47; less 2i per cent, cash discount, 4s. Bd.: £45 15s. 4d. Charges.—Freight £1 45., insurance 2s. 4d., cartage and wharfago Bs., commission 5 per cent. £2 75.: £i Is. 4d.: total, £50 16s. Bd.; less 5 per cent, invoico cost for prompt cash £2 75.; Jiefc cost to retailer, £48 9s. Bd. Prior to July 1 last the retailer obtained a gross margin of £7' 6s. 3d. per ton, and it may bo contended that if overhead expenses and a- fair return could bo provided by this margin hitherto, that the balanco of £7 10s. 4d., which' is the gross profit by selling at 6d. per lb., would do likewise under the new conditions. The board, however, has caused inquiries to be made, and has examined tho accounts of several leading Wellington grocers, and these disclose that for 6omo time past tho retailer has not received 1 ail adequate return for his services. The accounts show that wages, paper, string, delivery expenses, and other overhead items have so materially increased that tho margin of profit was exceedingly low. and in 6omo coses tho accounts actually showed a loss on the year's working. The following statement bliows a ratio of expenses and profits to turnover. The names of the firm for obvious reasons are 'omitted:— . 1913. Gross Not Retailer. Expenses, profit, profit. A 17.03 18.87 1.84 B 16.86 15.86 Loss C 15.99 19.57 3.57 D 12.72 16.62 3.90 . E 18.98 21.22 2.24 1919.' A 16.99 19.20 2.21 B 10.70 16.71 Loss C 19.14 18.32 Loss D 12.27 15.69 3.42 E 19.39 20.51 1.12 These figures are the results of two complete years' trading, hence tho theoretical argument about sugar being- a quick seller does not do justice to the retailer, as even allowing for the number of times turned over during the year, the absolute results at the end of the year are comparatively small. By selling sugar at Old. per lb., or £60 13s. 4d. per ton, tho gross return would bo 20.03 per cent., and after deducting, say 16 per cent, for overhead, a net profit of 4 per cent, would not be mora than a fair reward for tho retailer's services to the community. The board therefore, after carefully reviewing the case, both from the consumer's and tho retailer's point of view, and after making full allowance for the increased turnover duo to the increased cost of sugar, and the fact that overhead expenses have not immediately increased in the same ratio, has decided to approve of a flat rata of Old. P°r lb. tar all snles, subject to tho usual discounts. It is to be understood that the price iB not fixed at GJd., and any retailer, for the purpose of competition may sell at less than 6|d., but anyone in the main centres soiling at a price in excess of 6id. per lb., or its equivalent'when transit charges are incurred, is liable to the penalties imposed for a breach of regulations issued under the Board of Trade Act, 1919.