FACTORS INVOLVED

Hawke's Bay Herald-Tribune, Issue 192, 31 August 1937, Page 9

FACTORS INVOLVED

■Press Associalion.)

Determination of a Fair i Return i THE CHEESE MARGIN

(By Telegrapb—

|. " WELLINGTON, Last Night. The Minister of Marketing (Hon. Waltor Nash) made a further statement to-day following tho announcement of Ihe guaranteed prices for butter and cheese on Saturday. "Very full consideration was given j by Cabinet to all relevant factors involved in the determination of the fair prices, in accordance with the formula set out in the Primary Products Marketing Act," said Mr Nash. "In deciding upon the prices which have been announced, the Government has carried out to the full its undertaking that the prices would be so fixed that any efficient producer engaged in the dairy industry under usual conditions and in normal circumstances Should be assured of sufficient net return from his business to enable him to maintain hiinself and his family in a reasonable standard of comfort. f "The full range of f.o.b. purchase •prices. fixed in respeet of butter and cheeso exported diiring tho current season is as follows: —

1 "If dairy farmers will compare these | prices with those which have applied for the season just closed," continued ' Mr Nash, "they will see that the new i basic f.o.b. purchase price for export . creamery butter of 13$d is ll-16ths of a penny above the previous price, and the new basic f.o.b. purchase price for export cheese of 7.54d is .73d above tho previous priee. "The basic f.o.b. purchase prices for j the season just closed wero calculated | to return to farmers eupplying dairy j factories wbrking under average condi- | tions 1b 1.04d lb. butterfat in the case | of butter, and ls 2.54d lb. butterfat in j the *se of cheese. The new basic f.o.b. | purchase prices are calculated to return j 13.88d lb. butterfat in the case of butter, and 15.88d lb. butterfat in the case of cheese. Tlius the basic butterfat pay-out increases are .84d lb in the case of butter and 1.3-ld lb. in the case of , cheese. "The rosults for the season ju3t closed, which are being revealed as the accounts and statements of the dairy factory companies come to hand, are tending to show that the actual average butterfat pay-out will be approximately ls 14 d lb. butterfat in .the case of butter and ls 24 d lb. butterfat in the case of cheese. These figures Bhow that, ih the case of butter, the actual results exceed the estimate by approximately $d lb. butterfat and in the case of cheese equal the estimate. The disparity in the case of butter is due to an over-generous allowance fo'r factory costs, which had to be estimated, ag there were no reliable cost data available. With more accurate information

provided xrom tiie staudardised form of dairy factory accounts, it is expectcd -that tho calculations for the current season will mbre nearly approximato the actual results. "Reprcsentatives o£ cheese factory companies have urged that a further payment be made in respeet of export cheese i'or the past season to bring.the margin of the cheese price over the butter price up to the intended margin of 14d lb. butterfat. It will be seen that the case for a further payment rosts not on the fact of any under-pay-. ment for cheese, but on the fact oi over-payment for btftter haVing redueod the etfective. margin. Careful consideration will bo given- to the representations made, when all chcese factory company statements are to hand and the actual disparity San be more accurately determincd. "The formulae for the conversion of the basic f.o.b. purchase prices of butter and cheese into equivalent butterfat pay-outs to suppliers are as follow: ; In the case of- butter the over-run figure is 21.75 per cent., and other costs to f.o.b. ocean steamer are allowed at 2£d lb. butterfat. In. the case of cheese the net yield figure is 2.45 lbs. of cheese to oue pound of butterfat. The return from the manui'acture of wliey butter is ,6Cd lb. butterfat,1 and factory and other costs to f.o.b. ocean steamer are allowed at 3^d per lb. butterfat. It is considered that these conversion factors are fairly representative of the average factory conditions upon which the guaranteed prices are based. "It is pleasing to record an improvCment in the quality of butter and cheese submitted for grading during tlie wm—mmmmmmmmmmmmmm—mmmmmmmmmmmmmm mmmm mmmmm — — — ■«

season just closed, and it is reasonable to conclude that this iniprovement re-' sults from the quality price differentials: which were a feature of last season 's prices. These differentials will be continued for the current season. "The premiums payable for butter and cheese of a special type manufactured or packed at the request of tlie department have been reviewed in accordance with the undertaking given and have been determined as follow: TJnsaltcd butter, 3s 4d per cwt.; parchfoil wrapping of unsalted butter packed in other than saralac butter boxes, .0418d per lb.; coloured cheese, Gd crate; waxed cheese, 4Jd cratc. ! "The amounts payable by dairy factory companies for insurance on butter and cheese up to f.o.b. ocean steamer are: Butter, .69d per box; cheese, .S15d per crate. "In finalising these figures the Government has considered all factors that would ensure Teaching its objective — that is, to so organise production and services in the Dominion. that tho farmer and other rural workefs shall receivo an iucome equal to that of workers in other fields who render equal service."