BUTTER PRICES

Dominion, Volume 13, Issue 305, 18 September 1920, Page 7

BUTTER PRICES

EVIDENCE BEFORE THE

COMMITTEE

WHAT THE FARMER GETS

MUCH PRODUCTION Af A LOSS

The committee appointed by tin House of Representatives to consider tie retail pries .of butter, in. view of the increase in "the export price, took some evidence yesterday. ;>The members of..the committee present, were Sir. J. A. Nash (chairman), the' Bight Hon. W. F. Massey and Messrs. E. Kellett, J. R. Hamilton, P. F. Hockly, W. D. Powdrell. H. Poland, 0. J. Hawken, and JV M'Comb3. The evidence taken bore chiefly on tho question of tho cost of producing butter. - The-chairman suggested that evidence should be taken in the following order: Departmental, the producers, the factories, the distributors, the retailers and the consumers. The consumers, nnd specially the Labour organisations, would require to be heard. It was agreed that the representatives of the consumers 6hould be-heard after the producers. Tho chairman thought that one or two representatives of each group of interests would be sufficient; A letter was read from the Auckland. Butter Merchants' Association suggesting that tho retail prifce should be not less than 2s.- lfld. per pound. The packing and delivery costs of ljd. per pound and the retailers' profit of 2d. per pound would require to be added to the export price of 2s. 6d. per pound. - The chairman raised the question of whether the cheese and glaxo manufacturers should be asked to givo evidence. The committee decided that representatives of these interests should be heard.

Arthur Richard Stone, accountant, of the Agricultural Department, said the Department had gathered some information about the operations of typical producers. The cases'covered dairying districts throughout New Zealand and the information, which related to last sea : son, was deemed by the suppliers to bo accurate. He had taken the expenditure iln twenty-four cases and had deducted tlio price of all by-products to secure the actual cost of production. The land was reckoned at the present market valuo in. most, cases. Some men had valued the land at the prices paid for it, not'more than one-third of the, present value. The average of tho twenty-four cases 'showed that the cost of producing butter was 25. ; .5d. per pound and'that the gross income per pound was 2s. 2Jd. There was a loss of 2Jd. per pound. Interest had been taken at G per.cent. . Land that had been bought for d£lo was valued for the purposes of these figures at .£35 and more.

Mr. Powdrell: I suppose the labour of the family is allowed for?

... The witness: Yes. The rates vary from 6d. per hour to 2s. Perhaps the average is Is. Gd. per hour. Most of the farmers 6eem to nave.put tho time in at 11 hours per day during the season. . Soma farmers have given no. rate or hours. They have put down a sum which they think covers.the labour of the family during the y'enr.j The witness added that he had worked out the additional ccst per pound of buttbr-fat due to increases in the- value of tho land. The difference between tho price paid for-tho land and tho present valuo of the land made a difference of from sd. to UJd. per pound in the cost of production. ■ : The witness quote; a typical case in 'which a prcfit of about 3d. per pound of ■ butter-fat was shown on present" prices. Labour had been charged at the rate of only Gd. per hour, and there was no charge for cultivation or management. The total charge for labour, with 40 cows, in milk,'was .£ll7 for ,tho season. Another farmer with "40'' cows allowed '£5 per, cow for labour, and put down the cost of production at Is. Brl. and the revenue at Is. lOd. per pound. If interest'were charged on 'the present value of the land in the second caso the cost of production would be 2s. sd. per pound. ; -'The-land'hadbeeh-bought at"i£9 per acre ' in'lßß2'and was now worth ,£3O peracre. A. Taranaki case' showed the land at the 1911 purchase price of .£35 per acre. La- ' hour was charged at .£llß for the season, roughly ;£4 per cow, and tho cost of production was set down at Is. G|d., while s "the revenue per pound'was ls.'.lljd. A second TaTanaki case, with land valued at <£IGO per acre and labour chaTged at •,£lO per, cow, gave the cost of production as 2s. sd. per pound and the revenue as 2s. 02-d. per pound. A Waikato case gave the value of the land at .£55 per acre. • Labcur was charged at per cow. The revenue per pound of butrer-fat was set down at 2s. 3d. and the cost of produn- ■ tion at 2s. .Id. A Manawatn farmer, with ■lend valued at ,£IOO per acre, charged ,£lB. per cow.for labour including .£4OO a year for himself (and a son) and estimated the cost of production at 3s. .3d. per .pound and tho Tevenae at Is. 9Jd. per' pound Answering question?, the ritness said that in most case's interest was charged at 6 per cent, against the whole capital value of the land. .Some of the farmers night have sources of|revenue.other than butter-fat. The farmer charged the 6 per cent, on the value cf the home as I well os the farm.

„ . W. M. Singleton, Assistant-Director of the Dairy Division pf the Agricultural Department, presented figures relating to butter production and costs. Heestimat, ;ed tho butter production, of the Dominion "' at 28,000 tons, and the home consumption at 11.000 tons. This was not all .factory butter. The quantity available for export last year had been about 17,000 tons. The actual export had been about - 14.C00 •■ tons. .' Butter production had ' fallen during'the last five years owing • to the price paid by tho British Government for butter being less per-pound of butter-fat than the price for cheese. Mr. Massev remarked that cheese had been an Army ration during the war. • Tho witness said that while the quantity of butter, graded had declined from 469,000 cwt. to , -380,000 cwt. between 1916-17 and 1919-20, tho quantity of cheeso graded had risen.from 1,011,000 cwt. to . 1,208,000 cwt. The retail price of butter in Britain in Juno last was 3s. to is. 6d. per pound. . The prico in Sydney was 2s. lOd. per pound.

Mr. Singleton told the committee that an American commission had held that .the dairy farmer was entitled to interest on his investment, recompense for all costs, and a. 10 per cent, profit on his costs. Ho had been investigating the question of .cost of cow-keep for some years, and had checked his estimates in comparison with the returns of promin,cnt farmers. He had prepared some figures relating to' tho 1914 and 1920 seasons. The cost of labour, of land, of cows. <lnd of materials had increased in the period. Labour had gone up GO ■ per cent., and land G6 ner cent. Casual labour had gono up from Is. per hour 'to 2s.' 6d. per hour. He estimated tho -1920 cost of producing butter from a 1801b. cow as 2s. 4d, per pound, while tho income was atjthe rate of Is. 5Jd. per pound. Mr. M'Combs: And land is increasing in value in spite of the loss. It is is. remarkable phenomenon. Mr. Singleton: The explanation is that the average dairy farmer is not an accountant. If you chargo interest first, the farmer is not making current wages; if yon charge labour first, he is not making interest, Mr. Mass-sy: The farmer and the working members of his family;are not getting a fair wage. Tho farmer would often be better off if he put his monoy out at interest, and went to wort himself at current wages. Mr. Powdrell remarked that the farmer often found this out after a year or two. Then he sold out. Ho mado his profit that way. A man might bo making a loss on a poor or underfed herd, while a neighbour, with a better herd was njaking a profit. Mr. Singleton:. That is so, David HaberfieM, president of the Christchurch Master Grocers' Association, said that beforo tho war the grocers bought butter for Is. Id., and retailed it at Is. Gd., subject to discounts to customers. The minimum wage to a shop assistant was then £2 10s. In 1910 the butter had cost the grocers Is. 6d., aad .the maximum rotail price had been "s. 8(1. The percentage of profit had declined, while the minimum wage had risen to £1 7s. Od. All handling costs had inoreased. The grocers considered their margin on butter sold wholesale at 2». 6d. per pound should be 4d. per pound tor cash sales, and 4d. for' booked lata. Battu wprea«nted oae-MTtnik of,

the- furnovor. in the grocery business. The 'grocers' profit on .farmers' butter was 2d. to 3d. per pound. Ho did not think the consumption per head in tho average fi.mily exceeded half a pound per week. The proposed increase in. price was aure to reduce consumption.

'Mr. Singleton.agreed that the consumption per head per, : weok was about half a pound. . Sir. ft ash placed before the committee figures showing the following current retail prices of butter:—England 3s. per pound (homo make 4s. Gd.), Canada 35., Western Australia. Victoria, Queensland, and Now South ."Wales 2s; 10d., New Zealand Is. 9d.

. Sir. Sl'Combs drew attention to the fact that one' of the farmers quoted by Sir. Stone charged interest en his land at a'value of «Cl 5 per acre, and showed an annual loss of ~£3OO tr year nt the present price of butter-fat.. Yet ho added that he could, sell his land at .£22. per acre. , Tho discrepancies were extraordinary, and seemed to. make the figures valueless.

Sir, Hockly: If the dairy-farmers knew the real position, few of them would stay in the occupation. It is the poorest game in tho world.

The committee adjourned until Tuesday mr-rning • next at 10 o'clock, when some additional evidence will be taken. The. chairman mentioned that he would communicate with the : perso!is and organisations wheso evidence was desired:-