BUTTER PRICES

Dominion, Volume 13, Issue 308, 22 September 1920, Page 7

BUTTER PRICES

AN EXPORT TAX SUGGESTED A SMALL FARMER'S "MISERABLE PITTANCE" WORSE OFF THAN THE WHARF LABOURER The committee set up by the House of Representatives to consider the retail price of butter in view of the increase in the export price sat throughout yesterday morning, when further evidence was taken. The members of the committee present wero Mr. J. A. Nash, M.P. (chairman) and Messrs. J. R. Hamilton.]?. F. Hockly, W. D. Powdrell, A. I>. M'Leod, J. M'Combs, and 0 J. Hawken. . Evidence wae given by Miss N. L. Coad, on behalf of the Women's National Council. The council was of the opinion that the high value of land which was said to be one of the determining factors in the high price of butter wns i a community-created value, and should be viewed as such. The council therefore wished to advocato a controlled price and the imposition of an export tax. At the same time, Miss Coad said she admitted there were difficulties in the way of ber suggestions. Effect of an Export Taxi Witness went on to point out that the elimination of the middleman and the direct supply of butter from the producer to the consumer would be an important factor in determining the price. For instance, she herself had purchased butter from a direct supply company at Is. 7d. per lb., while the price charged in tho shops was Is. 9d. It had been said that the farmers would not produce it en export tax wefe imposed, butehe personally would , not believe that of patn-* otic farmers. Witness agreed that the farmer should get the full foreign price for butter exported. Mr. Hockly: You say that here, where conditions are better, people should, get .their butter, for Is. 9d. a. lb., but- are quite prepared for people at Home to pay 3s. a lb. . „ „ ■ Witness replied that we in New Zealand could not legislate for the people In Enclhnd. , . ■ To Mr. M'Leod: She had not considered the position of cbeese at all. It was . not such a necessity as butter. She thought that it would be only fair to place an export tax on cheese as well as

butter.She did not think that an export tax on butter would result in the farmers giving up tho manufacture of butter in favour o? cheese. There would be such a glut in cheese that if would react in favour of butter production Experiences of City Milk Committee, Councillor C. B. Norwood, chairman of the Municipal Milk. Committee, stated that the wholesale prices of fnilk fixed by tho Board of Trade,for this vear were: From September 1 to March 31, 1921, ls.'id. per gallon; April 1 to May 31, Is. 6d„ June 1 to August 31, 2s. per gallon.- The council had averaged up the exact charge for fill the year round. This had been fixed at Bd. per quart to the • . In 1915-18 the average wholesale price was 10.25 d., per •gallon, and in 1920-21 18.33 d... pCr gallon. This worked out at an increase of 78.83 per cent. The rise in the retail price was 68.42' per cent. The council had endeavoured in every way to keep down the price. In Auokland where there was not municipal control, the price was Bd. per quart in summer and 9d. per quart in winter. Thib increase iu favour of Auckland would represent a , to , Wellington of something, like <£8000. <In. Wellington tho council had got the cost of distribution down to a minimum. The council took over a co-operaiAve factory at Ctaki, and guaranteed tho suppliers Id. per lb. of butter-fat in excess_ of the price paid by any factory within a 70mile radius of Otaki.

■ To Mr. Nash: The chances were all egainst an individual beifag able ' to pasteurise a smaller quantity of milk at anything like the same ratio that the council pasteurised a mucli_ larger quantity. l£ would cost something like '.£2,000,000 for the counciH to undertake its own production. It was estimated that at least 7000 cows would be required, together with 14,000 to 15,000 acres of land. At present, however, the council had no recommendation on tho subject. > Incidence of Picture Shows. Mr. Hamilton: How do you account for people rushing into the towns in preference to-working on the land?— Picture shows and gai'ety, purely <uid simply. Questioned by tho chairman, the witness said he did not think it was commercially sound to pick.out one class of farm produce for taxation. If the Government taxed any produce at all, it Should tax the whole lot. -

To Mr. Powdrell: In the first place the abnormal conditions on the Home market and the general lack of supplies were responsible for runnitag up the price of butter. .

A member: If you are going to tax the fanner wheu prices are joing up, don't you think he is entitled to protection when his products fall below a certain figure?

Witness- thought that the' situation .would automatically adjust iltself in Such a case. -

Mr.. Powdrell: How would your suggestion of an export tax on all lines of produce apply in the case of meat and wool in view of their position to-day? •Witness-replied that tho tax would be such a small tax that it would not affect any particular brench of farming.

To Mr. M*Leod: Businesses outside of the fanning industry were already subetnntially taxed.

To the chairman: He thought an export tax was a sounder proposition than payment of an equalisation fund out of the Consolidated Fund. Wholesale Distributor's Evidonce. James B. M'Ewan gave evidence on behalf of [the wholesale butter distributors of Wellington. He put in a statement showing the increase in tlio cast of distribution since the Board of Trade report, from October, 1916, to September, 1920. as follows Cartage from rail, 55 per cent.; factory wages, packers and etoremen, 45 per cent.; offico salaries 5 per cent.; railage, 140 per cent.; parchment and wrappers, 125 per cent.; sec-ond-hand boxes, 100 per cent. Witness quoted, an extract from the Board of Trade report of October 11, 1916, showing that "the average cost of preparing the butter from bulk to pounds, including patting, wrappers, collection from railways, deliveries to grocers, booking, travellers' expenses, and bad debts, was |d. to Jd. per pound." This margin, itated Mr, M'Ewan, did not covor railage, which brought tho distributing allowance up to Id. per lb. Sinoe 1916 the only increase in the distributor's margin had been to make the price "ex store," instead of delivered to, "retailor." In June, 1920, the margin increased to IJd. per lb. On August 16 railage advanced considerably. For example, butter ex New Plymouth prior to August 16 cost •184 d. per lb. railage, while under tho new tariff it was .363 d.—an increase of ..179d. per lb. Tho margin iwked for under the new contract was IJd. per lb. if the distributors were to continue buying at the "factory door," or ljd. per lb. if "delivered Wellington rnil." In Australia, under present conditions, the distributor's margin was 1.27 d. per lb., ex railway station, at the main centres.

Mr. Hamilton asked witness if be did not think that the tendency on the part of consumers fa insist on delivery to their doors of all commodities, even to a tin of pepper, was a big factor in the increased cost of distribution.

Wi f n°ss replied that rotail grocers would ha in a better position to answer tho question. In reply to further questions. witness snid that tho credit and delivery system .was not so important M other factors in increasing tho price A Farmer's Balance-sheets.

Another witness wag Arthur Latham, farmer, of Kauwhata (Palmerston North district), whose farm was one of the twenty-four selected by tho committee for analysis as to tho costs of butter production. Witness tabled a copy of the profit and loss account of running bis form, taken rrora books kept under tho

double entry system, The area of hisform was 70 acres, and the land cost him .£64 per acre. According to his balance-sheet the actual, cost of production was 2s. 3jd. per lb. Ho had drawn .£2OO as wages to cover household expenses, and a loss of £!i was disclosed in the profit and loss account. Witness averred that had it not been for the fact that ho allowed himself 6 per cent, on tho actual amount of capital invested he would not have been able to exist. Ho had allowed himself only tho miserable pittance of about 6d. per hour for hife own labour, and in compiling his figures he had taken a very 'Conservative view of his expenditure and a very liberal view of his income. The average farmer was at the present time working at a loss, that was itf he allowed himself a dec'ont wage for his labour. "I would like," continued Mr. Latham, "the members of this committee to go round with mo on some of the New Zealand dairy farms in the early hours of tho morning. I would show them women far advanced in pregnancy 'with probably a couple of babies in arms going over to the milkiinj shed at i and 5 o'clock in the morning to milk 16 or 17 cows by band. I would show you children of tender yeara taken from their beds in the early morninfr, having to milk three or four cows and then wallc to school. Gentlemen, I ask you if this is just or humane? I also ask you if this lis the ■farmelra' fault. I empthatioally 6ay, no! He is coinp:-l!ed to do it in order to keep his head above' water." Cast of Production—2s. 10Jd, Witness then produced a second bal-ance-sheet in which his land and stock were valued at present-day prices. His land, which had cost him .£(i4 per acre, wae now valuod at illO, and he allowed .£25 per cow. Based on a working day of eleven hours ho hod allowed his own labour, as follows: 2s. an hour for eight hours, and 3s. for tho remaining three hours for week-days, with Bs. an hour for the six hours worked on Sundays. From the total, however, he had deduced .£ICO on the score of house rent and wood, whioh oost him nothing. .The showed, he oxplAined, that, based on average prices for land and stock butter was actually costing him 2s. 10{d. per lb. to produce. "I defy," he remarked, "any man to deny it." Questioned regarding the relative positions of town and country workers, witness remarked with some feeling: "There is a oertain section in tho community who are always crying out about the price of butter and threaten to cripple our industry if we put up the price of butter. My answer to them is: let them work one nioro hour a day, and they will earn sufficient money, to enable them to butter their bread on both sides. (Members: Hear, hear.)

A member: You consider you are entitled to the eame wages as a man who works on the wharves? Witness: A jolly aide more, because I work a jolly side harder. "Leeches." Witness added that one material factor in. the h%h cost of production was the number of leeches sticking to the farmer. • This was particularly noticeable in the ease of farms continually changing hands, " Every time a property changed hands, 15 per cent, wont to. tho land agent, 6 per cent, to the Government, about 6 per cent, to tho lawyer, making in all about 27 per cent, —equal to at least 25 per cent, of tho capital value of the property. In reply to Mr. M'Combs's point that of the 2-1 returns supplied to tho committee the stated cost of produotion ranged fiom Is. Id. to 3s. 3d. per lb., witness stated that there was bound to be a big discrepancy in' the figures. This was attributable to tho varying conditions, the varying prices paid for tho land, and tho varying seasons. Tho only way to get the correct estimate was to obtain the balance-sheet of ©very flailry farm in New Zealand and strike an average.

Mr. Latham was heartily thanked for his evidence, and after his retirement a general disouasion was indulged in. In. the course of this Mr. M'Combs urged that the oommittee should drop all the balance-sheets in which tho cost of production ranged so widely and get down to "brass tacks." Mr. M'Leod saild he held with .Mr. M'Oombs that the committee was only beating tho, air. Mr. Hockly: Instead of bringing these men here we should accept Mr, Singleton's statement as to the cost of production. The chairman, offered to procure the attendance of any of the remaining 3? farmors who had supplied batainfisheets, and further discussion on the point was taken in commiittee. The committee will meet again nt 10.30 a.m.'to-morrow find 10 a.m. on Friday.