TOWN MILK SUPPLY

Evening Post, Volume CXL, Issue 23, 27 July 1945, Page 9

TOWN MILK SUPPLY

STATE DECISIONS

SUBSIDY PAYMENTS

Decisions reached by the Government regarding payment for milk supplied to schools were announced by the Minister of Marketing and Agriculture, Mr. Roberts, to the first annual meeting of the New Zealand Town Milk Producers' Federation in Wellington yesterday. National town prices, he said, were to remain tied with the guaranteed price for butterfat. From September 1 next to August 31, 1946, an additional payment would be made to the producer organisations on the basis of one-eighth of a penny a gallon for all milk sold by the organisation directly to vendors; and one-sixteenth of a penny a gallon in respect of milk sold by the organisation to the treating houses. Twenty-seven milk marketing associations were recognised during the year, and only two failed to operate, said the Minister. These associations delivered a total of 61,702 gallons daily. A subsidy of £65,000 was paid to the industry for the first six months —September to February inclusive — this being the difference between national prices and the actual returns from vendors. An estimated subsidy of £110,000 would probably be paid during the second six months —March to August, 1945, inclusive. The total subsidy paid to the industry for the 12 months was estimated at not less than £170,000, being an average of 2.25 d a gallon. "The question of the payment to the industry for school milk is one matter outstanding this year," said the Minister, who added that he would communicate to the conference the decisions which had been made by the Government in that respect. "The principle of payment for milk supplied for schools on a 365-day basis is confirmed," he added. It was proposed that claims from the various "producer organisations shall be dealt* with in the following manner in the North Island:—

"1. Approved producer organisations in the North Island will be invited to establish claims on the assumption that they were prepared as from September 1, 1944, to August 31, 1945, to guarantee a 365-day supply of milk to schools. "2. The realisation value to approved organisations of surplus milk on weekends and school holidays will be fixed at 10.125 d a gallon /at the farm gate/ in all areas where the producer organisation could reasonably divert such surplus milk for cheese or dried milk manufacture. In areas where diversion 4o cheese or dried milk factories is not possible, the realisation value of 9.725 d will be 'accepted.

"3. The basis of compensation shall be the difference between these realisation prices and the full seasonal differentials as established under the National Milk Scheme this year. "4. The ■ Government accepts the responsibility of paying this compensation, on the monthly claims submitted by each producer organisation in accordance with the formula which can be finalised with representatives of the Milk Marketing Division. "5. On the industry's part, each producer organisation is required to accept a penalty of 2d a gallon for each short-supplied on any school day, with the proviso that over the 12 months' period, the total amount of the penalties paid or payable by the organisation shall not exceed the total amount of compensation payable by the Government, "The same provisions are to apply in respect of approved producer organisations in the South Island, with the exception that the realisation value shall be fixed at 8.75 d a gallon 'at the farm gate' in all areas where the producer organisation can divert for cheese manufacture, and 8.25 d a gallon in all areas where diversion to cheese factories is not possible. In consultation with your executive suitable forms will be prepared by the Milk Marketing Division, so that applications for compensation under this formula t can now be presented without delay by producers' organisations;" PRICE TIED. Announcing the Government's decisions on the points raised by the executive in an interview with the Minister of Health and himself in June, Mr. Roberts said the Government had decided that the national town milk prices should remain ' tied to the guaranteed price for butterfat, and that the formula announced last year, whereby a standard price for milk of an average, 4.3 per cent, test was fixed at 14.2 d a gallon on an 'at the farm gate' basis, would stand. The Government was of opinion that the comparison drawn between the allowance made to cheese factories and butter factories in respect of their manufacturing costs was not strictly analagous with the position of town milk producer organisations. Any concession made towards meeting the purely domestic costs involved in the administration of these tions would create dangerous precedents where organisations of producers were marketing their products on a co-opex'ative basis and had not sought a recovery of these administrative costs from the Government.

However, producer organisations were rendering valuable assistance to the Milk Marketing Division in, the operation of the equalisation accounts, which- were now an Integral part of the national milk scheme. Consequently, from September 1, 1945, to August 31, 1946, an additional payment would be made to the producer organisations on the basis of one-eighth of a penny a gallon for all milk sold by the organisation directly to vendors; and one-sixteenth of a penny a gallon in respect of milk sold by the organisation to the treating houses. Guided by the findings of the Milk Commission, together with further details submitted by the Milk Marketing Division, the Government had decided that, in respect of the coming year, the following contract cpnditions regarding surplus mflk should be entered into:— "(1) In consultation with each producer organisation, the Milk Marketing Division shall declare the daily quantity of milk required to be made available to meet normal town requirements. Approved producer organisations would be expected to make this quantity available under guarantee, with a penalty of 2d .a gallon a day for non-supply. "(2) The Milk Marketing Division will ensure payment in full of the national milk prices for all milk proved to have been made available daily by each organisation up to the quantity nominated by the division, plus a 10 per cent, contingency factor." Adopting a uniform basis of seasonal differentials with the highest possible weighting for the winter months, the Government suggested that unless special circumstances warranted an alteration, the price differentials should be on the basis that the pummer price should not exceed lljd a. gallon, and that the summer period should not be less than six months.

It had been suggested that the South Island price should be raised to the same level as the North Island.. This proposal had been very carefully examined, but on the evidence available of the low butterfat content in the major districts of the South Island, it was considered inadvisable to agree to this request. While it was the intention of the Government to continue the payment for this year of the national milk prices on a gallonage basis primarily because of lack of adequate testing facilities, it was the declared objective of the Government to adopt, as soon as facilities were available, the Milk Commission's recommendation that payment for town milk should be calculated on a butterfat plus gallonage formula. However, if a producer organisation in the South Island could prove to the Minister's satisfaction that it was producing a milk of butterfat content equal to the North Island avexage, then its application for payment of an equal price would be given favourable consideration.

"These decisions indicate the Government's desire to deal fairly with the industry, to give it stability, and to recognise in a practical form inherent characteristics of the industry which in the past have led to so much uncertainty and dissatisfaction," concluded the Minister.

Mr. J. J. Maher, who presided, said that the Minister's address had cleared up .many points. Subsequently the conference discussed with the Director of the Milk Marketing Division machinery for implementing the decisions.