COOL STORE LOSSES

Southland Times, Issue 20080, 18 January 1927, Page 10

COOL STORE LOSSES

VICTORIAS LESSON. STATE GOVERNMENT STANDS SHOCK. AN OPTIMISTIC MINISTER. Though Victoria is inclined to boast that it is a “never Labour” State, and not at all inclined to Socialistic experiments, the State Government is yet found as a cool store proprietor shouldering considerable losses. These can be borne with more equanimity when they fall on the Government’s shoulders—even in Victoria—than when private people feel the pinch of a freezing depression, as in New Zealand. ITie Victorian Minister of Agriculture, Mr Bourchier, anpointed a committee to investigate the Government cool stores and report on the losses. In its report the committee states that it had ascertained that although wages, which represented about 56 per cent, of the working costs, had increased by about 50 per cent, since 1918, the cool storage rates had remained unchanged. No commercial institution could stand up to those conditions for any length of time. The storage rates in Melbourne were substantially lower than those charged in other States. A SUBSIDY TO BUTTER AND FRUIT. Figures supplied by the department showed that for 1926, taking the whole store, the cost of handling dairy produce worked out at 11.71 d a package, compared with a revenue of 7.59 d, and that fruit worked out at 19.04 d a package, compared with a revenue of 9.86 d. Those two commodities represented roughly 62 per cent, of the revenue of the stores for 1926. “Although it is not expected that more than an amount sufficient to cover a moderate return on capital employed in the cool storage section of the stores can be earned,” the committee adds, “we have no hesitation in expressing the opinion that in the Government cool stores the State possesses a valuable national asset, which has been of great value to the producer and the consumer in the past, and should be of even greater value in the future. The steady growth of Melbourne’s population, and the increasing appreciation of the value of cool storage as applied to foodstuffs, will, in our opinion, involve an extension in the demand for cool storage in the future. It is further conceivable that a programme of publicity and propaganda in the country would stimulate the interest of the producer and bring home the realisation of the financial benefit that would accrue to him by regulating the marketing of his produce through the medium of cool storage.” MINISTER’S COMMENT. Commenting on the committee’s findings, Mr Bourchier said that in all countries of the world war expenditure was incurred by Governments, as well as by private enterprise, and in most cases such capital had to be adjusted or written off. Since the war the Government cool stores had, in that respect, been continuously shown at a disadvantage, through having been obliged to debit in the annual balance-sheet interest, depreciation, rent, insurance, and other overhead charges on buildings and plant provided to meet the emergencies caused by war conditions, which were not required or used for current business. The committee had reported that section B—comprising buildings and plant in excess of present requirements —was a good asset, and that it would, in course of time, be required for cool storage purposes. In addition in the meantime, it might be regarded as a valuable form of insurance in the event of breakdown or fire at another freezing works, delay of shipping, or fire or breakdown on a steamer. It was pleasing that the loss on last season’s operations on the portion of the store used was only £3693, despite the increase in wages since 1918, the increased cost of handling butter caused by the Federal Government regulations, the provision of experimental space free, and the fact that cool storage rates had remained stationaiy. The loss might be regarded, to a great extent, as expenditure incurred in encouraging and developing primary production and the export trade of the State.