GUARANTEED PRICES

Wairarapa Times-Age, 16 September 1938, Page 6

GUARANTEED PRICES

MR NASH ANNOUNCES RATES FOR CURRENT SEASON

Substantial Increase on Last Year

REPORT OF ADVISORY COMMITTEE TABLED

(By Telegraph.—Press Association.) WELLINGTON, This Day. An announcement of the guaranteed prices for dairy produce for the current season was made by the Minister of Marketing (the Hon W. Nash) in the House of Representatives this morning. The House met at 11.30 a.m. and, after the transaction of formal business, the Minister laid on the table the report of the Advisory Committee on the Guaranteed Price for Dairy Produce for 1938. He then proceeded to review the position as from a time immediately prior to last general election, as far as dairy produce was concerned, and announced the guaranteed prices for the current season. These were:— 14.89 d per lb for butter and 8.42 d per lb for cheese, equal to a pay-our of 1583 d for butterfat for butter and 17.88 d for butterfat for cheese.

After reviewing the history of the. guaranteed price system and its objectives, the Minister stated that in fixing the current season’s prices the Government had appointed an advisory committee to examine the evidence and make recommendations. The committee, in submitting its recommendations, stated that it could not make definite findings regarding the financial implications of prices, as this was necessarily dependent on the general consideration of Government policy regarding finances. With this qualification, the committee recommended prices which would give a butterfat price for butter of 16.750 d (16.jd) per pound and a butterfat price for cheese of 18.750 d (18.? d

Working and maintenance costs allowed by the committee show an increase of .625 d capital charges an increase of .315 d and labour reward an increase of 1.930 d over the sums allowed last season. The figure for pig returns is the same as that of last season. OPPOSED STANDARDS. The Government, said the Minister, held the opinion that it must differ from the committee’s standard of efficiency, which was 240 pounds of butterfat per cow, and it related a fiftycow farm to 2.087 adult male units of labour. The Government’s opinion is that a more correct standard of efficiency from the viewpoint of both the farm and farmer would be represented by relating forty-eight cows, producing 250 pounds of butterfat per cow, to two adult male units of labour. Accepting this standard of efficiency, which the Government after inquiry considered likely to be more nearly correct than that of the committee, the production ner adult male unit of labour is 6.000 lbs. of butterfat. The Government had therefore fixed the basic purchase prices as announced above, representing in terms of butterfat a payout for butter of 1.5 d per pound above the price for the past season.

Justifying the Government’s adoption of a price higher than that recommended, Mr Nash stated that the Government was of opinion that the committee had not given full heed to the central feature of the order of reference, namely: “The general standard of living of persons engaged in the dairy industry in comparison with the '■'eneral standard of living throughout New Zealand.” FINANCIAL IMPLICATIONS. There was a further factor, said Mr Nash, stressed by the committee, of which the Government was bound to take cognisance, namely, the financial implications of the price. A heavy deficit, if repeated, must inevitably wreck the whole guaranteed price procedure, which statement was supported by the committee’s opinion that prices should not be fixed at such levels as would cause a breakdown of a system designed to stabilise the incomes of persons in the dairying industry and afford insurance against fluctuations in

the world markets. Mr Nash expressed the opinion that the prices he had announced would, result in a deficit of £1,535,000, based on the estimate of a continuance of last year’s realisation for butter and cheese. If from this sum was deducted the estimated surplus for last season, £600,000, the net deficiency at the end of the 1938-39 season would be approximately £935,000. DETAILS OF PRICES. “The Government, to provide a sure return to the dairy farmer, . has to maintain the stability of the industry and is willing to take the responsibility of paying these prices,” said the Minister. “The Government proposes to issue an Order-in-Council authorising the purchase of all butter and cheese manufactured for export at the following prices: Butter, finest grade, 94 points and over, 15.015; for finest grade, 92 points and under 94 points, basic price 14,89 d; first grade, 92 points and under 93 points, 14,8275 d; for first grade, 90 points and under 92 points, 14.64 d; for second grade, 14.14 d. Whey butter: For first grade, 13.89 d; for second grade 13.39 d. Cheese: For finest grade, 94 points and over, 8.57625 d; for finest grade, 93 points and under 94 points, 8.545 d; for first grade 92 points and under 93 points, basic price 8.42 d; for first grade, 91 points and under 92 points, 8.3575 d; for second grade, 8.17 d. Sales on the local market would be adjusted to ensure that realisation would be equal to the price paid for export. PAST SEASON'S OPERATIONS. The Minister concluded by giving the result of the past season’s operations. As to butter, 125,800 tons were sold at an average London price of 117 s 9d per cwt, showing a surplus of £440,000, while 69,700 tons of cheese had been sold to date at an average London price of 68s 3d per cwt, showing a deficit of £24,000. Thus the approximate net surplus to date was £416,000. Assuming that unsold butter totalling 13,700 tons would realise: 122 s and unsold cheese, 15,300 tons, realised 71s pei’ cwt, the estimated surplus in the dairy account would be £600,000, representing a surplus from butter "of £565,000 and cheese £35,000.

“VERY DISAPPOINTING”

DAIRY BOARD CHAIRMAN’S COMMENT STATEMENT TO BE ISSUED WELLINGTON, This Day. “After the very strong case for a substantial increase made out in the evidence presented to the Guaranteed Price Committe on behalf of the dairy industry last month, the price as announced by the Minister- is very disappointing,” was the comment of Mr W. E. Hale, chairman of the Dairy Board, when the new season’s figures were communicated to him by ’phone. Mr Hale said that a comprehensive statement would be issued by the organisations concerned, probably some time next week.