BUTTER-FAT.

Taranaki Daily News, 27 October 1920, Page 7

BUTTER-FAT.

• THE COST OF PRODUCTION. At the last meeting of the executive of the Taranaki Farmers' Union, Mr. E. Maxwell made an interesting statement on the above subject. It was as follows: Several years ago Mr. Jas. Burgess, then of Warea, who all know was a most methodical and thorough farmer, made up a statement of cost of production of butter-fat on a per eow basis. I, also, before securing Mr. Burgess' figures, made up a similar statement. There was a difference between us of about 10s jcr cow. Speaking from memory, Mr. Burgess set down about 175 shillings per cow as her cost, while my figures showed about 185 shillings as the average. But-ter-fat was then worth 13 per lb, and therefore a cow producing 1801b butterfat per annum just covered cost, in other words, sueh a cow gave the owner nothing for his trouble. No doubt many others in different parts of the Dominion arrived at similar conclusions, and the approximate amount of 180s per cow formed a standard zero point out of any yield above which the fanner could only look for his return, and therefore it was all important that herds should be so improved as to give a butter-fat yield without increased cost of production, sufficient to show a reasonable living for the producer. Since then, the value of but-ter-fat has steadily risen to nearly double for cheese, approximating to the farmer close on 2s per lb for 1919. Unfortunately, the price of land has, without any warrant, risen in about the same proportion. The result is that those who hold their land at the old cost reap the advantage of the increased butterfat value, and make a reasonable, and in some cases of extended herd selection and long experience, a substantial return for dairy farming. On the other hand, all those who, in buying at increased prices have given away all or the greater part of the increased gross return to the land, instead of gaining it for themselves in the form of a reasonable wage return Now, in the light of 180 shillings per cow having been assessed as the zero point when butter-fat was la per lb, it is most interesting and instructive to cousider the present position, as disclosed ly Mr. Singleton's figures for 1919, put before the Butter Committee.

In reviewing hi 3 statement of costs I must say that whilst I am satisfied that as to the average farm, his estimates per cow under headings "Milk Delivery" 12s, and "Sundries" £1 4s 4d are far too low, on the other hand, as indicated before, I have never considered there was any justification for anything like the present prices for land, and that, therefore, although the £l5O set down by Mr. Singleton as cost of land per cow may, in fact, be approximately a correct estimate, there is no warrant for such prices, and therefore no warrant for charging it against cost of production, as I am satisfied that it can be clearly demonstrated that at the 1913-14 land values the recent price of butter-fat. will no more than allow a reasonable wage for the hours worked. However, if what I feel sure are under-estimates for "milk delivery" and "sundries" are set against the over price for land, and Mr. Singleton's gross amount be taken as a basis, it is most interesting and significant that when the amount he sets down for labor, £7 10s. is deducted from his gross of £2J 2s 7di so as to give cost per cow to the farmor, without allowing anything for wages or profit, show the position, based on Mr. Singleton's return, thus:—

Gross cost £2l 2 7 Less labor £7 10 0 Cost to producer without allowance for any labor £l3 12 7 Mr. Singleton's figures for average amount paid out by factories to suppliers 19.4 d equals on 1801b but-ter-fat per cow £l4 11 0 Balance is 5 (18s od only to apply for entire labor per cow.) This discloses the position for 1919 to be, after allowing for increased costs and increased price for butter-fat, that 1801b butter-fat per cow still stands practically at zero point. Every increase in butter-fat yield would allow £1 12s per cow addition towards wages: A 30 cow herd at 1801b but-ter-fat yield would show towards wages £27 12 6 Extra 201b, bringing up yield to 2001b per cow .. £4B 0 0

£75 12 0 It, I think, will be agreed that an average farm of 30-cow carrying capacity would require for all work—milking, milk delivery, calf rearing, pigs, cropping, maintenance and repairs—at least one man full time for ten hours per day, average throughout the year, and an equivalent of half time, either by members of family or other This would give 3650 hours to man, and 13G9 hours as half-time, or a total of 5475 hours. To return 3d an hour only wages for this time a sum of £6B 9s would be required, or for 6d per hour £136 18s. Therefore, on tiie figures given above, a 30 herd, giving an average yield of 2001b of butter-fat, shows barely 3d per hour wages. If the position set out is approximately correct, the unavoidable deduction must be that whilst those who have paid high prices for land may make reasonable return a.? wages during the coming season, a decline of price of produce to any great extent must result in ruin to all such except those whose herds average a very long way over the Dominion average.—Star.