Dairy Produce

Hawke's Bay Herald-Tribune, Issue 124, 11 June 1937, Page 8

Dairy Produce

fOwn Corresnondent)

GUARANTEED PRICES Deficiency Will Be Less Than Anticipated BANK CHIEF'S COMMENT

WEODLINGTON, This Day. Although be gives no prediction as to tbe deficiency likely to be incurred by tbe Government's bandling of tbe dairy produce of tbe Dominion, Mr A. T. Donnelly,\ cbairman of directors of tbe Bank of New Zealand, at to-day's meeting of sbarebolders of the bank, said tbe recent recovery of tbe market mad© it clear tbat the deficit will be mucb smaller tban was originally anticipated. The ."Primary Products Marketing Act, 1936'," is the form in wliich the Government gave expression to its poiicy of Guaranteed Prices, and introduced changes both in marketing and in finance, said Mr Donnelly. Althougb the Act gives power to the Crown to acquire any primary product and to market locally or overseas any primary product, whether acquired by the Crown or not, it has so far been applied only to the export of dairy produce and to the local disposal of butter in the Wellington provincial district. To administer the Act, a new department of State— "The Primary Products Marketing Department" — was set up and took control of the export of dairy produce as from August 1, 1936, purchasing butter and cheese from manufacturing compames at a fixed f.o.b. price and arrangmg for its sale and distribution overseas. Eor the purpose.s of the Act a "Dairy Industry Account" was established at tbe Reserve Bank of New Zealand whicb was given authority to grant accommodation by way of overdraft in aid of the account, All moneys derived from the sale of dairy produce are payable into the account, and all moneys required to purchase dairy produce .and to defray tbe costs of administration are jpayable from the account. The condition of the Dairy Industry Account, tkerefore,' will depend on the degree of conformity between the prices paid to dairy manufacturing companies and the prices reallsed on the market, Cheese Clears Account The low prices realised for dairy produce in the earlier part of tho season foreshadowed a heavy deficit in the Dairy Industry Account; but the later recovery of the market now makes it clear that tho deficit will be miich smaller than was originally anticipated. The relative movement of choese and butter prices indieates that the cheese account should fully clear itself, so that any loss on the account as a whole is likely to be due entirely to the deficiency on butter. It is estimated that when allowance ia made for the relatively heavy quantities sold at low -prices, the average realisations to date will be in the vicinfty of 97/6 for butter and 61/- for cheese. The guaranteed price for butter is 106/- per cwt. and for cheese 61/- a cwt. Payments to the dairy factories against shipments of butter and cheese are now iinanced by tbe Reserve Bank of New Zealand, wbich also receives in London the proceeds- of the produce when it is sold. The trading banks are thua deprived of the London exchange arising from dairy produce, but the Reserve Bank is prepared to sell to them any surplus of the London funds so obtained wbich may be avaiJable after the Government's requirements have been met. Tbe Marketing Act provides that, in fixing prices for dairy produce exported after July 31, 1937, regard sball be had to additional considerations. namely : — (a) The necessity in the public interest of maintaining the stability and ett'iciency of the dairy industry; (b) The costs involved in the efficient production of dairy produce; (c) The general standard of living of persons engaged in the dairy industry in comparison with the general standard of living throughout New Zealand; (d) The ©stimated cost to the Department of marketing the dairy produce concerned, and also the cost of the general administration of the Act ; (e) Any other matters deemed to be relevent. A "Guaranteed Prices Investigation Committee' has been set up by the Government to make recommendatious based upon the above considerations, but its report is not yet available. It is reasonable to suppose, liowever, that. the committee is fully aware of tbe desirability of maintaining as eloso a connection as possible between priccs paid to producers and prices realised on the market. Provided no peimanently increasing gap appears between these two sets of prices, the Act should prote beneficial to( producers in protecting them from severe fluctuations of the market. The exports of butter and cheese for the past three years were as follow * —

Production is being well maintained and it is estimated tliat by tlie end of the 1936-1937 season the quantities of butter and cheese manufactured will materially exceed tliose of last year. It must be remembered, however, that the production of clieese for the 1935-1936 season declined by approximately 8 per cent compared with that of, the previous* season.

. -N. al SB 15 ^5 1935 2,701,320 10,928,353 1936 2,664,502 13,736,807 1937 2,941,702 15,967,343

BUTTER

/S r~! l53 t ^ A hi? S m O fe: x ^ CD > 1935 1,937,228 4,6-15,863 1936 1,636,017 4,311,824 1937 1,697,731 5,' 253, 702

CHEESE