PENNY INCREASE

Waikato Times, Volume 121, Issue 20262, 3 August 1937, Page 8

PENNY INCREASE

GUARANTEED PRICE. CONSIDERED ADEQUATE. OPINION AT TE AWAMUTU. OFF-SETTING HIGHER COSTS. (By Telegraph.—Special Reporter.) TE AWAMUTU, Tuesday. A statement that he was unable to agree with estimates Indicating that the farmer was entitled to an Increase of approximately per lb butterfat on last year’s guaranteed price was made by Mr C. M. Alexander, chairman of directors, In his address to shareholders at the annual meeting of the Te Awamutu Co-operative Dairy Company to-day. He considered an Increase of 1d per lb butterfat on the present price would be adequate to enable the Industry to meet the higher costs. Mr Alexander said that when the price of 12.56 d per lb butter was fixed by the Government in August last year, the formula used by the Government for converting butter to butterfat was based on an over-run of 21.75 per cent., and an all-in cost to f.o.b. of 2.25 d per lb butterfat. and it was anticipated that this would enable the “average efficient factory” to pay Is i.o4d per lb butterfat. Practically all the butter factories in the Auckland Province, he said, had exceeded this figure, and were paying in the region of Is lid per lb, or slightly over, on the basis of average over all grades, not including cartage. “The benefits of the guaranteed price,” said Mr Alexander, “ have been nullified to a large extent by the increase in costs during the past twelve months. This Increase has been quite substantial even where the farmer has found the labour in his own family, but where hired labour has been necessary, the farmer is undoubtedly worse off than he was during the previous year.” He stated that he was unable to agree with estimates published recently indicating that the farmer was entitled to an increase of approximately 3id per lb butterfat on last year’s guaranteed price. These estimates, he said, overlooked the fact that last year’s price had no relation to the cost of production, but represented merely an arbitrary figure based on a ten-year average. " I have given this matter a great deal of thought,” he said, “ and I believe that If the price for butter this year Is fixed at a figure which will enable efflclerft factories to pay out 1s 2Jd to 1s 3d per lb butterfat, this would give general satisfaction, and would be a fair attem.pt on the part of the Government to meet the Increased costs which the Industry Is now This would Involve an increase of 1d per lb butter on the present price.” Issuing of Shares. Mr Alexander referred to a difficulty facing the directors in connection with the issue of new share capita], as a result of ihe large increase in supply. He stated that if all new suppliers applied for share capital next year, the additional supply of approximately J.150,0001b butterfat would Involve the issue of £15,000 share capital, in the form of contributing shares. The directors would consider the possibility of issuing fully-paid shares, thus reducing the issue to £ISOO, making a corresponding adjustment in favour of the present holders of contributing shares. The company, he said, proposed to continue its policy of paying a dividend on share capital, and also of resuming share capital at full face value in all cases where suppliers went out of dairying. The secretary-manager, Mr A. J. Sinclair, addressed the meeting, and explained the company’s accounts in detail. He said that the new system of issuing standardised recounts was of great benefit, hut that Its value was discounted by the manner in which some companies continued to quote their total payment for the season. “ There is only one correct method of declaring a dairy company’s pay-out,” said Mr Sinclair, “ and that is the average payment over all grades, not including cartage. Some companies persist in quoting Hie payment for finest quality butterfat, including cream cartage, and other companies feel compelled to follow suit.’’ Price Committee’s Work. As a member of the Government committee, Mr Sinclair said that he could make only a guarded reference at the moment to guaranteed prices. “ The committee’s work will he concluded within the next few days,” he said, “ and I must pay a tribute to the manner in which the Government departments marshalled all their resources in supply the committee with the information required. A more complete investigation into the dairying industry has never been undertaken, even for the Dairy Commission of 1934, and after a survey of over 17,000 farms we discovered ‘the average efficient farmer.’ We know just how many cows he ran milk efficiently with machines, the class of land he should farm, the average butterfat production of his cows, the capitalised value per cow of all his assets; hut we did have a little difficulty in determining what was a reasonable state of comfort for this important unit in ihe dairying industry.” Mr Sinclair added there was a possibility Hint much of the data prepared by the departments would he made available to the industry at a later date. At the conclusion of the meeting cheques for the final payment, amounting to £21,244, were distributed. This represents a payment of Hd per lb butterfat on the total supply for the >ear, together with a dividend of 5 per cent, on paid-up share capital.