THE OVER-RUN EXPLAINED.

Shannon News, 22 November 1921, Page 3

THE OVER-RUN EXPLAINED.

A PROFITABLE PRODUCT

“What is the ovy-run?” This question puzzles many people. The answer was supplied by Mr A. J. Sinclair, assistant manager of the New Zealand Co-op. Dairy Co., Ltd., while in Morrinsville on Friday evening, says the Star. He said that in every lpOlb of butter made, 201 b of it consisted of which cost practically nothing. In a pound of butter there was 16 per cent of water, the maximum allowed by law, 2-J- per cent of salt, and 1J per cent of curd and ash. Salt cost £8 per ton, but was sold as over-run at the rate of £2BO per ton, so that the cost was almost infinitesimal. There was a theoretical over-run of 23 per cent in butter, but actually it was less than that. In' every 1001 bof butter packed, one pound was added for “the tip of the scale” in accordance with the custom of the trade. J’lien there were mechanical losses ranging from two to three per cent. With a 20 per cent over-run in an output such as the New Zealand Dairy Co.’s, there was a wide margin of profit That was why the company could pay 2s 9d per lb butterfat when butter was sold for 2s 6d. The company’s enemies had suggested all sorts of unfair practices, which enabled them to make ..such a big pay-out, but Mr Sinclair assured his hearers * that everything was straight and above board. The company last year sold 12,660 tons of butter. Of that amount there was 2532 tons represented by over-run, which cost nothing to make. The value of the over-run to the company last year was £709,000. Out of this sum the company could well afford to pay a bonus in excess of the amount that

was actually received for the butter content only.