DAIRY INDUSTRY

Wairarapa Times-Age, 6 December 1939, Page 7

DAIRY INDUSTRY

“Under the first year’s guaranteed price, then, the dairy farmer not only got more than he had received on the average of 10 years but he also got more than the two previous years and more than was estimated as a fair guaranteed price for that year. The same can be said of subsequent years. If we take the guaranteed price for the second year, that is. 1937-38. and for the third year, that is 1938-39, we will find that again the average payout from dairy factories was much higher than was estimated as the fair guaranteed price. Here are the figures:— Payouts in Pence per lb. of Butterfat.

1 EXCESS PAYMENTS. 1 Having dealt, in further detail, with I these excess payments, which totalled . in 1936-37 £911,569, in 1937-38 £1,336,- , 153 and in 1938-39 £408,635, the Min- . ister continued:—“What do these figures show? They show that in 1937-38 suppliers of butter factories received “ almost Id more than was considered 1 fair at the beginning of the season, , while suppliers of cheese factories . received id more. Last year, the i guaranteed price was substantially increased, so much so that the estimated payout was 2d higher than the ‘ estimated price for the previous year. 1 But these estimates were exceeded, for I in the case of both the suppliers of I butter factories and suppliers of . cheese factories the actual payout was . much higher than the Government , estimated as being a fair figure. That being the case, it is very difficult to 1 find any basis whatsoever for an increase in the guaranteed price for ■ this year which has been fixed at the same level as last season. The makeup of the price is-as follows: — d. Working and maintenance costs 5.34 Capital charges (interest).... 3.24 Labour reward 8.84 17.42 Less return from pigs 1.54 Estimated payout for butter 15.88 FACTORY COSTS. “Let us look at another point—factory costs. In the first year of the guaranteed price the estimate of the factory costs of producing butter and cheese was of necessity not as accurate as it has been in the last year or two, when much more material has been at hand on which to base figures. The following table shows that with butter factories an allowance for factory costs has been made in the guaranteed price, but actually the manufacturing cost in each of the last three years was lower than the figure allowed in the guaranteed price. In the case of cheese, the first year showed some disparity against the cheese factory, which was, however, made up in subsequent years’ guaranteed price so that the cheese supplier has received his fair return based on factory costs, but the supplier to a butter factory has received more than what was assessed as a fair return. Here is the table of costs: —'

“It was difficult to find out exactly what factory costs were in the years 1934-35 and 1935-36, but they were estimated at 2d per lb for butterfat for butter and 2.75 d per lb for butterfat for cheese. i OUTPUT VARIATIONS. “Now a few words as to output. Out- : put is a matter that varies very much : with the . seasons. It varies with i costs and it is affected to some extent ; by income which a farmer feels he i needs. The biggest main operating i factor in the last year or two in re- < gard to output has been the climatic i factor, but in addition to this there i has been the question of disease. Notwithstanding variations in the output of butterfat due to the various factors ,the amount received by the : dairy industry for this .varying pro- > duction has progressively increased- 1 even for 1938-39 when production 1 dropped over 10 per cent, owing to 1 the bad season, the return to the < dairy industry as a whole dropped by ! about 2 per cent, and it is possible that 1 this climatic factor is responsible for 1 some of the assertions that farming ‘ income is not what it was. The fig- s uies for output and total payments of 1 dairy products since 1931 are as fol- < lows: — }

(estimated! 342.000,000 27,250.000 1 As far as the dairy industry ac- ' count itself is concerned, it is well ' known that the payments out to dairy 1 factories have exceeded materially the c market realisations over the period c since the inception of the guaranteed s price. During the three complete years the guaranteed price system has ’ been m operation, the excess paid out ] by the Marketing Department to the 1 armer over the amount realised in c London in two of these years is -ip- J proximately £2.824.645; and for the . year 1937-38 the realisation was £576,- ’ Z 24 over the amount paid out to farm- ’’ ers, making a net payout to the farmer lor the three seasons of £2.247,921 in C excess of realisation by sale. The do- , tails are as follow:— ■ J non’ 37 ' clcficit £272,109 J 1937- surplus £576,724 1 1938- estimated deficit £2.552,536 1 “As the Government had promised that any deficit for the first year of the guaranteed price would "be the i esponsibility of the Government the t first year’s deficit of £272,109 has been s paid out of the Consolidated Fund, i leaving a net deficit in the guaranteed 1 price account of an estimated figure 1 of £1.975.812, Had the Government t

! not been marketing the dairy product ■ for New Zealand, market realisations ’ would have been less. In addition tc ’ this, costs in New Zealand would have been higher, for the Government has ’ saved commission charges, saved or - Dairy Board Levy, saved on interest • Over three export seasons the total 1 savings to the industry is worked out ' at over £650.000, quite apart from the higher market realisations that have ■ come about through a better market- ' ing procedure. ‘■Let me give you some examples ol individual factory payouts above the estimated basic payout for last season. It will be recalled that for 1938-39 it was estimated that the payout for butter would be 15.88 d and the payout for cheese, 17.88 d. The average was much higher than this. Here are some cases of total payments to suppliers:— Butter. d. N.Z. Co-op. Dairy Co 16.253 Awahuri (Palmerston Nth.) 16,761 Tai Tapu (Canterbury) .... 16.449 Te Awamutu 16.136 Levin 16.978 Kaitaia 16.142 N.Z. Co-op. Dairy Co 18.446 Tatua (Waikato) 18.110 Kaupokonui 18.024 Island (Southland) 18.33 Dalefield (Wairarapa) 19.46 Normanby (Taranaki) 18.37 Awarua (Southland) 19.134 “Is it not clear that the dairy industry is receiving much more than the basic guaranteed price which has come in for so much discussion? As to costs which may increase to a major degree, I have already suggested that in regard to fertiliser the Government will see to it that there is no material increase in the price." The Minister developed in detail a contention that it would be better to offset any increase in the price of fertiliser by a subsidy than by an increase in the guaranteed price. PRODUCTION & PAYMENT. “From the tables in this statement,” Mr Nash continued, “it will be seen that the dairy farmer on the average (some more some less) received the following payouts for butterfat: — Butter. Cheese.

“If the output is compared with the total payout the figures show that compared with 1934-35 output last year (largely due to climatic conditions and facial eczema) declined by less than 10 per cent but the payout increased by over £9,000,000 or 50 per cent. Even compared with the record production year of 1936-37, the total payments to dairy farmers were higher last year by' £382,000 despite a production decrease of 16 per cent. Production was well down but the total payment to the farmer was increased. REASONABLE PAY. I “The dairy farmer with other citi-| zens is rendering good service to the nation and to the Commonwealth; he is worthy of reasonable pay for his work; and the Government will do everything possible to see that he receives it. All the evidence that 1 have received from various sources in New Zealand is to the effect that dairy farmers on the whole are doing well and with few exceptions are quite satisfied with the guaranteed price. However, if the industry has some evidence relating to dairy farmers’ balance sheets which they would like to submit to the Government, I am sure that the Government would be very willing indeed to examine individual farmers' returns. WAR DEMANDS “Wo are at war. Every dairy farmer in the Dominion is anxious to do his share of the work necessary to help in the conflict. Whilst the conflict lasts, and after, the Government will do all that it can to ensure that the dairy farmer with other sections of the community receives a fair share of the wealth of the Dominion in some relation to his work and service. “The Government believes (ho guaranteed price procedure has brought more benefits to the working farmer than any policy that has boon introduced into the dairy industry’ for many years. It has brought stability. It has brought consistency, certainty with regard to market price, and relief from worry to a greater degree than ever before. The Government desires to continue the guaranteed price, and believes that the majority of working farmers also desire it continued, and I that the statements in the Press do noil represent the working farmers’ views."

! THE GUARANTEED PRICE SCHEME I I I MINISTER ON RESULTANT BENEFITS. i SURVE V OF PAYMENTS & COSTS (By Telegraph.) (.Special to "Times-Age." > WELLINGTON. This Day. Referring to the recent discussion on thi- guaranteed price for 1938-39. the Minister of Marketing (the Hon W. X'asli) stated today that it appeared that the representatives of the dairy industry had not taken into account all 1 he details which are relevant to the guaranteed price prior Io and since its inception. "There are one or two points in particular,” said Mr Nash, "which require emphasis. ’ "The first is that no dairy farmer really wants to go back to the mercies of the open market over which he has no control. There is no argument about the principle of guaranteed or stabilised prices. This has not been made clear in recent dscussions. but a stable price in itself is a factor of some value and the working dairy farmer is very well aware of this. It will be remembered that for the first yea)- the guaranteed price was assessed on an average of the previous ten years’ realisations. The average prices paid for butterfat for the ten-year period prior to July 31. 1935, were: Butterfat for butter: 12.73 d per lb. Butterfat for cheese: 13.81 d per lb. PRICE & PAYOUT. "The guaranteed price for the first year, that is for the 1936-37 season, was in advance of this figure, making a payout for the 1936-37 season of approximately 13.6 d per lb for butter and 15.18 d per lb for cheese. The first point to make here is that the actual payouts were over Id on the average higher than the estimated guaranteed price. That means that for the first year of the guaranteed price the dairy farmers of this country were actually getting much more than had been calculated on an average basis. But let us compare the above figures with those for the two preceding years. Here they are:— Payouts for Butter and Cheese. 1934-35. 1935-36. 1936-37 (under

"The guaranteed price for 1935-36 nol only included payment for butter and cheese carried over from the previous season when there was no guaranteed price and farmers would otherwise have had to take market returns, but it also included an additional amount of |d per lb paid to cheese factories in order to make their payout l).d higher than that for butter factories as had been promised earlier.

1936-37 Estimated. Actual. Butter .... 13.04 13.558 Cheese .... 14.54 1937-38 15.176 Estimated. Actual. Blitter .... 13.880 14.812 Cheese .... 15.880 1938-39 16.389 Estimated. Actual. Butter .... 15.880 16.199 Cheese .... 17.88 18.060

Costs in Pence per lb. of Butterfat. 1936-37 Estimated. Actual. Blitter 2.25 1.984 Cheese 2.75 3.139 1937-38 .Estimated. Actual. Blitter 2.25 2.047 Cheese 3.25 3.337 1938-39 Estimated. Actual. Butter 2.25 2.222 Cheese 3.50 3.592

Total Total butterfat value all 1933-34 (lbs.) products, £. .... 391,961,202 17,911,129 1934-35 .... 376,710,355 18.172,547 1935-36 .... 390,540.197 23,364.594 1936- .... 19371938- .... 406.841.958 .... 383.037.469 26.868.643 27,767.288

1934-5 d. 9.500 d. 10.125 1935-6 12.125 13.125 1936-7 13.558 15.176 1937-8 14.812 16.389 1938-9 16.199 18.060

guaranteed price.) Butter 9.5 12.125 13.558 Cheese 10.125 13.125 15.176