Papers Past | Parliamentary Papers | Appendix to the Journals of the House of Representatives | 1940 Session I | PRIMARY PRODUCTS MARKETING DEPARTMENT ANNUAL...

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CONTENTS.

(1) DAIRY-PRODUCE EXPORT DIVISION. Accounts — page Annual: Export Division .. .. .. .. .. .. .. .. 35 Completion of Operations, 1937-38 Season .. .. .. .. .. 3 Summary, 1936-37 and 1937-38 Seasons .. .. .. .. .. .. 6 Advertising and Publicity . . . . . . . . . . . . . ■ . . 27 Consumption of Butter in relation to Margarine . . .. . . . . .. ..17 Exports of Butter and Cheese — To all Destinations .. .. .. .. .. .. • ■ .. 10 To the United Kingdom .. .. .. .. .. .. .. 22 Freight Rates .. .. .. .. .. . • • • ■ ■ .. 27 Gradings of Butter and Cheese .. .. .. .. .. .. .. 9, 11 Guaranteed Prices, 1936-37 to 1939-40 .. .. .. .. .. .. .. 7 Imports into the United Kingdom .. .. .. .. .. 17, 20, 23, 41 Inspection of Shipping .. .. .. .. .. .. • • ~ 26 London Prices .. .. .. .. .. .. .. • • 14, 18, 45 Manufacturing-costs .. .. .. .. .. .. .. • ■ .. 32 Marketing in the United Kingdom .. .. .. .. .. .. ..11 Marine Insurance .. .. .. .. . ■ • • • • • • .. 27 Milk-production in the United Kingdom .. .. .. .. .. .. 20 Payouts by Dairy Companies .. .. .. .. .. .. .. .. 31 Premiums for Quality .. .. .. .. . . . • • ■ • • .. 8 Processed Milk .. .. .. ■ ■ • • • • • • • • .. 21 Production and Consumption of Butter in the United Kingdom .. .. .. .. 17 Quantities of Butter and Cheese purchased .. .. .. .. .. .. 8 Relation between Manufacture of Butter and Cheese .. .. .. .. .. 10 Sales to Markets other than the United Kingdom .. .. .. .. .. 21 Shipping .. .. .. .. • ■ • • • ■ • • • • • • 22 Sources of Supply .. .. .. • • • • • • • • • ■ .. lo Visit of Director to the United Kingdom .. .. .. .. .. ..11 World Trade in Butter and Cheese .. .. .. .. .. .. .. 44 (2) INTERNAL MARKETING DIVISION. Accounts, Annual .. .. .. • ■ ■ ■ • ■ ■ ■ • • .. 60 Auckland Branch .. . . . . .. • • ■ ■ ■ ■ • • .. 59 Barley .. .. .. ■ • • ■ • • • • • • • • .. 55 Bobby Calf Pool Operations ■ .. .. .. . ■ • ■ • • ■ • .. 56 Dairy-produce .. . . . • • • • • • ■ • • • • .. 49 Eggs and Egg-pulp .. .. .. . ■ • • • • • • • • .. 52 Fruit .. 57 Honey .. .. .. • • • • • • • • • • • • .. 51 Hops 56 Kauri-gum . . . . . . .. ■ ■ • • • • • • • ■ .. 57 Maize .. .. .. • • • • • • • • • • ■ • .. 55 Onions .. .. .. • • • • • • • • • ■ • ■ .. 56 Potatoes .. .. • • • • • • • • ■ • ■ • • • .. 53 Trading Branch, Thorndon . . .. . . .. • • • • • • .. 59

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1939. NEW ZEALAND.

PRIMARY PRODUCTS MARKETING DEPARTMENT ANNUAL REPORT AND ACCOUNTS.

Presented to both Houses of the General Assembly pursuant to the Provisions of the Primary Products Marketing Act, 1936.

I have the honour to submit the annual report and Statement of Accounts of the Primary Products Marketing Department for the year ended 31st July, 1939. This report is presented in two sections, the first section covering the operations of the Dairy-produce Export Division of the Department, and the second section covering the operations of the Internal Marketing Division of the Department. (1) DAIRY-PRODUCE EXPORT DIVISION. (For the Year ended 31st July, 1939.) REVIEW OF COMPLETED FINANCIAL OPERATIONS FOR 1937-38 SEASON. When the annual report for the year ended 31st July, 1938, was prepared, unsold stocks of the season's produce were taken into the accounts at estimated sales values as under : — Creamery butter: 994,638 boxes. Estimated sale value : 116s. Id. per hundredweight sterling gross. Whey butter: 5,468 boxes. Estimated sale value : 108s. I Id. per hundredweight sterling gross. Cheese : 302,050 crates. Estimated sale value : 70s. Id. per hundredweight sterling gross. On the basis of these valuations for dairy-produce unsold, the surplus in the Dairy Industry Account for the 1937-38 season was estimated, to the nearest pound, to be as follows : — £ £ Estimated surplus on creamery butter .. .. .. 443,398 Estimated surplus on cheese .. .. .. .. 100,447 Plus estimated surplus on whey butter .. .. .. 11,340 111,787 Estimated surplus, Dairy Industry Account, 1937-38 season .. .. £555,185 The actual realizations in respect of the above-mentioned produce exceed the estimate in the case of butter but were below the estimate for cheese, the average sale prices being as follows Creamery butter : 117s. 4d. per hundredweight sterling gross. Whey butter : 110s. 2d. per hundredweight sterling gross. Cheese : 695. 3d. per hundredweight sterling gross.

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The final result of the operations for the 1937-38 season, expressed to the nearest pound, is as follows:— £ £ Surplus on creamery butter .. .. .. .. .. 486,041 Surplus on cheese .. .. .. .. .. 75,676 Plus surplus on whey butter .. .. .. .. 11,577 87,253 573,294 Add receipts, special milk products (Special Milk Products Regulations 1938) .. .. .. .. •• •• 3,430 Surplus, Dairy Industry Account, 1937-38 season .. .. .. £576,724 Full details of the completed financial operations for the 1937-38 season are shown in the accounts section of this report. In terms of the undertaking given to the dairy industry, the deficit for the 1936-37 season was the responsibility of the Government, and the sum of £276,850 has accordingly been paid into the Dairy Industry Account, being the balance as shown by the 1936-37 season accounts plus interest to date of payment. SUMMARY OF RESULTS OF PURCHASE AND SALE OF BUTTER AND CHEESE FOR 1937-38 SEASON. The following tabulations show summarized details of the purchase and sale operations for the 1937-38 season in respect of creamery butter, cheese, and whey butter : —

Purchase and Sale of Creamery Butter, 1937-38 Season.

(Quantity : 5,502,253 boxes. Weight: 137,541 tons 16 cwt. 0 qr. 14 lb.) Amount. Per Hundredweight. Per Pound. £ £ d. s. d. d. d. Realization on sales, United Kingdom 15,719,921 117 9-713 12-622 (sterling gross) Less trade discount* .. .. 129,498 0 11-646 0-104 15,590,423 116 10-067 12-518 Less selling charges, United Kingdom — Port dues and consolidated rate 127,543 11-470 0-102 Storage, cartage and delivery, 46,338 4-167 0-037 averaging, and other charges Commission .. .. 309,908 27-870 0-249 483,789 3 7-507 0-388 Realization on sales, United King- 15,106,634 113 2-560 12-130 dom (sterling net) Plus exchange on remittances to 3,625,297 27 2-026 2-911 Zfe&l&ild ■ 1 ——— Realization on sales, United King- 18,731,931 140 4-586 15-041 dom (New Zealand currency) Less freight and insurance .. 1,010,890 7 6-909 0-812 Net realization on sales, United King- 17,721,041 132 9-677 14-229 dom, f.o.b. New Zealand Plus realization on sales to destina- 512,645 124 9-994 13-375 tions other than United Kingdom Total net realization sales creamery 18,233,686 132 6-820 14-204 butter, f.o.b. New Zealand Less administration, interest, ad- 144,664 1 0-622 0-113 vertising cost of remittances, and general expenses Eintal net realization sales creamery 18,089,022 131 6-198 14:-091 butter Purchase cost under 1937-38 guaran- 17,602,981 127 11-794 13-712 teed price Surplus on creamery butter, 1937-38 486,041 3 6-404 0-379 season * Allowed in termB of rules of London Provision Exchange.

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Purchase and Sale of Cheese, 1937-38 Season.

(Quantity : 1,176,260 orates. Sale weight: 83,487 tons 5 cwt. 3 qr. 23 lb.) Amount. Per Hundredweight. Per Pound. £ £ d. s. d. d. d. Idealization on sales, United Kingdom 5,722,461 68 7-410 7-352 (sterling gross) Less trade discount* .. .. 47,674 0 6-860 0-061 5,674,787 68 0-550 7-291 Less selling charges,United Kingdom — Port dues and consolidated rate .. 69,732 10-034 0-090 Storage, cartage and delivery, 16,043 2-308 0-021 averaging, and other charges Commission .. .. .. 112,177 16-141 0-144 . 197,952 ——y— 2 4-483 0-255 Realization on sales, United Kingdom 5,476,835 65 8-067 7-036 (sterling net) Plus exchange on remittances to New 1,315,699 15 9 • 317 1 ■ 690 Zealand —» Realization on sales, United Kingdom 6,792,534 81 5-384 8-726 (New Zealand currency) Less freight and insurance .. 653,252 7 9-997 0-839 Net realization on sales, United King- 6,139,282 73 7-387 7-887 dom, f.o.b. New Zealand Plus realization on sales to destina- 6,347 69 10-606 7-488 tions other than United Kingdom Total net realization sales cheese, f.o.b. 6,145,629 73 7-338 7-887 New Zealand Less administration, interest, adver- 45,644 0 6-560 0-059 tising, cost of remittances, and — general expenses Final net realization sales cheese .. 6,099,985 73 0-778 7-828 Purchase cost based on sale weights 6,024,309 72 1-901 7-731 under 1937r-38 guaranteed price Surplus on cheese, 1937-38 season .. 75,676 0 10-877 0-097 * Allowed in terms of rules of London Provision Exchange.

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Purchase and Sale of Whey Butter, 1937-38 Season.

Summary.

(Quantity : 71,829 boxes. Weight: 1,795 tons 12 cwt. 1 qr. 17 lb.) Amount. Per Hundredweight. Per Pound. £ £ d. s. d. d. d. Realization on sales, United Kingdom 199,872 111 3-730 11-926 (sterling gross) Less trade discount* .. .. 1,665 0 11-129 0-100 198,207 110 4-601 11-826 Less selling charges, United Kingdom — Port dues and consolidated rate .. 1,912 12-775 0-114 Storage, cartage and delivery, 158 1-059 0-009 averaging, and other charges Commission .. .. 3,990 26 • 665 0 • 238 6,060 3 4-499 0-361 Realization on sales, United Kingdom 192,147 107 0-102 11-465 (sterling net) Plus exchange on remittances to New 46,113 25 8-174 2-752 Zealand Realization on sales, United Kingdom 238,260 132 8-276 14-217 (New Zealand currency) Less freight and insurance .. 13,553 7 6-572 0-809 Net realization on sales, United Kingdom, 224,707 125 1-704 13-408 f.o.b. New Zealand Less administration, interest, adver- 1,833 1 0-250 0-109 tising cost of remittances, and general expenses Final net realization sales whey butter 222,874 124 1-454 13-299 Purchase cost under 1937-38 guaranteed 211,297 117 8-086 12-608 price Surplus on whey butter, 1937-38 season 11,577 6 5-368 0-691 * Allowed in terms of rules of London Provision Exchange.

1936-37 Season. 1937-38 Season. £ £ £ £ Creamery butter .. .. Deficit 384,313 Surplus 486,041 Cheese .. .. •• Surplus 126,369 Surplus 75,676 Whey butter .. .. Deficit 5,956 Surplus 11,577 Surplus 120,413 Surplus 87,253 Total season's produce .. Deficit 263,900 Surplus 573,294 Other items — Premiums, staff annuities Dr. 5,380 Adjustments special milk Dr. 2,829 Cr. 3,430 products Interest on deficit .. Dr. 4,741 Dr. 12,950 276,850 Payment from Consolidated 276,850 Fund to Dairy Industry Account Dairy Industry Account as at .. Surplus£576,724 close of 1937-38 season

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GUARANTEED PRICES, 1938-39 SEASON. The guaranteed purchase prices for butter and cheese manufactured during the 1938-39 season and exported, were: Butter (basic price) 14-89 d. per pound and cheese (basic price) 8-42 d. per pound. The prices to be paid for the 1939-40 season are the same as those paid for the 1938-39 season. The full range of f.o.b. purchase prices fixed for each season to date since the inception of the guaranteed-prices system is as follows : —

The conversion formula; used in the determination of the 1939-40 season prices shown above are — Butter. Cheese. Over-run .. .. 21-75 per cent. Yield .. .. 2-51 gross. Costs of manufacture and\2-25d. per pound 2-45 net. delivery to f.o.b. butterfat. Return from whey butter 0-75 d. per pound butterfat. Costs of manufacture and\3-sd. per pound delivery to f.o.b. J butterfat.

1938—37 Season.* 1937—38 Season."j* 1938—39 Season 1939—40 Season. _ , Butter and Cheese manufactured Butter and exported after Butter and Cheese manufactured Butter and Cheese manufactured Grade. on and after 1st August 1930, 31st July 1937 and which is ft J t A t 193g tQ from ut A t lg39 t0 Slat Ju]y° r i937 ° n ° r ™lst July 1938 3l8t July ' ,939 ' and ex P°' ted - 31st Ju 'y> 194 °' and exported. Creamery Butter. Per Pound. Per Pound. Per Pound. Per Pound. Finest grade— d. d. d. d. 94 points and over 12-6875 13-785 15-015 15-015 93 to 93J points .. 12-5625:]: (basic price) 13-66J (basic price) 14-89J (basic price) 14-89J (basic price). {Equivalent to 106s. Od. sterling {Equivalent to 115s. sterling {Equivalent to 124s. sterling { Equivalent to 124s. sterling per hundredweight on London per hundredweight on London per hundredweight on London per hundredweight on London market. market. market. market, on basis costs at 1st August, 1939. First grade— 92 to 92J points .. 12-5 13-5975 14-8275 14-8275 90 to 91J points .. 12-3125 13-41 14-64 14-64 Second grade .. 11-8125 12-91 14-14 14-14 Whey Butter. First grade .. I 11-5625 i 12-66 | 13-89 I 13-89 Second grade .. | 11-0625 j 12-16 | 13-39 I 13-39 Cheese. Finest grade— 94 points and over 7-21875 7-90625 8-57625 8-57625 93 to 93i points .. 7-3875 7-875 8-545 8-545 First grade— 92 to 92£ points .. 7-0625t (basic price) 7-75{ (basic price) 8• 42f (basic price) 8-42{ (basic price) {Equivalent, to 63s. 3d. sterling {Equivalent to 68s. 3d. sterling {Equivalent to 73. 6d. sterling {Equivalent to 73s. 6d. sterling per hundredweight on T.ondon per hundredweight on London per hundredweight on London per hundredweight on London market. " market. market. market, on basis costs at 1st August, 1939. 91 to 91i points .. 7-00 7-6875 8-8575 8-3575 Second grade .. 6-8125 7-50 8-17 8-17 Premiums. Unsalted butter .. 2s. 4d. per hundredweight, 3s. 4d. per hundredweight 3s. 8d. per hundredweight 3s. 8d. per hundredweight. Coloured cheese .. 6d. per crate 6d. per crate 6d. per crate 6d. per crate. Deep-coloured cheese Is. 5d. per crate Is. 5d. per crate Is. 5d. por crate Is. 5d. per crate. Waxed cheese .. 4Jd. per crate 4£d. per crate 4£d. per crate per crate. Deductions. Butter, per Cheese, per Butter, per Cheese, per Butter, per Cheese, per Butter, per Cheese, per Box. Crate. Box. Crate. Box. Crate. Box. Crate, d. d. d. d. d. d. d. d. Insurance to f.o.b. .. 0-68 1-07 0-69 1-085 0-565 0-935 0-60 0-96 Dairy Board levy .. 1-12 1-63 0-56 0-815 0-56 0-815 1-12 1-63 Average Payments by Dairy Companies for Butterfat Supplies. Pay-out, per Pound Butterfat. Pay-out, per Pound Butterfat. Pay out, per Pound Butterfat. Pay-out, per Pound Butterfat. d. d. d. d. For buttermaking .. 13-558 14-81 16-199 15-88 (est.) For cheesemaking (in- 15-176 16-39 18-060 17-88 (est.) eluding whey butter) » It was estimated that the purchase prices originally fixed for cheese for the 1936-37 season (basic price, 6-8125d. per pound) would enable efficient cheesemanufacturing companies to pay, on average, to the suppliers for butterfat lid. per pound in excess of the corresponding average payment made by buttermanufacturing companies. The differential of ljd. per pound butterfat, was not realized, and the Government made a further payment to cheese-manufacturing companies of id, per pound of cheese. The purchase prices for cheese for the 1936-37 season shown above include this further payment. t The purchase prices originally fixed for butter and cheese for the 1937-38 season (butter basic price, 13-25d. per pound ; cheese basic price, 7-54d. per pound) were increased by 0*41 per pound for butter and 0-21d. per pound for cheese. The purchase prices for butter and cheese for the 1937-38 season shown above include these price increases.

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PREMIUMS FOR QUALITY, AND QUANTITIES OF BUTTER AND CHEESE PAID FOR AT DIFFERENTIAL PRICES. Under the Dairy Produce Export Prices Order, 1939, provision is made for additions to or deductions from the basic purchase prices for butter and cheese according to quality as disclosed by the grading points awarded to the dairy-produce, and it is evident that this system of price differentials has proved a stimulus to the production of dairy-produce of higher quality. For the season under review the percentages of butter and cheese which gained the basic price or over were higher than those for the previous two years, with a corresponding diminution in percentages of lower-grade produce. In the case of cheese the improvement in quality was particularly marked. For the 1938-39 season 42§ per cent, of creamery butter was paid for at the basic guaranteed price, 42 per cent, above, and 15| per cent, below the basic guaranteed price. In the case of cheese, 62 per cent, was paid for at the basic guaranteed price, 18| per cent, above, and 19| per cent, below the basic guaranteed price. The following tables show the quantities of butter and cheese purchased and paid for at the respective differential prices : —

Creamery Butter (in Tons): Quantities purchased and paid for at Differential Prices.

Whey Butter (in Tons): Quantities purchased and paid for at Differential Prices.

Finest Grade. First Grade. Grading Ports. Total. „„ . „o, 94 Points 9 ® J?. 93 * 92 to 92J 90 to 01J Grade ' and over. (Basio Pri ' oei) Points. Points. Tons. Tons. Tons. Tons. Tons. Tons. Auckland .. .. .. 86,248 28,390 43,503 7,797 6,183 375 Bluff .. .. .. 147 .. 52 16 32 47 Dunedin .. .. .. 116 7 61 11 36 1 Gisborne .. .. .. 1,535 987 426 99 23 Lyttelton .. .. .. 1,698 1,116 479 56 13 34 Napier .. .. .. 1,233 464 629 17 123 New Plymouth .. .. 8,833 5,647 2,148 598 438 2 Patea .. .. .. 952 111 498 233 109 1 Timaru .. .. .. 542 118 237 116 27 44 Wanganui .. .. .. 1,912 1,480 304 83 44 1 Wellington .. .. 13,215 10,483 1,422 902 401 7 Grand totals — 1938-39 .. .. 116,431 48,803 49,759 9,928 7,429 512 1937-38 .. .. 137,555 55,611 07,275 15,399 8,753 517 1936-37 .. .. 149,810 53,844 66,717 15,550 13,192 507 Percentage of qualities — 1938-39 .. .. 100 41-91 42-74 8-53 6-38 0-44 1937-38 .. .. 100 40-43 41-64 11-19 6-36 0-38 1936-37 .. .. 100 35-94 44-53 10-38 8-81 0-34 Butter figures calculated at 40 boxes to a ton.

Grading Ports. Total. First Grade. Second Grade. Tons. Tons. Tons. Auckland .. .. .. 497 445 52 BluB .. .. .. .. 27 26 1 Dunedin .... .. 3 .. 3 New Plymouth .. .. .. 384 368 16 Patea .. .. .. .. 594 586 8 Timaru.. .. .. .. 27 19 8 Wellington .. .. .. 168 166 2 Grand totals— 1938-39 .. .. .. 1,700 1,610 90 1937-38 .. .. .. 1,795 1,613 182 1936-37 .. .. .. 1,436 1,249 187 Percentage of qualities— 1938-39 .. .. .. 100 94-7 5-3 1937-38 .. .. .. 100 89-86 10-14 1936-37 .. .. .. 100 86-38 13-62

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Cheese (in Tons): Quantities purchased and paid for at Differential Prices.

QUANTITIES OF BUTTER AND CHEESE GRADED. The total gradings of butter and cheese for the twelve months ended 31st July, 1939, are shown below, also the comparative gradings for the 1936-37 and 1937-38 seasons :—

Butter gradings for the 1938-39 season show a decrease of 14-39 per cent, and cheese gradings a decrease of 4-63 per cent. Expressed in terms of butterfat, the total decrease in gradings is 13-252 per cent.

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Finest Grade. First Grade. Grading Ports. Total. I Qf> . 0 „, I ® ec0 " d 94 Points 93 to 93J 9 f, ? ® * 91 to 91 j Grade, and over. Points. Points. Tons. Tons. Tons. Tons. Tons. Tons. Auckland .. .. .. 14,830 553 1,426 8,379 3,287 1,185 Bluff .. .. .. 11,169 71 1,676 5,916 3,226 i 280 Dunedin .. .. .. 1,800 173 410 1,077 129 11 Gisbome .. .. .. 85 .. 3 60 18 4 Lyttelton .. .. .. 684 32 244 368 34 6 Napier .. .. .. 63 25 35 3 New Plymouth .. .. 16,970 45 5,608 9,283 1,996 38 Patea .. .. .. 20,550 166 2,676 15,461 2,184 63 Timaru .. .. .. 614 4 84 446 69 11 Wanganui .. .. .. 2,182 216 267 1,334 333 32 Wellington .. .. 11,267 104 1,099 7,386 2,457 221 Grand totals — 1938-39 .. .. 80,214 1,364 13,518 49,745 13,736 1,851 1937-38 .. .. 83,784 385 7,350 53,658 18,023 4,368 1936-37 .. .. 86,708 2,079 15,768 48,045 18,561 2,255 Percentage of qualities— 1938-39 .. .. 100 1-70 16-85 62-01 17-12 2.32 1937-38 .. 100 0-46 8-77 64-05 21-51 5-21 1936-37 .. 100 2-40 18-18 55-41 21-41 2-60 Percentage of— Waxed cheese— 1938-39 .. .. 60-04 1937-38 .. 59-32 1936-37 .. .. 58-54 Coloured cheese— 1938-39 .. .. 29-32 1937-38 .. .. 33-44 1936-37 .. .. 32-69 I Cheese figures calculated at fourteen crates to a ton.

1936-37. 1937-38. 1938-39. Butter (in Tons). Salted .. .. .. 147,168 136,023 117,832 Unsaltcd .. .. .. 7,396 6,812 4,440 154,564 142,835 — 122,272 Cheese (in Tons). White .. .. .. 59,337 56,752 53,619 Coloured .. .. .. 28,885 28,718 27,888 88,222 85,470 81,507

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Grading of Dairy-produce: Percentages of New Zealand Butter and Cheese of the Various Grades.

QUANTITIES OF BUTTER AND CHEESE EXPORTED. The quantities of butter and cheese exported from the various grading ports of the Dominion are shown in the following tabulation : —

Butter and Cheese Exports from 1st August, 1938, to 31st July, 1939.

THE RELATION BETWEEN BUTTER-MANUFACTURE AND CHEESE-MANUFACTURE, AND DIFFERENTIAL PAYMENTS AND ALLOWANCES. In last year's report comment was made in regard to the stabilizing effect of the differential marginal payment in favour of butterfat for cheesemaking in arresting the decline in cheese-manufacture, and for the 1938-39 season the relative position of cheese-manufacture as compared with butter-manufacture is still more favourable. From a production point of view the season was a poor one, with a serious reduction in dairy-factory outputs principally on account of adverse climatic conditions. However, while the butter gradings showed a decrease of 14-39 per cent, as compared with the previous season, the fall in cheese was only 4-63 per cent. The cheese position was assisted to a minor degree by the fact that during the season a number of dairy factories which formerly received whole milk from which they manufactured butter and green casein curd were obliged, on account of lack of a market for casein, to revert to cheese-manufacture. Also, owing to restriction of imports into Great Britain of certain kinds of dried and condensed milk, some factories manufacturing those commodities changed over to cheesemaking. The principal factor, however, influencing the improved trend in cheese is undoubtedly the allowance under the guaranteed-prices system of 2d. per pound butterfat more for cheesemaking than for buttermaking. In 1935-36, the season immediately prior to the coming into operation of the guaranteedprices plan, the cheese gradings represented only 36-8 per cent, of the total quantity of butter and cheese, whereas for the 1938-39 season the grading figures show that cheese represented 40 per cent, of the total quantities of butter and cheese graded, thus indicating that the decline in cheese-production as compared with butter-production has not only been checked, but that some of the lost ground has been regained.

Butter. Cheese. ear * Finest. First. Second. Total. Finest. First. Second. Total. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. 1934-35 .. .. 77-04 21-66 1-30 100-00 20-60 76-27 3-13 100-00 1935-36 .. .. 76-48 22-36 1-16 100-00 19-47 77-18 3-35 100-00 1936-37 .. 79-98 19-12 0-90 100-00 20-58 76-81 2-61 100-00 1937-38 .. .. 82-00 17-44 0-56 100-00 9-22 85-55 5-23 100-00 1938-39 .. .. 84-37 15-10 0-52 100-00 18-54 79-16 2-29 100-00

To Great Britain. To Total Exports. Percentage. Grading Ports. j I Butter. I Cheese. Butter. Cheese. Butter Cheese. Butter. Cheese. Butter. Cheese. i ! ; Boxes. Crates. Boxes. Crates. Boxes. Crates. Boxes. Crates. Boxes. Crates. Auckland .. 3,482,919 208,797 17,450 151 71,853 580 3,572,222 209,528 72-98 18-55 Now Plymouth .. 400,761 242,045 400,761 242,045 8-19 21-43 Patea .. 72,396 293,084 72,396 293,084 1-48 25-95 Wanganui .. 77,332 30,915 37 77,332 30,952 1-58 2-74 Wellington 553,056 170,776 1,550 .. 2,639 158 557,245 170,934 11-38 15-13 Gisborne .. 63,478 1,188 63,478 1,188 1-30 0-12 Napier .. .. 53,162 988 .. .. .. .. 53,162 988 1-09 0-05 North Island totals 4,703,104 947,793 19,000 151 74,492 775 4,796,596 948,719 98-00 84-00 Lyttelton .. 68,127 9,303 14 68,127 9,317 1-39 0-S2 Tirnaru .. .. 18,732 8,363 18,732 8,363 0-38 0-74 Dunedin .. 4,629 24,072 14 4,629 24,086 0-10 2-13 Bluff .. .. 6,577 138,954 34 6,577 138,988 0-13 12-31 South Island totals 98,065 180,692 .. .. .. 62 98,065 180,754 2-00 16-00 Dominion totals.. 4,801,169 1,128,485 19,000 151 74,492 837 4,894,661 1,129,473 100-00 100-00 Butter : Forty boxes equals 1 ton. Cheese: Fourteen crates equals 1 ton.

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The following table shows the grading figures fof the past five years and the percentages of increase or decrease each year :—

Butter and Cheese Gradings.

MARKETING OF BUTTER AND CHEESE. The marketing procedure in. the United Kingdom, as outlined in pievious reports of the Department, has been continued during the 1938-39 season, and the same number of selling-agents has been employed. Broadly speaking, the objectives in marketing remain unchanged, and the Department, maintaining closest contact with individual agents, endeavours to ensure — (1) That regular supplies of New Zealand butter and cheese are made available to meet the requirements of wholesale and retail buyers. f (2) Avoidance of unnecessary competition to clear stocks during periods of quiet demand. (3) The development of the maximum distribution of New Zealand butter and cheese to wholesale, retail, and manufacturing interests throughout the United Kingdom. These activities are supported by an extensive publicity and sales-development campaign, the effectiveness of which is generally recognized as an important factor in the establishment of a consistent rather than an intermittent demand for New Zealand butter and cheese. The effectiveness of the marketing policy is evidenced by the price premiums obtained for New Zealand butter over competitive box butters. The success of the Department's marketing system has attracted the attention of other countries exporting dairy-produce to Great Britain. Last year Major J. R. King and Mr. A. W. Wilson, members of the Australian Dairy Produce (Export) Board, visited Great Britain for the purpose of making investigations concerning the marketing of dairy-produce in that country. The following extract from the report subsequently submitted by Major King and Mr. Wilson to their Board is particularly interesting : — " We have a very high opinion of the way the New Zealand Marketing Department is now conducting its butter business in London. It has completely cut out all speculation, which, prior to Government control, was a common practice amongst the importers. " The Australian Board should fall in line with the New Zealand Marketing Department. By co-operating they could do valuable work, especially from November to March, when the peak of the Southern Hemisphere arrivals are on the market. " Each of the Boards should care for its share of the surpluses in the peak periods and not allow overloading to break down the market. It is our opinion that the work now being carried out by New Zealand is nearly 100 per cent, perfect." VISIT TO ENGLAND BY THE DIRECTOR OP THE DAIRY-PRODUCE EXPORT DIVISION. In May, 1939, the Government decided that Mr. G. A. Duncan, Director of the Dairy-produce Export Division, should be sent to England on an official visit for the purpose of viewing at first hand the operation of the marketing policy inaugurated by the Government in 1936, and of conferring with the London Manager of the Division on policy and administration questions. While in England, Mr. Duncan also inspected the arrangements for the distribution of New Zealand dairy-produce in United Kingdom ports other than London, and participated on behalf of the Government in discussions regarding the renewal of the overseas freight contract for New Zealand dairy-produce, meat, and fruit. INFLUENCES AFFECTING BUTTER-PRICES IN THE UNITED KINGDOM DURING THE 1938-39 SEASON. During the year 1938 the butter trade was marked by a number of features, of which the following were particularly important:— (а) The reduction in total New Zealand exports, which constituted a reversal of the upward trend which has been so noticeable a feature in past years. (б) The recovery in volume of Australian exports following two unfavourable production years. (c) The favourable weather and production conditions in Continental countries, with increased exports from these sources. (d) The absence of shipments from Russia.

Butter. Cheese. Increase or Decrease on T Increase or Decrease on Previous Year. OJl ' Previous Year. E'er Cent. Per Cent. 1934-35 .. .. .. 136,217 2-86 (decrease) 92,673 10-62 (decrease) 1935-36 .. .. .. 146,687 7-69 (increase) 85,555 7• 68 (decrease) 1936-37 .. .. .. 154,564 5-37 (increase) 88,222 3-12 (increase) 1937-38 .. .. .. 142,835 7-59 (decrease) 85,470 3-12 (decrease) 1938-39 .. .. .. 122,272 14-39 (decrease) 81,507 4• 63 (decrease) i j

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MARKETING OF NEW ZEALAND BUTTER IN THE UNITED KINGDOM. Quantities (in Tons) sold Weekly, with average London Prices (per Hundredweight Sterling), 1st August, 1938, to 31st July, 1939.

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MARKETING OF NEW ZEALAND CHEESE IN THE UNITED KINGDOM. Quantities (in Tons) sold Weekly, with average London Prices (per Hundredweight Sterling), 1st August, 1938, to 31st July, 1939.

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(e) The increased importation of butter by Germany. (/) Increased production in the United States and Canada, and the accumulation of large stocks in those countries. (g) Generally unsettled political conditions throughout Europe. (h) An increase in stocks in the United Kingdom, accompanied by a decline in butter consumption and an increase in margarine consumption. New Zealand production declined markedly during the first quarter of 1939 owing to severe drought conditions, the influence of which continued throughout the season. At the end of 1938, Australian production was reduced as the result of weather conditions and shipments were falling sharply, but the first quarter of 1939 showed a great improvement and Australia proceeded to establish record shipments to the United Kingdom during the summer months. Increased production and stocks in the United States and Canada resulted in comparatively large quantities being shipped from Canada to the United Kingdom. At the commencement of October, 1938, cold-store stocks in the United Kingdom, according to the figures published by the Imperial Economic Committee, showed an increase of approximately 16,000 tons over the same period in 1937, the total stocks being the highest for several years. This volume of stocks, without any compensating offset by way of reduced imports, resulted in a decline in prices which continued until the early part of December, when Australian weather conditions indicated the likelihood of decreased imports from that country. Stocks at the beginning of December, 1938, were still markedly above those of the preceding year, but, in view of the possible decline in Australian production, prices for New Zealand butter rose sharply during the month from 105s. per hundredweight to 1255. during January, at about which figure prices remained fairly steady until March. During and prior to March the acuteness of the international situation caused a good deal of anxiety, and day-to-day buying led to an accumulation of stocks, which subsequently required reduced prices to clear. New Zealand fell to 105s. during May, from which it gradually recovered to reach 1255. to 1265. per hundredweight in July, when the full effect of the drought conditions prevailing in New Zealand became apparent, and it was clear that imports from that source would be unexpectedly low. The already substantial price margin (35.) for New Zealand over Australian was further increased by the relative shortage of supplies from New Zealand and increase in supplies from Australia, and reached, on 21st July, the unprecedented margin of 10s. in favour of New Zealand. Reference to the decline in New Zealand exports and its effect on marketing conditions and policy is made in another section of this report. The present indications are that the season will close with stocks at about the same level as last year —namely, 30,000 tons.

Average Monthly Prices of Butter at London.

Average London Market-prices.

New Zealand Australian p. . , Finest Salted. Choicest Salted. anls ' Month. l 1936-37. 1937-38.| 1938-39. 1936-37. 1937-38. 1938-39. 1936-37. 1937-38. 1938-39. I I ' I Per Cwt. Per Cwt. PerCwt. Per Cwt. Per Cwt. Per Cwt. Per Cwt. Per Cwt. Per Cwt. s. d. s. d. s. d. s. d. s. d. s. d. s. d. s. d. s. d. August .. 119 6 116 6 121 0 118 3 115 9 118 0 127 6 126 6 130 3 September .. 107 9 117 6 120 0 107 6 117 3 116 0 125 3 134 6 135 9 October .. 99 9 137 0 114 6 100 0 136 9 111 0 122 6 145 0 130 9 November .. 109 0 131 6 108 3 107 9 130 0 103 9 122 6 150 0 138 9 December .. 100 6 113 3 109 6 98 9 111 6 107 3 114 9 151 9 144 6 January .. 94 6 110 3 122 6 94 6 109 3 120 0 113 0 132 3 141 9 February .. 86 6 112 3 121 6 86 6 111 9 118 6 119 6 126 9 146 6 March .. 96 3 117 0 116 6 96 6 117 0 115 6 126 9 121 2 138 6 April .. 105 0 124 3 114 0 104 6 123 9 113 0 115 0 125 3 128 6 May .. .. 107 0 129 6 109 3 106 0 126 6 107 6 110 6 129 6 124 6 June .. .. 110 0 122 2 117 0 108 6 119 10 113 6 114 9 124 5 124 6 July .. .. 114 0 121 6 123 6 112 9 120 0 114 6 120 3 124 6 129 0 Average .. 104 2 121 1 116 6 103 5 119 11 113 3 119 4 132 8 134 5

1936-37. 1937-38. 1938-39. Per Cwt. Per Cwt. Per Cwt. s. d. s. d. s. d. New Zealand .. .. .. 104 2 121 1 116 6 Australian .. .. .. 103 5 119 11 113 3 Danish .. .. .. .. 119 4 132 8 134 5 Premiums— Danish over New Zealand .. 15 2 11 7 17 11 New Zealand over Australian .. 0 9 1 2 3 3

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BUTTER PRICES. London Weekly Average Cabled Quotations (per Hundredweight Sterling), 1st August, 1938, to 31st July, 1939.

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Diagrams showing the Sources of Supply of Butter and Cheese available for Consumption in United Kingdom in 1938.

SUPPLIES OF BUTTER AVAILABLE IN THE UNITED KINGDOM IN 1938. United Kingdom butter-production in 1938 has been estimated to be about 46,500 tons, which is slightly in excess of the figure for the preceding year, which was estimated to be 45,000 tons. The total import of butter into the United Kingdom during 1938 was slightly greater than in 1937, but was 2 per cent, below the record figure for 1936. Imports of butter from Empire countries declined in 1938 and accounted for 51 per cent, of the gross imports, as against 52 per cent, in 1937 and 53 per cent, in 1936. New Zealand, in 1938, was the principal source of supply, but sent 13 per cent, less than in 1937 and accounted for only 27 per cent, of the total imports, as compared with 31 per cent, in the preceding year. Australian supplies were 21 per cent, heavier than a year earlier and amounted to 19 per cent, of the total, as compared with 16 per cent, in 1937. Supplies from foreign countries increased by 4 per cent, and were greater than in any previous year. Imports from Denmark increased by 5 per cent. ; Holland was about the same in both years, but the Baltic and Scandinavian countries showed a remarkable expansion in total. Receipts from Central European countries were reduced. Imports from the Argentine declined by 31 per cent., and no supplies were received from Russia for the first time since 1922. The diagram on page 16 shows the sources of supply of butter consumed in the United Kingdom in 1938. Imports from all countries for the seven months ended 31st July, 1938 and 1939, are set out in the following table. For the period January to July, 1939, the estimated production of butter in the United Kingdom was 12,700 tons, which was 1,700 tons greater than for the same period in 1938.

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Imports of Butter into the United Kingdom for the Seven Months January to July.

BUTTER CONSUMPTION IN RELATION TO MARGARINE CONSUMPTION. The following table shows the United Kingdom estimated butter-production and net imports yearly from 1930 to 1938. The table also shows the average weekly consumption of imported butter and the per capita consumption of butter and margarine. Taking as a basis the net imports, the Imperial Economic Committee figures for stocks in cold storage, and the United Kingdom production of 46,500 tons, the consumption of all butter in the United Kingdom during 1938 shows a decline, and was equal to 24-1 lb. per head of the population, the lowest consumption since 1933. The consumption of margarine has been increasing since 1934, and on the Imperial Economic Committee figures the consumption of margarine during 1938 was 10 lb. per capita and thus reached a, higher level than in any year since 1931.

United Kingdom Annual Production and Consumption of Butter.

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Country. 1939. 1938. Increase. Decrease. Tons. Tons. Tons. Tdlis. New Zealand .. .. .. .. 73,723 86,599 .. 12,876 Australia .. 59,468 54,765 4,703 Eire .. .. .. .. .. 5,964 8,532 .. 2,568 Canada 4,304 44 4,260 Union of South Africa .. .. .. 2,149 1,143 1,006 Other Empire countries .. .. .. 2,457 1,021 1,436 Total, Empire countries .. .. 148,065 152,104 .. 4,039 Denmark .. .. .. .. .. 60,997 71,243 .. 10,246 Netherlands .. .. .. .. 28,842 22,380 6,462 Latvia .. .. .. .. .. 9,406 8,777 629 Sweden 6,097 10,012 .. 3,915 Lithuania .. 7,325 6,299 1,026 Finland .. .. .. .. .. 6,282 6,962 .. 680 Poland 7,069 8,021 .. 952 Estonia .. .. .. .. .. 6,217 5,348 869 Argentina .. .. .. .. .. 2,471 2,415 56 U.S.S.R Other foreign countries .. .. . . 496 2,454 .. 1,958 Total foreign countries .. .. 135,202 143,911 .. 8,709 Total imports .. .. .. 283,267 296,015 .. 12,748 Less re-exports .. .. .. 2,628 2,266 362 Net imports .. .. .. 280,639 293,749 .. 13,110 (See page 4-1 for United Kingdom imports for complete years up to 1938.)

Consumption. Total, all Butter. 'SSE" Tons. Tons. Tons. Tons. Lb. Lb. 1930 .. .. 48,185 332,421 380,606* 6,435 18-7 11-8 1931 .. .. 48,185 385,451 428,236 7,335 20-9 10-3 1932 .. .. 48,185 402 ,'946 446,131 7,650 21-6 9-2 1933 .. .. 48,185 437,300 491,655 8,475 23-5 8-4 1934 .. .. 48,185 480,180 528,365 9,170 25-2 7-9 1935 .. .. 47,500 474,060 526,390 9 ,'225 25-2 8-4 1936 .. .. 52,850 484,031 525,089 9,030 25-0 8-6 1937 .. .. 45,000 465,108 524,150 9,180f 24-8 8-9 1938} .. .. 46,250 471,476 510,750 8,900 24-1 !0-0 Source : Imperial Economic Committee. * Apparent total annual consumption. After 1930, changes in cold-storage stocks in the beginning and end of the year have been taken into account. f Amended. j Provisional (figures subject to amendment).

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CHEESE PRICES IN THE 1938-39 SEASON. The first arrivals of the New Zealand 1938-39 production met a steady demand and cleared well until February at prices approximating those prevailing in the preceding year. From then onwards prices for New Zealand cheese fell sharply, reaching a low level in May, but recovering in June and July. Quotations for Canadian cheese failed to show their usual seasonal increase and, instead, tended to decline. Prices for New Zealand and Canadian white cheese during the first six months of 1939 averaged 10 per cent, and 5 per cent, respectively below last year's figures. Quotations for both classes were in each month under the previous year's level. Canadian production prospects were reported at the commencement of the season to be extremely good, and, in addition, it was anticipated, having regard to the unfavourable experience of buttermakers in the preceding year, that considerable quantities of milk would be diverted from butter-manufacture to cheese-manufacture. These good prospects were not fulfilled at the commencement of production, but reports received in August indicated likelihood of fulfilment. The following table of average monthly prices of cheese at London shows, in respect of New Zealand and Canada, the movements during the season compared with preceding years :■ —-

Average Monthly Prices of Cheese at London.

SUPPLIES OF CHEESE AVAILABLE IN THE UNITED KINGDOM IN 1938. The production of cheese in the United Kingdom in 1938 has been estimated to be about 43 000 tons, or 5,000 tons above 1937. The total imports of cheese into the United Kingdom in 1938 were about the same as the preceding year and were 9 per cent, heavier than in 1936. Imports of cheese from Empire countries comprised 89 per cent, of the total. New Zealand the most important source of supply, declined by 5 per cent, and accounted for only 56 per cent, of the total, as against 59 per cent, in 1937. Supplies from Canada during 1938 were 6 per cent less than in 1937 and accounted for 23 per cent, of the total. The most notable feature of the trade during the year was the marked increase in Australian cheese shipments, bringing that country to the position of being the third most important source of supply. Australian shipments during 1938 doubled those of the previous year and were approximately 12,000 tons. This upward trend continues, and during the first six months of 1939 Australian supplies were 41 per cent, heavier than last year, while shipments from New Zealand were slightly less. The following table shows the total cheese available for consumption in the United Kingdom— the home production, net imports, and the main sources of supply:—

Cheese available for Consumption in the United Kingdom.

New Zealand (Finest White). Canadian (Finest White). Month. —— — 1936-37. 1937-38. 1938-39. 1936-37. 1937-38. 193S-39. Per Cwt. Per Cwt. Per Cwt. Per Cwt. Per'Cwt. Per Cwt. s - d. s. d. s. d. s. d. s. d. s. d. August .. .. . 68 9 70 3 71 6 68 9 71 3 80 0 September .. .. 68 9 68 6 72 6 71 3 70 3 Z 72 °* October .. .. .. 70 0 71 0 71 6 70 3 71 6 72 IT November .. .. 72 3 71 9 68 9 73 3 73 6 72 6 December .. .. 62 9 66 0 69 3 71 9 73 6 72 3 January .. .. .. .. 55 6 67 9 69 6 72 0 73 9 73 9 February .. .. 53 0 67 6 66 0 72 0 74 9 74 0 March .. .. .. 60 6 69 3 61 0 73 0 77 3 73 6 A P nl 68 3 69 6 60 0 75 6 78 0 73 9 Ma y 72 6 70 0 53 9 78 3 78 3 73 3 Jlme •• •• •• 74 3 68 9 60 6 80 0 80 0 72 3 Ju] 7 73 0 69 0 63 0 80 0 75 3 Average, twelve months .. 66 8 69 1 65 7 73 6 75 2 73 9 * New Season's. f Old Season's.

1934. 1935. 1936. 1937. 1938* u- , Tons - Ton s- Tons. Tons. Tons. Home production .. .. 50,238 57,074 54,585 37,900 43 380 Net imports - .. .. 147,917 134,274 132,600 145,740 145,'560 198,155 191,348 187,185 183,640 188,940 * Provisional.

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CHEESE PRICES. London Weekly Average Cabled Quotations (per Hundredweight Sterling), 1st August, 1938, to 31st July, 1939.

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In relative importance the main sources of supply are :—

The diagram shown on page 16 gives the sources of supply of cheese consumed in the United kingdom in 1938. Cheese-production in the United Kingdom for the seven months ended 31st July, 1939, is estimated at 26,000 tons, which is 900 tons less than for the same period in 1938. The following table sets out the imports from all sources for the period January to July for the years 1938 and 1939 : —

Imports of Cheese into the United Kingdom for the Seven Months January to July.

MILK PRODUCTION IN THE jUNITED. KINGDOM. The following tabic shows the total quantity of milk passing under the control of the Milk Marketing Boards in England, Wales, and Scotland in 1938, 1937, and 1936.

19 34. j 1935. 1936. 1937. 1938. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. New Zealand .. .. 53 46 45 47 43 Home production .. 25 30 29 2! 23 Canada . . .. .. 13 12 16 20 18

Country. 1939.: 1938. | Increase. | Decrease. AT „ . , Tons. Tons. Tons. Tons. New Zealand .. .. .. .. ..52,491 55,059 . 2 568 Canada 9,310 8,856 45.4 Australia .. .. .. .. .. 9,507 7,134 2,373 Other Empire countries .. .. .. .. 1,832 764 l'o68 Total, Empire countries .. .. 73,140 71,813 1,327 Netherlands .. .. .. .. .. 5,160 0,736 .. 1,576 ltal y •• •• •• •• •• .. 2,277 2,029 248 Switzerland .. .. .. .. .. 552 532 20 Other foreign countries .. .. .. .. 1,166 1,166 Total, foreign countries .. .. .. 9,155 10,463 .. 1,308 Total imports .. .. .. 82,295 82,276 .. 19 Re-exports .. .. .. 423 495 . 72 Net imports .. .. .. .. 81,872 81,781 .. 91 (See pago 41 for imports into the United Kingdom for complete yoars up to 1938.)

Year Sold P?* f ° r ■ Liquid Form. facture, including Total. i'arm Cheese. Gallons. Gallons. Gallons. 1936 749,000,000 410,000,000 1,159,000,000 1937 * 787,000,000 335,000,000 1,122,000,000 1938 t •• •• 845,000,000 365,000,000 1,210,000,000 Increase in 1938 .. 58,000,000 30,000,000 88,000,000 Increase in 1937 .. 38,000,000 Decrease in 1937 .. .. 75,000,000 37,000,000 * Figures for 1937 amended. f Figures for 1938 provisional.

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The figures for the first seven months of 1939 show milk passing under the control of the Boards in that period as being greater by 19,500,000 gallons than in the same months of the previous year. Milk consumed in liquid form increased by over 8,500,000 gallons and that used in manufacture by almost 11,000,000 gallons. PROCESSED MILK. Under the provisions of section 1 of the Agricultural Marketing Act, 1933, the British Board of Trade have made the Processed Milk (Import Regulations) Order 1939, which provides that no processed milk shall be imported into the United Kingdom unless there is produced at the time of importation either a license issued by the Board of Trade or a certificate in a form approved by the Board of Trade. The Order applies to imports from all sources of condensed whole milk, condensed skimmed milk, full cream milk powder, skimmed milk powder, buttermilk powder, whey powder, and cream, and came into force on 19th June, 1939. The Order was made to assist the reorganization of the United Kingdom milk industry and on the grounds that the limitation of imports was essential to the maintenance and development of the industry. Under the Order, quotas have been fixed for imports of processed milk into the United Kingdom for the twelve months ending 30th June, 1939. The quotas for New Zealand are as follows : — Owt; Condensed whole milk .. .. .. .. .. 30,000 Milk powder .. .. .. .. .. .. 115,000 Buttermilk and whey powder .. .. .. .. 12,000 157,000 The fixing of this quota involves a reduction in exports of New Zealand processed milk, as the quantity imported into Great Britain from New Zealand in 1938 amounted to 198,840 cwt. Strong representations were made to have the New Zealand quota increased, but without success, the United Kingdom Government pointing out that imports from foreign countries had been materially reduced since 1932, whereas supplies from Empire countries had considerably increased in the same period, as shown by the following figures : — Imports into United Kingdom j?rom Foreign Countries. Year 1932 .. .. .. .. .. .. 138,155 tons. Year 1938 .. .. .. .. .. .. 75,872 tons. A decrease of .. .. .. .. .. 62,283 tons, or 45-1 per cent; Imports into United Kingdom from Empire Countries (including New Zealand). Year 1932 .. .. .. .. .. .. 20,835 tons. Year 1938 .. .. .. .. .. .. 29,799 tons. An increase of .. .. .. .. .. 8,964 tons, or 43-02 per cent. Imports into United Kingdom from New Zealand. Year 1932 .. .. .. .. .. .. 5,465 tons. Year 1938 .. .. .. .. .. .. 9,942 tons. An increase of .. .. .. .. .. 4,477 tons, or 81-92 per cent. The Customs Prohibition Export Order No. 3 was issued in New Zealand to enable the export of processed milk to be regulated in accordance with the quotas imposed by the United Kingdom Order. (Note. —on 31st August, 1939, the Board of Trade advised that the British Government was temporarily suspending the restrictions on the importation of processed milk). SALES OF BUTTER AND CHEESE TO MARKETS OTHER THAN UNITED KINGDOM. Direct sales of butter and cheese from New Zealand to countries other than Great Britain fell away to about half of the previous year's figures in the case of butter and one-third in respect of cheese. The continuance of the war between Japan and China accounted for the lack of Japanese orders, but consignments to China were not far below last year's figures. Shipments to the East Indies have also been fairly well maintained, a drop in consignments to Manila being offset by an equivalent increase in despatches to Singapore. Shipments to India show a further increase over the previous year's sales. As indicated in iast year's report, the subsidizing by the United States Government of sales of American butter to the Panama Canal Zone has seriously reflected on Now Zealand operations in that market and a further marked drop in our sales has to be recorded. Shipments to Honolulu and the United States also show a decrease, and there was a complete absence of demand from Canada during the year. The latter country is not a regular importer of New Zealand butter, and only imports when local production is unable fully to meet the consumptive demand. Exports to the West Indies were below those of the previous year. It is interesting to note that a fair quantity of New Zealand butter was taken by South Africa.

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The tollowing table shows the quantities of butter and cheese shipped from New Zealand to the markets referred to above :—

SHIPPING. During the period covered by this report the Department has continued its policy of spreading shipments from the Dominion in an endeavour to regulate arrivals in the United Kingdom in accordance with the estimated monthly requirements of the trade, always taking into consideration the total volume of butter and cheese that is expected to be available for export to the United Kingdom over the complete dairy season. The results have again been satisfactory, due in no small measure to the co-operation and assistance of the cool-storage companies and the Overseas Shipowners' Allotment Committee. Shipments for discharge direct at Southampton, Hull, Newcastle-on-Tyne, Cardiff, Avonmouth, Liverpool, Manchester, and Glasgow have been well maintained with the exception of Hull. During certain months of the season the combined tonnage of all cargo offering for the port of Hull was not sufficient to warrant direct shipments, and the shipping programme was varied accordingly. During the season 107 despatches of dairy-produce were made to the United Kingdom, as compared with 111 last season. Sixty-six despatches loaded for discharge at London only, and 55 carried produce for one or more of the United Kingdom outports, some of these vessels also carrying produce for London discharge on the same voyage. Of the season's exportable make of butter and cheese, 115,914 tons of butter and 80,191 tons of cheese were shipped to the United Kingdom as follows, the preceding seasons' shipment being shown for comparison :—

Total Exports of Butter and Cheese to the United Kingdom.

The Department has endeavoured, in conjunction with the Overseas Shipowners' Allotment Committee, to minimize the number of ports of loading. The refrigerated space available has been allocated equitably amongst all ports in proportion to the stocks awaiting shipment.

Butter (boxes). Cheese (crates). Destination. 1937-38. 1938-39. 1937-38. 1938-39. Japan .. .. .. .. .. . . 720 6 Chilla 14,089 13,123 350 75 French Cochin China .. .. .. .. 1,153 1,576 Siam • • .. .. .. .. .. 45 Philippine Islands .. .. .. .. .. 4,920 2,225 Straits Settlements .. .. .. .. .. 9,425 11,016 Dutch East Indies .. .. .. .. .. 83 93 !ndia .. .. .. .. .. 7,946 9,131 3 131 Hawaii .. .. .. .. .. .. 17,247 11,435 United States of America .. .. .. .. 5,283 3,400 Canada .. .. .. .. .. .. 58,550 !. 565 150 Panama Canal Zone .. .. .. .. .. 27,590 16,200 100 British West Indies .. .. .. .. .. 16,410 11,179 208 60 Falkland Islands .. .. .. .. .. 91 80 South Africa .. .. .. .. .. .. 9,000 163,507 88,509 1,226 416

Butter. Cheese. 1936-37. 1937-38. 1938-39. 1936-37. 1937-38. 1938-39. Tons. Tons. Tons. Tons. Tons. Tons. London .. .. .. .. 108,638 87,127 70,742 64,361 55,990 53,194 Avonmouth .. .. .. 10,200 11,250 11,184 6,961 7,350 7,102 Liverpool .. .. .. 8,026 8,200 7,617 4,419 5,225 5,189 Manchester .. .. .. 10,859 10,414 9,704 4,965 5,383 5,281 Glasgow.. .. .. .. 8,756 8,362 6,323 4,530 4,879 4,966 CardiS 215 2,084 4,178 151 1,304 1,690 Southampton .. .. .. 1,075 2,281 2,349 401 1,239 1,155 Newcastle .. .. .. 139 2,148 2,455 133 1,252 1,128 Hull .. .. .. .. 216 2,379 1,362 157 1,069 486 148,124 134,245 115,914 86,078 83,691 80,191

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BUTTER. Map Showing Annual Imports into United Kingdom Ports, 1st October, 1932, to 30th September, 1939.

Note.-—Total from weekly Customs and Excise returns. Customs returns of total arrivals at Manchester are not comparable with New Zealand figures from the London office of the Department.

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The 107 despatches that covered the season's shipping programme necessitated 365 calls at the various ports in the Dominion from which dairy-produce is shipped. This works out at an average per vessel of 3-41 ports, which is slightly higher than the preceding season's average of 3-35, but compares favourably with earlier averages ; they are as follows : —

Arrivals of New Zealand Butter in United Kingdom Ports (in Tons).

Season. Vessels loaded. 1934-3 Ill 4-00 1935-36 .. .. .. 104 3-98 1936-37 .. .. .. 108 3-67 1937-38 .. .. .. Ill 3-35 1938-39 .. .. .. 107 3-41

Port. 1936-37. 1937-38. 1938-39. P ™ g 3 ™"™ 0 ' London — New Zealand .. .. .. .. .. 107,224 90,320 73,697 80,960 Other sources .. .. .. .. .. 135,266 145,750 Total .. .. .. .. .. .. 242,490 236,070 Southampton — New Zealand .. .. .. .. .. 1,083 2,503 2,304 2,700 Other sources .. .. .. .. .. 6,887 3,417 Total .. .. .. .. .. .. 7,970 5,920 Avonmouth— New Zealand .. .. .. .. .. 9,674 10,977 11,352 13,350 Other sources .. .. .. .. .. 176 373 Total .. .. .. .. .. .. 9,850 11,350 Cardiff— New Zealand .. .. .. .. '.. 217 1,824 4,187 4,605 Other sources .. .. .. .. .. 23 186 Total .. .. .. .. .. .. 240 2,010 Liverpool— New Zealand .. .. .. .. .. 7,799 8,004 7,977 9,900 Other sources (Liverpool and Manchester) .. .. 10,876 9,410 Total .. .. .. .. .. .. 29,190 27,400 Manchester — New Zealand .. .. .. .. .. 10,515 9,983 10,187 9,555 Glasgow— New Zealand .. .. .. .. .. 8,984 8,045 6,595 7,070 Other sources .. .. .. .. .. 5,226 3,705 Total .. .. .. .. 14,210 11,750 Newcastle — New Zealand .. .. .. .. .. 37 2,066 2,165 1,860 Other sources .. .. .. .. .. 28,163 28,774 Total .. .. .. .. .. .. 28,200 30,840 HullNew Zealand .. .. .. .. .. 75 2,314 Other sources .. .. .. .. .. 35,825 43,406 Total .. .. .. .. .. .. | 35,900 45,720

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CHEESE. Map Showing Annual Imports into United Kingdom Ports, 1st November, 1932, to 31st October, 1939.

Note.—Totals from weekly Customs and Excise returns. New Zealand figures from New Zealand Dairy Sales Division converted from, crates at fourteen crates to ton. Customs returns of total arrivals at Manchester are not comparable with New Zealand figures from London office of the Department.

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Arrivals of New Zealand Cheese in United Kingdom Ports (in Tons).

SUPERVISION AND INSPECTION OP SHIPPING, TRANSPORT, AND STORAGE OF DAIRY-PRODUCE. As in previous years, the Department's officers exercise supervision and inspection of the handling, transport, and storage of dairy-produce, thus providing for examination and protection from factory to United Kingdom cool stores. Such work involves the inspection of coastwise vessels, railway-trucks, refrigerated spaces of overseas vessels, cool stores, record of temperatures and supervision of storage, as well as carrying temperatures. The Department maintains, in this connection, three Inspectors in New Zealand and one in London ; in all their activities the Inspectors collaborate with the officers of the Dairy Division of the Department of Agriculture both in the United Kingdom and New Zealand. This supervision has been proved to be most valuable and ensures careful handling of the produce on land and sea. It has become an important factor in the obtainance of reduced rates under the marine-insurance contract. During 1938-39 this work has been fully maintained and satisfactory results achieved.

p °rt. 1936-37. 1937-38. fusST ! ' * London— New Zealand .. .. .. .. .. 65,504 55,242 53,136 50,422 Other sources .. .. .. .. .. 34,346 37,988 Total .. .. .. .. .. .. 99,850 93,230 Southampton— New Zealand .. .. .. .. .. 439 1,275 1,281 1,500 Other sources .. .. .. .. .. 746 1,145 Total .. .. .. .. .. .. 1,185 2,420 Avonmouth — New Zealand .. .. .. .. .. 7,092 7,257 7,288 8,913 Other sources .. .. .. .. .. 2,968 3,193 Total .. .. .. .. .. 10,060 10,450 CardiffNew Zealand .. .. .. .. .. 150 1,304 1,651 2,195 Other sources .. .. .. .. .. 1,300 1,336 Total .. .. .. .. .. .. 1,450 2,640 Liverpool— New Zealand .. .. .. .. .. 4,210 5,435 5,347 6,660 Other sources (Liverpool and Manchester) .. .. 6,084 4,538 Total .. .. .. .. .. .. 15,080 15,340 Manchester— New Zealand .. .. .. .. .. 4,786 5,367 5,720 6,270 Glasgow— New Zealand .. .. .. .. .. 4,341 4,810 5,317 6,630 Other sources .. .. .. .. .. 1,764 1,770 Total .. .. .. .. .. .. 6,105 6,580 Newcastle— New Zealand .. .. .. .. .. 90 1,174 1,175 1,410 Other sources .. .. .. .. .. 2,130 1,976 Total .. .. .. .. .. .. 2,220 3,150 HullNew Zealand .. .. .. .. .. 109 1 117 Other sources .. .. .. .. .. 1,431 i'683 Total 1,540 2,800 Note.—New Zealand figures calculated at fourteen crates to a ton. The 1938-39 figures in this table are estimated so far as October, 1939, is concerned.

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MARINE INSURANCE. All butter and cheese exported from New Zealand and purchased by the Department is protected by a comprehensive insurance contract which covers the produce until thirty days after arrival in the United Kingdom. The contract also covers cream and milk which is made into butter and cheese intended for export and which is identifiable as such from the time such cream and milk is received at the factory until the produce is placed f.o.b. ocean steamer. Until the cream and milk is manufactured into butter and cheese the cover is against fire risk only. The Department pays the insurance underwriters flat rates covering the complete risk, and charges to dairy companies the portion of the premium which represents the risk up to f.o.b. ocean steamer. Practically all the important insurance interests in the United Kingdom have a share in the contract, and British insurance companies, as distinct from Lloyd's, take approximately two-thirds of the total risk and Lloyd's underwriters one-third. The contract continues until the 31st August, 1941, at the following inclusive rates : — Butter .. .. .. .. .. .. 4s. 3d. per cent. Cheese .. .. .. .. .. .. 4s. 3d. per cent. These rates represent an annual saving in insurance premiums of approximately £9,000. The portion of the premium which represents the risk up to f.o.b. ocean steamer and which is charged to dairy companies is as follows : — Butter .. .. .. .. .. .. 0-565 d. per box. Cheese .. .. .. .. .. .. 0-936 d. per crate. COLD STORAGE IN THE UNITED KINGDOM. Cold-storage contracts for butter and warehousing for cheese at the various ports of discharge throughout the United Kingdom continue as heretofore. Rates for storage vary as between the several ports, but remain unchanged from those prevailing last season. FREIGHT RATES. The freight contract for the carriage of butter, cheese, meat, and fruit expired on 31st August, 1939. During March and April, 1939, representatives of the shipping lines visited New Zealand to discuss terms for a new contract. Subsequently, discussions were resumed in London and continue. Meantime and pending finality the pre-existing rates — ® utter trhV 1 ; 1 ( f rling) pe i bOX \ less 0-102 per cent. Cheese .. .. .. -j |d. (sterling) per pound j 1 remain unchanged. ADVERTISING, PUBLICITY, AND SALES PROMOTION. In the two previous annual reports reference is made to the various methods adopted for making known the quality of New Zealand butter and cheese and of encouraging its consumption. The amount spent on publicity, advertising, and sales promotion during the 1938-39 season was £104,808. The aim of the Department in spending this sum has been to keep the Dominion's dairy-produce to the forefront in the highly competitive United Kingdom market and to extend the demand for " New Zealand " butter and cheese as such. The Department's publicity methods centre on two vital factors in distribution—namely, the grocer and the consumer. (1) Grocer. The Grocer plays a key part in the development of a wider distribution of New Zealand's butter and cheese. The Department seeks to enlist the co-operation and interest of the grocer in the wider distribution of butter and cheese by personal canvass, by the supply of display material and butterwrappers, by retail-shop demonstrations, and by a special sales scheme. These several features are reviewed in detail hereunder : — Personal Canvass of Retail and Wholesale Grocers. Much has already been written on this subject in previous reports, and it will be sufficient now merely to reaffirm the great confidence reposed in it, and to invite attention to the vital part it continues to play in the programme as a whole, as revealed by the results obtained during the current season. The following figures summarize the position for the season, and for comparative purposes the 1937-38 figures are also quoted : —

| Definite Season. Calls made. a JXing. Stock 1937-38 .. .. .. 20,232 13,473 478 1938-39 .. 33,767 20,105 652

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There has been an increase from ten to twelve in the number of representatives, and an increase in the number of calls a representative can make each day. In addition to sales-promotion calls, representatives undertake the preliminary investigation of any complaints that may arise in their respective territories, they give advice where sought on the subject of window displays, see that retailers are equipped with the necessary amount of d'splay material to meet their requirements, and do everything possible to ensure that New Zealand butter and New Zealand cheese are properly marked and sold as such. All these and other duties devolving upon representatives may be summarized as follows : " Building and cemehting friendly relationships with the distributive trade and rendering that service which under present-day conditions the trade feels itself entitled to expect." When this is considered in relation to nearly 34,000 contacts made, the great value of this work must be apparent. Display Material and Distribution. The provision to retailers, free of charge, of properly designed window and interior display material is still an indispensable feature of this or any other marketing plan. There is always a demand for smart attractive material which fulfils a useful purpose in retail shops. The Department has continued to meet these requirements, and New Zealand dairy-produce is prominently displayed in retail shops all over the United Kingdom. An increasingly large proportion of the distributive trade has, through long usage and recognition of the merits of the material supplied, come to regard this service as a standard business requirement. Requests for renewal supplies are received at regular intervals. This has been the objective since the inception of United Kingdom advertising, and unremitting efforts are still applied to encourage the development of this attitude on the part of distributors towards the use of the Department's display service. The display material has been further improved during the season by the introduction of new designs in price tickets and show-cards. The total distribution of display material to the trade, expressed in parcels, each sufficient for a show of average size, is as follows :— Parcels. Private retailers .. .. .. .. .. .. 13,600 Multiple shops .. .. .. .. .. .. 11,800 Co-operative societies .. .. .. .. .. 7,900 Wholesalers .. .. .. .. .. .. 4,000 Agents .. .... .. .. • .. ], 500 Total .. .. .. .. .. .. 38,800 In addition Ito the distribution of standard material referred to above, each year brings a considerably bigger demand from retailers for items of a specialized type, such as large painted backgrounds, the distribution of which cannot very well be efEected in the same way as standard material. It is interesting to record, however, that at the end of this season about one hundred backgrounds ranging in size from 5 ft. by 4 ft. to 12 ft. by 6 ft. were on permanent exhibition in a similar number of large high-class retail establishments throughout the country. The publicity value of this is very considerable, apart from the fact that good service is rendered thereby to the shops concerned. Hundreds of letters have been received from grocers expressing their appreciation of the display material received by them and of its value in stimulating sales. Butter-wrappers. The policy Of providing retailers in approved circumstances with supplies of standard butterwrappers at cost price has been continued. These retailers are sellers of New Zealand bulk butter who have been in the habit of packing in the presence of the customer and using either plain wrappers or wrappers marked " Empire." Sales during the year were as follows : — lib wrappers .. .. .. .. .. .. .. 894,000 £ lb. wrappers .. . . .. .. .. .. .. 1,575,000 Total .. .. .. .. .. .. .. 2,469,000 For the year ending 31st July, 1938, the total was 1,058,000 wrappers. The feature referred to above supplements the efforts persistently being made to prevail upon retail distributors to adopt the policy of selling both New Zealand butter and New Zealand cheese as such ; in the case of butter by the abandonment of wrappers bearing somewhat ambiguous descriptions, in favour of the mark " New Zealand," and in the case of both butter and cheese by the use of New Zealand price tickets on exposure for sale in the shop. Greater progress has been made in this direction during the present year than in any single year hitherto. Retail-shop Demonstrations. During the present season a vigorous policy to extend this feature has been pursued, the results of which have proved eminently satisfactory, and the number of demonstrations arranged was 186. Retail-shop demonstrations have figured prominently in every publicity programme since the inception of advertising in the United Kingdom. In the early days it was the practice to use a

N.z.151

[» Specimen of advertisement. See page 21).

Face page 28.]]

N.Z.156

Specimen of advertisement. JSee page 29.]

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miniature hand-operated moulding-machine, turning out small samples of butter up to 2 oz. in weight, but as time went on it became clear that such a system was quite inadequate to the needs of retailers, and the manual machines were gradually taken out of service and replaced by power-driven moulders. With the advent of th? latter type of machine, samples of Jib. in weight became the accepted size for demonstration purposes, but only a year or two elapsed before retailers expressed the view that the machines might be better employed in turning out pats of usual household size—namely \ lb. and 1 lb. Accordingly this procedure has now come into general use, and although \ lb. sizes are still sold, there is an increasingly greater quantity sold in \ lb. and 1 lb. sizes during demonstrations. The machines themselves have undergone numerous detail improvements, and are now very highly finished and a credit to any retail establishment in which they may be installed. Retail-shop demonstrations furnish an opportunity to establish contact with a retailer's customers in his own shop, and by selling to those customers, supply the best practical demonstration to the retailer himself that New Zealand Dutter and cheese will find a ready outlet and become increasingly satisfactory products to handle from his own point of view. Sales Scheme. This scheme was referred to in the last annual report and it is regarded as a useful adjunct to the general programme. It seeks to encourage competition to sell New Zealand butter and cheese between the branch shops of particular concerns, and it has been applied this season to one hundred retail establishments with satisfactory results. Participation was also arranged in a'similar type of scheme run by a competitive firm, covering a London multiple group of 140 branches, with equally satisfactory results. This feature will not be extended until further investigations have established its value beyond doubt. (2) Consumer. The consumer's interest is aroused and stimulated by press advertising and outdoor publicity, by displays at exhibitions, by temporary display shops, by sales of samples, by lectures on the dietetic value of dairy-produce, and by the distribution of literature. Detailed reports of these methods are as follows:— Press Advertising. A greater degree of continuity has been maintained throughout this season than in any previous season with regard to press advertising. It is not suggested that the limits in press advertising have been reached, but, having regard to funds available, it is possible to allot a sufficient sum to assure that a large body of consumers and potential consumers is covered regularly and that the intervals between the appearance of advertisements are such as to achieve a cumulative effect. In the approach to the retail trade, press advertising is of great practicable value, for the average retailer expects the major responsibility for creating the demand for products to be carried by the producer or manufacturer. The retailer is then willing to do his part in attracting as much of the created demand as possible to his own shop. In that sense, therefore, our representatives now find themselves equipped with one of the strongest arguments possible—'the ability to produce evidence as to the steps being taken by New Zealand to keep up an active consumer demand through the press and by other publicity means. Systematic advertising has appeared in each of the three London evening newspapers, the Evening News, the Evening Standard, and the Star, which cover a wide field throughout London and the Home counties, and which have a combined circulation of approximately 2,000,000 copies per issue. The advertisements themselves are large and boldly treated, and could scarcely be missed by even the most hurried reader. Two specimens of these advertisements are reproduced facing pages 28 and 29. Greater London's greater press, a combined group of seventy-four of the best suburban newspapers, is now also being used. The combined circulation of this group is 600,000 copies per issue. In the provincial daily press the same degree of continuity has not been possible, but the intervals between one series and the next have been very much shorter than hitherto, and in future it is hoped to secure a still greater evenness of spread. The provincial newspapers employed are twenty-seven in number, and include such well-known and influential organs as the Manchester Guardian, the Manchester Daily Dispatch, the Yorkshire Evening Post, and the Birmingham Mail. The total circulation of these twenty-seven newspapers amounts to 3,500,000 copies per issue. The advertisements used are of the same size and type as those used in the London press —namely, 11 in. triple column, or approximately 11 in. by 7| in. upright. Women's publications are used consistently once each month throughout the year. Leading, journals to a total of sixteen cover this field. Their total circulation of 2,500,000 copies per issue is fairly evenly distributed throughout the United Kingdom. Trade-paper coverage has also been adequately maintained throughout the entire period, embracing weekly, bi-weekly, and monthly publications circulating amongst all sections of the grocery trade throughout the country. Net circulation figures are not generally made available by these papers, but an estimate of 2,000,000 individual advertisements for the year would be very close to the mark. Provincial Outdoor Publicity. During this season attention has been confined, so far as the provinces are concerned, to getting together a select list of key sites in the bigger cities. This usually entails a period of waiting until the desired site becomes vacant, but the ultimate result is well worth while. The position at the moment is that sites have been secured in Birmingham, Nottingham, Leeds, Liverpool, and Crewe. It is hoped to be able to extend this as opportunity occurs in the future. The size of the bills used throughout is forty-eight sheet (20 ft. by 10 ft. 6 in., landscape).

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London Publicity. As stated previously, advertising in the London press has continued regularly from practically the beginning of the season. The twelve railway-bridges spanning busy shopping centres in South London have carried large bills continuously throughout the same period, and 106 positions on the sides of vans delivering goods to retail grocers' shops have also been in continuous operation. Having regard to the importance of the London market with its high purchasing-power, an intensification of effort was considered desirable as from the beginning of April, to continue at least until the end of the season. Accordingly, at that date a comprehensive scheme of outdoor advertising came into operation, consisting of the following features : 200 side positions on London Passenger Transport Board buses. The bills employed measure 21 ft. by 2 ft. 200 side positions on Messrs. Carter Paterson's delivery vans. The bills measure 80 in. by 30 in. 640 railway delivery van sides —60 in. by 40 in. 100 side positions on London Passenger Transport Board trolley buses. Bills measure 21 ft. by 2 ft. It will be seen therefore, that there are at the present moment 1,246 advertisements moving within a fifteen-mile radius from the centre of London, each one of considerable dimensions unlikely to be missed by the millions of consumers, who must see them again arid again. In addition to the foregoing, fifty-three sites have been selected, after personal examination, in commanding positions throughout the busiest suburban shopping areas. The smallest size of poster in use measures 20 ft. by 20 ft. 6 in.; others are considerably larger. Also, eight well-placed positions are occupied in central London in Oxford Street, Charing Cross Road, Piccadilly Circus, Knightsbridge, Holburn, Strand, Victoria Street, and Earls Court. The total of fixed sites, including railway-bridges, is therefore seventy-three. Taken altogether, the scheme provides a thoroughly effective coverage of the 8,000,000 residents within this area of relatively limited size to such an extent, indeed, that it would be impossible to proceed along any reasonably important thoroughfare without meeting at least one reminder of New Zealand butter and cheese. Exhibitions. Displays of butter and cheese have been arranged during this season at the following exhibitions : Glasgow Empire (conclusion) ; London Grocers ; Birmingham Grocers ; South Wales Grocers ; Women's Fair" London ; Newcastle ■Grocers ; and Ideal Home Exhibition, London. In addition to the above, displays at the undermentioned exhibitions have been made in collaboration with the High Commissioner's Department: North London, Hull Civic, Brighton and Hove, British Industries Fair, and Aldershot Horse Show. The total sample sales for both groups amount to : Butter, 106,785 ; cheese, 129,532. Temporary Display Shops. On two occasions this year, temporary display shops have been rented in connection with special publicity drives, the first in Bradford, Yorkshire, from the 30th November, 1938, to 23rd December, 1938, and the second at Hanley, Stoke-on-Trent, from the 2nd June to the Ist July, 1939. The shop at Bradford was arranged in connection with a special drive to stimulate both trade and consumer interest. This display shop was excellently situated in one of the principal shopping thoroughfares and created much interest. Notwithstanding bad weather, it was estimated that some ten thousand people visited the shop. The display itself occupied two floors, the ground floor being devoted to a presentation of the products themselves in an attractive setting, with facilities for the selling of samples, whilst the second floor housed the model pastoral scene recently removed from the Empire Exhibition at Glasgow, together with the murals of New Zealand's historic sequence, also from the Empire Exhibition. Arrangements were made to include a display of New Zealand honey at this shop with facilities for sampling. Once again we were fortunate in securing the consent of the Lord Mayor of Bradford—Alderman T. Robinson, J.P.—and the Lady Mayoress to be present at the shop and to declare it open to the public on Wednesday the 2nd of December, 1938. The New Zealand High Commissioner, Mr. W. J. Jordan, was present, and addressed a representative gathering of members of the trade, who were invited to the ceremony in order that they might be informed regarding the steps it was proposed to take to push forward sales in that area, and their active co-operation sought. Apart from the display shop, a thorough canvass was made of all the retailers and wholesalers in the area to obtain their support for the scheme, firstly by stocking to meet demand, and secondly by maintaining displays of sufficient attractiveness that the public could see at once where supplies could be purchased. The drive was backed up by advertisements in the local press and large-size outdoor posters drawing attention to the attractions of the display shop. The number of samples sold was 12,531. The Hanley (potteries) shop proved itself one of the most successful displays of this kind for many years, the public attendances being on a large scale and well maintained throughout, and sample sales reached the figure of 15,860. . . Display shops will continue to find a place in the programme whenever circumstances are propitious, but the necessity for them nowadays does not arise to quite the same extent as it did before the industrial areas were so well covered by our outdoor representatives. Sample Sales. The selling of samples has been commented upon under the separate headings where sampling has taken place. Total sales for the year amount to : Butter, 246,099 ; cheese, 132,042 ; Total, 378,141. Sales for the previous year amounted to 322,381 samples.

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Literature, Circulars, &b. Substantial quantities of booklets, leaflets, folders, and novelties for children have been distributed this season. Generally, outlets for material of this description are to be found on all occasions where samples are sold, although one notable exception has just recently occurred by the preparation of twenty thousand folders for inclusion in the weekly account books isstied to their customers by a large multiple grocery firm in London. The total number of items" put into circulation this season amounts to approximately one hundred thousand. Miscellaneous. Co-operation is frequently sought in the following directions, and given when circumstances are satisfactory:— Advertisements in price-lists published by wholesale and retail grocers. Advertisements in the annual reports of grocers' associations. Provision of advertisement material for bazaars, fetes, processions, tableaux, &c. Provision of maps of New Zealand and other information to school-teachers. Recipes and dietetic information for teachers of domestic science. Finally, this opportunity must not be allowed to pass without grateful acknowledgment being paid to the United Kingdom grocery trade for the very cordial manner in which the representations of this Department have been received almost without exception, and for the assurances so often volunteered that the publicity work of the Department is welcome, by virtue of the valuable support it gives to their own efforts to sell more New Zealand dairy-produce. CHEESE EXHIBITS AT LONDON DAIRY SHOW. As stated in last year's report, New Zealand cheesemakers were most successful with their exhibits in the 1938 London Dairy Show, and this year some twenty cheese companies prepared exhibits which were forwarded to London for entry in the 1939 show. However, owing to the outbreak of hostilities, the British Dairy Farmers' Association found it impossible to continue with the arrangements for the show, and the fixture was therefore cancelled. PAYMENTS MADE BY DAIRY-FACTORY COMPANIES FOR BUTTERFAT SUPPLIES. The following tabulation shows the average butterfat-prices paid to suppliers of butter and cheese manufacturing companies in respect of the 1936-37, 1937-38, and 1938-39 seasons, The dairy companies are grouped, for purposes of averaging, under the appropriate dairy-produce grading ports. It should be borne in mind that when making comparison of butterfat payouts of companies it is necessary to take into consideration the location of the factories and special circumstances pertaining to individual companies, as those factors reflect appreciably on manufacturing and transport costs.

Payments by Dairy Companies for Butterfat-supplies.

COSTS IN MANUFACTURE AND DELIVERY OF BUTTER AND CHEESE TO F. 0.8. OVERSEAS STEAMERS. The standardized form in which dairy companies are required to publish their accounts provides that in the manufacturing and marketing section all costs must be grouped under the following six headings : Cream collection, manufacturing charges, depreciation, repairs and maintenance, charges factory to f.0.b., and overhead charges. These costs, and also the total cost to f.0.b., have in addition to be shown worked out on the basis of per pound of butterfat. By this means it is possible to obtain an informative and reliable comparison of costs, item by item, as between companies, and the availability of such data is helpful both to the industry and the Government.

(In pence per pound of butterfat.) Season 1936-37. Season 1937-38. Season 1938-39. Butter. Cheese. Butter. Cheese. Butter. Cheese. Auckland .. .. .. .. 13-642 15-546 14-870 16-514 16-331 18-328 New Plymouth .. .. .. .. 13-615 15-139 14-776 16-449 15-910 17-815 Patea-Wanganui .. .. .. 13-453 15-203 14-588 16-602 15-799 18-057 Hawke's Bay-Gisborne .. .. .. 13-386 14-425 14-557 15-697 15-721 17-392 Wellington .. .. .. .. 13-610 14-923 14-935 16-151 16-301 17-885 Marlborough-Nelson-Westland .. .. 12-918 14-266 14-254 15-514 15-670 17-488 Canterbury .. .. .. .. 12-861 14-836 14-764 16-353 15-933 17-865 Otago.. .. .. .. 12-831 14-398 14-195 16-166 15-210 17-984 Southland .. .. .. .. 12-310 15-393 13-724 16-128 15-062 18-409 New Zealand average .. .. 13-558 15-176 14-812 16-389 16-199 18-060

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The following tabulation shows the average costs of butter and cheese-manufacturing companies for the 1938-39 season, the companies being grouped, for the purpose of averaging, under the appropriate dairy-produce grading ports. The New Zealand averages for the two previous seasons are also shown :—

Season 1938-39: Costs in Manufacture and Delivery of Butter to f.o.b. Overseas Steamers.

Season 1938-39: Costs in Manufacture and Delivery of Cheese to f.o.b. Overseas Steamers.

ACCOUNTS. The method of presentation of the accounts which was adopted in previous annual reports of the Department was found quite satisfactory, and has therefore been followed in this report. For convenience in publication of the accounts, shillings and pence are omitted. The accounts now submitted are in terms of New Zealand currency, and they show, first, the completed financial operations for the 1937-38 season, and, secondly, the operations of the Department in the purchase and sale of export dairy-produce for the 1938-39 season. The completed operations for the 1937-38 season are referred to on page 4 of this report. The relevant accounts show that in the case of creamery butter and whey butter the actual realizations for produce which was unsold at balance date exceeded the estimates. In the case of cheese the actual realizations were less than the estimates. The net result is that at the date of closing the accounts the actual surplus for the 1937-38 season was £576,724. In the accounts published with last season's report the surplus for the 1937-38 season was estimated at £555,185. The accounts for the 1938-39 season cover all export butter and cheese which was manufactured from Ist August, 1938, to 31st July, 1939, the quantities being— Creamery butter .. .. .. .. .. 116,420 tons. Whey butter .. .. .. .. .. 1,700 tons. Cheese .. -• .. .. .. •< 79,567 tons.

(In pence per pound of butterfat.) 60 JO a I • § «! -cS ■« • a I Is | <* § g § _3 5 -P o W) .2 2 c bo-P w> _g — Il -if I '§1 Sb «s 1 §6 | &-| 63 06 H • a_ a_ aa °g ° Auckland .. .. .. .. 0-374 0-975 0-075 0-104 0-420 0-160 2-108 New Plymouth .. .. .. 0-301 1-215 0-104 0-099 0-304 0-191 2-214 Patea-Wanganui .. .. .. 0-492 1-193 0-173 0-091 0-313 0-267 2-529 Hawke's Bay-Gisborne .. .. 0-492 1-166 0-121 0-102 0-417 0-330 2-628 Wellington .. .. .. .. 0-384 1-025 0-071 0-075 0-329 0-183 2-067 Marlborough-Nelson - Westland .. .. 0-482 1-232 0-161 0-068 0-554 0-337 2-834 Canterbury .. .. .. .. 0-763 0-917 0-085 0-098 0-282 0-669 2-814 Otago .. .. .. .. 1-042 1-390 0-106 0-118 0-183 0-849 3-688 Southland .. .. .. .. 0-641 1-456 0-253 0-103 0-272 0-717 3-442 New Zealand average — 1938-39 season .. .. 0-405 1-026 0-086 0-099 0-396 0-210 2-222 1937-38 season .. 0-381 0-953 0-075 0-076 0-384 0-178 2-047 1936-37 season .. .. 0-352 0-927 0-072 0-088 0-398 0-147 1-984

(In pence per pound of butterfat.) I t M f nu " _ ' He P a , ir8 Charges: 0verhead Total factoring Depreciation. and Factory to ch Charges. Charges. Maintenance. f.o.b. ° Auckland .. .. .. 2-248 0-192 0-298 0-684 0-234 3-656 New Plymouth .. .. 2-200 0-143 0-160 0-508 0-274 3-285 Patea-Wanganui .. .. 2-141 0-134 0-190 0-534 0-281 3-280 Hawke's Bay - Gisborne .. 2-307 0-167 0-175 0-807 0-434 3-890 Wellington .. .. 2-389 0-125 0-177 0-696 0-351 3-738 Marlborough-Nelson-Westland 2-773 0-326 0-114 0-874 0-597 4-684 Canterbury.. .. .. 2-467 0-245 0-150 0-642 0-642 4-146 Otago .. .. .. 2-616 0-202 0-199 0-723 0-552 4-292 Southland .. .. .. 2-600 0-165 0-193 0-705 0-472 4-135 New Zealand average— 1938-39 season .. 2-289 0-157 0-203 0-617 0-326 3-592 1937-38 season .. 2-151 0-141 0-166 0-589 0-290 3-337 1936-37 season .. 2-056 0-134 0-146 0-577 0-226 3-139

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The approximate average f.o.b. purchase prices paid or payable for this produce in terms of the Primary Products Marketing Act are as follows : — Creamery butter .. .. .. .. 14-96766 d. per pound. Whey butter .. .. .. .. 13-87899 d. per pound. Cheese .. .. .. .. .. 8-45819 d. per pound. The approximate average f.o.b. realizations for produce (actual and estimated) as shown in the accounts are as follows :— Creamery butter .. .. .. .. 13-75680 d. per pound. Whey butter .. .. .. .. 12-59314 d. per pound. Cheese . . .. .. .. . . 6-81966 d. per pound. In the compilation of the accounts butter and cheese unsold at balance date were taken in at the following values : — Creamery butter (shipments partially sold) : 1235. 9d. per hundredweight sterling gross. Creamery butter (in store awaiting shipment) : 1245. 6d. per hundredweight sterling gross. Whey butter (shipments partially sold) : 106s. per hundredweight sterling gross. Whey butter (in store awaiting shipment) : 116s. 6d. per hundredweight sterling gross. Cheese (shipments partially sold) : 665. 6d. per hundredweight sterling gross. Cheese (in store awaiting shipment) : 665. per hundredweight sterling gross. The accounts submitted comprise— (1) Separate Purchase and Sale or " Pool " Accounts for creamery butter, whey butter, and cheese. (2) Administration and General Expenses Account. (3) Income and Expenditure Account. (4) Balance-sheet. The Purchase and Sale or " Pool" Accounts show the purchase value of the produce, and the sale value less selling-charges, freight, and insurance. To each Purchase and Sale Account is charged its proportion of the total administration and general expenses, amounting to £238,799. The Dairy Industry Account shows the position of the Produce Purchase and Sale Accounts as follows:— £ Estimated deficit on creamery butter .. .. .. .. 1,315,712 Estimated deficit on cheese .. .. .. .. .. 1,216,819 Estimated deficit on whey butter .. .. .. .. .. 20,398 Estimated deficit, Dairy Industry Account, 1938-39 season .. £2,552,929 The balance-sheet is drawn up in the usual form to show liabilities and assets as at 31st July, 1939. VrrUgk, Minister of Marketing.

5—H. 30.

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DAIRY INDUSTRY ACCOUNT.— RECORD OF WEEKLY BALANCES.

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MARKETING DEPARTMENT. EXPORT DIVISION. Final Statement op the Dairy-produce Purchase and Sale Accounts, 1937-38 Season. Creamery Bwlter. Dr. £ Or. £ Aotual surplus on sale of 5,500,764 boxes .. .. 480,041 Estimated surplus on 5,500,764 boxes shown in accounts at 31st July, 1938 .. .. .. .. 443,398 Surplus on realization of produce unsold at 31st July, 1938 .. .. .. .. .. .. 42,643 £486,041 £486,041 Whey Butter. Dr. £ Or. £ Actual surplus on sale of 71,829 boxes .. 11,577 Estimated surplus on 71,829 boxes shown in accounts at 31st July, 1938 .. .. .. .. 11,340 Surplus on realization of produce unsold at 31st July, 1938 237 £11,577 £11,577 Cheese. Dr. £ Cr. £ Deficit on realization of produce unsold at 31st July, Estimated surplus on 1,176,180 crates shown in accounts 1938 .. .. .. .. .. .. 24,771 at 31st July, 1938 .. .. .. .. 100,447 Actual surplus on 1,176,180 crates .. .. .. 75,676 £100,447 £100,447 Income and Expenditure Account, 1937-38 Season. Dr. £ Cr. £ Balance: Surplus, 1937-38 season .. .. 576,724 Surplus— Creamery Butter Account .. .. .. 486 041 £ Cheese Account .. .. .. 75,676 Whey Butter Account .. .. .. 11,577 87,253 Recoveries from manufacturers of special milk products (the Dairy-produce (Special Milk Products) Regulations 1938) .. .. .. .. .. 3,430 £576,724 IfmTvM Reconciliation of Balance in Dairy Industry Account. £ £ £ Estimated surplus in published accounts at 31st July, 1938 .. .. .. .. ~ 555 185 PIUS £ Surplus on realization of creamery butter .. .. .. .. .. 42 643 Surplus on realization of whey butter .. .. .. .. .. .. 237 Recoveries from manufacturers of special milk products .. .. .. .. 3 ; 430 — 46,310 Less deficit on realization of cheese .. .. .. .. .. __ 24*771 Actual surplus, 1937-38 season's produoe .. .. .. .. .. ~ _ _ _ _ £576 724 Examined and found correct —Cyril G. Collins, Controller and Auditor-General.

H.—3o.

MARKETING DEPARTMENT—continued. EXPORT DI VlSlON—continued. CREAMERY BUTTER. Purchase and Sale Account, 1938-39 Season. Shipments for which Complete Sale Proceeds have been received at 31st July, 1939. Dr. £ Gr. £ £ Purchase of 3,053,095 boxes .. .. .. 10,656,762 Sale of 3,053,095 boxes (less United Kingdom selling-charges, including landing-charges, agents' commission, discount, and storage) .. .. 10,349,510 Less—• £ Freight .. .. 542,651 Insurance .. .. 16,505 559,156 9,790,354 Balance carried forward (deficit on 3,053,095 boxes) 866,408 £10,656,762 £10,656,762 Shipments for which only Partial Sale Proceeds have been received at 31st July, 1939. Dr. £ Gr. £ £ Balance brought forward (deficit on 3,053,095 boxes) 866,408 Sale of 862,514 boxes (less United Kingdom Purchase of 1,446,714 boxes .. .. .. 5,061,234 selling - charges, including landingTotal : 4,499,809 boxes. charges, agents' commission, discount, and storage) .. .. .. 2,934,124 Estimated sale value of 584,200 boxes in store in United Kingdom or afloat, 31st July, 1939 (basis of valuation, 1235. 9d. per hundredweight sterling, less United Kingdom selling-charges) 2,123,588 Total (1,446,714 boxes) .. .. 5,057,712 Less— £ Freight .. .. .. 265,089 Insurance .. .. 14,457 279,546 4,778,166 Balance carried forward (deficit on 4,499,809 boxes) 1,149,476 £5,927,642 £5,927,642 Stocks in Store in New Zealand awaiting Shipment at 31st July, 1939. Dr. £ Gr. £ £ Balance brought forward (estimated deficit on 4,499,809 Estimated sale value of 157,435 boxes (basis boxes) .. .. .. .. .. 1,149,476 of valuation, 1245. 6d. per hundredweight Purchase of 157,435 boxes .. .. .. 545,691 sterling, less United Kingdom sellingTotal: 4,657,244 boxes (116,420 tons 3 cwt.). charges) .. .. .. .. 586,608 Less — £ Freight .. .. .. 28,002 Insurance .. .. .. 5,018 33,020 — 553,588 Balance carried forward (estimated deficit on 4,657,244 boxes), (116,420 tons 3 cwt.) .. .. .. 1,141,579 £1,695,167 £1,695,167 £ £ Balance brought forward .. .. .. 1,141,579 Balance to Dairy Industry Account (estimated deficit Proportion of administration and general expenses .. 174,133 on sale of creamery butter) .. .. .. 1,315,712 £1,315,712 £1,315,712

H.—3o.

MARKETING DEPARTMENT—continued. EXPORT DIVISION —continued. CHEESE. Purchase and Sale Account, 1938-39 Season—continued. Shipments for which Complete Sale Proceeds have been received at 31st July, 1939. Dr. £ Or. £ £ Purchase of 513,786 crates .. .. .. 2,884,956 Salesofsl3,7B6crates(less United Kingdom selling - charges, including landing - charges, agents' commission, trade discount, and storage) .. .. 2,712,516 Less — £ Freight .. .. .. 281,368 Insurance .. .. 4,512 285,880 2,426,636 Balance carried forward (deficit on 513,786 crates) .. 458,320 £2,884,956 £2,884,956 Shipments for which only Partial Sale Proceeds have been received at 31st July, 1939. Dr. £ Cr. £ £ Balance brought forward (deficit on 513,786 crates) .. 458,320 Sale of 274,555 crates (less United Kingdom Purchase of 461,645 crates .. .. .. 2,579,785 selling - charges, including landing - Total : 975,431 crates. charges, agents' commission, trade discount, and storage) .. .. 1,293,463 Estimated sale value of 187,090 crates in store in United Kingdom or afloat at 31st July, 1939 (basis of valuation, 665. 6d. per hundredweight sterling, less United Kingdom selling-charges) 934,972 Total (461,645 crates) 2,228,435 Less — £ Freight .. .. .. 251,542 Insurance .. .. 5,135 256,677 1,971,758 Balance carried forward (estimated deficit on 975,431 crates) .. .. .. .. .. 1,066,347 £3,038,105 £3,038,105 Stocks in Store in New Zealand awaiting Shipment at 31st July, 1939. Dr. £ Or. £ £ Balance brought forward (estimated deficit on 975,431 Estimated sale value of 147,567 crates (basis crates) . . .. .. .. 1,066,347 of valuation, 665. per hundredweight Purchase of 147,567 crates .. .. .. 816,538 sterling, less United Kingdom sellingTotal : 1,122,998 crates (79,567 tons 3 cwt.). charges)— Total (1,122,998 crates) .. .. 824,780 Less — £ Freight .. .. ..84,833 Insurance.. .. .. 11,688 96,521 728,259 Balance carried forward (estimated deficit on 1,122,998 orates), (79,567 tons 3 cwt.) .. .. .. 1,154,626 £1,882,885 £1,882,885 £ r~" Balance brought forward .. .. .. 1,154,626 Balance to Dairy Industry Account (being estimated Proportion of administration and general expenses .. 62,193 deficit on sale of cheese) .. .. .. 1,216,819 £1,216,819 £1,216,819

H.—3o.

MARKETING DEPARTMENT —continued. EXPORT DIVISION —continued. WHEY BUTTER. Purchase and Sale Account, 1938-39 Season —continued. Shipments for which Complete Sale Proceeds have been received at 31st July, 1939. Dr. £ Or. £ £ Purchase of 44,161 boxes .. .. .. ■■ 142,984 Sale of 44,151 boxes (less United Kingdom selling-charges, including landing-charges, agents' commission, trade discount, and storage) .. .. .. .. 140,733 Less— £ Freight .. .. .. 8,071 Insurance .. .. .. 217 8,288 132,445 Balance carried forward (deficit on 44,151 boxes) .. 10,539 £142,984 £142,984 Shipments for which only Partial Sale Proceeds have been received at 31st July, 1939. Dr. £ Cr. £ £ Balance brought forward— Sale of 16,881 boxes (less United Kingdom sellingDeficit on 44,151 boxes .. .. ..10,539 charges, including landing-charges, agents' Purchase 0f23,598 boxes .. .. .. ■■ 76,416 commission, trade discount, and storage) .. 52,305 Total: 67 749 boxes. Estimated sale value of 6,717 boxes in store in United Kingdom or afloat at 31st July, 1939 (basis of valuation, 106s. per hundredweight sterling, less United Kingdom selling-charges) 21,154 Total (23,598 boxes) .. .. .. 73,459 Less— £ Freight .. .. .. 4,310 Insuranoe .. .. .. 148 4,458 69,001 Balance carried forward (deficit on 67,749 boxes) .. 17,954 £86,955 £86,955 Stocks in Store in New Zealand awaiting Shipment at 31st July, 1939. j) r% £ Gr. £ £ Balance brought forward (estimated deficit on 67,749 Estimated sale value of 243 boxes (basis of valuaboxes) .. .. .. •• •• 17,954 tion, 116s. Od. per hundredweight sterling. Purchase of 243 boxes .. .. •• •• 768 less United Kingdom selling-charges) .. 849 Total: (67,992 boxes) (1,699 tons 13 cwt.). Less— £ Freight .. .. .. 45 Insuranoe .. .. .. 7 — 52 797 Balance carried forward (estimated deficit on 67,992 boxes), (1,699 tons 13 cwt.) .. .. .. 17,925 £18,722 £18,722 £ £ Balance brought forward .. .. .. •• 17,925 Balance to Dairy Industry Account (estimated deficit on PWipOrtion of administration and general expenses .. 2,473 sale of whey butter) .. .. .. .. 20,398 £20,398 £20,398

HL—3O.

MARKETING DEPARTMENT— continued. EXPORT DIVISION— continued. Administration and General Expenses Account, 1938-39 Season.

United i Cr ' £ Kingdom, i New Zealand - Total. Allocation of expenses to Produce Purchase and Sale Accounts — — —— —; -- Creamery butter .. .. .. .. .. .. 174,133 Dr tee Whey butter .. .. .. .. .. .. 2,473 Salaries .. .. .. .. .. .. .. .. 12,349 . 12,651 25,000 Cheese Legal expenses .. .. .. .. .. .. .. 535 .. 535 Office rent, maintenance, cleaning, telephone, and sundry expenses .. 2,746 2,743 5,489 Postage, cables, and printing and stationery .. .. .. .. 1,358 1,128 2,486 Travelling-expenses .. .. .. .. .. .. .. 937 '987 1^924 Subscriptions, donations, and entertainment .. .. .. .. 165 18 183 Shipping inspection .. .. .. .. .. .. .. 1,573 2,099 3,672 Agency expenses: Lyttelton .. .. .. .. .. .. .. 225 225 Audit fees .. .. .. .. .. .. .. .. ,. 967 967 Depreciation (office and departmental equipment) .. .. .. 290 297 587 19,953 21,115 41,068 Advertising in United Kingdom .. .. .. .. .. .. .. 104,808 Miscellaneous expenses .. .. .. .. .. .. .. .. .. 1 044 £ Cost of remittances to dairy companies .. .. .. .. .. .. 11,599 Interest on overdraft at Reserve bank .. .. .. .. .. .. .. 80,066 — 91,665 Subsidy, Public Service Superannuation Fund .. .. .. .. .. .. .. 214 £238,799 £238,799 ■

H.—3o.

MARKETING DEPARTMENT—continued. EXPORT DlVlSlON—continued. Income and Expenditure Account, Period Ist August, 1938, to 31st July, 1939. Dr. £ Gr. £ Estimated deficit, Creamery Butter Account .. 1,315,712 Estimated deficit, Dairy Industry Account, 1938-39 2,552,929 £ Estimated deficit, Cheese Account .. 1,216,819 Plus estimated deficit, Whey Butter Account .. .. .. .. 20,398 Estimated deficit, cheese and whey butter .. 1,237,217 £2,552,929 £2,552,929 Balance-sheet as at 31st July, 1939. Liabilities. £ £ Assets. £ Overdraft, Reserve Bank of New Zealand.. 5,124,129 Sundry debtors for produce and amounts accrued due 426,430 Less balance at Bank of England and Stocks— £ Bank of New Zealand, London .. 17,231 Produce .. .. .. .. 4,491,951 —— 5,106,898 Advertising-material and sundries .. 5,224 Sundry creditors for accrued charges and sundry credit 4,497,175 balances .. .. .. .. .. 1,798,077 Office and departmental equipment .. .. 5,165 Dairy Industry Account— Deficit at 31st July, 1938, for 1936-37 season .. .. .. 272,482 Plus interest on balance, 31st July, 1938, to 31st March, 1939 .. 4,368 276,850 Recovery from Consolidated Fund .. 276,850 Estimated deficit, 1938-39 season .. 2,552,929 Less surplus, 1937-38 season .. .. 576,724 1,976,205 £6,904,975 £6,904,975 (Note. —In order that the accounts should cover all export butter and cheese manufactured up to and including 31st July, 1939, the quantities in store in New Zealand at that date are included. Ownership of this produce passes to the Crown, in terms of the Marketing Act, 1936, when it is placed on board ship for export from New Zealand. G. A. Duncan, Director. I hereby certify that the Purchase and Sale Accounts, the Administration and General Expenses Account, and the Dairy Industry Account (Income and Expenditure), together with the Balance-sheet as at 31st July, 1939, have been duly examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed thereby, subject to the departmental note enfaced thereon.—Cyril G. Collins, Controller and Auditor-General.

a.—3o.

Imports of Butter into United Kingdom.

Imports of Cheese into United Kingdom.

6—H. 30.

(From Dairy-produce Supplies, 1938.) Country whence consigned. 1913. 1931. 1932. 1933. 1934. 1935. 1936. 1937 1938. Tons. Tons. Tons. Tons. Tons. Tons. Tons. Tons. Tons. New Zealand .. .. 12,600 90,300 106,950 125,600 133,850 131,900 139,600 147,550 129,100 Australia .. .. .. 29,700 77,900 89,750 84,600 105,200 105,650 84,700 74,550 89,900 Eire .. .. .. (a) 19,050 15,750 18,950 23,400 24,400 23,400 16,000 16,350 Canada .. .. .. 50 3,900 950 1,650 .. 3,150 2,000 1,600 1,500 Union of South Africa .. ■ 2,000 1,850 1,250 1,050 4,100 3,750 3,450 1,250 South-west African Territory .. •• 1,100 300 150 1,650 1,900 1,250 1,300 Kenya .. .. •• (b) 300 350 250 400 650 1,050 1,000 700 Nigeria .. .. .. •• •• •• •• ISO (b) (b) (b) Other Empire countries ■. 50 50 100 100 150 100 50 100 50 Denmark .. .. 85,350 123,300 129,200 125,950 124,300 109,300 108,600 112,900 118,250 Netherlands .. 7,650 4,800 2,350 7,300 15,050 23,200 37,250 35,850 35,600 U S.S.R. (Russia) .. .. 37,550 20,200 16,150 28,150 24,550 25,150 20,600 13,650 Lithuania .. .. .. (c) 2,000 3,400 5,200 7,050 9,050 10,550 10,250 11,400 Latvia .. .. .. c) 1,950 5,600 7,300 7,800 9,650 9,800 10,850 17,000 Poland .. .. .. (d) 1,650 150 .. 2,500 4,950 9,450 5,250 9,950 Finland .. .. .. (c) 12,700 JO,850 6,700 7,550 5,800 8,000 7,900 10,500 Sweden .. .. •• 16,600 10,600 8,800 11,350 15,100 9,200 7,450 10,250 15,000 Estonia (c) 6,250 4,150 4,200 6,150 5,950 5,800 8,000 9,150 Austria .. •• •• 400 1,250 950 1,800 1,300 750 Hungary . .. •• •• ■■ •• 1,600 2,000 900 1,750 2,100 1,050 France .. .. .. 12,450 50 100 50 750 350 1,450 300 Belgium .. (e) .. 50 100 700 .. 800 50 250 Germany .. • • • • • • 400 200 200 200 •. • • 50 Norway .. .. •• 1,000 650 750 150 .. •• •• •• 650 Argentina .. .. 3,650 18,700 19,550 10,100 5,550 3,450 7,150 6,500 4,500 Other foreigA countries 300 250 100 150 50 750 150 200 (/) 1,250 Totals, Empire countries .. 42,400 199,500 216,800 232,700 264,200 271,750 256,450 245,500 240,150 Totals, foreign countries .. 164,550 203,500 201,400 208,900 220,550 208,650 230,600 225,400 235,300 Totals, all countries .. 206,950 403,000 418,200 441,600 484,750 480,400 487,050 470,900 475,450 (a) Not separately distinguished before April, 1023. (b) Included in " Other Empire countries." (c) Included in Russia. (d) Included in Itussia, Germany, and Austria-Hungary. (e) Included in " Other foreign countries. (/) IncludeB 550 tons from Czechoslovakia, 400 tons from Japan, and 300 tons from Uruguay.

(From Dairy-produce Supplies, 1938.) Country whence consigned. j 1913. 1931. 1932. 1933. 1934. 1935. 1936. 1937. 1938. " : ' I Tons. Tons. . Tons. Tons. Tons. Tons. Tons. Tons. Tons. New Zealand .. .. 27,350 86,650 92,450 102,950 104,600 88,150 84,050 86,550 81,950 Canada , .. .. 64,700 35,350 37,350 31,500 26,000 23,500 30,150 36,100 33,900 Australia .. .. .. 400 3,400 3,700 4,650 5,750 6,700 4,550 5,950 11,900 Union of South Africa and South- .. 750 850 650 150 1,100 600 750 1,150 west African Territory , Eire .. .. .. (a) 100 100 50 250 450 850 800 1,000 Other Empire countries .. .. • • • ■ • • • ■ • ■ 50 50 Netherlands .. .. 14,600 8,400 8,500 6,100 6,400 9,950 9,100 10,850 10,100 Italy .. 5,100 6,600 5,300 4,500 4,700 4,000 700 3,100 3,550 Denmark !. .. .. (b) 250 300 300 300 500 1,450 1,000 950 France .. 750 600 450 350 350 400 1,150 500 600 Switzerland .. .. 600 1,600 700 700 700 750 850 850 900 Finland (b) . 150 150 100 100 100 50 200 150 Norway .. .. •• (b) 50 100 50 100 50 50 50 50 Belgium .. .. •. 100 100 50 50 .. •. 50 • ■ Germany •. ■■ •• (b) 50 50 .. .. .. •• United States of America .. 1,100 200 .. ... .. •• • '• "„ AA Other foreign countries .. 150 50 100 50 50 50 100 oO 200 Totals, Empire countries .. 92,450 126,250 134,450 139,800 136,750 110,900 120,250 130,200 129,900 Totals, foreign countries .. 22,400 18,050 15,700 12,200 12,700 15,800 13,550 16,600 16,500 Totals, all countries .. 114,850 144,300 150,150 152,000 149,450 135,700 133,800 146,800 146,400 (a) Not separately distinguished before April, 1923. (6) Included in " Other foreign-Countries."

H.—3o.

Imports of Butter into Ports in the United Kingdom, 30th December, 1937, to 28th December, 1938

(In tons.) ' Country whence consigned. j London. Sou t£amp- Bristol. Fishguard. Liverpool. Manchester ! Glasgow. Leith. ] Newcastle. Hull. Goole. Grimsby. Harwich. Other Ports.| Total. | P !£™ us I - ■ _ : vr- ire ** ** ** '* ■' *' 5,600 4,450 .. 3,400 .. .. .. .. ! (a) 2 850 16 300 15 950 New Zealand .. .. 83,200 2,500 10,550 .. 16,250 j 2,450 8,450 .. 2,200 1,300 .. .. .. lb) 129!650 146|300 Australia .. .. .. 85,000 50 250 .. 2,050 | 400 1,050 .. 50 1,200 .. .. .. (c) 150 90 200 72 700 Canada .. .. .. 700 .. .. .. 650 50 .. .. .. .. .. 1 400 1500 South Africa .. .. 50 1,200 .. .. .. !....... ' " i'oko 3450 South-west Africa Territory .. 250 1,000 .. .. .. " " .. .. .. , u o, u Other Empire countries .. 800 .. .. .. .. .. .. " | " " 'gQ 0 1100 ■' •• •' 100 •• •• •• 21,550 23,750 7,050 5,250 44,*800 14,"750 .'.' 117,500 lll^OO Netherlands .. .. 14,800 .. oO .. 1,200 450 50 8,300 1,500 4,200 1,050 .. 800 (<Z)2,050 34,450 35,100 •• •' •• •' '• 300 500 2 ' 800 •• - 16,950 10,350 T i " ' " " " "• •• •• 50 •' 1 > 750 2 ' 600 8 > 600 •• •• ' •• (e)300 15,100 9,800 7,850 3 > 550 •• •• •" 50 " «0 lO^OO a 'k* n '• •' '• •• •• •• I 0 ' 500 •• •• •• 10,500 7,850 Estonfa " " " " " " " " I' 750 " •• •• •• 10,400 5,200 hZ™v " " "• " "" •• - •• 5,200 •• •• •• •' 9 > 200 7 ' 900 lu st ria ?*n " " " " •" '• '• •• •• •• •• •• 1 > 050 2 ' 100 Norway " 550 !! " " " ! " " " 50 ™> Czechoslovakia .. .. 550 .. .. ..I " " " " 'inn Belgium 250 V- .. 100 Germany .. .. .... [ " ' " " " " 55 France " " " V " ;; 50 50 50 Yugoslavia .. .. .... . . " " " " " " "' "" 99 TJSSR ** ** "* I •• •• •• •• •• • • •• . • ou Argentina 3,'250 1,'250 !! !! .*.' " " " " " '* " " 4 "; oo Uruguay 200 100 .. .. .. .. " " " " 4 'oXX 6 ' 4 °° Ja P an • • ■ • • • 350 .. .. .. .. .. " " " " " " o9n Other countries .. .. " " !! !! " " 1)4 00 1,250 Total •• •• 227 ' 650 6.10° 10,950 5,600 24,600 3,400 12,950 31,900 30,600 46,200 6,300 44,800 15,550 9,600 476,200 Total, 1937 .. .. 237,850 7,750 10,300 4,800 24,200 3,350 | 12,900 30,900 27,700 36,600 7,750 41,450 14,150 6,200 .. 465,900 total^l0^00 1 ton e s PrOPOrtiOn qUantity fr0m New Zealand shown under Liverpool was on through bill of lading for Manchester. Actual shipments to Manchester in the period under review ire „ : In2, luding 2 ' 650 tons throu 8 h Irish la nd Stations, 70 tons to Douglas 60 tons to Holyhead, and 105 tons to Belfast (b) New Zealand- Inclndine 2 710 tons to Cardiff m i„«+r»n« • Twinriino {^Sweden*: Including 300 t S t0 Yarm ° Uth ' 25 ° t0 ****■ 50 to ™ t0 and JPtSttbZftS.

H.—3o.

Imports of Cheese into Ports in the United Kingdom, 30th December, 1937, to 28th December, 1938.

(In tons.) Country whence consigned. London. Dover. | Sou^ mp " Bristol. Cardiff. Liverpool. Manchester. Glasgow. Leith. | Newcastle. ! Hull. OooK | Harwich. Other Ports.; Total. P^ e ™ lla New Zealand .. .. 54,450 .. 1,300 7,200 1,400 10,300 950 5,150 | .. 1,400 900 .. •• •• Canai . " - 19!800 .. 50 1,450 3,500 950 1,600 1,100 1,200 ooO .. ;; («)1 ; 150 33,600 35,250 Australia .. .. .. 11,500 .. •• •• 100 •• •• ** " ' _ 1,050 750 SouthAfrica .. .. • • 1,050 .. .. .. •• •• •• •• •• "" (6)650 l'ooo 850 Eire .. ,. . • • • • • - • • • • • •'OO .. ou ..... - 50 .. South West Africa Territory .. .. .. 50 .. •• •• •• ' I00 (c jk) 10,100 10,750 Netherlands .. .. 5,750 .. 50 .. . • •• •• 1 150 ., 3,500 3,100 My 2 >i50 2oo .. .. .. .. •• •• •• •• •• ' 500 50 950 1,000 Denmark .. .. .. 300 •• •• •• •• •• •• ' 150 .. 900 850 Switzerland .. .. .. 450 200 .. .. . • o0 .. 50 .. • • • ■ _ (d)400 550 500 France .. .. . • . • • • 150 .. .. • • • • • • • • • • • • ' 150 Finland .. .. . • 150 .. .. . • • • • • • • ■ • • • • * "" '' ' ° 50 50 Norway .. .. . • 50 .. .. . • • • • • • • • • • • • • *' " | ° 50 Sweden .. .. .. j 50 .. .. . ■ • • • • ■ • • • • * "" *' "' _ 100 Argentina .. .. .. 100 .. .. .. •• -• •• •• •• •• " " " 300 850 Other countries .. .. .. . • • • • ■ • • • ■ • ■ ■ • " —__ Total .. .. 94,750 400 2,650 9,450 2,850 j 14,250 1,900 6,850 1,800 3,300 2,500 1,800 1,900 2,850 14i,250 Total, 1937 .. .. 98,200 .. 1,350 10,050 1,350 | 11,400 I 2,450 6,200 1,950 2,350 1,700 2,250 1,800 4,200 .. 14o,250 j_ ! I : — Note. — A. large proportion of the quantity from New Zealand shown under Liverpool was on through bill of lading for Manchester. Actual shipments to Manchester m the period under review t0ta "fcanada° X ™Mtag Belfast, 250 tons to Swansea, and 450 tons to Aberdeen. (6) Eire: Including 625 tons to Fishguard. <0 Netherlands : Including 200 tons to Dundee and 100 tons to Yarmouth, (cf) France : Including 400 tons to Newhaven. (e) Details not available.

H— 30.

THE WORLD TRADE IN BUTTER. Export of Butter from Principal Exporting Countries.

Imports of Butter into Principal Importing Countries.

THE WORLD TRADE IN CHEESE. Exports of Cheese from Principal Exporting Countries.

Imports of Cheese into Principal Importing Countries.

(In tons.) From Dairy-produce Supplies. Country. 1933. 1934. 1935. 1936. 1937. 1938. Denmark .. .. .. .. 148,334 147,460 136,116 143,896 150,500 155,550 Netherlands .. .. .. 27,925 36,304 46,047 59,235 (a)52,950 (a)50,050 Ei «> 20,193 25,396 26,549 25,907 19,000 18,850 Sweden .. .. .. .. 16,857 22,836 19,939 18,806 23,150 28 100 Finland .. .. .. .. 11,697 10,923 10,081 13,766 13 700 16 850 Estonia .. .. .. .. 9,079 9,958 10,667 10,782 12,950 14'500 Latvia .. .. .. .. 15,399 15,453 16,550 17,017 18 900 23 100 Lithuania.. .. ... .. 9,429 9,518 11,962 14,398 14 800 16'950 Poland .. .. 1,583 4,367 5,595 10,735 8,000 13'000 France .. .. .. .. 3,049 . 3,258 5,181 5,660 2,950 2,900 Totals, Europe .. .. 263,545 285,473 288,687 320,202 316,900 339,850 U.S.S.R. .. .. .. .. 36,617 37,305 28,929 22,732 14,100 (6)200 New Zealand .. .. .. 131,760 130,725 139,466 139,810 148 800 130 750 Australia .. .. .. .. 94,434 110,171 102,898 82,889 81,650 10l'750 Argentina 13,688 8,191 6,753 10,107 8,650 7'200 Canada .. .. .. .. 7,981 191 3,436 2,290 J,830 1,740 Totals, overseas .. .. 241,863 249,278 252,553 235,096 240,930 241,440 Grand totals .. .. 542,025 572,056 570,169 578,030 571,930 581,490 (a) Net weight. (b) January to October.

(In tons.) Country. 1933. 1934. 1935. j 1936. 1937. I 1938 ; i I Great Britain and Northern Ireland .. 437,300 479,808 474,060 484,030 465 200 471 500 Germany .. .. .. .. 58,210 60,788 69,879 74,216 8M50 90'850 Belgium-Luxemburg .. .. 12,235 9,238 5,943 3,634 2 200 l'l50 *> nce , 9,066 4,287 674 1,898 650 '600 Switzerland 511 292 135 1,439 2,500 150 Canada 615 1,283 66 53 30 2,340 U.S.A. .. .. .. 247 561 10,123 4,407 4,950 700 Totals .. .. .. 518,184 556,257 560,880 569,677 560,980 567,290

(In tons.) Country. 1933. 1934. 1935. 1938. 1937. 1938. Netherlands 62,903 60,220 00,088 55,942 (o)81,650 la)57 550 J, ta ly , 23,562 24,680 17,805 19,096 23,500 23 800 Switzerland .. .. .. 20,244 17,475 17,968 18,186 17 200 22 100 £ rance , •• •• •• H.176 11,595 10,994 10,422 11,050 ll'850 Denmark .. .. .. .. 9,920 6,201 6,558 9,379 9,250 8 950 New Zealand 99,146 99,226 86,378 82.911 82,350 80 500 Canada 33,111 27,307 24,876 36,558 39,700 36 150 Australia .. .. .. . .. 4,864 5,565 6,845 5,550 8,350 15|700 Totals •• v . 264,926 252,269 231,;512 ; 238,044 253,050 256,600^ (a) Net weight.

(In tons.) Country. 1933. 1934. 1935. 1936. 1937. 1938. Great Britain and Northorn Ireland .. 150,783 147,918 134,222 132,600 145 750 145 550 Germany •• 40,591 33,254 27,527 27,458 32'000 gelgwm 21,615 21,173 22,645 22,695 22,250 23 750 20 ' 583 15 > 692 15 ' 539 14,508 13,100 14 000 U.S.A. .. .. .. .. 21,606 21,220 21,846 26,718 27,100 24,300 Totals 255,178 239,257 221,779 223,979 244,500 239,600 ~

H.—3o.

BUTTER weekly Medium Prices at the London Provision Exchange.

(Shillings per hundredweight.) 1938-39. 1936-37. 1937-38. 1938 39. 13 § A S * - a . ej f ! J- I . g) Date. J! i |! a | 1 J S | | Date. «J 1 f J 1 1 | 5 = "I Date I! 1 I si 1 ill 2 2 I i I I I * I •£ I *| ! & I 2 3 * I *1 ! «§ i ! ! « i I ; i t ' "*C , - | -sj j *■*. s - W.F. U.S. | S. U.8. S.F. S.F. S. U.F. U.S. S. U.S. S.F. S.F. S. ! U.S. I U. U. 6. Aug. 7 .. 117 115 .. 105 125 109 109 104 109 Aug. 6 .. 119 117 .. .. 124 113 .. .. 113 Aug. 4 122 120 .. .. 125 110 112 .. 14 .. 118 117 .. 109 127 111 110 165 110 13 .. 115 114 .. .. 124 110 112 107 110 11 .. 121 117 .. .. 126 108 111 21 .. 121 120 s . 108 128 112 113 107 112 20 .. 114 113 .. 126 108 110 106 108 18 .. 120 116 .. .. 130 109 110 28 .. 119 118 ,. 110 128 110 112 107 112 27 .. 116 116 .. 132 112 112 ..111 25 .. 121 117 .. .. 136 110 112 Sept. 4 .. 114 114 .. 107 128 108 108 102 109 Sept, 3 .. 116 115 .. .. 132 112 114 .. Ill Sept. 1 .. 122 119 .. .. 135 112 113 11 .. 109 108 .. 101 128 103 104 92 105 10 .. 115 115 .. .. 132 113 114 110 110 8 .. 123 119 .. .. 135 112 18 .. 105 105 .. 96 124 101 .. 87 102 17 .. 117 116 .. .. 135 115 116 ..113 15 .. 120 115 .. 109 135 113 25 •• 99 99 .. 91 120 97 96 80 94 24 .. 120 119 i. .. 138 121 120 .. .. 22 .. 116 110 .. 106 135 110 26* .. 116 114 .. 112 135 112 110 Oct. 2 .. 103 104 .. 94 125 97 .. .. 97 Oct. 1 .. 127 127 .. .. 139 126 126 9 .. 101 101 .. 94 126 95 .. 82 93 8 ; . 130 130 .. .. 139 129 128 .. .. Oct, 8* .. 116 114 113 112 129 112 112 110 16 •• 95 96 •• ..121 90 .. 81 88 15 135 134 .. .. 145 133 133 ..132 15 .. 114 109 .. .. 126 108 108 23 96 96 .. 90 120 .. 82 88 22 .. 139 138 .. .. 148 138 139 .... 22 .. 114 109 .. .. 128 107 108 30 .. 99 98 .. ..119 91 .. 84 91 29 151 151 .. .. 151 14(6 150 .. .. 29 .. 114 109 107 .. 136 109 111 Nov. 6 .. 108 107 .. .. 125 98 .. 88 99 Nov. 5 .. 150 150 .. .. 159 150 150 148 148 Nov. 5 .. 114 110 .. .. 135 109 110 13 .. 109 108 105 >. 125 103 .. 94 101 12 .. 137 135 .. .. 151 134 12 109 104 .. .. 136 108 .. 103 20 .. 109 108 105 .. 120 101 .. 94 99 19 121 120 .. .. 143 122 .. 113 .. 19 106 100 96 137 106 27 .. 106 105 102 ..119 98 .. 93 96 26 114 112 .. 107 143 110 116 105 .. 26 .. 104 100 .. 94 144 100 ■ * I Dec. 4 ..104 102 98 97 118 98 .. .. 94 Dec. 3 .. 114 111 .. 109 152 113 113 .. .. Dec. 3 .. 105 103 .. .. 143 116 108 11 .. 104 101 98 95 117 98 .... 95 10 110 108 .. 107 150 114 10 .. 108 105 .. 99 144 118 109 18 •• 99 97 .. 94 111 96 .... 94 17 .. 114 113 .. 109 155 116 114 .. 17 .. Ill 109 104 144 124 112 23 .. 94 S3 .. 91 110 .. .. 91 91 24 .. 113 112 .. 109 155 116 115 111 24 .. Ill 108 .. 102 145 126 113 31 .. Ill 109 .. 107 146 114 115 109 31 .. 112 HO .. 105 144 125 114 Jan. 1 .. 94 94 .. 90 109 93 96 ,. 92 8 .. 98 98 95 92 110 97 .. 93 96 Jan. 7 .. 112 110 .. 108 135 114 116 .. .. Jan. 7 ..116 115 .. 109 145 117 121 15 .. 95 95 93 92 111 97 .. 93 94 14 112 111 .. .. 135 112 116 14 .. 123 122 119 117 144 124 126 • 22 .. 93 93 90 90 113 96 .. 89 92 21 .. 109 108 .. 107 134 112 116 21 .. 125 121 119 117 139 124 126 121 29 .. 89 88 86 89 119 97 .... 88 28 106 104 .. 105 124 110 114 104 28 .. 124 120 117 116 137 124 125 118 Feb. 5 .. 87 87 .. 87 122 99 .. 86 88 Feb. 4 ., 109 108 ,. 107 127 111 115 .. .. Feb, 4 ..122 119 .. 114 144 123 125 12 .. 85 85 82 87 122 100 .. .. ~87 11 .. Ill 111 ,. .. 127 113 115 .. .. 11 .. 122 119 116 114 151 127 125 19 .. 83 83 81 ..116 99 .. .. 84 18 .. 112 112 .. .. 128 114 115 .. .. 18 .. 122 118 .. 115 146 128 125 118 26 88 88 .. 85 117 98 .. .. 87 25 .. 114 113 125 119 115 .. .. | 25 .. 118 115 113 113 141 122 123 115 * Owing to crisis, maximum prices fixed by London Provision Exchange, 26th September to 8th October, 1938.

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BUTTER—continued. Weekly Medium Prices at the London Provision Exchange—continued.

(Shillings per hundredweight.) 1938-39. 193&-37. 1937-38. 1938-39. 5 § 5 ® •§ -2 ■§ .1 c' s § I ■§' i -j r).,. gl s-gS -g ~ S 2 - : •a Date. oS S ' a.S c a ■§ ii = I Date. J .3 g 35 1 : c ■§ - = uate. g— h g— g - s -a , 2 m 0 £ 3 x o>3 ® i § s a 3 | "I § a q m fi | *,§ | ®5 | j S a « S SIber- U Siber- [ s F SF S U.F. U.S. S. U.S. ian S.F. S.F. S. U.F. ! U.S. S. U.S. ian. S.F. S.F. S. U.S. U. U. S. \lar 5 89 90 87 87 121 99 .. .. 89 Mar. 4 .. 116 115 .. .. 124 116 115 .. .. Mar. 4 ..117 114 112 143 116 122 113 12 97 96 93 91 128 99 .... 94 11 118 118 .. ..I 124 117 118 11 .. 118 115 113 112 141 115 120 114 19 !! 98 98 96 92 128 102 18 .. 119 119 .. .. 124 117 120 18 .. 118 117 114 .. 135 115 .. 115 26 .. 100 100 97 92 127 101 25 .. 114 113 .. .. 118 110 25 .. 116 114 111 110 135 114 .. 113 April 2 99 99 .. 93 118 97 April 1 .. 115 115 .. .. 116 112 116 .. .. Apr. 1 ..114 113 109 .. 135 110 116 111 9 102 101 92 114 97 8 .. 118 118 115 .. 122 116 118 .. .. 8 .. 114 113 108 .. 133 110 115 110 16 106 105 102 . 115 103 15 .. 122 122 .. .. 123 118 122 15 .. 114 113 107 .. 127 106 113 107 23 ' 108 107 104 102 112 105 22 .. 125 125 .. .. 128 124 126 22 .. 114 112 107 107 126 109 .. 109 30 .. 108 107 104 .. 115 107 29 .. 128 127 .. .. 128 125 118 29 .. 114 112 106 .. 126 108 .. 108 May 7 104 102 99 .. 109 99 105 .. 101 May 6 .. 128 127 .. .. 130 125 128 .. .. May 6 ..114 111 104 .. 126 106 108 106 14 107 106 103 .. 108 102 105 .. .. 13 .. 133 131 127 .. 132 126 128 .. 13 .. 108 107 99 .. 126 100 105 103 21 108 107 .. 110 104 107 .. .. 20 .. 129 126 122 .. 130 123 126 122 20 .. 105 104 97 .. 124 99 102 100 28 .. 108 107 105 .. 114 105 27 .. 124 121 .. .. 126 117 27 .. 109 107 .. .. 119 103 104 102 June 4 .. 110 109 .. 104 114 106 June 3 .. 122 119 .. .. 123 114 116 .. .. June 3 .. 114 112 .. .. 122 109 111 107 11 .. 110 108 106 .. 114 106 108 .. .. 10 .. 120 117 .. .. 123 111 115 .. .. 10 .. 117 115 112 .. 126 113 113 111 18 .. 110 109 107 .. 115 107 108 106 .. 17 .. 119 117 .. .. 122 110 114 .. .. 17 .. 114 111 106 .. 123 108 112 108 25 .. 109 107 .. .. 115 107 .. 104 .. 24 .. 124 121 .. .. 125 114 117 24 .. 118 113 112 .. 124 109 111 107 July 2 .. 109 106 .. .. ll5 106 .. 103 105 July 1 .. 123 121 .. .. 124 113 113 .. July 1 ..119 113 109 .. 124 109 110 108 9 110 109 .. 115 106 .. ..105 7 .. 121 119 .. .. 122 111 113 7 .. 124 116 .. .. 126 111 112 109 16 .. 115 113 .. .. 122 109 111 .. 108 14 .. 122 120 .. .. 123 111 115 .. .. 14 .. 126 117 .. .. 130 111 112 110 23 . 116 115 .. .. 124 112 113 ..112 21 .. 121 120 .. .. 125 113 115 .. .. 21 .. 123 113 .. .. 129 108 112 107 30 118 117 .. .. 124 112 115 28 .. 121 120 .. .. 125 111 113 .. .. 28 .. 120 110 .. .. 128 107 109 105

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CHEESE. Weekly Medium Prices at the London Provision Exchange.

(Shillings per hundredweight.) 1938-39. 1936-37. 1937-38. 1938-39. New Zealand. Canadian. English. New Zealand. Canadian. English. New Zealand. Canadian. English. Date 1 j Date. — — | Date. W.F. C.F. | W.F. j C.F. armers Factory W.F. C.F. W.F. C.F. Farmers j ac tory. W.F. C.F. W.F. C.F. Farmers Factory AU§ ' il " 5o 64 64 72 j 58 Aug. 6 .. I 74 71 72+ 80* 72+ 80* 87 73 Aug. 4 .. 70 70 79 79 85 65 of " ™ ™ 67 67 74 61 13 .. 70 68 71+ 81* 71+ .. 89 71 11 .. 71 71 79 79 85 86 ~ •• ™ ® 7 69 78 65 20 .. | 67 65 69+80* .... 89 70 18 .. 72 72 79 79 85 66 28 •• 7 " 67 68 71 78 67 27 .. 68 68 j 69+ 80* 70+ .. 89 70 25 .. 73 73 79 79 87 66 Sept. 4 .. 70 67 69 71 78 67 Sept. 3 .. 70 71 70+ 80* 70+ .. 89 .. Sept. 1 .. 73 73 71+ 80* 71+ 80* 87 67 ■ • ° 9 ® 7 71 69 79 64 10 .. 68 69 70+ 80* 70+ 80* 89 74 8 .. 73 73 71+ 79* 71+ 79* 87 67 "j • • 2 7 6 ® 70 70 79 64 17 .. 67 68 70+ 80* 70t 80* 91 .. 15 .. 73 73 71+ 79* 71+ 79* 88 67 25 ■■ 67 65 69 69 79 64 24 ,. 67 68 69+ 80* 69+ .. 91 .. 22 .. 72 72 71+ 79* 71+ 79* 88 68 „ . 0 263;.. 72 72 72+ 80* 72+ 80* 89 68 Oct. 2 .. 70 67 69 69 82 64 Oct. 1 .. 70 69 70+ 80* 70+ . • 91 9 •• ™ 66 69 69 83 63 8 .. 71 70 70+82* 71+ .. 91 .. Oct. 7J.. 72 72 72+80* 72+80* 88 68 • • °8 6° 68 68 82 63 15 .. i 70 69 70+ 83* 71+ .. 91 .. 14 .. 72 72 72+ 80* 72+ 80* 88 68 ™ " 1} 70 69 84 64 22 ■ • 70 69 70+ .. 71+ .. 93 .. 21 .. 71 71 73+ 80* 73+ 80* 89 67 30 ■■ 71 67 70 69 84 66 29 72 71 72+ .. 72+ .. 93 75 28 .. 71 71 72f 80* 73f 80* 89 68 Not. 6 .. 72 68 70 68 84 67 Nov. 5 .. 74 73 73 73 93 78 Nov. 5 .. 70 70 73f 80* 73+ 80* 89 68 " • * It It 73 71 85 67 12 • • 73 72 ; 73 73 93 73 12 .. 69 69 72| 80* 72f 80* 90 66 ix " A l 2 73 72 85 66 19 •• 71 70 ; 72 73 93 72 19 .. 68 68 71+ 79* 71+ 80* 89 66 " 7 '' 68 68 72 71 85 66 26 .. 69 68 72 73 95 73 26 .. 67 68 71f 79* 71t 79* 90 64 Dec. 4 .. 62 62 71 71 87 62 Dec. 3 .. 68 67 73| 89* 73 95 75 I Dec. 3 .. 68 68 72+ 79* 72+ 80* 91 63 , •• 64 71 71 87 61 10 .. 66 65 73 73 95 .. 10 .. 69 -69 71+ 79* 72+ 80* 91 67 i„ • • ? 3 ® 3 71 | 70 | 87 62 17 .. 65 65 | 73 | 73 95 j 17 .. 70 70 ' 72+ 79* 71+ 80* 90 L3 • • 60 60 71 71 87 59 24 .. 65 65 72 73 95 .. 23 .. 70 69 71f . - 73+ 80* 91 64 30 .. 64 65 72 73 97 .. 30 .. 69 69 72f .. 72f 80* 91 63 Jan - I 57 57 71 71 87 56 Jan. 7 .. 65 66 72 73 97 .. Jan. 7 .. 69 69 72+ 80* 72+ 80* 92 63 8 ■ • 58 58 71 71 86 56 14 .. 68 69 , 73 73 97 .. 14 .. 70 70 73f • • 72| 80* 90 65 Ijj • • 56 56 69 71 86 62 21 .. 69 70 74 73 97 .. 21 .. 70 70 73t 80* 73+ 80* 90 64 H y 53 53 71 71 87 ■ ■ j 28.. 67 68 74 74 97 .. 28.. 68 68 73t 81* 73f 81* 91 63 Feb - 5 •• 51 51 72 72 87 53 Feb. 4 .. 68 69 74 74 97 ! 75 Feb. 4 .. 67 67 73+ .. 73+ .. 91 •• ! 53 52 71 71 87 52 11 .» 68 68 74 74 97 .. 11 .. 66 66 ! 73+ 80* 73+ 81* 91 i 9 -• 52 51 71 71 87 .. 18 .. 67 67 74 75 97 , 74 18 .. 66 66 73+ .. 73+ 81* 91 26 • • ' 04 1 71 i 87 50 25 .. I 67 67 75 75 97 1 74 25 .. 64 65 I 73| .. 73f 81* 91 ♦ Old seasons. t seasons. } Owing to crisis, maximum prices fixed by London Provision Exchange, 26th September to 8th October, 1938.

#—301

CHEESE-continued. Weekly Medium Prices at the London Provision Exchange-continued.

' (Shillings per hundredweight.) 1938-39. 1936-37. 1937-38. 1938-39. New Zealand. Canadian. English. New Zealand. Canadian. English. New Zealand. Canadian. English. Date. j Date. —: ' Date. j W.F. C.F. W.F. C.F. Farmers Factory W F C J. W.F. OF. Maimers. Fact0Iy W.F. C.F. W.F. C.F. farmers raetoryMar. 5 .. 55 56 71 71 87 50 Mar. 4 .. 68 68 75 76 97 .. Mar. 4 .. 63 63 73f • • 73f 82* 91 64 12 .. 59 59 71 71 87 .. 11 .. 69 69 76 77 97 .. 11 .. 62 62 73f .. 73f 82* 91 63 19 .. 64 64 73 73 89 .. 18 .. 70 70 77 77 97 18 .. 60 60 72f .. 73f 82* 91 62 26 .. 63 63 73 73 89 66 25 .. 68 68 77 77 97 .. 25 .. 60 60 72f .. 72f 82* 91 j 63 April 2 .. 66 66 74 47 89 .. April 1 70 70 77 77 101 .. April 1 .. 60 60 72 72 94 .. 9 .. 66 66 74 74 92 .. 8 .. 70 70 77 77 103 .. 8 .. 60 60 72 72 94 64 16 .. 69 69 75 75 92 .. 15 .. 70 70 77 77 103 .. 14 .. 60 60 72 71 94 23 .. 69 69 75 75 92 .. 22 .. 70 71 77 77 103 .. 22 .. 60 60 72 72f 82* 94 63 30 .. 70 70 77 92 .. 29 .. 68 69 77 77 103 .. 29 .. 60 60 73 73f 82* 94 56t May 7 .. 70 70 77 77 92 j May 6 .. 68 69 77 77 .. .. May 6 .. 60 60 73 73f 82* 94 14 .. 72 72 77 77 13 .. 70 70 77 78 ., 68 13 .. 54 54 72 72f »2* 95 21 .. 73 73 77 77 I .. I 20 .. 71 71 77 78 ... 69 20 .. 50 50 71 72f 82* 95 28 .. 74 74 78 77 .. i .. j 27 .. 70 70 78 78 .. 70 27 .. 51 51 72 .... 95 j June 4 .. 74 74 79 79 . . .. June 3 .. 70 70 79 79 . . 69 June 3 .. 53 53 71 71f 82* 95 11 .. 74 74 79 79 98 .. 10 .. 69 69 79 79 .. 68 10 .. 59 59 71 72f 82* 95 51 18 .. 74 74 79 79 .. .. ! 17 .. 67 67 79 79 .. 66 17 .. 60 61 71 72 95 48 25 .. 74 73 79 79 .. 71 24 .. 69 69 79 79 .. 66 24 .. 64 66 71 71 % 56 July 2.. 72 71 79 .. .. .. July 1 .. 68 68 79 79 .. 65 July 1 65 67 72 72 9 .. 71 69 78 78 .. 70 7 .. 68 68 79 79 .. 65 7 .. 64 67 63f 75* 63f 75* 16 .. 72 70 .. .. .. 69 ! 14 .. 70 70 79 79 85 66 14 .. 64 67 63f 74* 63f 75* 23 .. 74 72 73f 80* 72f 80* .. 73 21 .. 69 70 79 79 85 65 21 .. 63 65 .. 74* .. 74* 30 .. 75 72 74f 80* 73f 80* : ... 73 28 .. 68 69 79 79 85 65 28 .. 60 62 62f 75* 62f 75* 81 60 • < 'I.' I I i I ? ; : I 7 ; ' ' ' ' " - ' - ' I ' I : * ' » Old seasons. , t New seasons. } Stocks practically cleared.

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(2) INTERNAL MARKETING DIVISION. (For the Year ended 31st March, 1939.) The following report and statement of accounts covers tlie activities of the Internal Marketing Division of the Marketing Department for the period of twelve months ended 31st March, 1939. The Division has continued and expanded its activities during the year, and considerable progress in the development of orderly marketing has been achieved, with benefit to both producers and consumers. A brief summary of the principal sections of the Division's operations is given below. DAIRY-PRODUCE. The Butter Marketing Regulations 1937 have now been in forcc for one complete dairying seasonNotwithstanding the lack of data available at their inception, the regulations have, with few exceptions, made accurate provision for allowances to manufacturers with regard to patting and distributing costs. The Primary Products Marketing Act, 1936, under which these regulations were promulgated, provides in section 22 that in fixing prices for butter on the local market such prices must assure to the producer a net return for his butterfat equivalent to that which he would have received had the same produce been exported. This legislation has been endorsed in a resolution carried at the National Dairy Federation's annual conference in June, 1939, which agreed " that during the operation of the guaranteedprice system each and every dairy company should receive the same net return for their butter, grade for grade, whether sold locally or exported." It is contended, however, that some factories have derived advantages, particularly in regard to containers, which are not altogether the result of efficient and economical working. A complete survey of the butter-box operations for local sales has found this to be true ; in fact, factories situated in or near to populous areas have in many instances enjoyed a distinct advantage over those factories whose main local trade is in the scattered areas where boxes, either by reason of transport difficulties or heavy return costs, cannot be economically returned to the factory for reuse. In addition, factories situated in or adjacent to large consuming areas are able to show distinct savings by using cardboard boxes, a type of container which is hardly suitable for country areas, where transport distances are greater. With the data collected, however, it has been possible to gauge more accurately whether such advantages are due to geographical as against efficiency factors and, as a result, to assess what allowances are necessary to compensate for the servicing of butter-boxes where such must be used, including such items as washings, new lids, return freights, &c., Early in the 1939/40 season the differential payable by factories will be slightly amended in order to cover the savings on butter-containers which are not the result of economic working. It should be emphasized, however, that the economies resulting from efficiency in management will still accrue to the factory (and if any factory considers that the investigation made has not conveyed the true facts in its case, arrangements will be made for a qualified officer to take out actual costs from the records of the company in conjunction with its secretary or auditor). A survey of comparative figures for local market turnover (see table p. 23) reveals that since the inception of the Butter Marketing Regulations an upward tendency has been manifested throughout the various marketing districts in the quantity of butter sold locally. The policy followed by the Division has been an important factor in this connection. In the first place, the desirability of at least maintaining and, if possible, extending local consumption has been obvious to the Division from the outset. The local market has, of course, always been attractive because of the slightly higher returns obtained as against export. An endeavour has been made to make this margin sufficiently attractive to induce each factory to supply the local market with the highest quality, yet at the same time small enough to avoid placing at a disadvantage those factories which have either been zoned out of the local market in the interests of economic working or which for other reasons send the major portion of their make to export. Secondly, it is gratifying to note that the system adopted by the Division of paying " grade " differentials for butter sold on the local market has resulted in improved quality and consequently a greater demand. Whilst there can be no question as to the general improvement in quality, the grading of butter sold on the local market has been exercising the attention of the Division for some time. When the regulations were first brought down, it was accepted that the factory-manager was, generally speaking, competent to grade butter according to the standards adopted by the Government Grader. In actual practice, however, a tendency on the part of the factory-manager to overestimate his grade has been apparent. It cannot be said that the gradings generally have been unsatisfactory, but it is natural to expect that a factory-manager enthusiastic in his work is likely to regard his manufacture as being worthy of the highest possible grade points. In order to avoid this position and at the same time be absolutely fair to those factories which are grading in accordance with the best possible procedure, the question of relieving factory-managers of the grading responsibility is being considered. It has been suggested that no hardship would be created if each factory were asked to pack one box of bulk butter, under export conditions out of each churning for the local market, and to forward this to the grade stores for examination. The sample would be graded under the same conditions as export and an indication thus obtained of the grade points of the churning from which it was taken. This procedure fits in very well with certain proposals now under consideration by the Dairy Division of the Department of Agriculture in relation to overrun, and is being seriously considered by the Internal Marketing Division as an alternative to the method of grading at present in vogue. The supply of butter to areas which are unable to manufacture sufficient to meet their own requirements has been complicated this year by the decline in manufacture due to drought conditions in the autumn months. Despite the lesser manufacture, however, adequate supplies have been made available by the Division through the co-operation of dairy factories, the Export Division of the Marketing

7—H. 30.

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Department, and the various cool stores. In order to ensure that sufficient supplies would be available for winter use throughout the Dominion, the Division acquired some 155,000 boxes of butter for the purpose of supplementing the output of those factories whose supply is inadequate during the winter months to cope with local requirements. The relief thus afforded those factories, particularly in the South Island, has been invaluable. The requirements of such factories must necessarily be assessed from information supplied by the factories concerned, and, whilst the correctness of these estimates is subject to many factors beyond the control of either the Division or the manufacturers, the information obtained has enabled us to compile statistical records which should prove extremely useful in future seasons in determining close estimates of actual requirements without any fear of there being insufficient good-quality butter for the local trade throughout the whole year. The problem of deterioration of quality associated with the storage of butter for long periods has also been the subject of careful investigation by the Dairy-produce Section. Valuable experience gained in this connection has been of considerable assistance in providing the public with the best possible butter, at the same time ensuring that storage, transport, and other costs are reduced to a minimum. As the price realized for butter sold on the English market throughout the year may vary considerably from the parity of the guaranteed price, attention has been given to sales of butter for ships' stores to overseas vessels where shipping companies are in a position to purchase their requirements of New Zealand or other butter overseas. Sales to certain of the Pacific islands, where competition is met from Australian produce, have also been encouraged. In order to overcome the difficulties created in this connection and to ensure that these outlets are retained as far as possible for New Zealand, the Division, in co-operation with the Dairy Export Division of the Department, has initiated a procedure whereby authority is granted to those distributors normally supplying this trade to quote a special price based on the New Zealand equivalent of the current London market price at the time oi sale. The Department fixes the prices from week to week after consideration has been given to London cables and also to the prices quoted from competitive sources. The difference between the regulated wholesale price and the special rate for these transactions as fixed from time to time by the Division is adjusted through the Butter Equalization Account to distributors authorized under this procedure. A glance at the Butter Equalization Account for the twelve months ended 31st March, 1939, shows that a credit balance of £48,412 at the beginning of the year was changed to a debit balance of £54,420 at the end of the year. This reversal is explained by the fact that the Equalization Account has been debited with the amount of £110,741 representing the retrospective increase in the guaranteed price of 0-41 d. per pound and 0-21 d. per pound on butter and cheese respectively manufactured from milk or cream received at the factory stage between the Ist August, 1937, and 31st July, 1938, inclusive, and sold on the local market, whereas no differentials were collected on butter prior to November, 1937, and cheese has not as yet been subject to the payment of differential. A further factor contributing to the debit balance for the year ending 31st March, 1939, was the amount of £G9,012 paid to factories from the Equalization Account during the period 1 st August, 1938, to 30th November, 1938, representing the difference between the regulated local price and export parity, which was not. adjusted until the Ist December. The Division was awari that considerable quantities or butter had been placed in cool store for sale on the local market during the period just prior to the rise in the guaranteed price. It was considered desirable that speculative advantages which might arise through the increase in the regulated local price should be minimized as tar as possible, and the rise was accordingly delayed in order to give the Division an opportunity to ascertain the quantities so held and to ensura that they went into consumption at a price commensurate with the price at which they were actually purchased. It is anticipated that the Equalization Account will be in credit by the end of June, 1939, and that there should be a surplus by the end of the actual dairying season.

Table showing Increase in Local Market Turnover since the inception of the Butter Marketing Regulations 1937.

CHEESE. The Division has been collecting data with a view to introducing more orderly m;thods into the local marketing of cheese, and it is hoped to introduce a procedure in this connection before the 1939-40 season is concluded. It is telt, however, that the difficulties involved and the comparatively small proportion of local to export sales of cheese makes this question not so pressing in comparison with other aspects of the Division's activities.

1937 - 38. 1038 - 39. Month. n „ n , 0 ~~ Second Increase. Secona Grade Grade (in(included in Creamery. Whey. Total. eluded in Creamery. Whey. Total. Total? Creamery 10Ial) - Total). November 360,372 4,490,211 169,354 4,665,565 139,483 4,951,179 145,011 5,096,190 430,625 December .. 380,339 4,868,468 186,288 5,054,756 110,740 4,927,093 172,556 5,099,649 44,893 January .. 238,768* 4,514,266 163,082 4,677,348 86,336 4,675,399 144,901 4,820,300 142,952 February .. 217,219* 4,568,584 140,886 4,709,470 87,449 4.709,037 131,804 4,840,841 131,371 March .. 218,324* 5,289,984 162,170 5,452,154 93,153 5,408,540 158,589 5,567,129 114,975 1,415,022 23,737,513 821,780 24,559,293 517,161 24,671,248 752,861 25,424,109 864,816 * Second-grade price raised to within £d. of the first-grade creamery, 13th December, 1937; no statistics available prior to November, 1937.

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The Dairy-prod uce Section wishes to express its appreciation of the assistance and co-operation afforded by the Dairy Export Division of the Marketing Department, the Dairy Division of the Department of Agriculture, as well as by cool-storage proprietors and by dairy factories generally. HONEY. The 1939 honey season proved again the well-established fact that honey-production is subject to more severe vagaries thaii any other primary producing industry. A very short season in 1937 was offset by a particularly good one the following year, but owing to climatic conditions the 1939 season has been disastrous for some important producing areas. Reports of " nil " crops from many districts were unfortunately too common. A spell of good weather almost at the end of the season, however, saved the situation for some beekeepers who were fortunate enough to accumulate sufficient stocks to carry them through the winter. Producers in certain areas in New Zealand, more particularly in the South Island, have not been so fortunate, however, and in many cases insufficient honey has been produced to accommodate the hives through winter and spring feeding. The acute and serious position thus created called for immediate action, and accordingly the Government, through the Division, made complete arrangements for advances to producers throughout New Zealand for the purpose of buying sugar to supplement their honey stocks. Quito a number of producers have availed themselves of this assistance, which was made available to individual producers with a minimum of delay. Expressions of appreciation have been received by the Division for the prompt and efficient manner in which the position lias been handled. Apart from providing immediate relief to beekeepers, the policy of the Government in providing a central and capable organization to handle honey as a means of stabilizing conditions from year to year in order to cope with the vagaries of yearly production has been completely justified. In 1937 the lack of such a safety measure did New Zealand producers incalculable harm through their inability to maintain a continuous supply to the English market, and as a result the excellent goodwill created i'or New Zealand's " Imperial Bee " brand was considerably impaired. Strenuous efforts are being made by the Division to recover the leeway lost, and with the organization and equipment available at this end the Division has no fear of being unable to recapture the trade so unfortunately lost. The blending of all honey for the English market before it leaves New Zealand is an innovation which is being tried this season. Under this scheme, repacking from the blended bulk into bottles or jars is the only extra handling required of the Division's English agents, and the blending and grading of all honey for sale in England will then be under the supervision and control of our experts in New Zealand. This new development has, of course, necessitated additions to the plant and equipment at the Auckland Honey Depot, and when this plant has been completed and finally installed in the up-to-date premises to be built for the Division a service excelled by none in the world will be available to New Zealand beekeepers. On the 11th November the Honey Board (Transfer of Powers) Order 1938 vested the powers of the Honey Export Control Board in the Minister of Marketing, thus transferring to the Division the authority for handling overseas sales, the proceeds of which could be pooled with the returns from the local market. At the same time the Honey Marketing Regulations 1938 were brought down to give effect to the wish of the industry that some form of stabilized marketing should be introduced. The lack of an equalization scheme in the past has been one of the root causes of failure of voluntary efforts, but this difficulty was overcome with the advent of the regulations mentioned above. Briefly stated, the regulations require a marketing seal on the basis of £d. per pound to be placed on all honey sold by way of wholesale or retail save in the case of sales made direct to consumers from a beekeeper's premises and honey in the comb, which are exempted. The honey seals are available from the Division's office in Auckland and Wellington, and in response to requests from South Island beekeepers arrangements have now been made for seals to be available at the offices of the Department of Agriculture in Christchurch and Dunedin. Experience, both of beekeepers and the packing department of the Division, has proved that the adhesive seal is far from satisfactory when applied to wax cartons. The seals frequently come off before the honey reaches its destination, causing inconvenience to resellers. To avoid this the Division has arranged to have the seals printed on the waxed cartons of 1 lb. and \ lb. capacity, in which the greater proportion of packed honey is sold. This desirable improvement has been made by the Government's policy of import selection whereby all waxed cartons for honey are manufactured under license in New Zealand, the printing of the seal being incorporated with the process of manufacturing the cartons. The new system is already proving a boon to beekeepers and repackers, and appreciation of the Division's action has been expressed in many quarters. Adhesive seals are still available in all denominations for those who still have supplies of unsealed cartons on hand. Already a very desirable degree of price stabilization has been effected by the operation of the regulations, and has assisted the Division to proceed with confidence with a national honey-marketing scheme. The last annual report of the Division advised that a second payment of fd. per pound for the 1938 season pool, in addition to the original advance of 4|d. per pound fro rata, would be supplemented by a final payment of a substantial amount. Final overseas figures now to hand justified our earlier assessment, and payment has been made of a sum sufficient to make the total payment on both local and overseas sales 6d. per pound fro rata, a very satisfactory figure in view of the heavy crop in

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1938. Financial details of the operations of the local and overseas pool will be found in the statements of account published at the end of this report. It is advisable to mention at this point that if producers exercised more care in packing and straining their honey a higher pro rata return would be received by suppliers. It is perhaps pertinent at this stage of the report to express the Division's appreciation of the large measure of co-operation afforded by the beekeeping industry as a whole. Beekeepers have obviously realized that the Division has their interests at heart, and have responded to all suggestions and requests for necessary information in a very helpful manner. The assistance of the Department of Agriculture has always been appreciated by the industry, and has again this season proved of immense value both to beekeepers and to the Division in the smooth working and improvement of qualities in honey. The Division records with pleasure the part played in this way by Mr. E. A. Earp, former Chief Apiary Instructor, whose retirement took place last March. In terms of the Honey Export Control Act, 1924, Mr. L. F. Robins, the South Island producers' representative, was due to retire from the Control Board at the end of 1938. Mr. Robins again offered his services to the industry, and, no other nomination being received, he was re-elected unopposed for a further term of two years. It is pleasing to note the unanimity and satisfaction of the industry with the activities of the Control Board. One of the first steps taken by the Division after assuming the functions of the Board was to liquidate the debt to the Unemployment Board, covering advances made to the Board in 1933 in connection with the purchase of the goodwill and certain trade-marks on the overseas market. These advances have now been fully repaid. Requests were received by the Division for permission to import quantities of beeswax into New Zealand on account of the commodity being difficult to procure in New Zealand. The Division took prompt steps to ascertain the position of immediate and anticipated stocks to enable the Government to determine to what extent licenses should be issued. Supplies of beeswax have been made available to manufacturers, who must be assured of supplies, but the Division will continue to exercise a watching brief on the position in order to protect New Zealand beekeepers from unnecessary imported competition. Opportunity was taken during the visit to New Zealand of the Assistant Manager of the Dairy Sales Division of the New Zealand Government in London, which Division is supervising United Kingdom sales, to fully discuss the position of present and future marketing in England, with a view to increasing sales. The unfortunate position previously referred to under which " Imperial Bee " brand New Zealand honey was removed altogether from the market has been very capably handled, and goodwill so endangered is being satisfactorily regained. Of the 1,218 tons of honey received by the Auckland Depot, 801 tons were shipped overseas, which again emphasizes the essential value of an export market in order to maintain reasonable sellingconditions in New Zealand. The Dominion is second only to Canada in the quantity of honey shipped to the United Kingdom, and continues to be second to none in quality and popularity with the British market. With the anticipated increase in production due to reliable marketing-conditions, it is essential that the overseas sales coverage be increased, and the Division is well seized of this need. In June the annual conference of the National Beekeepers' Association was held in Hastings, when the Division was represented by the Director and officers of the Honey Section. Appreciative references to the Division's work were made, and at the same time suggestions were offered and received for the improvement of conditions in the industry and for the more effective working of the Government's scheme of orderly marketing. EGGS AND EGG-PULP. In 1938 the Division again rendered valuable assistance to the poultry industry, firstly by assuming full responsibility for the export of eggs from New Zealand, and secondly by supervising the prices and period of manufacture of egg-pulp. The egg-market will always present serious problems between the months of August-January on account of the natural increase of production, which far exceeds the consumable demand during that period. There is no way of avoiding this sudden and natural flush of production, but it is possible to relieve the position very materially, thus enabling the price received to be maintained at economic levels. This can be achieved by disposing of, or storing, the surplus, which is one of the functions of the Division. Fortunately, the geographical position of New Zealand, situated as it is in the Southern Hemisphere, places us at an advantage in supplying the English market, because the lowest point of production and supply in Great Britaiu coincides with the period when export is essential to balance our own market. The export of eggs is hardly satisfactory, however, when looked at purely from a profit-and-loss viewpoint, because many factors both internal and external mitigate against consignments being marketed in England on a profitable basis. To the New Zealand industry as a whole the economic value of such consignments, whether sold at a profit or a loss, is sufficient justification for the continuation of export during years when the surplus is of any magnitude. In 1938 the Division gave a guarantee of Is. 2|-d. per dozen in grading-store for all eggs of exportable quality, which price had the desired effect of maintaining a satisfactory return to the producer in New Zealand.

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Difficulty was experienced last season in procuring sufficient supplies for early export from the South Island, and this was later accentuated by a shortage of labour which retarded packing for the early space bookings. Arduous work and co-operation on the part of the Egg Export Committees in the various exporting centres overcame this difficulty, and finally a total of 7,812 crates, each of thirty dozen, was shipped by the Division in 1938. The following table shows the detailed exports : — Auckland .. .. .. .. 1,053 crates 31,590 dozen. Christchurch .. .. .. .. 3,447 „ 103,410 „ Dunedin .. .. .. .. 3,312 ~ 99,360 ~ 7,812 234,360 No export was made from Wellington, but considerable quantities of surplus eggs were shipped to Wellington for disposal. Always a problem, suitable shipping space again proved difficult to procure, and in spite of every endeavour made by the Export Division of the Marketing Department on our behalf no suitable ship could be located for a further shipment at the end of the season. The fact of the Marketing Department now shipping all butter, cheese, eggs, and honey to England has, however, made the shipping-space problem considerably easier than in the past years. Market values in England were comparatively lower than in the previous season, due in the main to international conditions, but also in no small part to the milder weather conditions experienced in the Northern Hemisphere resulting in Home and European production being largely increased. The other main factors in the relief of the market —the manufacture of egg-pulp and the storage of eggs for winter use —frequently competed with instead of co-operated with export, but during the last two seasons the Division has so arranged these activities that there has been more continuous relief and over a longer period than formerly. Marketing Reuulations. The poultry industry has for many years approached successive Governments for some form of market regulation, and the Division has put in a great amount of investigational work into the needs of the industry, in addition to which many discussions have taken place with representatives of the poultrykeepers. As yet, however, no regulations have been brought down in respect to this industry. EXPORT OF POTATOES : DISPOSAL OF 1938 CROP. The decision to export potatoes to South America in 1938 was based on the following circumstances: — (1) It was clear that the 1938 New Zealand crop was going to be considerably in excess of local market requirements : (2) The Australian market was closed : (3) Low prices to growers had set in—potatoes being quoted as low as £1 10s. per ton on trucks : (4) Growers had approached the Government requesting assistance in the marketing of the surplus with a view to obtaining prices that would at least cover their costs of production : (5) The Argentine, which had taken 20,805 tons of New Zealand potatoes in 1937, was the only export market that offered any prospect of absorbing a sufficient quantity, although there seemed little likelihood of the market proving a favourable one in 1938 : (6) The only possible solution of the growers' problem was for the Government to purchase a quantity of potatoes for shipment to South America and accept responsibility for any loss thereby incurred. Prior to the decision to export to the Argentine, Mr. L. L. Burke, of J. and H. Goodwin, Spitalfields, London, was communicated with by cable to ascertain the feeling of world markets generally. The information received indicated that the prospect of a profitable export market being found was uncertain, but in cables received from Messrs. Jose Peluffo, of Buenos Aires, it was suggested that if exports were confined to good quality, and did not exceed two or three shipments, there was a possibility of recovering certain of our production costs. Arrangements were therefore made early in July by the Division with Messrs. Pyne, Gould, Guinness, Ltd., of Christchurch, who were the agents for Messrs. Jose Peluffo, for the purchase of a quantity of potatoes and their sale on consignment to the latter at Buenos Aires. Messrs. Pyne, Gould, Guinness, Ltd., were to arrange the necessary finance and handle the shipment on a commission basis —the Government, through the Division, to be responsible for any profit or loss. The agreement further stipulated that the purchase price was to be £3 per ton on trucks, sacks in, country stations, and that the buying was to be restricted in parcels with a view to spreading the benefit over a suitable number of farmer sellers. Cables from Messrs. Jose Peluffo stressed the importance of prompt shipment, but after extensive inquiries it was found that the earliest boat available was the - " Port Alma," leaving New Zealand about 25th August and offering only a limited amount of space. There was reason to believe, however, that shipment by the " Port Alma," which would arrive at Montevideo about 15th September, would be quite safe since the previous year the first boat had arrived on 30th August and was followed by five others —the last not leaving New Zealand till 21st October.

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At the beginning of August Pyne, Gould, Guinness, Ltd., advised the Division that potatoes were very slow in coming forward, due firstly to the bad weather conditions, and secondly to the fact that the growers had been advised not to sell below £3 10s., sacks extra. A fortnight later in a further communication, Pyne, Gould, Guinness again emphasized the slowness of potatoes in coming forward. In all, they had obtained 751 tons, but fully 50 per cent, of these potatoes were in the country or in transit to stores. Moreover, 50 per cent, of those received had been rejected for export. Nevertheless, when the " Port Alma " left in the first week in September she had 563 tons on board. According to advice from Messrs. Pyne, Gould, Guinness, who supervised their loading, there was every reason to believe that the potatoes, which were of excellent quality, would arrive in first-class condition. As it was not possible to export white potatoes, the " Port Alma " shipment, consisted of Dakota Reds, the export of which facilitated the disposal of the heavy supply of whites at reasonable prices on the local market. This first shipment, though not in itself sufficient to clear the market, nevertheless had a temporary hardening effect upon the price, as a result of which returns more closely approximating costs of production were obtained by South Island growers. In making investigations for added freight, the Division communicated direct with the Shipowners' Allotment Committee, but was advised that no boat could be made available prior to the end of October or early November. As this would be too late to catch the Argentine market according to Jose Peluffo's advice, negotiations were promptly entered into with Messrs Gollin and Co., as agents for Norddeutscher Lloyd of Bremen, who were able to offer space for a shipment not to exceed 3,000 tons per the s.s. " Dessau." The " Dessau," then on its way to New Zealand was to be accelerated in its unloading here, proceed to Australia, and return for the shipment of potatoes, in anticipation of loading on or about 15th October. Advice received about this time from the Argentine emphasized the desirability of a September shipment, and further efforts were therefore made to secure an earlier boat. The knowledge that space on the " Dessau " had been secured apparently stimulated the Shipowners' Allotment Committee to arrange freight, with the result that, shortly after the contract with the agents for the " Dessau " had been completed, we were advised that the " Port Melbourne " could be withdrawn from an Australian charter and made available for potatoes to South America provided a minimum freight of 3,000 tons was guaranteed -loading in New Zealand to commence prior to 20th September. Coincidentally with this information, advice was received from the Argentine stressing the advisability of cancelling all shipments after the end of September as it was problematical whether a sale would be found for subsequent shipments, since exceptionally warm weather pointed to an early domestic crop. In view of this advice, plus the fact that a late September delivery by the " Port Melbourne " could now be obtained, arrangements were entered into for the cancellation of the " Dessau " booking, for which a cash payment of £910 16s. had to be made. At the time the " Port Melbourne " was due to load, Messrs. Jose Peluffo cabled they were having some difficulty in the disposal of the " Port Alma's" cargo, and recommended that we should consider the advisability of cancelling all further shipments. Since, however, all contracts in connection with the " Port Melbourne " had been completed and the goods were at this time alongside, cancellation of this shipment would have involved heavy loss, and there seemed, therefore, no possible alternative to proceeding with the shipment in the normal manner. Loading was completed by 30th September, when 3,235 tons of potatoes had been placed on board. There was no reason to believe from the information and cabled reports received up to this time that the sale of these potatoes in the Argentine would be as unprofitable as ultimately turned out to be the case. That the time factor was particularly important was fully appreciated from the beginning, and every endeavour was consequently made by the Division to arrange for shipment at the earliest possible date. The people in the Argentine had likewise stressed the necessity of the potatoes arriving in first-class condition, and every precaution was therefore taken in conjunction with the Department of Agriculture and the shipping company to ensure strict grading and satisfactory stowage on board ship. As well as the export to South America we were able to forward two small experimental shipments to Singapore, and the surplus stocks left after all export had been completed were disposed of within New Zealand. In these miscellaneous transactions an amount of £326 above costs was recovered. The major loss occurred in the sale of the " Port Melbourne " shipment. Prior to the first shipment's arrival in the Argentine interested parties at that end evidently got to work and endeavoured to put every obstacle in the way of the importation of the potatoes to the point where it became necessary for us to solicit the good offices of the British Embassy to negotiate on our behalf and ensure that everything possible was done to protect the interests of the New Zealand Government. At one stage there was every prospect that importation of the "Port Melbourne" shipment would be prohibited, although an assurance had previously been given through Messrs. Jose Peluffo that these potatoes would be admitted. Again, when the potatoes were landed, every obstacle was put in the way of their sale, by complaints as to quality. Practically the whole shipment had to be rehandled and rebagged, despite the scrupulous attention that had been given to the question of grading prior to their export from New Zealand. Efforts were made to have part of the " Port Melbourne " shipment diverted to the Uruguayan market, but permission to land the potatoes at Montevideo could not be obtained on account of Uruguay's rigid exchange control and the strict reciprocal basis on which her trade is conducted. As a result of this export taking place, however, and the fact that the new season's crop was late in coming forward, the South Island growers were able to dispose of practically the whole of the 1938 crop at payable prices. Had export not taken place there is no question but that sales on the local market could not have been made at any price approximating production costs.

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When the account sales for the two shipments arrived and all the entries had been put through it was found that the loss amounted to £37,670. The transactions in detail are as follows : — £ Loss on " Port Alma" .. .. .. .. .. .. 5,138 Cancellation on " Dessau" freight .. .. .. .. .. 911 Loss on " Port Melbourne " .. .. .. .. .. 31,943 Sundry Charges . . . . .. . . .. .. .. 4 37,996 Net profit on miscellaneous sales .. .. .. .. .. 326 Total loss .. .. .. .. .. .. £37,670 It should be added that no effort was spared to explore the possibilities of exporting potatoes to Australia during 1938, but the most that could be secured was permission to supply ships stores through bond. An officer of the Internal Marketing Division visited Australia and there were negotiations by correspondence, cables between the Prime Minister of New Zealand and the Prime Minister of Australia, and telephonic conversation between the New Zealand Minister of Marketing and the Commonwealth Ministry. The New Zealand Trade and Tourist Commissioner at Sydney also kept in constant touch with the position. MAIZE. The production of maize in the Dominion had assumed such proportions in 1937 that no importations were necessary to supplement the local supplies. This was a most encouraging achievement, particularly in view of the fact that the Division had negotiated with the merchants and the growers at the commencement of the season with a view to stabilizing prices. Under this arrangement it was agreed that the minimum price for maize for the season should be not less than ss. 3d. per bushel f.o.b. Gisborne, the understanding being that, if the merchants were unwilling to operate, the Division would be prepared to buy all the maize offered at that price. The Division was not, however, called upon to make any purchases, owing to the fact that the merchants bought freely. The success of the scheme was so pronounced that growers suggested that the Division take similar steps the following year as a means of stabilizing selling-conditions and of encouraging the planting of an increased acreage. In the case of the 1938-39 season, the minimum price was determined at ss. per bushel f.o.b. Gisborne for the early part of the crop. Unfortunately the season proved unfavourable and the crop figures fell considerably below the previous year's (269,024 bushels in 1938-39, as against 295,576 bushels in 1937-38). The Division was therefore faced with the prospect of a shortage of supplies of maize towards the latter end of the season, and accordingly consideration had to be given to importation to meet the needs of local consumers. In the past, the importation of maize has been the function of the merchants, protection being afforded the local growers by means of a tariff of Is. 6d. to 2s. per cental according to the country of origin. Whilst admirable in many respects, the system of allowing unrestricted importation had many dangers and some regulation of imports was obviously desirable. It was therefore decided that the importation of maize should become the responsibility of the Division, thus ensuring that the New Zealand market would be reserved for locally produced maize and that only in the event of insufficient local supplies would maize be brought in from overseas. Under this plan the Division became the sole Dominion importer of maize, and because of the short crop last season made arrangements to import supplies from Java to meet the deficiency. The first shipment arrived in New Zealand on 16th March, 1939, by which time the local crop was entirely exhausted. It is interesting to note that the distribution, of this imported maize has been made through the usual trade channels, so that no dislocation of distribution occurs. Each shipment is arranged according to the requirements of the merchants, who purchase the maize from the Division on an "ex wharf " basis. At the same time, facilities have been provided whereby consumers can buy ten-sack lots at an "ex wharf " price. In initiating this scheme the Government has provided an excellent service to producer and consumer alike, and the co-operation rendered by the trading interests has been much appreciated. BARLEY. The production of barley in New Zealand is practically confined to malting qualities for brewers' use, any rejected by the latter on the grounds of inferior quality being used for stock-food purposes. The supply of barley of this latter quality is, as a rule, however, very limited indeed and is produced in the South Island, where practically all of it is consumed. In the North Island, however, where barley is required in considerable quantities for pig and poultry raising, no local supplies are available, hence it becomes necessary each year to import supplies from abroad for these purposes. The function of importing barley, formerly carried out by merchants and others, was transferred at the beginning of 1939 to the Division, which is now the sole importer of feed barley for stock-food purposes. Under this scheme the Division purchases the barley in South Australia and arranges for shipment to Now Zealand, distribution being made through recognized trade channels, and at present confined to members of the North Island Grain, Seed, and Produce Merchants' Federation. Sales are made to such distributors at a fixed "ex wharf " price, such sales being determined by the Division. As a protection to consumers, arrangements have been made by which barley may be purchased " ex wharf " at fixed prices provided not less than ten sacks are purchased at a time.

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ONIONS. At the request of the Onion Advisory Committee, the Division has now assumed the responsibility for the importation of onions. Although the actual importation will be handled by the Division, the Committee will continue to advise as to the quantities of imported onions necessary to fulfil the requirements of the Dominion after the local crop has been exhausted and also as to how such importations should be distributed between the various points of consumption. Such arrangements could only be made by keeping a very close watch on the position of stocks and supplies coming forward from local growers, and this is achieved by means of returns obtained by the Committee from growers throughout the country at regular intervals during the season. As yet, however, the Division has not made any purchases of onions. HOPS. The Fruit Marketing Committee, appointed by the Government in 1936 to investigate the fruit and vegetable industries, gave very full attention to the conditions relating to the hopgrowing industry, and in their report stressed the need for improved marketing-conditions, either through an Advisory Committee or by means of Government control. It was not until ] 938, however, that any serious attempt was made to assist the hopgrowers. In that year, representatives of the industry approached the Government for a scheme of organized marketing. The Division therefore made a very complete investigation into the whole matter, and its officers attended meetings of producers called for the purpose of determining the wish of the industry and the most satisfactory method of ensuring improved marketing-conditions. The result of these meetings and investigations was the introduction of the Hop Marketing Regulations 1939, which were made pursuant to the Agricultural (Emergency Powers) Act, 1934, and the Primary Products Marketing Act, 1936, in which provision was made for the establishment of a Hop Marketing Committee consisting of five producers' representatives and one Government nominee. The growers' representatives arc appointed after an annual election held in accordance with the regulations. The members of the first Hop Marketing Committee were appointed to hold office until the 30th September, 1939, at which date a poll will be taken for the election of producer representatives for the ensuing season. The members of the first Committee were Messrs. H. C. Beuke, C. J. Boyes, K. J. Holyoake, S. O'Hara, and B. T. Rowling, and Mr. J. E. Thomas representing the Division as Government nominee. The functions of the Committee are to regulate and control the marketing of all New-Zealand-grown hops. All policy matters of the Hop Marketing Committee are subject to the approval of the Minister of Marketing, and the Division has the responsibility of seeing that the Committee carries out its functions in a sound and reasonable manner. The past season has been a very poor one as far as the quantity of hops produced is concerned. In fact, production was so reduced as to make it necessary to import from overseas to meet the normal requirements of brewers. Import licenses were issued on the recommendation of the Division to brewers who found it necessary to supplement their local purchase. The control thus exercised by the Division assures growers that no overiinportation will be permitted which might have a deleterious effect on future prices. The prices agreed upon for first-grade hops for the 1939 season are Is. lOd. per pound for brewing-quality and Is. 9d. per pound for packet hops. The regulations have not been in operation long enough to fully estimate their benefits, but it is obvious that the principle of controlled and orderly marketing of hops can only react to the benefit of the industry as a whole. BOBBY CALF POOL OPERATIONS. Before the commencement of the 1938 bobby calf marketing season the Government introduced, as a result of widespread agitation on the part of farmers throughout the Dominion, the Bobby Calf Marketing Regulations, which afforded protection to defined areas where farmers were anxious to rationalize the collection and marketing of their calves. The Division was charged with the responsibility of putting these regulations into practical effect and of supervising the general activities of the pools which were subsequently formed. This measure proved an immediate success, fifty-eight pools being formed in the first season, and through the agency of producer Committees set up in each area over 350,000 calves were successfully marketed, with substantial savings to the producer and material improvement in the treatment afforded to these small animals. The following is a brief summary of the results obtained by the utilization of the pool principle as against the previous system of open tender : —

Average Per- Avern „ c Average f ? en , ta 8 e °j Cartage Coat Pa y ment to Condemned 1f farmer Calves. per Calf. per Ca}f Per Cent. s. d. s. d. Pool areas .. .. .. .. 1*98 011-9 72 Non-pool areas .. .. .. 5-0 15-5 6 5

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At the completion of the 1938 season the Division undertook a complete survey of the whole position, and communicated with every Pool Committee for the purpose of receiving suggestions and recommendations for the further improvement of the bobby calf trade. As a result of these investigations the existing regulations were amended to provide machinery of self-government which would enable each Pool Committee, elected entirely by the producers eoneemed, to carry out the efficient collection and marketing of calves with full legal protection, and at the same time giving them a free hand to make whatever arrangements they felt were necessary in the best interests of the farmers they represented. A large number of pools adopted the system of selling their calves by open tender, and by this method all the leading exporters were invited at regular intervals to» tender a prioe for the number of calves available at that time. This method has proved highly successful, and the results have been received with widespread satisfaction on the part of the dairy-farming community. A considerable number of pools also adopted the policy of marketing their calves on a consignment basis through the Pig Marketing Association, and in this instance, also, very gratifying results were obtained. Although the 1939 season has hardly begun, further applications for additional pool areas have already been received, and there is no doubt that the coming season will see even a greater number of calves marketed under the pool principle. The results are most encouraging not only because each pool area before formation is backed by a 75 per cent, voluntary support, but in addition is securing for farmers increased economic benefits which would otherwise be impossible to obtain. KAURI-GUM. The production of kauri-gum is a unique industry and one of the oldest in New Zealand. For many years the gum has found ready market in England and America for the manufacture of special varnishes and linoleums. In latter years, however, and particularly since the war, synthetic gums have gradually displaced kauri-gum, mainly on account of their being cheaper and because of the continuity of supply of synthetic gums being assured. The types of New Zealand gum vary considerably, and thus value is largely determined by the overseas demand for a particular type at a particular time. This has had the effect of banking up stocks in New Zealand of those types which have not had a ready market and, taken over all, has slowed up sales to such a point that in recent years growers have experienced increasing difficulties in persuading buyers to remain in the market for all the gum produced. With the overseas market so unreliable, merchant buyers have been unable to quit existing stock quickly, and consequently have been offering lower prices to diggers in order to discourage the forwarding of gum in large quantities. The position became so aggravated in 1937 that the Internal Marketing Division was asked to render assistance to kauri-gum diggers by arranging minimum prices for the various types and qualities of gum in order to facilitate sales. In the event of buyers or merchants failing to purchase at the prices agreed upon,, the Division undertook to find a market for the diggers' gum. It is pleasing to be able to say that buyers have co-operated to the fullest extent and it has therefore not been necessary for the Division to make any purchases. On many occasions, however, the Division has found a market for the diggers when they themselves were unable to make sales at the arranged prices. The whole obj eet of the Division's activities in this connection has obviously been to enable diggers to remain on the fields and continue the production of gum, and the confidence given to the market by the Division's action has made this possible. The Government's action in maintaining open selling channels has been very much appreciated by the kauri-gum diggers. With a view to maintaining production, the Division is also making a survey of the local and overseas markets, with the object of bringing about a continuity of demand and an expansion of sales. In this connection during my recent visit abroad the opportunity was taken of approaching importers of kauri-gum in America and Great Britain, with the object of stimulating the demand for gum. As a result of these negotiations it is pleasing to note that American importers have already reacted favourably, and it is hoped that the stimulus given to the trade will result in a permanent increase in the sales of gum to manufacturers overseas. IMPORTS. Under the imports-selection procedure which was introduced by the Government in December, 1938, the Division, in conjunction with the Customs Department, has been dealing with applications for licenses to import certain food lines such as dried fruits and vegetables, canned fruits and vegetables, fruit-juices and fruit-pulp, hops, &c. The applications are made by prospective importers to the Controller of Customs at the port of entry in the first place, and in turn are referred to the Division for consideration and recommendation. The purpose of adopting this procedure is to ensure that the quantities of foodstuffs imported were minimized, having regard to the necessity for safeguarding and encouraging the development of New Zealand primary and secondary industries. There is no doubt whatever that this method of regulating imports has given confidence and impetus to certain industries. In fact, it is anticipated that the planting of some crops will be extended to the point where manufacturers will be enabled to obtain their full requirements from Dominion sources instead of importing a proportion of raw materials from overseas as has been done frequently in the past to the detriment of the local producer. FRUIT SECTION. This Division became the sole importer of citrus fruits and bananas under a Customs Proclamation dated 11th May, 1938, and the value of controlled importations, together with fixed wholesale prices, is now apparent when compared with previous uncontrolled importations and the resulting serious price fluctuations.

B—H. 30.

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Although at all times our overseas buying must be affected by values in the countries of production and our landed costs must fluctuate from season to season, the Division has been able to so control the wholesale selling-price in New Zealand that its relationship to the landed cost is decidedly more equitable that it was before control was instituted. The marketing of all fruit controlled by the Division has been effected through a panel of distributors comprised of fruit auctioneers and merchants. Prior to control there were eight distribution centres, and these have now been increased to eighteen, this step being amply justified by the marked improvement in service to consumers surrounding the new centres of distribution. Bananas. During the twelve months ended 31st March, 1939, a total of approximately 37,000,000 lb. of bananas was imported from the various island groups, in the following proportions Per Cent. Samoa .. .. .. .. .. .. .. 51•5 Fiji .. .. .. .. .. .. .. 32-7 Rarotonga .. .. .. .. .. .. ..9-1 Niue .. .. .. .. .. .. .. 3-2 Tonga .. .. .. .. .. .. .. 3-5 Total .. .. .. .. .. .. 100-0 The quality was well maintained throughout the greater part of the year, but early in 1939 a severe hurricane drastically curtailed supplies from Fiji, and what little fruit was shipped during the p.naning months did not come up to the usual standard, and it was necessary to make up part of this deficiency by calling on other islands to supply increased quantities. As was to be expected, there was a general slight falling off in quality from these islands also. It is not possible to sell bananas at a flat price throughout any one year, for the reason that the production during the summer months would not satisfy the heavy demand at low prices, whilst during the winter period of low consumption it is necessary to fix prices below landed cost in order to stimulate the demand. It is therefore found necessary to follow somewhat the procedure of the past in relation to prices, and bananas have been sold during the winter months at less than the landed cost, and the resultant loss has been recovered during the summer period. Nevertheless, with the economies effected by rationalized distribution by the Division, previous high summer prices are not necessary, and it is anticipated that the summer demand may exceed the quantity available during these months. During the last period of peak consumption the Division landed two small experimental shipments from Australia, with a view to finding a source of added supply, but unfortunately the fruit did not land in a condition which could be compared with island fruit. Oranges. The first shipment imported by the Division landed early in May, 1938, and during the elevenmonth period ended 31st March, 1939, approximately 85,000,000 oranges were imported. These were drawn from various sources, and in the following proportions : — Per Cent. Australia .. .. .. .. .. .. .. 64-3 Cook Islands .. .. .. .. .. ..21-0 Jamaica .. .. .. .. .. .. ..12-5 California .. .. .. .. .. .. .. 2• 2 Total .. .. .. .. .. .. 100-0 The period under survey was the initial trading year for the Division, and results generally have been most satisfactory, while many of the difficulties experienced during the past year have now been overcome. Plentiful supplies of oranges were at all times available to the public, but difficulty is being experienced in the season through which we are now passing : the total Cook Island production is only about two-thirds of the previous year, and Australian crops were very much below normal. The position has been accentuated further by heavy rain in the Australian irrigation areas and the appearance of an unusual disease in citrus fruits. Grapefruit. To encourage the sale of New-Zealand-grown grapefruit, importations were reduced to a minimum while the local fruit was available. Increased quantities of Australian and Jamaican grapefruit were imported because of their lower landed cost when compared with fruit from other sources, such as California. Particular interest was displayed by the trade in an experimental shipment of Jamaican seeded grapefruit which the Division was able to sell at unusually low prices. Increased quantities of this variety will probably be available during the coming season. Lemons. During the previous years, various brokers throughout New Zealand had imported fairly large quantities of Californian lemons, which had adversely affected the sales of New-Zealand-grown citrus, but this year the control of imports exercised by the Division ensured a reasonable market for New Zealand fruit. After repeated requests by representatives of the great majority of commercial lemon-growers in the three main production areas, the Government decided that the Division should assume control of all New-Zealand-grown lemons, and a scheme was instituted to take effect from the Ist May, 1939.

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TRADING. BRANCH: THORNDON. The trading sections of the Division continue to give a very satisfactory service to the trade in the centres where they are established, and the Thorndon Branch is steadily increasing its turnover. The main primary products serviced by the Division are butter, cheese, eggs, honey, fresh pork, bacon, and milk powder. The butter-patting plant established last year has been functioning very efficiently and has provided Wellington City with adequate supplies of butter, packed and distributed under hygienic conditions and by most modem machinery. The addition of an up-to-date cool room for holding butter both prior to and after patting has given the Branch the means of maintaining the butter at a uniform temperature, which is an essential feature in successful local marketing. The cool room will also be a distinct advantage during the warm weather in ensuring to the public a firm fresh pat. The generally improved methods of local marketing have increased the consumption of butter throughout New Zealand, and this is also reflected in the trading figures of the Thorndon Branch. The obvious advantages of a central hygienic patting plant have been universally acknowledged, and the manufacturers supplying the Wellington City market are fully appreciative of the facilities provided. A feature of the Branch's activities has been its ability to handle the large increase in egg-supplies, which are received from all over the lower half of the North Island and from as far south as Oamaru. The Division is thus providing a very necessary and satisfactory service for poultry-keepers, and is able to exercise a stabilizing effect on the local egg-market. During the flush season a quantity of eggs were diverted from the local market to pulping and preserving, which, with the export from other centres, held the Dominion market at an economic price level. As the egg-grading machines in use by the Division were unable to cope satisfactorily with the large increase in supplies, an up-to-date electric automatic grader was purchased. This grader has proved to be completely satisfactory, and an order has been placed for a further machine, thus making full provision for the handling of additional quantities which will be received from time to time. Such lines as cheese, bacon, and pork products have maintained a steady sale. Sales of honey continue to prove very satisfactory, and the standardization of quality now made possible by the Division's central blending and packing depot in Auckland has tended to establish a regular consumer demand for a reliable article. It is pleasing to note a very appreciable increase in the sales figures for skim-milk powder, and bakers are realizing more and more the value of dried milk in improving bread texture and keepingquality It has been the constant aim of the Branch to maintain a high standard of service, and this has been successfully accomplished. Daily contacts are made with retail trade units, and a highly efficient selling and delivery service has enabled the Branch not only to maintain, but also to increase, its clientele. Trading has been carried on on a sound basis throughout the year, and a satisfactory excess of revenue over expenditure is shown. AUCKLAND BRANCH. The great importance of Auckland as a marketing centre for approximately one-third of New Zealand's population made it imperative for the Division to extend its influence into that city, and in February, 1938, the Auckland Section was established for the purpose of providing honey blending and packing facilities for beekeepers, and butter-patting facilities for the Auckland City. Vast improvements have already been made in handling both butter and honey, but it will not be until the Division's new building is completed that the entirely satisfactory position will exist where all the activities of the Division can be carried on in the one location. This building, when completed, will embody the most up-to-date appliances and machinery for processing and packing butter, honey, and lemons, and will also provide storage space for other products handled by the Division. The building will, in fact, be a model of modern food packing and processing development and one of which the Dominion may well be proud. Situated at the corner of Nelson and Fanshawe Streets, the Division's premises will be in the centre of marketing activities, close to wharves and railroad, and in every way convenient to the trade in Auckland. Auckland being the centre of the lemon-producing areas (Kerikeri, Auckland, Tauranga) the responsibility for the running of the lemon grading and packing sheds is mainly with this Branch. These sheds are running very well, and the problem of shed costs and efficiency is receiving the constant attention of the Department's officers. Honey blending and packing continues to occupy a prominent place in the Auckland Section's activities, and, as previously mentioned in this report, the task of blending all honey for overseas is now performed in the Honey Depot at Auckland. The completion of the new building will enable the Division to install even more efficient blending and packing machinery which will compare favourably with any plant in the world and will enable New Zealand to maintain and increase its splendid honey reputation overseas. Besides butter-packing and honey and lemon processing, the Auckland Section pays a great deal of attention to fruit shipments and distribution, including retail inspections, storage and distributing of grain and produce, formation of bobby calf pools, butter marketing in North Auckland and Waikato, and many other functions associated with the orderly marketing of primary products. Minister of Marketing.

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MARKETING DEPARTMENT. INTERNAL MARKETING DIVISION. Trading Account for the Year ended 31st March, 1939.

Profit and Loss Appropriation Account.

Head Thorndon Auckland I Tnt«l 'I Head 1 Thorndon Auckland r Frtfol Office. Branch. Branch. " Office. Branch ! Branch. ' : ! II i ! Dr. £ £ £ £ j Cr. £ £ £ £ Gross profit transferred to Profit and Loss Account.. 2,562 29,543 8,771 40,876 Gross profits and commissions on trading .. 2,562 29,543 8,771 40,876 2,562 29,543 8,771 40,876 2,562 29,543 8,771 40,876 Profit and Loss Account for the Yeak ended 31st March, 1939. Head Thorndon Auckland Tntjil Head Thorndon Auckland Tnta , Office. Branch. Branch. Office. Branch. Branch. ' Dr. £ £ £ £ Cr. £ £ £ £ Salaries, wages, and overtime .. .. .. 9,898 13,890 2,261 26,049 | Gross profits transferred from Trading Accounts.. 2,562 29,543 8,771 40,876 Audit fees .. .. .. .. .. 315 250 60 625 Net rents and sundry recoveries .. .. 1 211 9 221 Advertising .. .. .. .. .. 857 .. .. 857 Cost of administration of honey pools .. .. .. .. 3,895 3,895 Depreciation .. .. .. .. .. 38 2,194 195 2,427 Cost of administration of Butter Equalization 8,500 .. .. 8,500 Furniture, fittings, and other equipment .. .. 27 .. 55 82 Account General expenses and repairs .. . . .. 200 634 79 913 Interest and exchange .. .. .. .. 2,535 1,345 971 4,851 Insurance .. .. .. .. .. .. 234 216 450 Light, heat, and power .. .. .. .. 10 241 7 258 Postages, telegrams, and telephone services .. 1,792 412 311 2,515 Printing and stationery .. .. .. .. 420 360 134 914 Rent and rates.. .. .. .. .. 444 119 830 1,393 Travelling and motor expenses .. .. .. 2,550 2,404 334 5,288 Bad debts .. .. .. .. .. .. 435 .. 435 Superannuation subsidy.. .. .. .. .. .. 4 4 Net profit to Appropriation Account .. .. 8,023* 7,236 7,218 6,431 11,063 29,754 12,675 53,492 11,063 29,754 12,675 53,492 * Denotes debit balance.

Head Thorndon Auckland T , t . ' Head Thorndon Auckland Office. Branch. Branch. Office. Branch. Branch. total. Dr. £ £ £ £ Cr. £ £ £ £ Egg Export Account — Balance from period ended 31st March, 1938 .. 2,212* 6,804 131 4,723 Balance for year ended 31st March, 1938 .. 468 .. .. 468 Net profit from Profit and Loss Account .. 8,023* 7,236 7,218 6,431 Balance for year ended 31st March, 1939 .. 5,287 .. .. 5,287 Transfer of workers' compensation reserve (not .. 467 .. 467 Potato Account: Balance for year ended 81st 37,670 .. 37,670 now required) March, 1939 Grant to Honey Control Board .. .. .. 500 .. .. 500 Grant to Poultry Board .. .. .. 500 .. • ■ 500 Balance .. .. .. .. .. 54,660* 14,507 7,349 32,804* 10,235* 14,507 7,349 11,621 10,235* 14,507 7,349 11,621 * Denotes debit balances.

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MARKETING DEPARTMENT —continued. INTERNAL MARKETING DlVlSlON—continued. Butter Equalization Account for the Year ended 31st March, 1939. Dr. £ £ Gr. £ £ Equalizing payments under section 12, Market- Balance from accounts for the period ended ing Amendment Act, 1937 — 31st March, 1938 .. .. .. .. 48,413 (а) Payment to dairy factories of 0-41 d. per Differentials — pound and 0-21 d. per pound on butter (a) Directly paid and payable by dairy and cheese respectively manufactured factories under the Butter Marketing between Ist August, 1937, and 31st Regulations 1937, clause 31 .. 116,731 July, 1938, and sold on the local Less paid to dairy factories by the market .. .. .. .. 110,741 Internal Marketing Division over (б) Charges payable to dairy factories the period Ist August to 30th mainly in connection with the November, 1938 .. .. 69,012 storing of butter for local — 47,719 consumption during the winter (b) Indirectly accrued under the Butter months in the South Island Marketing Regulations 1937, clause 16, and not allowed for in butter representing the difierence between differential — £ the proceeds of butter withdrawn from Freight and cartage .. 1,617 export, &c., for sale at the regulated Reworking and defrosting .. 1,556 local price (less allowances for patting, Storing and freezing .. 6,738 &o.) and the amount paid for purchase Bulking and parchment .. 197 at the f.o.b. guaranteed price as Interest and Insurance .. 3,978 follows— ——— 14,086 Sales at regulated local price .. 234,450 (e) Payments to authorized distributors in Purchase at guaranteed f.o.b. price 230,068 connection with the sale of butter as 4,382 ships' stores to foreign-going vessels, Balance forward to next year's accounts .. .. 54,421 sales to island dependencies, climatic and servicing allowances, &c. .. 16,643 141,470 Payments under section 11, Marketing Amendment Act, 1937— Freight and cartage ...... 2,051 Wharfago and handling .. .. .. 249 Storage .. .. .. .. 1,978 Insurance .. .. .. .. 239 Grading fees .. .. .. .. 448 4,965 Administrative and overhead expenses (including interest) 8,500 £154,935 £154,935 HONEY SECTION. Local and Export Pool Account for the Period ended 31st March, 1939. Dr. £ Cr. £ Balance stocks .. .. .. .. .. 4,988 Sales packed and bulk honey in London and in New Advance to producers at s £d. per pound pro rata .. 51,059 Zealand .. .. .. .. .. 63,568 Honey purchases .. .. .. .. .. 2,416 Exchange.. .. .. .. .. .. 8,720 Administration expenses (salaries, rents, telephone, Sundry credits .. .. .. .. .. 363 stationery) .. .. .. .. .. 3,575 Balance: Stocks transferred to 1939 account .. .. 22,339 Advertising .. .. .. .. .. 2,412 Commissions .. .. .. .. .. 3,483 Pool Account expenses — £ Blending and Packing Depot charges .. 14,245 Cartage, freight, shipping charges .. .. 4,348 18,593 Export levy .. .. .. .. .. 121 Bad debts . . .. .. .. .. 28 Balance carried forward (payable to producers when stocks oleared) .. .. .. .. .. 8,315 £94,990 £94,990

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MARKETING DEPARTMENT—continued. INTERNAL MARKETING DlVlSlON—continued. Balance-sheet as at 31st March, 1939. Liabilities. I Assets. Creditors— £ | £ Sundry .. .. .. .. .. 108,380 Land .. .. .. .. .. .. 12,000 Departmental .. .. .. . .. 1,455 Buildings .. .. .. .. .. 17,056 Reserve for audit fees .. .. .. .. 50 Motor-vehicles .. .. • .. .. .. 3,018 Reserve for Public Service Superannuation Fund .. 140 Loose tools and equipment, plant, furniture, and office Reserve for insurance on fruit in transit and cool store in appliances .. .. .. .. .. 12,031 New Zealand .. .. .. .. .. 20 Stocks in trade .. .. .. .. .. 175,149 Gift Parcel Account (Honey) .. .. .. 5 Stocks of stationery, packing-materials, &c. .. .. 3,105 Honey Pool Account .. .. .. .. 8,315 £ Fruit Advertising Suspense Account.. .. .. 109 Goodwill .. .. .. .. 19,000 Honey Seals Account .. .. .. .. 1,899 Purchase of honey brand .. .. .. 789 Writings-off Reserve .. .. .. .. 355 19,789 Bank balance .. .. .. .. 313,434 Debtors— Sundry .. .. .. .. 103,669 Departmental .. .. .. .. .. 537 Payments in advance .. .. .. .. 198 Cash in hand .. .. .. .. .. 20 Deposit Account .. .. .. .. .. 10 Losses in Suspense .. .. . . .. 355 Butter Equalization Account .. .. .. 54,421 Profit and Loss Appropriation Account .. .. 32,804 £434,162 £434,162 F. Picot, Director. G. C. Jupp, Accountant. 1 hereby certify that the Trading Account, Profit and Loss Account, and Profit and Loss Appropriation Account, the Honey Section Local and Export Pool Account, the Butter Equalization Account, and the Balancesheet have been duly examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed thereby.—Cyril G. Collins, Controller and Auditor-General.

Approximate Cost of Paper.—preparation, not given ; printing (582 copies including graphs and Illustrations), £120.

By Authority: E. V. Paul, Government Printer, Wellington. —1940.

Price Is. 3d.]

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1940. NEW ZEALAND.

MARKETING DEPARTMENT (EXPORT DIVISION).

ANNUAL REPORT.

CONTENTS.

Accounts — Page Balance-sheet .. .. .. .. .. .. .. .. 42 Dairy-produce .. .. .. •. .. .. .. .. 17, 36, 37 Fruit .. .. .. • ■ • ■ • ■ .. ■ ■ .. 33, 40, 41 Hides 32 Meat .. .. ■ ■ • • • • • ■ • • • ■ .. 22, 38 Scheelite .. .. .. .. .. .. .. .. .. 35, 39 Tallow .. .. .. .. .. .. .. .. .. 29, 39 Wool .. .. . • •. • • • • • • • • .. 27,38 Woolly sheep-skins.. .. .. .. .. .. .. .. 30,40 Co-operation of Boards and Organizations with Marketing Department .. .. 35 Departments of Agriculture and Marketing : Co-operation in regard to Production and Preparation of Products for Export .. .. .. .. 4 Extension of Scope of Export Division Consequent on Outbreak of War .. .. 3 London Organization : Change consequent on Outbreak of War .. .. 5 Marketing Amendment Act, 1939 .. .. .. .. .. .. 4 Parliamentary Paper, " Food and other Sltpplies to the United Kingdom during the War " .. .. .. .. .. • • • • • • • • ■ • 3 Reports— Dairy-produce — Accounts .. .. .. .. • • • • • • • • 17, 36, 37 Advertising, Publicity, and Sales Promotion .. .. .. .. 16 Bulk Purchase of 1939-40 Season Butter and Cheese by the United Kingdom Government 8 Completed Financial Operations, 1938-39 Season .. .. .. 6, 7 Contract f.o.b. Purchase Prices for Butter and Cheese .. .. .. 8, 14 Costs in Manufacture and Delivery to f.o.b. of Butter and Cheese .. .. 17 Distribution of Butter and Cheese in the United Kingdom .. .. .. 12,13 Exports : Quantities of Butter and Cheese exported .. .. .. .. 12 Freight Rates .. .. .. .. .. • • • • • • 16 Grading — Percentages of Butter and Cheese of various Grades .. .. .. ..11 Premiums for Quality .. .. .. .. . ■ ■ • 9 Quantities of Butter and Cheese graded .. .. .. .. 11, 12 Quantities of Butter and Cheese paid for at Differential Prices .. .. 10, 11 Guaranteed Prices — 1939-40 Season .. .. .. .■ • • • ■ •• .. 8 1936-37 to 1940-41 Season .. .. .. .. .. .. -.9 Inspection of Shipping and Storage .. . . .. . . .. . . 15 London Marketing Organization .. .. .. .. .. .. ..5 Margarine Sales : Influence on Butter Consumption .. . . .. ..12 Marine Insurance . . • • ■ ■ • • • • • ■ • • .. 16 Payments by Dairy-factory Companies for Butterfat-supplies .. .. 9,16 Processed Milk .. .. .. • • ■ • • • • • .. 14 Sales of Butter and Cheese from Outbreak of War to Commencement of Bulk Purchase Contracts .. .. .. .. • • ■ • ■ • ■ • .. 5, 6 Sales of Butter and Cheese to Markets other than United Kingdom .. .. .. 15 Shipping .. .. • • • • • • • ■ • ■ • • 15 Summary of Purchase and Sale of Butter and Cheese, 1938—39 Season .. 6, 7 Supervision and Inspection of Shipping and Storage ~ ~ .. .. 15

I—H. 30

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Reports—continued. Fruit — Page Accounts .. .. .. .. .. .. .. .. 33, 40, 41 Costs in Preparation and Delivery to f.o.b. .. .. .. .. 33 Exports : Quantities of Apples exported .. .. .. .. .. 32, 33 London Marketing Organization .. .. .. .. .. .. 32 Hides — Accounts .. .. .. .. .. .. .. .. 32 Committee: Appointment of .. .. .. . . .. 30, 31 Equalization Levy .. .. .. .. .. .. .. 31,32 Export Quantities .. .. .. .. .. .. .. 32 Market Prices .. .. .. .. .. .. .. .. 31 Tanners' Claims .. .. .. .. .. .. .. .. 32 Meat — Accounts .. .. .. .. .. .. .. .. 22,38 Bulk Purchase of 1939-40 Season Meat by United Kingdom Government .. 18 Canned Meat .. .. .. .. .. .. .. .. 22 Grading, Quality, Dressing, and Packing ~ .. .. .. .. .. 20 Killings for Export .. . . .. .. . . .. .. 21 London Representation .. .. .. .. .. .. 22 Prices and Payments .. .. .. .. .. .. .. .. 18 Purchase and Sale Procedure .. .. .. .. .. .. 18 Quantities purchased to 31st July, 1940 . . .. .. .. .. 18, 19 Shipments of Meat to Markets other than United Kingdom . . . . .. 22 Shipping .. .. . . .. .. .. .. .. 21 Stocks in Store ... .. .. .. .. .. .. 21 Storage .. .. .. .. .. .. .. .. ..22 Survey of Season .. .. .. .. .. .. .. .. 20 Scheelite — Accounts .. .. .. .. .. .. .. .. 35,39 Bulk Purchase by United Kingdom Government .. .. .. .. 34 Contract Conditions covering Quality, Price, Deliveries, Assay, and Payment .. 34 Quantity and Value of Scheelite exported to United Kingdom . . .. .. 35 Tallow— Accounts .. .. .. .. .. .. .. .. 29, 39 Bulk Purchase of 1939-40 Season's Tallow by United Kingdom Government .. 27 Grading, Quality, and Packing .. .. .. .. .. .. 28 Prices and Payments .. .. .. .. .. .. .. 28 Purchase and Sale Procedure .. .. .. .. .. .. 28 Quantities of Tallow shipped to India . . . . .. . . . . .. 29 Quantities of Tallow shipped to United Kingdom to 31st July, 1940 . . .. 28 Requirements of Local Soapmakers .. .. .. .. .. 29 Survey of the Season .. .. .. .. .. .. .. 28 WoolAccounts .. .. .. ~ .. .. .. .. 27,38 Agreements with Woolbuyers, Woolbrokers, and Woolscourers . . . . 23 Appraisal Procedure .. . . .. .. . . .. . . 24 Bulk Purchase of Wool by United Kingdom Government . . . . .. . . 23 Contract Conditions .. .. .. .. .. .. .. .. 23 Exports, Destinations of .. .. .. .. .. .. 26, 27 Purchase and Sale Procedure .. .. .. .. . . .. 24 Quantities and Values of Wool appraised . . . . . . . . .. . . 25 Schedule of Types, Yields, and Prices .. .. .. . . .. 24 Scouring of Wool .. .. .. .. .. .. .. 26 Shipping . . . . .. .. .. .. .. .. .. 26 Survey of Season . . .. .. .. .. .. .. 26 Woolly Sheep-skins — Accounts .. .. .. .. .. .. .. .. 30,40 Appointment of Controller .. .. .. .. .. .. 29 Bulk Purchase of Woolly Sheep-skins by United Kingdom Government . . 29 Contract Conditions .. .. .. .. .. .. . . 29 Quantities and Values of Exports to the United Kingdom . . . . .. . . 30 Volume and Value of all Exports by Department fob Period ended 31st July, 1940 35

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1940. NEW ZEALAND.

MARKETING DEPARTMENT (EXPORT DIVISION). ANNUAL REPORT (FOURTH) AND ACCOUNTS FOR THE YEAR ENDED 31st JULY, 1940.

Presented to both Houses of the General Assembly pursuant to the Provisions of the Marketing Act, 1936.

I have the honour to submit the annual report and Statement of Accounts of the Marketing Department (Export Division) for the year ended 31st July, 1940. The report of the Internal Marketing Division of the Department has been made separately. EXTENSION OF SCOPE OF EXPORT DIVISION CONSEQUENT ON OUTBREAK OF WAR, 3rd SEPTEMBER, 1939. The deterioration in the European situation during 1938 and 1939 had led to the formulation of plans in New Zealand and in the United Kingdom for the supply of foodstuffs in the event of war. These plans envisaged the United Kingdom Government becoming the sole purchaser of imported foodstuffs, and the Marketing Department becoming the authority in New Zealand responsible for the bulk purchases and shipment of the various food and other products. Thus immediately upon the outbreak of war the Marketing Department was ready to undertake its extended duties, and negotiations began with the United Kingdom Government in regard to bulk purchases. PARLIAMENTARY PAPER "FOOD AND OTHER SUPPLIES TO THE UNITED KINGDOM DURING THE WAR." On 2nd July, 1940, as Minister of Marketing, I presented to Parliament the paper H.-30b, 1940, " Food and other Supplies to the United Kingdom during the War," which should be read with this report. The parliamentary paper covers the arrangements made by the New Zealand Government in regard to the sale and export to the United Kingdom of essential food and other supplies during the period of the war. The paper also outlines the action taken prior to the war in the making of preliminary plans against the possibility of hostilities, the action taken immediately upon the outbreak of war when the New Zealand Government offered its full resources to the United Kingdom Government, and the negotiations in respect of specific agreements for sale of the various products with details of

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prices and quantities covered by the agreements. Important cablegrams exchanged during the negotiations are quoted, and the full text of each agreement is given. The paper relates to the supply to the United Kingdom of the following products, with which the Marketing Department (Export Division) is now concerned : Dairy-produce, meat, wool, tallow, woolly sheep-skins, hides, fruit, and scheelite. The transactions in respect of each product are reviewed in this report, and under the appropriate headings the prices at which the New Zealand Government has purchased the products from producers are given. The Department desires to acknowledge the very effective help it has received in the negotiations with the United Kingdom Government, in the London rearrangements following the outbreak of war, and in its day-to-day activities, from the High Commissioner in London, Mr. W. J. Jordan, and the Official Secretary, Mr. E. M. Campbell. MARKETING AMENDMENT ACT, 1939. The extension of the scope of the Export Division, consequent on the outbreak of war, necessitated an amendment to the Marketing Act to give the Department the required additional powers. The following is a summary of the amendments :— (1) The Department is now to be known as the Marketing Department. (2) The Dairy-produce Export Division of the Department is now to be known as the Export Division. (3) The Governor-General may by Order in Council authorize the Department to purchase or otherwise acquire any specified goods, and to sell or otherwise dispose of such goods for consumption or use in Now Zealand or elsewhere. (4) The prices to be paid by the Department for any goods acquired by it may be fixed by Order in Council or may be ascertained in a manner to be prescribed by such Order in Council. Provision is also made for handling, pooling, transport, storage, shipment, insurance, and for payment for services rendered in respect of such goods. (5) The Department may, on the authority of an Order in Council, in lieu of acquiring such goods, fix wholesale or retail prices at which any foodstuffs may be bought or sold or may fix margins (as maximum prices and minimum prices) within which any such foodstuffs may be bought or sold, and may also fix general conditions subject to which sales shall be made. (6) Finance provisions are made as follows (a) For one or more special accounts to be established at the Reserve Bank. (b) For the Reserve Bank to grant accommodation by way of overdraft in aid of any special account. (c) For the Department to pay without further appropriation the moneys due in respect of the price of goods acquired, the cost of remitting moneys to the persons entitled thereto, the charges for freight, insurance, storage, or marketing, and the interest payable to the Reserve Bank on any overdraft incurred. (d) lor charging to special accounts their due proportion of administrative expenses. (7) Fixation of prices for goods acquired by the Department during a state of emergency or of war shall be undertaken, with due regard both to the existence of that state of emergency or of war and to the conditions thereby created. CO-OPERATION BETWEEN DEPARTMENTS OF AGRICULTURE AND MARKETING IN REGARD TO PRODUCTION AND PREPARATION OF PRODUCTS FOR EXPORT. Although the actual purchase and ownership of primary produce for export is not assumed by the Marketing Department until the produce is placed f.o.b. ocean steamer, or in the case of wool until time of appraisal, the Department is naturally concerned in the arrangements for grading or appraisal, preparation, packing, quality, and storage of produce intended for export. The responsibility for supervision of all stages of this work preparatory to shipment devolves upon the Department of Agriculture, and the fullest co-operation is maintained between the two Departments to ensure compliance with the export requirements of the contracts between the United Kingdom Government and the New Zealand Government. The Marketing Department is also responsible for all shipping arrangements, the allotments of shipping-space in overseas vessels being a matter of consultation and arrangement with the Overseas Shipowners' Allotment Committee.

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CHANGE IN LONDON ORGANIZATION CONSEQUENT ON OUTBREAK OF WAR. The decision of the United Kingdom Government to make a bulk purchase of all butter and cheese exported from New Zealand vitally affected the London organization of the Department. The purchase terminated the ownership by the Department of the dairy-produce at the point of f.o.b. New Zealand ports, and thus temporarily left the London organization with no goods to sell or marketing duties to perform. The rearrangement of the London organization was facilitated by the presence in London, at the outbreak of war, of the Director of the Export Division of the Department, and was further assisted by a request from the United Kingdom Government that the senior officers in London, together with a considerable proportion of their staff, should be seconded to the United Kingdom Ministry of Food for the period of the war. The London Manager of the Department, Mr. H. E. Davis, had been engaged for some months prior to the war in the formulation of plans for the control and distribution of butter and cheese in the United Kingdom under war conditions. Upon the outbreak of war the New Zealand Government readily agreed that Mr. Davis should accept office with the United Kingdom Ministry of Food as Controller of Butter and Cheese Distribution, and also that the Assistant London Manager, Mr. J. W. Rodden, should accept office as Deputy Controller, and Deputy Director of Finance (Butter and Cheese). This arrangement was mutually helpful, in that the United Kingdom Government was able to co-opt administrative officers and staff thoroughly competent and expert in butter and cheese distribution, and the New Zealand Government was able to preserve its London organization so that its activity can be readily resumed after the war. It is pleasing to record that, on the basis of the pre-war plans made by Mr. Davis, the London staff of the Department was able to take up its duties with the United Kingdom Ministry of Food immediately war was declared. It should be noted that other New Zealand officials in London were or are also concerned with food distribution and supplies for the United Kingdom Government. Sir Francis Boys recently retired from the office of Director of Meat and Live-stock ; Mr. R. S. Forsyth is Director of Imported Meat; Mr. H. S. Turner is Director of Live-stock and Home-produced Meat; and Mr. F. S. Arthur is Secretary of the Wool Control. With the seconding of Messrs. Davis and Rodden and the London staff of the Department, a skeleton organization only was retained to attend to the remaining interests of the Department and to maintain the necessary contacts during the continuance of the war-time bulk-purchase arrangements. This report will now review the transactions during the year ended 31st July, 1940, in respect of the products handled by the Export Division of the Department. DAIRY-PRODUCE. SALES OF BUTTER FROM TIME OF OUTBREAK OF WAR AND PENDING COMPLETION OF CONTRACT FOR BULK PURCHASE BY UNITED KINGDOM GOVERNMENT. At the outbreak of war the London price of New Zealand butter was 1245. to 1255. per hundredweight, with other butters showing their relative price margins. At the request of the United Kingdom Government, through the Board of Trade, the Provision Exchanges established a price for New Zealand butter of 1255. per hundredweight, and this figure continued to be effective until 14th September, 1939, when the Board of Trade raised the price to 1295. per hundredweight. This new price continued until the night of 22nd September, 1939, when all butter in the United Kingdom, and to arrive, was requisitioned by general order. It should be noted that during the period prior to 14th September, 1939, Australian butter was fixed at 117s. per hundredweight. All these quoted prices were on the usual landed terms basis. During September, 1939, in conformity with the request of the United Kingdom Government, the London organization of the Department continued to sell steadily in the normal way as shipments became available, and this procedure continued until 15th September, 1939. Thereafter sales were made on a more restricted basis, as the United Kingdom Ministry of Food were desirous, without undue fuss, of accumulating stocks. During this period of selling, preference was given to the requirements of the supply sections of the Armed Forces. The stocks thus accumulated, together with the butter discharging and arriving after midnight on 22nd September, 1939, and up to 30th September, 1939, were paid for in terms of the Compensation Act, 1939 (United Kingdom), at 1255. per hundredweight for finest grade. Arrivals of New Zealand butter on and after Ist October, 1939, were paid for on the basis of the bulk-purchase contract prices for the 1939-40 season. No attempt was made by New Zealand to exploit the market position, the desire of the New Zealand Government being to assist the United Kingdom Government to the full, and to take no advantage of war conditions.

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SALES OF CHEESE FROM TIME OF OUTBREAK OF WAR AND PENDING COMPLETION OF CONTRACT FOR BULK PURCHASE BY UNITED KINGDOM GOVERNMENT. At the commencement of the war New Zealand cheese was selling at 61s. per hundredweight landed terms, and that price was continued by the Board of Trade through the Provision Exchanges. During early September, 1939, arrivals of cheese were sold normally to the trade, with a preference for supplies to the Armed Forces. About the middle of September the cheese market became rather bare of supplies, and quantities were difficult to obtain. Producers and owners of English cheese, not being members of the Provision Exchanges, were unwilling to accept the price specified (61s. per hundredweight), and demanded 4s. to ss. per hundredweight higher, which offers were accepted by buyers. Holders of Canadian cheese (all bought on c.i.f. terms), having exhausted stocks of cheese which they were able to sell profitably at 61s. per hundredweight, refused to sell their dearer cheese at a loss, and a heavy demand fell on New Zealand cheese. The Board of Trade in their anxiety to prevent a rise in prices had refused to advance the maximum price of 615., with the result that sales of cheese practically ceased. On 3rd October, 1939, pressure from the trade caused the Board of Trade to raise the price to 665. per hundredweight. This price continued for New Zealand cheese until the arrivals after 20th November, 1939, which were paid for on the basis of the bulk-purchase contract prices for the 1939-40 season. REVIEW OF COMPLETED FINANCIAL OPERATIONS FOR 1938-39 SEASON. When the annual report for the year ended 31st July, 1939, was prepared, unsold stocks of the season's produce were taken into the accounts at estimated sales values as under Creamery butter : 741,635 boxes. Estimated sale value : 1235. lid. per hundredweight sterling gross. Whey butter : 6,960 boxes. Estimated sale value : 106s. 4d. per hundredweight sterling gross. Cheese : 334,657 crates. Estimated sale value : 665. 3d. per hundredweight sterling gross. On the basis of these valuations for dairy-produce unsold, the deficit in the Dairy Industry Account for the 1938-39 season was estimated, to the nearest pound, to be as follows :— £ £ Estimated deficit on creamery butter .. .. .. .. .. 1,315,712 Estimated deficit on cheese .. .. .. .. .. 1,216,819 Plus estimated deficit on whey butter .. .. .. 20,398 1,237,217 Estimated deficit, Dairy Industry Account, 1938-39 season .. .. £2,552,929 The actual realizations in respect of the above-mentioned produce were below the estimate in the case of butter but exceeded the estimate in the case of cheese, the average sale prices being at the rate of — Creamery butter : 1235. 7d. per hundredweight sterling gross. Whey butter : 105s. lOd. per hundredweight sterling gross. Cheese : 68s. 3d. per hundredweight sterling gross. The final result of the operations for the 1938-39 season, expressed to the nearest pound, is as follows :— £ £ Deficit on creamery butter .. .. .. .. .. 1,323,762 Deficit on cheese .. .. .. .. .. • • 1,157,928 Plus deficit on whey butter .. .. .. .. 20,505 1,178,433 2,502,195 Add payments, special milk products (Special Milk Products Regulations 1938).. • 12,694 Deficit, Dairy Industry Account, 1938-39 season .. .. .. .. £2,514,889 Details of the completed financial operations for the 1938-39 season are shown in the accounts section of this report, page 36.

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SUMMARY OF RESULTS OF PURCHASE AND SALE OF BUTTER AND CHEESE FOR 1938-39 SEASON. The following tabulation shows the summarized details of the purchase and sale operations for the 1938-39 season in respect of creamery butter, cheese, and whey butter:—

Summary of Purchase and Sale of Dairy-produce, 1938-39 Season.

Creamery Butter. Whey Butter. Cheese. Total. Tons (Purchase Tons (Purchase Tons ( Sale Tons Quantity to United Kingdom- ' Weight) ' Wdght) - Marketed usual channels .. .. .. .. .. 4,085,577 102,128 64,702 1,618 1,072,605 76,726 180,472 Requisitioned, &e.* .. .. .. .. .. .. 482,982 12,073 3,290 82 50,067 3,503 15,658 4,568,559 114,201 67,992 1,700 1,122,672 80,229 196,130 Quantity to other destinations .. .. .. .. .. 88,685 2,219 .. .. 326 19 2,238 4,657,244 116,420 67,992 1,700 1,122,998 80,248 198,368 Amount. Hundredweight, Per Pound - Amount. Hundredweight. Per Pound ' Amount, Hundredweight. Per Pound - Total - £ s. d. d. £ s. d. d. £ s. d. d. £ Sales United Kingdom through usual channels: Sterling gross .. 11,652,075 114 1-112 12-224 170,485 105 4-878 11-294 4,642,359 60 6-068 6-482 16,464,919 LessPort dues and consolidated rate .. .. .. .. 98,593 0 11-584 0-103 1,724 1 0-791 0-114 64,220 0 10-044 0-090 164,537 Storage, cartage and delivery averaging, and sundries .. 37,771 0 4-438 0-040 149 0 1-106 0-010 22,943 0 3-588 0-032 60,863 Commission .. .. .. .. .. .. 232,983 2 3-375 0-244 3,409 2 1-292 0-226 92,849 1 2-522 0-129 329,241 Discount .. .. .. .. .. .. 95,317 0 11-200 0-100 1,421 0 10-543 0-094 38,668 0 6-048 0-054 135,406 Total charges .. .. .. .. .. 464,664 4 6-597 0-487 6,703 4 1-732 0-444 218,680 2 10-202 0-305 690,047 Realized United Kingdom: Sterling net .. .. .. .. 11,187,411 109 6-515 11-737 163,782 101 3-146 10-850 4,423,679 57 7-866 6-177 15,774,872 Plus exchange on remittances to New Zealand .. .. 2,733,998 26 9-243 2-868 40,026 24 8-965 2-651 1,079,796 14 0-881 1-508 3,853,820 Realized United Kingdom: New Zealand currency .. .. 13,921,409 136 3-758 14-605 203,808 126 0-111 13-501 5,503,475 71 8-747 7-685 19,628,692 Less — Freight and insurance .. .. .. .. .. 769,196 7 6-380 0-807 12,140 7 6-070 0-804 594,735 7 9-017 0-830 1,376,071 War-risk insurance .. .. .. .. .. 326 0 0-038 .. .. .. .. 3,538 0 0-553 0-005 3,864 769,522 7 6-418 0-807 12,140 7 6-070 0-804 598,273 7 9-570 0-835 1,379,935 Realized — Sales United Kingdom: Net f.o.b. New Zealand .. .. 13,151,887 128 9-340 13-798 191,668 118 6-041 12-697 4,905,202 63 11-177 6-850 18,248,757 Requisitions, &c., United Kingdom: Net f.o.b. New Zealand* .. 1,672,356 138 6-237 14-841 10,468 127 3-371 13-637 278,919 79 7-485 8-531 1,961,743 Sales to other destinations: Net f.o.b. New Zealand .. .. 289,725 130 6-821 13-989 .. .. .. 1,423 74 8-546 8-005 291,148 Total realized all sales: Net f.o.b. New Zealand .. .. .. 15,113,968 129 9-871 13-909 202,136 118 11-137 12-742 5,185,544 64 7-427 6-923 20,501,648 Less administration, interest, dsc. .. .. .. .. 174,133 1 5-949 0-160 2,473 1 5-460 0-156 62,193 0 9-300 0-083 238,799 Final net realizations all sales .. .. .. .. 14,939,835 128 3-922 13-749 199,663 117 5-677 12-586 5,123,351 63 10-127 6-840 20,262,849 Purchase cost at 1938-39 guaranteed prices.. .. .. . 16,263,597 139 8-369 14-967 220,168 129 6-448 13-879 6,281,279 78 3-279 8-386 22,765,044 Deficit, 1938-39 season .. .. .. .. .. i 1,323,762 11 4-447 1-218 20,505 12 0-771 1-293 1,157,928 14 5-152 1-546 2,502,195 Payment to manufacturers of special milk products .. .. .. .. .. .. .. .. .. .. .. 12,694 Final deficit, Dairy Industry Account, 1938-39 season .. .. .. j .. .. .. .. .. .. .. .. 2,514,889 * Includes the whole of shipments partially or wholly requisitioned by Ministry of Food ex United Kingdom stores or requisitioned or sold under contract on arrival.

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BULK PURCHASE OF 1939-40 SEASON'S BUTTER AND CHEESE BY UNITED KINGDOM GOVERNMENT. The parliamentary paper " Food and other Supplies to the United Kingdom during the War," which has already been referred to and which is to bo read with this report,' gives full details of the contracts for the bulk purchases of butter and cheese, but for convenience in reference the short details of these contracts are given, as follows: — Butter. Quantity.—One hundred and fifteen thousand tons from production 1939-40 season, commencing with shipments from Ist October, 1939. Price— Creamery Finest Grade, 93 points and over, 112s. 6d. sterling per hundredweight delivered f.o.b. ocean steamer. Creamery Finest Grade, 90 to 92| points, Ills. 3d. sterling per hundredweight f.o.b. Creamery Second Grade : 107s. 6d. sterling per hundredweight f.o.b. Whey First Grade : 104s. 6d. sterling per hundredweight f.o.b. Whey Second Grade : 100s. 6d. sterling per hundredweight f.o.b. Storage.—The New Zealand Government will be responsible for storing butter in suitable stores at suitable temperature in New Zealand and will be responsible for placing butter on board steamers for shipment as they become available. The United Kingdom Government undertake that, in the event of butter having to be kept in store in New Zealand for an unduly long period owing to the inability of the Ministry to provide ocean-going ships, they will be prepared to make payments towards the consequential additional costs of storage in accordance with arrangements to be agreed with the New Zealand Government in the light of actual experience up to the end of January, 1940. Cheese. Quantity.—Eighty-four thousand tons from production 1939-40 season, commencing with arrivals after the 20th November, 1939. Price—■ Finest and First Grade, 91 points and over, 645. 3d. sterling per hundredweight delivered f.o.b. ocean steamer. Second Grade, 625. 3d. sterling per hundredweight f.o.b. (All cheese to be white and unwaxed.) Storage.—The New Zealand Government will be responsible for storing cheese in suitable stores at suitable temperature in New Zealand, and will bo responsible for placing cheese on board steamers for shipment as they become available. The Ministry undertake that, in the event of cheese having to be kept in store in New Zealand for an unduly long period owing to the inability of the Ministry to provide ocean-going ships, they will be prepared to make payments towards the consequential additional costs of storage in accordance with arrangements to be agreed with the New Zealand Government in the light of actual experience up to the end of January, 1940. Shrinkage in Weight.—Shrinkage at the rate of 2± per cent, will be deducted from the cheeked packed weights of cheese. Should the actual shrinkages, as ascertained in London, in respect of tlie cheese from any particular dairy company prove to be consistently higher than 2| per cent., the shrinkage deduction on subsequent shipments will be increased accordingly unless it is evident that such excess shrinkage arises from abnormal periods of storage. GUARANTEED PRICES, 1939-40 SEASON. The guaranteed purchase prices for butter and cheese manufactured during the 1939-40 season and exported were : Butter (basic price), 14-89 d. per pound ; and cheese (basic price), 8-42 d. per pound. The prices to be paid for the 1940-41 season are the same as those paid for the 1939-40 season, and full details of these prices are given in the Dairy-produce Export Prices Order 1939. • The full range of guaranteed f.o.b. basic purchase prices fixed for each season to date since the inception of the guaranteed-prices system, with the corresponding average payments by dairy companies for butterfat-supplies, is given below. Differential prices according to grade, above and below the basic prices, are given in the Dairy-produce Export Prices Orders issued from time to time.

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Guaranteed F.O.B. (Basic) Purchase Prices for Butter and Cheese.

The conversion formulae used in the determination of the 1940-41 season prices shown above are —

Resulting Average Payments by Dairy Companies for Butterfat-supplies.

PREMIUMS FOR QUALITY, AND QUANTITIES OF BUTTER AND CHEESE PAID FOR (OR TO BE PAID FOR) AT DIFFERENTIAL PRICES. Under the Dairy-produce Export Prices Order 1939 provision is made for additions to or deductions from the basic purchase prices for butter and cheese according to quality as disclosed by the grading points awarded to the dairy-produce. This system of price differentials is intended to provide a stimulus to the production of dairy-produce of higher quality. For the season under review the percentage of quantities of butter falling into the Finest Grade shows a slight decrease, while the percentage of quantities of cheese falling into the Finest Grade shows a slight increase. For the 1939-40 season 39-74 per cent, of the butter will have been paid for at the basic guaranteed price, 40-30 per cent, above, and 20 per cent, below the basic guaranteed price. In the case of cheese, 61-18 per cent, will have been paid for at the basic guaranteed price, 19-26 per cent, above, and 19-56 per cent, below the basic guaranteed price.

2—H. 30.

1936-37 Season.* 1937-38 Season.t 1938-39 Season. 1939-40 Season. 1940-41 Season. Batter and Cheese manu- Butter and Cheese ex- Butter and Cheese inanu- Butter and Cheese manu- Butter and Cheese manua , actured on and after 1st ported after 31st July, factured from 1st faotured from 1st factured from 1st v e. August, 1936, and ex- 1937, and which is August, 1938, to 31st August, 1939, to 31st August, 1940, to 31st ported on or before 31st manufactured on or July, 1939, and ex- July, 1940, and ex- July, 1941, and exJuly, 1937. before 31st July, 1938. ported. ported. ported. Creamery Butter. Per Pound. Per Pound. Per Pound. Per Pound. Per Pound, d. d. d. d. d. Finest Grade— 93 to 93i points 12-5625J 13-66J 14-89J 14-89J 14-89:f % Basic price ; equivalent J Basic price ; equivalent % Basic price ; equivalent J Basic price ; equivalent % Basic price; equivalent to 106s. 6d. sterling per to 115s. sterling per to 124s. sterling per to 124s. sterling per to 124s. sterling per hundredweight on Lon- hundredweight on Lon- hundredweight on Lon- hundredweight on Lon- hundredweight on London market. don market. don market. don market, on basis don market, on basis costs at 1st August, costs at 1st August, 1939. 1939. Whey Butter. First Grade .. | 11-5625 | 12-66 I 13-89 | 13-89 I 13-89 Cheese. First Grade— 92 to 92J points 7 ■ 0G25i 7-75{ 8-42J 8-42J 8-42J t Basic price ; equivalent J Basic price ; equivalent ( Basic price ; equivalent t Basic price ; equivalent J Basic price ; equivalent to 03s. 3d. sterling per to (!8s. 8d. sterling per to 73s. 6d. sterling per to 73s. fid. sterling per to 73s. fid. sterling per hundredweight on Lon- hundredweight on Lon- hundredweight on Lon- hundredweight on Lon- hundredweight on London market. don market. don market. don market, on basis don market on basis costs at 1st August, costs at 1st August, 1039. 1039. • It was estimated that the purchase prices originally fixed for cheese for the 1936-37 season (basic price, fi-8125d. per pound) would enable efficient cheesemanufacturing companies to pay, on average, to the suppliers for butterfat ljd. per pound in excess of the corresponding average payment made by buttermanufacturing companies. The differential of l}d. per pound butterfat was not realized, and the Government made a further payment to cheese-manufacturing companies of }d. per pound of cheese. The purchase prices for cheese for the 1936-37 season shown above include this further payment. t The purchase prices originally fixed for butter and cheese for the 1937-38 season (butler basic price, 13-25d. per pound ; cheese basic price, 7-64d. per pound) were increased by 0'41d. per pound for butter and 0-21d. per pound for cheese. The purchase prices for butter and cheese for the 1937-38 season shown above include these price increases.

Butter. Cheese. Over-run .. .. 21-75 per cent. Yield .. .. 2-51 gross. Costs of manufacture and\2-25d. per pound 245 net. delivery to f.o.b. .. / butterfat. Return from whey butter 0-75d. per pound butterfat. Costs of manufacture and\3-5d. per pound delivery to f.o.b. J butterfat.

1936-37 1937-38 1938-39 1939-40 1940-41 Season: Payout Season: Payout Season: Payout Season: Payout Season: Payout per Pound per Pound per Pound per Pound per Pound Butterfat. Butterfat. Butterfat. Butterfat. Butterfat. d. d. d. d. d. For buttermaking .. .. 13-558 14-812 16-087 16-179 15-88 (est.) For cheesemaking (including 15-176 16-389 18-060 18-091 17-88 (est.) whey butter)

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The following tables show for the 1939-40 season the quantities of butter and cheese purchased and paid for at the respective differential prices. For comparison purposes the totals for the previous three seasons are also shown : —

Creamery Butter (in Tons): Quantities purchased and paid for at Differential Prices.

Whey Butter (in Tons): Quantities purchased and paid for at Differential Prices.

Finest Grade. First Grade. Grading Ports. Total. Q „ . Q „, 94 Points 9 | t ? , 92 to 92£ 90 to 914 Grade - and over. (Baai ° 0 'Points. Points. Tons. Tons. Tons. Tons. Tons. Tons. Auckland .. .. .. 97,339 31,547 43,178 13,442 8,670 502 Bluff .. .. .. 206 42 33 95 36 Dunedin .. .. .. 200 14 126 16 29 15 Gisbome .. .. .. 1,907 1,097 643 87 80 Lyttelton .. .. .. 1,258 833 325 38 6 56 Napier .. .. .. 1,305 814 479 3 9 New Plymouth .. .. 9,063 4,854 3,065 749 393 2 Patea ., .. .. 906 269 321 201 113 2 Timaru .. .. .. 422 181 178 29 8 26 Wanganui .. .. .. 2,136 1,459 534 115 28 Wellington .. .. .. 13,532 10,556 2,113 724 139 Grand totals — 1939-40.. .. .. 128,274 51,624 51,004 15,437 9,570 639 1938-39.. .. .. 116,431 48,803 49,759 9,928 7,429 512 1937-38.. .. .. 137,555 55,611 57,275 15,399 8,753 517 1936-37 .. .. .. 149,810 53,844 66,717 15,550 13,192 507 Percentages of qualities— 1939-40 .. .. 100 40-25 39-76 12-03 7-46 0-50 1938-39 .. .. 100 41-91 42-74 8-53 6-38 0-44 1937-38 .. .. 100 40-43 41-64 11-19 6-36 0-38 1936-37 .. .. 100 35-94 44-53 10-38 8-81 0-34 Butter figures calculated at 40 boxes to a ton.

Grading Ports. Total. First Grade. Second Grade. Tons. Tons. Tons. Auckland .. .. .. 653 638 15 Bluff ,. ,, .. .. 48 46 2 Dunedin .. .. .. 5 3 2 New Plymouth .. .. .. 450 448 2 Patea .. .. .. .. 696 691 5 Timaru.. .. .. .. 25 19 6 Wellington .. .. .. 218 218 ,. Grand totals — 1939-40 .. .. .. 2,095 2,063 32 1938-39 .. .. .. 1,700 1,610 90 1937-38 1,795 1,613 182 1936-37 .. .. .. 1,436 1,249 187 Percentage of qualities— 1939-40 .. .. .. 100 98-47 1-53 1938-39 .. .. .. 100 94-71 5-29 1937-38 .. .. 100 89-86 10-14 1936-37 .. .. .. 100 86-98 13-02

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Cheese (in Tons): Quantities purchased and paid for at Differential Prices.

Grading of Dairy-produce: Percentages of New Zealand Butter and Cheese of the Various Grades.

QUANTITIES OF BUTTER AND CHEESE GRADED. The total gradings of butter and cheese for the twelve months ended 31st July, 1940, are shown below, also the comparative gradings for the 1936-37, 1937-38, and 1938-39 seasons : —

Finest Grade. First Grade. Grading Ports. Total. qo , q2 , C}rad<f 94 Points 93 to 93J 91 to 91$ Urade - and over. Points. (Basio Pri ; e-) Points. Tons. Tons. Tons. Tons. Tons. Tons. Auckland .. .. •• 20,936 61 734 11,867 5,717 2,557 Bluff .. .. 10,892 133 2,821 5,730 1,960 248 Dunedin .. • ■ • • 1,670 136 401 984 145 4 Gisborne 79 .. 4 49 24 2 Lyttelton .. .. .. 585 22 244 245 70 4 Napier .. . • • • 109 7 41 32 24 5 New Plymouth .. .. 19,348 277 7,570 9,454 1,951 96 Patea 23,922 78 2,940 18,196 2,546 162 Timaru .. .. .. 704 37 226 401 37 3 Wanganui .. .. .. 2,545 84 467 1,445 464 85 Wellington .. 11,718 116 1,372 7,668 2,336 226 Grand totals — 1939-40 .. .. 92,508 951 16,820 56,071 15,274 3,392 1938-39 .. .. 80,214 1,364 13,518 49,745 13,736 1,851 1937-38 .. .. 83,784 385 7,350 53,658 18,023 4,368 1936-37 .. .. 86,708 2,079 15,768 48,045 18,561 2,255 Percentage of qualities— 1939-40 .. .. 100 1-03 18-18 60-61 16-51 3-67 1938-39 .. .. 100 1-70 16-85 62-01 17-12 2-32 1937-38 .. .. 100 0-46 8-77 64-05 21-51 5-21 1936-37 .. .. 100 2-40 18-18 55-41 21-41 2-60 Cheese figures calculated at fourteen crates to a ton.

Butter. Cheese. ear " Finest. First. Second. Total. Finest. First, j Second. Total. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. 1934-35 .. .. 77-04 21-66 1-30 100-00 20-60 76-27 3-13 100-00 1935-36 .. .. 76-48 22-36 1-16 100-00 19-47 77-18 3-35 100-00 1936-37 . .. 79-98 19-12 0-90 100-00 20-58 76-81 2-61 100-00 1937-38 .. .. 82-00 17-44 0-56 100-00 9-22 85-55 5-23 100-00 1938-39 .. .. 84-37 15-10 0-52 100-00 18-54 79-16 2-29 100-00 1939-40 .. .. 80-21 19-23 0-56 100-00 19-26 77-07 3-67 100-00

1936-37. 1937-38. 1938-39. 1939-40. Butter (in Tons). Salted .. .. 147,168 136,023 117,832 133,124 Unsalted .. 7,396 6,812 4,440 179 154,564 142,835 122,272 133,303 Cheese (in Tons). White .. .. 59,337 56,752 53,619 89,996 Coloured .. 28,885 28,718 27,888 3,700 88,222 85,470 81,507 93,696

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Butter gradings for the 1939-40 season show an increase of 9-022 per cent, and cheese gradings an increase of 14-96 per cent. Expressed in terms of butterfat, the total increase in gradings is 10-342 per cent. The following table shows the grading figures for the past six years and the percentages of increase or decrease each year : —

BUTTER AND CHEESE GRADINGS.

QUANTITIES OF BUTTER AND CHEESE EXPORTED. The quantities of butter and cheese exported from the various grading ports of the Dominion are shown in the following tabulation :—

Butter and Cheese Exports from 1st August, 1939, to 31st July, 1940.

DISTRIBUTION OF BUTTER AND CHEESE IN THE UNITED KINGDOM UNDER WAR CONDITIONS, AND INFLUENCE OF MARGARINE-SALES ON BUTTER-CONSUMPTION. Prior to the outbreak of war the supply of butter available to consumers in the United Kingdom was approximately 515,000 tons per annum (470,000 tons imported and 45,000 tons Home produced), or an average of approximately 8 oz. per person per week. The pre-war consumption of margarine was slightly over 3 oz. per person per week. The outbreak of war caused the immediate diversion from the United Kingdom of 75,000 tons of butter from Baltic countries out of the total of 230,000 tons of European importations. As a necessary war measure the United Kingdom Ministry of Food instituted a system of sale of all table butters as " Government butter " irrespective of brand, and retail sales were rationed (January, 1940) at 4 oz. per person per week. In order that the necessary fats would, under all circumstances, be available to the people of the United Kingdom, the Ministry of Food had arranged the purchase of large quantities of raw products for the manufacture of margarine. This action, together with the rationing of butter, was intended to provide for the contingency that butter-supplies from New Zealand and Australia might be interfered with. Actually supplies from both New Zealand and Australia since the outbreak of war have considerably exceeded the supplies of the previous season, and present stocks of butter in the

Butter. Cheese. Tons Increase or Decrease on Tons Increase or Decrease on Previous Year. ns - Previous Year. Per Cent. Per Cent. 1934-35 .. .. .. 136,217 2-86 (decrease) 92,673 10-62 (decrease) 1935-36 .. .. .. 146,687 7• 69 (increase) 85,5.55 7• 68 (decrease) 1936-37 .. .. .. 154,564 5-37 (increase) 88,222 3 ■ 12 (increase) 1937-38 .. .. .. 142,835 7-59 (decrease) 85,470 3• 12 (decrease) 1938-39 .. .. .. 122,272 14-39 (decrease) 81,507 4-63 (decrease) 1939-40 .. .. .. 133,303 9-02 (increase) 93,696 14-96 (increase)

Groat Britain. 1 Destimrtons. I Total Exports. Percentage. Grading Ports. ; Butter Cheese Butter Cheese Butter Cheese Butter Cheese Boxes. Crates. Boxes. Crates. Boxes. Crates. | Boxes. Crates. Butter. Cheese. Auckland .. 3,547,101 300,850 16,731 1,166 60,915 535 3,624,747 302,551 74-70 22-42 New Plymouth .. 347,448 285,077 .. .. .. .. 347,448 285,077 7-16 21-13 Patea .. .. 60,281 326,323 .. .. .. .. 60,281 326,323 1-24 24-18 Wanganui .. 80,505 39,150 .. .. .. 20 80,505 39,170 1-66 2-90 Wellington .. 519,584 170,040 .. .. 5,107 75 524,691 170,115 10-81 12-61 Gisborne .. .. 72,099 1,111 .. .. .. 72,099 1,111 1-49 -08 Napier .. .. 51,627 1,528 .. .. .. .. 51,627 1,528 1-06 -11 North Island totals 4,678,645 1,124,079 16,731 1,166 66,022 630 4,761,398 1,125,875 98-12 83-43 Lyttelton .. 50,312 8,854 9 50,312 8,863 1-04 -66 Timaru .. .. 21,915 10,262 21,915 10,262 -45 -76 Dunedin.. .. 8,217 26,019 .. .. 125 7 8,342 26,026 -17 1-93 Bluff .. .. 10,654 178,342 .. .. 2 10,654 178,344 -22 13-22 South Island totals 91,098 223,477 .. .. 125 18 91,223 223,495 1-88 16-57 Dominion totals.. 4,769,743 1,347,556 16,731 1,166 66,147 648 4,852,621 1,349,370 100-00 100-00 Butter : Forty boxes equal 1 ton. Cheese: Fourteen crates equal 1 ton.

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United Kingdom are said to be at record high levels. These stocks, together with the current regular arrivals, are taxing storage space available for butter. Thus the United Kingdom Ministry of Food, set up to deal mainly with an expected problem of shortage in so far as butter is concerned, was somewhat exercised to cope with surpluses. The rationing of butter and its sale in retail stores from Is. 4d. to Is. 7d. per pound, compared with margarine (until recently not rationed) retailed at from sd. to 9d. per pound, had led to a sharp increase in margarine-sales and corresponding diminution in butter-sales. The acceptance of margarine in place of butter has been aided by its price advantage, and by claims made that the vitaminized margarine now available is a quite satisfactory substitute for butter. In view of the position as outlined, the butter ration was temporarily raised (March, 1940) to 8 oz. per person per week. With the German occupation of European countries—Norway, Denmark, Holland, Belgium, and France —a further 155,000 tons of butter per annum were diverted from the United Kingdom market, leaving New Zealand and Australia the main suppliers to this market. New Zealand and Australia, with Eire, Argentine, and South Africa, supply approximately 250,000 tons of butter. To safeguard the position, the butter ration was again reduced (June, 1940) to 4 oz. per person per week, and later (July, 1940) a combined ration for butter and margarine was instituted at 6 oz. per person per week, consumers having the option of taking either butter or margarine in any proportion up to the maximum of 6 oz. In July, 1940, with a view to assisting the distribution of margarine by decentralization, all margarine-manufacturers in the United Kingdom decided to pool their resources, to discontinue their individual brands, and to operate as one company under the name of " Marcom Ltd." This organization has been appointed the selling-agents for the Ministry of Food, and it will distribute two brands of table margarine only, " Special" at 9d. per pound, and "Standard" at sd. per pound. Under the combined ration arrangements already referred to, butter-sales increased substantially, and from 26th August, 1940, the option to take butter was limited to 4 oz. per person per week. The circumstances governing the war-time distribution of butter and margarine as outlined are disturbing to New Zealand butter-producers, and consideration has been given by the Government to the possibility of some action to protect the market for butter against the inroads of margarine. The Government has no desire, and indeed has no right, to question the action of the United Kingdom Ministry of Food in regard to the distribution of butter and margarine, when such action has been taken as a war-time necessity. Nevertheless, the present and post-war aspects of the matter were represented to the United Kingdom Government, which in reply indicated that the war-time policy of the United Kingdom Government in regard to butter is intended to serve only war-time conditions, and that there is no intention to influence the post-war situation to the detriment of butter-producers in the Dominion. Mention was made of the Ministry of Food's duty to supply the people of the United Kingdom with war-time food at the cheapest possible price, but consistent with this duty, and within the limits imposed by war-time conditions, every effort would be made to avoid prejudicing the interests of producers in New Zealand. It is likely that the post-war demand for butter will be largely influenced by its selling-price compared with that of margarine, by considerations of the relative nutritive value of the two products, and by the extent of importations of butter from Continental sources. The position in regard to cheese distribution and consumption is that pre-war quantities available annually to consumers in the United Kingdom were approximately 200,000 tons, of which one-quarter was Home produce, the balance coming mainly from New Zealand and Canada, with Australia and the Netherlands supplying lesser quantities. Owing to the war, approximately 16,500 tons from European sources have been diverted from the United Kingdom. The Ministry 0 f Food indicated its desire to take from New Zealand increased quantities of cheese, and no difficulty is expected in finding a market during the war for as much cheese as New Zealand can produce. On 2nd September, 1940, the Ministry of Food announced its intention to reduce the price of Home (United Kingdom) produced cheese to the same price-level as that applying to imported cheese. The price reduction became operative from Ist October, 1940, and traders were thus given one month to dispose of stocks of higher-priced cheese. A full control plan for all cheese except small fancy varieties was introduced on Ist October, 1940, and it operates on the same lines as the butterdistribution plan, except that the consumer is not rationed. Retailers may purchase cheese only against buying permits, which are based on the adjusted monthly usage during 1939. Wholesalers and first-hand agents are, as in the case of butter, issued with quantities for distribution in accordance with the nominations of their customers, which specify the appropriate monthly quantities. Broadly speaking, cheese is sold without regard to country of origin. In deciding the war-time order of precedence for imported foodstuffs, the Ministry of Food has given a high place to cheese because of its high nutritive value and because of the relatively lesser shipping-space taken up by cheese compared with certain other foodstuffs.

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CONVERSION OF NEW ZEALAND CONTRACT F. 0.8. SALE PRICES FOR BUTTER AND CHEESE INTO EQUIVALENT " EX STORE " UNITED KINGDOM PRICES. The following tabulations show the conversion of New Zealand contract f.o.b. sale prices for butter and cheese into equivalent ex store United Kingdom prices. The charges shown are the closest estimates which can be made, and the figures are approximate only : —

The following are the marginal prices at present operating in the United Kingdom as fixed by the Ministry of Food : —-

PROCESSED MILK. The pre-war situation in regard to processed milk was that importations into the United Kingdom were regulated by the Processed Milk (Import Regulations) Order 1939, which provides for importation only under Board of Trade licenses. The Order, which came into force 011 19th June, 1939, applied to imports from all sources of condensed whole milk, condensed skim milk, full cream milk powder, skim-milk powder, buttermilk powder, and whey powder and cream. The Order was made to assist the reorganization of the United Kingdom milk industry and on the grounds that the limitation of imports was essential to the maintenance and development of the industry. Under the Order, quotas were fixed for imports of processed milk into the United Kingdom, the New Zealand quotas for the twelve months ending 30th June, 1939, being— Cwt. Cwt. Condensed whole milk .. .. .. .. .. 30,000 Milk powder .. .. .. .. .. .• 115,000 Buttermilk and whey powder .. .. .. .. 12,000 157,000 On the 31st August, 1939, the Board of Trade advised that the United Kingdom Government was temporarily suspending the restrictions on the importation of processed milk. As a consequence of this suspension of the restrictions, exports from New Zealand to the United Kingdom for the 1939-40 season proceeded normally. In April, 1940, the United Kingdom Ministry of Food indicated its desire to purchase all imported full cream milk powder, skim-milk powder, and evaporated milk. Quantities required are the normal New Zealand supplies. The Ministry of Food indicated that all importations are to be undertaken by the Ministry, to the exclusion of importations on private account. Discussions are now (August, 1940) proceeding in regard to prices and terms of an agreement covering exports from New Zealand for the 1940-41 season.

Butter Cheese (Per Hundredweight (Per Hundredweight Sterling). Sterling). s. d. 8. d. 8. d. s. d. Contract prices f.o.b. New Zealand .. .. .. 112 6 64 3 Freight .. .. • • • ■ • • 10 0 10 9 Insurance (est.) .. .. •• •• 36 20 13 6 12 9 126 0 77 0 Landing charges (est.) .. .. ■■ 16 16 Additional charges in United Kingdom: Storage, 5 0 3 0 insurance, interest, and inland freight (est.) 6 6 4 6 132 6 81 6 Importers' commission .. .. .. .. 23 16 Estimated cost " ex store " United Kingdom 134 9 83_ 0

Butter Cheese (per Hundredweight (per Hundredweight Sterling). Sterling). s. d. s. d. First-hand importers' selling commission ..23 16 Wholesalers' purchase price" ex store" 143 0 93 2 Retailers' purchase price delivered .. .. 150 0 99 2 Maximum retail price to consumer .. .. 177 4 (Is. 7d. per pound) 121 4 (Is. Id. per pound)

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SALES OF BUTTER AND CHEESE TO MARKETS OTHER THAN UNITED KINGDOM. In concluding the agreements with the United Kingdom Government for the bulk purchase of the exportable surpluses of butter and cheese, provision was made for the continuance of normal supplies from New Zealand to the small markets in countries other than the United Kingdom. Direct sales of butter from New Zealand to these countries during the 1939-40 season were slightly less than sales for the previous season, and amounted to approximately 2,000 tons. Direct sales of cheese amounted to approximately 100 tons, a figure comparable with sales in previous seasons. There is little to comment on in regard to this outside trade. Sales to China, more especially to Shanghai, have decreased considerably, corresponding to the general decline in European trade with China. Sales to the East Indies, Singapore, India, and the West Indies have shown increases, while those to other regular markets have been maintained. The following table shows the quantities of butter and cheese shipped from New Zealand to markets other than the United Kingdom

SHIPPING. It is undesirable under war conditions that the shipping situation during the past season should be the subject of the customary full review. It should be recorded, however, that liftings from the Dominion of all classes of export produce during the 1939-40 season have been very satisfactory, and quantities exported compare more than favourably with past peace-time seasonal exports. The aim of the Department, in conjunction with the Overseas Shipowners' Allotment Committee, has been to minimize the number of ports of loading in order to give the quickest " turn-round " for overseas vessels. During the season 106 despatches of ships were made, with an average of " ports per vessel" of 2-92 compared with " ports per vessel "of 3-41 for the previous season. This result is quite satisfactory, and it has been achieved without unduly disturbing the shipment policy of giving all ports fairly regular clearances. The following is a tabulation of " vessels loaded " and " average ports per vessel" for the past six seasons :—

SUPERVISION AND INSPECTION OF SHIPPING, TRANSPORT, AND STORAGE OF DAIRY-PRODUCE. The contract arrangements with the United Kingdom Ministry of Food covering dairy-produce specify that pre-war standards of grading should be maintained. Every effort has been made to ensure the arrival of butter and cheese in good condition by the supervision and inspection in New Zealand and the United Kingdom by the Department's officers of the methods of handling, transport, and storage within the limits imposed by war conditions.

Butter (Boxes). Cheese (Crates). Destination. 1937-38. 1938-39. 1939-40. 1937-38. 1938-39. j 1939-40. I Japan .. .. .. .. 720 6 China .. .. .. .. 14,089 13,123 6,170 350 75 60 French Cochin China .. .. 1,153 1,576 1,893 Thailand .. .. .. .. 45 Philippine Islands .. .. 4,920 2,225 5,090 Straits Settlements .. .. 9,425 11,016 12,328 Dutch East Indies .. .. 83 93 277 India .. .. .. .. 7,946 9,131 10,730 3 131 127 Hawaii .. .. .. .. 17,247 11,435 11,884 United States of America .. .. 5,283 3,400 1,448 Canada .. .. .. .. 58,550 .. .. 565 150 1,166 Panama Canal Zone .. .. 27,590 16,200 15,400 100 British West Indies .. .. 16,410 11,179 17,171 208 60 Falkland Islands .. .. .. 91 80 South Africa .. .. .. .. 9,000 2,200 163,507 88,509 84,591 1,226 416 j 1,353

Season. Vessels loaded. Avera f, e Po , rts per Vessel. 1934-35 .. .. .. Ill 4-00 1935-36 .. .. .. 104 3-98 1936-37 .. .. .. 108 3-67 1937-38 .. .. .. Ill 3-35 1938-39 .. .. .. 107 3-41 1939-40 .. .. .. 106 2-92

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MARINE INSURANCE. At the time of the outbreak of the war the Department had a comprehensive insurance contract which protected all butter and cheese expor-ted from New Zealand and purchased by the Department. The insurance cover applied from the time of arrival of the cream and milk at the dairy factory until thirty days after arrival in the United Kingdom of the resultant butter and cheese. Upon the completion of the agreement with the United Kingdom Government for the bulk purchase of butter and cheese, the insurance risk from f.o.b. ocean steamer became the responsibility of the United Kingdom Government. Arrangements were made for the continuance of the necessary insurance protection in New Zealand, and the insurance contract covers cream and milk which is made into butter and cheese intended for export and which is identifiable as such from the time such cream and milk is received at the factory until the produce is placed f.o.b. ocean steamer. Until the cream and milk is manufactured into butter and cheese, the cover is against fire risk only. The premium for the risk up to f.o.b. is charged to dairy companies on the following basis :— Butter .. .. .. .. .. .. 0-565 d. per box. Cheese .. .. .. .. .. .. 0-935 d. per crate. FREIGHT RATES. The bulk purchase by the United Kingdom Government of all New Zealand butter and cheese at the point of f.o.b. ocean steamer leaves the responsibility for the freight charge with the buyer. New Zealand is therefore not now directly interested in any change in the rates of feight, but it is considered advisable to record the fact that rates on all produce, including butter, cheese, meat, fruit, tallow, and wool, have been increased by an added 70 per cent, on account of conditions brought about by the war. The present rates on butter and cheese, with the percentage increase added, are as under :— Butter .. .. .. At ss. sterling per box (l-07d. sterling per pound). Cheese .. .. . . At l-125d. sterling per pound. ADVERTISING, PUBLICITY, AND SALES PROMOTION. Under war conditions, and the present system of rationed distribution of butter in the United Kingdom and its sale as Government butter, there is no recognition of country of origin or of national or other brands. In these circumstances advertising and publicity in support of New Zealand butter would be ineffective, and the expense would not be justified. Consequently the Department's extensive advertising and publicity activity has had to be discontinued for the period of the war. However, the Department has retained a small staff of publicity officers attached to its London organization in order to maintain contact with the trade, to endeavour to promote butter-sales under the present difficult conditions, and to form the nucleus of the organization which will be required to support New Zealand's post-war marketing activity. PAYMENTS MADE BY DAIRY-FACTORY COMPANIES FOR BUTTERFAT-SUPPLIES. The following tabulation shows the average butterfat-prices paid to suppliers of butter- and cheesemanufacturing companies in respect of the 1936-37, 1937-38, 1938-39, and 1939-40 seasons. The dairy companies are grouped for purposes of averaging under the appropriate dairy-produce grading ports. It should be borne in mind that when making comparison of butterfat payouts of companies it is necessary to take into consideration the location of the factories and special circumstances pertaining to individual companies, as those factors reflect appreciably on manufacturing and transport costs : —

Payments by Dairy Companies for Butterfat-supplies.

(In pence per pound of butterfat.) Season 1936-37. Season 1937-38. Season 1938-39. Season 1939-40. Butter. Cheese. Butter. Cheese. Butter. Cheese. Butter. Cheese. Auckland .. .. 13-642 15-546 14-870 16-514 16-164 18-328 16-257 18-436 New Plymouth .. .. 13-615 15-139 14-776 16-449 15-910 17-815 16-023 17-960 Patea-Wanganui .. 13-453 15-203 14-588 16-602 15-799 18-057 15-916 18-065 Hawke's Bay-Gisborne .. 13-386 14-425 14-557 15-697 15-721 17-392 15-726 17-544 Wellington .. .. 13-610 14-923 14-935 16-151 16-301 17-885 16-394 18-106 Marlborough-N el son-West- 12-918 14-266 14-254 15-514 15-670 17-488 15-516 16-845 land Canterbury .. .. 12-861 14-836 14-764 16-353 15-933 17-865 16-207 18-014 Otago .. .. 12-831 14-398 14-195 16-166 15-210 17-984 15-161 18-091 Southland .. .. 12-310 15-393 13-724 16-128 15-062 18-409 14-516 17-946 New Zealand average.. 13-558 15-176 14-812 16-389 16-087 18-060 16-179 18-091

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The following tabulation shows the average costs of butter- and cheese-manufacturing companies for the 1939-40 season, the companies being grouped, for the purpose of averaging, under the appropriate dairy-produce grading ports. The New Zealand averages for the three previous seasons are also shown: —

Season 1939-40: Costs in Manufacture and Delivery of Butter to f.o.b. Overseas Steamers.

Season 1939-40: Costs in Manufacture and Delivery of Cheese to f.o.b. Overseas Steamers.

ACCOUNTS. The dairy-produce accounts covering the completed operations for the 1938-39 season and the operations for the 1939-40 season are shown in the accounts section at the end of this report, pages 36 and 37. The completed operations for the 1938-39 season are referred to on page 6of this report. The relevant accounts show that the actual deficit for the 1938-39 season was £2,514,889. This deficit had been estimated in last year's report at £2,552,929. The accounts now presented in respect of the 19.39-40 season cover purchases of butter and cheese by the Department up to 31st July, 1940. The following table shows the quantities so purchased, the total season's production for export, and the stocks in store awaiting purchase and shipment at 31st July, 1940

The accounts for the 1939-40 season comprise Purchase and Sale and Revenue Accounts, and Administration and General Expenses Account. It will be observed from the accounts that the purchase and sale transactions to 31st July, 1940, show a surplus of £49,788 after allowance has been made for administration and general expenses,

3—H. 30,

(In pence per pound of butterfat.) bO _D •S S & o a .2 J <B '■§ 18 & So SS -8 I g « I S J | EP* £ g> « * |l I ag .3 I* £.5 °§ 1° f || "1 oo H o I a « g Auckland .. .. .. .. 0-365 0-922 0-068 0-061 0-438 0-140 1-994 New Plymouth .. .. .. 0-303 1-173 0-110 0-091 0-329 0-191 2-197 Patea-Wanganui .. .. .. 0-528 1-170 0-171 0-080 0-340 0-254 2-543 Hawke's Bay-Gisborne .. .. 0-512 1-128 0-142 0-065 0-442 0-330 2-619 Wellington .. .. .. .. 0-374 0-966 0-068 0-043 0-360 0-189 2-000 Marlborough-Nelson-Westland .. .. 0-486 1-263 0-188 0-067 0-552 0-340 2-896 Canterbury .. .. 0-829 0-982 0-094 0-131 0-283 0-634 2-953 Otago ' .. .. .. 1-116 1-330 0-224 0-072 0-241 0-891 3-874 Southland .. .. .. 1-116 1-556 0-322 0-082 0-295 0-784 4-155 New Zealand average — 1939-40 season .. .. 0-398 0-977 0-084 0-063 0-418 0-187 2-127 1938-39 season .. .. 0-402 1-019 0-085 0-098 0-394 0-208 2-206 1937-38 season .. 0-381 0-953 0-075 0-076 0-384 0-178 2-047 1936-37 season __ . . 0-352 0-927 0-072 0-088 0-398 0-147 1-984

(In pence per pound of butterfat.) | Manu- I Repairs j Charges: overhead Total i facturing Depreciation. and i Factory to , ,, ' o a j | 'hiiviroa I n I'rrou Charges. .Maintenance. f.o.b. Uiarges. Charges. I I I Auckland .. .. .. 2-144 0-166 0-233 0-687 0-213 3-443 New Plymouth .. .. 2-243 0-143 0-123 0-516 0-258 3-283 Patea-Wanganui .. .. 2-161 0-128 0-183 0-553 0-269 3-294 Hawke's Bay-Gisborne .. 2-291 0-147 0-190 0-846 0-404 3-878 Wellington .. .. 2-318 0-119 0-145 0-714 0-328 3-624 Marlborough-Nelson-'Westland 2-823 0-274 0-160 0-896 0-567 4-720 Canterbury .. .. 2-511 0-229 0-186 0-577 0-598 4-101 Otago .. .. .. 2-602 0-208 0-195 0-749 0-525 4-279 Southland .. .. .. 2-589 0-170 0-198 0-709 0-479 4-145 New Zealand average — 1939-40 season .. 2-259 0-148 0-180 0-624 0-299 3-510 1938-39 season .. 2-289 0-157 0-203" 0-617 0-326 3-592 1937-38 season .. 2-151 0-141 0-166 0-589 0-290 3-337 1936-37 season .. 2-056 0-134 0-146 0-577 0-226 3-139 .

Purchased up to Remaining in Store, Total Season's Pro31st July, 1940. 31st July, 1940. auction for Export. Boxes. Boxes. Boxes. Creamery butter .. .. .. 4,608,018 515,670 5,123,688 Whey butter .. .. .. 76,818 6,982 83,830 Total butter ,. • . 4,684,866 522,652 5,207,518 Crates. Crates. Crates. Cheese .. 1,190,596 99,970 1,290,566

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MEAT. BULK PURCHASE OF 1939-40 SEASON'S MEAT BY UNITED KINGDOM GOVERNMENT. The parliamentary paper H.-30b, 1940, " Food and other Supplies to the United Kingdom during the War," which is to be read with this report, contains a summary of the negotiations with the United Kingdom Government for the purchase of the 1939-40 season's meat. This parliamentary paper also gives full details of the purchase agreement for frozen meat and edible offals, and the complete schedule of f.o.b. sterling prices agreed upon with the United Kingdom Ministry of Food for the various descriptions of meat. In terms of the contract, the Ministry of Food undertook to purchase 300,000 tons of frozen meats from the production of the season ending 30th September, 1940, and from the carry-over from the previous season, which amounted to 45,000 tons. PURCHASE AND SALE PROCEDURE. The procedure to be followed in the purchase of meat by the New Zealand Government and its subsequent sale to the United Kingdom Ministry of Food was decided upon after consultation with the New Zealand Meat-producers Board, freezing companies, and meat-exporters. Briefly, the Marketing Department pays to the freezing companies and meat-exporters the fixed f.o.b. purchase prices for all classes of meat, the prices payable to the growers being left in the hands of the trade. In accepting this method of procedure, the Government stipulated that the operations of the freezing companies both as regards freezing services and buying operations should be subject to an audit either by the Auditor-General or by a private firm of auditors approved by the Government and reporting to it. The arrangements for the conduct of this audit are embodied in the Meatexporters' Accounts Emergency Regulations 1940. Power to purchase meat of any description, and to dispose of such meat in New Zealand or elsewhere by sale or by delivery to His Majesty's Government in the United Kingdom, was conferred on the Marketing Department by the Meat Marketing Order 1939, pursuant to section 4 of the Marketing Amendment Act, 1939. Further powers were given to the Department under the Meat Marketing Order 1939, Amendment No. 1. In Circular No. M 3, dated 30th November, 1939, addressed by the Hon. the Minister of Marketing to all freezing companies and meat-exporters, full details of the purchase procedure were set out. Instructions regarding shipping documents, parcelling, grading, quality, invoicing, and other matters were given in detail. Regarding bills of lading, it was required that all bills of lading covering the shipment of meat and edible offals to the United Kingdom were to be made out in the name of the New Zealand Government (Marketing Department) as shipper or consignor, and showing the Ministry of Food, United Kingdom, as the consignee. PRICES AND PAYMENTS. The f.o.b. (Now Zealand currency) purchase prices payable to freezing companies and meatexporters are set out in the schedules attached to the Meat Marketing Order 1939, Amendment No. 1. These prices were arrived at by converting the sterling f.o.b. sale prices agreed with the United Kingdom Government at the current telegraphic transfer exchange rate of £124 7s. 6d., and deducting therefrom | per cent, to cover Marketing Department expenses, interest, and Meat Board levy. Provision is made by the Meat-export Control Act (Partial Suspension) Regulations 1940 for the suspension of the levy hitherto collected by the New Zealand Meat-producers Board on all meat exported from New Zealand by virtue of section 13 of the Meat-export Control Act. In lieu thereof the regulations provide for the payment to the Board in each financial year, out of moneys in any appropriate account established in the Reserve Bank in connection with the purchase of meat pursuant to the Meat Marketing Order 1939, such sum not exceeding £30,000 as the Minister of Marketing may approve. A feature of the purchase arrangements is that payment in full at the f.o.b. prices set out in the Schedules is made against shipping documents as soon as the meat is shipped, whereas in terms of the sale agreement with the United Kingdom Government payment of 90 per cent, is made on shipment and 10 per cent, within twenty-eight days after arrival or, in case of the steamer being lost, on estimated due date of arrival. In the case of mutton and lamb, the payments made to freezing companies and meatexporters include the agreed telescoping allowance of r ' H d. per pound sterling (0-0777 d. New Zealand currency). Additional to the original price schedules agreed upon, premiums are now paid by the United Kingdom Ministry of Food for sheep and lamb livers packed in pails, also for beef and calf tongues trimmed to the Ministry of Food specifications. Prices were also agreed upon for other minor items which had not been covered in the original negotiations. The interest which accrues on the remaining 10 per cent, carried by the Government from time of shipment until final settlement is made is absorbed in the deduction from the sterling f.o.b. sale prices referred to above. Purchases made by the Department from freezing companies and exporters for the eight months ended 31st July, 1940, total £14,975,845 (New Zealand currency). Debits to the United Kingdom Ministry of Food total £15,069,329 (New Zealand currency) for the same period. The total weight of meat purchased aggregated 256,396 tons, giving an average payout to freezing companies and meat-exporters of 6-23 d. per pound for all descriptions of meat and edible offals. When shipment is completed of the balance of the season's production for the twelve months ended 30th September, 1940, it is estimated that a further sum of approximately £4,600,000 will have been disbursed, making a total payment to the trade of approximately £19,500,000 (New Zealand currency). The following table shows particulars of meat purchased to 31st July, classified under ports and main descriptions of meat purchased; —

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Meat Purchases to 31st July, 1940.

~ I I Purchase iamb. i Mutton. Quarter Beef. | Boneless Beef and Veal. Pork. Sundries. Total Weight. (New Zealand currency / • Port. ! —: Carcasses. lb. j Carcasses. lb. Quarters. lb. Bags. ! lb. lb. lb. lb. £ I I | O mi a 78 965 2,529,611 35,224 1,948,135 14,686 2,139,011 45,637 4,701,911 3,367,753 457,074 15,143,495 354,966 Auckland" " 985'l77 33,703,066 310,735 18,158,446 ! 112,794 17,908,686 208,288 19,388,539 19,875,658 3,745,520 112,779,915 2,753,o33 Gisborne " 204 384 6,418,260 147,589 8,009,128 10,865 1,709,099 5,159 513,118 593,389 607,976 17,850,970 424,897 Tokomaru Bav " " 23 087 722,675 54,360 2,925,832 2,595 383,718 859 107,710 120,248 96,202 4,356,385 94,491 NanieT " " 1002 209 33,912,793 417,161 23,156,011 75,169 11,750,701 24,465 2,926,655 1,862,750 2,886,323 76,495,233 1,873,868 Waikokopu .. 53,302 1,635,321 13,751 719,915 3,224 506,038 2,686 264,297 .. 216,387 3,341,958 85,022 Wansanui " .. 347 386 11,494,745 161,935 8,908,044 11,587 1,894,994 13,957 1,465,377 452,028 880,179 25,095,367 625,791 Wellington " .. 1,448,354 48,365.815 541,939 30.476,758 78,234 12,653,910 70,657 7,294,868 4,976,599 2,705,321 106,473,271 2,648,616 NewPlvmouth " ' .. 373,845 12,650,639 148,567 8,405,483 50,151 7,249,480 72,283 7,477,272 9,838,701 2,068,654 47,690,229 1,180,851 p icton 135,270 4,257,692 36,250 1,591,109 .. .. 1,492 153,828 161,509 168,334 6,332,472 179,715 Nelson 35 465 1,163,971 4,179 ■ 211,576 .. .. 770 132,694 806,299 53,680 2,368,220 70,506 Lvttelton !. 1,330*153 44,372,338 206,544 9,717,409 .. .. 16,689 1,697,590 575,167 2,160,752 58,523,256 1.690, §41 Oamaru ' .. 169,090 5,552,858 23,416 1,114,270 .. .. 224 37,535 .. 358,008 7,062,671 20 ®' 2^ Timarn 546,736 17,964,611 47,245 2,255,315 .. .. 2,008 222,623 .. 762,576 21,205,125 640,520 Port Chalmers " ' .. 585.536 20,094,978 58,515 3,128,022 262 32,968 12,663 1,100,445 .. 969,686 25,326,099 741,499 Bluff " .. 1,078,420 37,742,514 59,108 3,421,572 9,558 1,336,181 5,587 684,597 .. 1,098,004 44,282,868 1,335,934 Totals .. .. .. 8,397,379 282,581,887 2,266,518 124,147,025 369,125 57,564,786 483,424 48,169,059 42,630,101 19,234,676 574,327,534 14,909,299 ) V J\_ ) Tons .. .. 126J53 55,423 25,698 21,504 19,031 8,587 256,396 Purchase (New Zealand cur- £9,052,067 £2,040,639 £1,268,096 £591,039 £1,364,403 £593,055 .. £14,909,299 rency) addition to the foregoing relating to the purchase of frozen meat and frozen edible offals, the Department purchased to the 31st July, 1940, canned meat valued at £66,546 (New Zealand currency).

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GRADING, QUALITY, DRESSING, AND PACKING. The general condition of purchase in respect of grading as laid down by the contract with the Ministry of Food is that meat is to be of the usual descriptions and grades as shipped from New Zealand prior to the war. This general condition was, however, qualified as regards the North Island to the extent that all works were instructed to grade Down Cross lambs separately from the ordinary Crossbredtype lambs, and an undertaking was given to the United Kingdom Government that all carcasses graded " Down Cross " will be of the " Down " type. The grading standards are supervised by the Supervising Graders of the New Zealand Meat-producers Board. In addition, works managements are expected to ensure that their standards of dressing and general get-up of both carcasses and of sundries are fully up to their regular standards. All specifications, in addition to the usual certificate regarding condition, dressing, &c., carry the following clause: — "We hereby certify that the abovementioned meat has been graded in accordance with the standards established and supervised by the Supervising Graders of the New Zealand Meat-producers Board." No meat may be tendered for shipment unless it is in good condition. The Ministry of Food has the right to survey meat upon arrival for quality, and if not up to standard an allowance is to be agreed upon between buyers' and sellers' surveyors. In the event of disagreement an umpire is to be appointed by agreement between the two parties, whose decision shall be final. The buyers also have the right to weigh cargo upon arrival, and in the event of any claim for short weight such claim is to be based on the customary rule of the trade with 1 per cent, franchise. If the loss in weight is over 1 per cent., the sellers are to make the necessary allowance. The Marketing Department reserves the right to recover from sellers in the event of quality claims being received from the United Kingdom, and also to recover any claims for short weight. Shippers were given the opportunity of appointing a representative in the United Kingdom to watch their interests in regard to survey matters. These representatives of shippers are permitted to attend surveys with the New Zealand Government's surveyor, at the expense of their principals, but without power to negotiate. The New Zealand Government's surveyor consults the shipper's representative before agreeing to any settlement concerning his principals, but such representative has no power to veto any proposed settlement. SURVEY OF THE SEASON. The season under review has been an exceptionally good one, the killings for export being easily a Dominion record. On the whole, climatic conditions were favourable, and a good fattening season was experienced. After a normal commencement, killings in the autumn —particularly in the months of April and May—soared to an unprecedented level, and freezing-works generally were kept exceptionally busy during this period. The quality of stock handled on the whole was good, and the average weights recorded were well above last year's average. The total killings this season to the 27th July were 1,927,109 freight carcasses (of 601b. weight) in excess of the killings last season to the nearest comparable date (31st July). It is to be noted that by far the greater part of this increase has taken place in the North Island. In numbers slaughtered for export, the greatest increase is in the sheep and lambs group, but there has also been a marked increase in the total weight of cattle slaughtered, both in quarters and in the boned form. Pork-production for export shows a slight increase. Regarding mutton killings, there has been a very large increase in ewe killings but a drop in the number of wethers killed. The total weight of export-meat production for the season is expected to reach a figure of approximately 350,000 tons, an increase over the previous season of 18 per cent. At the commencement of the season there was in store in New Zealand, and in vessels loading on the coast, approximately 45,000 tons of old season's meat. The contract quantity of liftings from carry-over stocks at 30th September, 1939, and from killings for the production year ended 30th September, 1940, was 300,000 tons, with a proviso that the Ministry of Food, subject to freight being available, would use its best endeavours to ship additional quantities available for export within the limit of its requirements, such quantities to be paid for in accordance with the terms of the agreement. It is anticipated that by the 30th September, 1940, the United Kingdom Ministry of Food will have lifted an additional quantity of approximately 50,000 tons over and above the contracted quantity of 300,000 tons.

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STATISTICS. Weekly returns are obtained by the Department from all freezing companies, showing full statistical details in regard to killings, shipments, and stocks in store of all grades and descriptions of meat. The following statement shows the killings at all works of the various classes of meat from the Ist October, 1939, to the 27th July, 1940. The comparative figures to the nearest date of the previous season are also shown :—

Killings for Export.

The stocks of meat held in store in the Dominion at the 27th July were as follows. The comparative figures to the nearest date of the previous season are also shown : —

Stocks in Store.

SHIPPING. The Department as shipper of all meat to the United Kingdom Ministry of Pood notifies the Overseas Shipowners' Allotment Committee of the allotments of shipping-space to be made to freezing companies. The shipping-space available has, as far as possible, been allocated equitably amongst all shippers in proportion to the stocks awaiting shipment. Under war conditions the requirements of the United Kingdom Government in regard to monthly liftings of the various classes of refrigerated produce necessarily take precedence over other considerations. Tentative forward tonnage programmes are framed having regard to stocks in store and estimated future killings, and these are submitted to the United Kingdom Government, with whom the final decision rests. In the interests of expeditious loading and despatch of overseas vessels, the number of ports of loading per vessel has been substantially reduced. Loadings have proceeded satisfactorily and a greater tonnage of meat has been despatched from the Dominion than in any previous year. In the early part of the season the tonnage liftings resulted in the speedy clearance from works' stores of the accumulated stocks carried over from last season. At 31st March of this year the stocks in store were appreciably less than at the same date in the previous season. The exceptionally heavy killings which took place from April onwards, and for which additional shipping tonnage could not be immediately made available, resulted in some accumulation of stocks which, however, is now being rapidly reduced as the shipping programme overtakes the killings in the off season. The Congestion which has occurred in some freezing works' stores in the North Island has been due not to a deficiency of normal shipping tonnage, but to the great increase in killings at these works, concentrated in a comparatively short period, and aggravated by the fact that the greatest killing increases have occurred in districts where the storage capacity of freezing-works has been least able to cope with substantial increases.

North Island. South Island. Dominion. To 27th To 31st To 27th To 31st To 27th To 31st July, 1940. July, 1939. July, 1940. July, 1939. July, 1940. July, 1939. Lamb (carcasses) .. .. 5,305,659 4,740,095 5,073,397 5,002,408 10,379,056 9,742,503 Wether mutton (carcasses) .. 1,331,700 1,218,952 175,706 226,943 1,307,406 1,445,895 Ewe mutton (carcasses) .. 1,219,338 629,582 700,231 523,24-8 1,919,569 1,152,'830 .Beef (quarters) .. .. 672,638 400,260 14,543 1,626 687,181 401,886 Boneless (601b. freight carcasses) 905,507 751,323 72,646 62,287 978,153 813,610 Pork (freight carcasses) ... 871,682 843,703 33,690 43,807 905,372 887^510 Offals (freight carcasses) 294,197 253,242 115,561 116,766 409,758 370,008 Total (freight carcasses).. 8,913,030 7,187,223 3,833,871 3,632,569 12.746,901 10,819,792

North Island. South Island. Dominion. 27th .July, 31st July, 27th July, 31st July, 27th July, 31st July, .1940. 1939. 1940. 1939. ' 1940, 1939. Lamb (carcasses) .. .. 754,660 384,062 1,195,913 998,916 1,950,573 1,382,978 Wether mutton (carcasses) .. 307,190 580,264 75,668 106,004 382,858 686,268 Ewe mutton (carcasses) .. 267,397 282,409 372,697 315,680 640,094 598,089 Beef (quarters) .. .. 318,572 54,129 4,723 435 323,295 54,564 Boneless (60 lb. freight carcasses) 343,407 289,038 18,910 8,068 362,317 297,106 Pork (freight carcasses) .. 141,982 134,855 10,766 10,842 152,748 145,697 Offals (freight carcasses) .. 58,724 61,622 10,473 20,258 69,197 81,880 Total (freight carcasses) .. 2,249,574- 1,587,394 1,090,068 934,061 3,339,642 2,521,455

H.—3o.

With the co-operation of the Overseas Shipowners' Allotment Committee in arranging for special shipping relief, threatened hold-ups in killings of fat stock, due to congested stores, were overcome. The Meat Board has been most helpful in meeting the difficulties which have arisen from time to time, and freezing companies have shown an appreciation of the problems arising out of unexpected delays and alterations in arranged itineraries of vessels due to war conditions, and have extended their co-operation in the rearrangements which have had to be made. The telescoping of all mutton and lamb carcasses has enabled greater use to be made of refrigerated space, both in works' stores and in ships' holds. The estimated space saving due to telescoping is approximately 25 per cent, over all. In order to obtain the most effective utilization of storage and shipping space, further economies in packing are at present under consideration. STORAGE. During the season freezing companies have proceeded with the erection of additional cool-storage accommodation under the programme laid down by the Government whereby all works were required to build up to 60 per cent, storage capacity based on the assessed killings for the 1938-39 season. Most of these additions have now been completed, and the extra storage space will be available for next season. New proposals for further increase in works' storage accommodation, and also for the making of greater use of existing storage, are now being considered by the Government. CANNED MEAT. Since the outbreak of war the New Zealand Government has been in continuous touch with the United Kingdom Government to ensure that the maximum requirements of canned meat at appropriate prices are drawn from New Zealand. All offers to purchase corned beef are submitted by the Ministry of Food to the New Zealand Government, and shipment of accepted tenderings is made in the same way as in the case of frozen meat. So far the United Kingdom Ministry of Food has not made any purchases from the New Zealand Government of other types of canned meat, such as sheep and lamb tongues and boiled mutton. Such classes of canned meat have been shipped under license to private consignees in the United Kingdom for independent sale. SHIPMENTS TO OUTSIDE MARKETS. In agreeing that the Dominion's exportable surplus be sold to the United Kingdom Government, the New Zealand Government made a reservation in respect of the small quantity of meat required to retain the Dominion's regular trade outside the United Kingdom. The Ministry of Food agreed, and small shipments both of frozen and canned meat have been made from time to time during the season to destinations other than the United Kingdom. These shipments are controlled by export permits issued by the Customs Department on the recommendation of the Marketing Department. During the season the New Zealand Meat-producers Board made a shipment to Canada comprising 2,300 carcasses of lamb. The Board represented to the Government the desirability of continuing this outlet, which had been established by them prior to the war. UNITED KINGDOM REPRESENTATION. The office of the High Commissioner for New Zealand in the United Kingdom forms a valuable medium for negotiation and interchange of information with the United Kingdom Ministry of Food on all matters pertaining to meat shipments. An experienced staff handles shipping documents and claims, and also attends to the collection of final payments on arrival of shipments. GENERAL. During the season, various conferences and discussions have taken place between the New Zealand Meat-producers Board and officers of the Departments of Agriculture and Marketing. Helpful cooperation has been extended to this Department from these sources. The freezing companies' committee has been available to discuss points arising in regard to meatprices, packaging, and storage, and their services have been valuable. The co-operation of the freezing companies has also been manifested in many ways, and relations between the Department and the trade have been very satisfactory. The payment and shipment arrangements in New Zealand have proceeded smoothly, and the methods of documentation and delivery of meat have been satisfactory to the Ministry of Food. At the outbreak of the war the New Zealand Meat-producers Board placed the whole of its organization both in New Zealand and in London, at the service of the Government. Advantage was taken of this offer, and several members of the staff of the Board, both in New Zealand and in London, were co-opted for service with the Department. ACCOUNTS. The meat accounts are shown in the accounts section at the end of this report, page 38. The accounts cover purchases of meat by the Department up to 31st July, 1940, and they comprise Purchase and Sale Account and Revenue Account. It will be observed from the accounts that the purchase and sale transactions to 31st July, 1940, show a surplus of £59,411 after allowance has been made for administration and general expenses.

H..—30.

WOOL. BULK PURCHASE OF WOOL BY THE UNITED KINGDOM GOVERNMENT. The parliamentary paper H.-30b, 1940, "Food and other Supplies to the United Kingdom during the War," which is to be read with this report, contains a summary of the discussions between the New Zealand Government and the Dominion wool interests, and of the negotiations between the New Zealand Government and the United Kingdom Government for the bulk purchase of wool. The parliamentary paper also gives full details of the contract between the two Governments, and of the agreements between the New Zealand Government and the members of the Dominion woolbrokers', woolbuyers', and woolscourers' associations. These agreements cover services to be performed by the respective parties in the preparation, appraisal, scouring, and export or other disposal of wool. For convenience in reference, the short details of the contract for purchase of wool by the United Kingdom Government, and of the agreements with the woolbrokers', woolbuyers', and woolscourers' associations, are given, as follows : — Contract for Purchase of Wool by the United Kingdom Government. The contract covers the 1939-40 season's export wool-clip, and succeeding wool-clips during the period of the war, and the following season's clip. The wool year (or season) covered by the contract for bulk purchase by the United Kingdom Government is that ending on 30th June in each year. The Department has accordingly adopted this date as the close of its wool year. The statistics and accounts presented with this report will therefore not represent a full year's operations, in that they excluded wool sold at the crutching sales during the months of July and August, 1939. The purchase price fixed for greasy wool is 10-55 d. per pound sterling f.o.b. This price enable s the agreed over-all average payment to be made to woolgrowers for greasy wool of 12-25 d. per pound New Zealand currency delivered to appraisal warehouse. The price also allows for payment for services to woolbrokers, to wool-appraisers, and for costs to f.o.b. (transport, storage, and insurance), and for Marketing Department expenses. Details of these payments for services are given in the parliamentary paper referred to. The purchase price fixed for slipe wool is 13-75 d. per pound sterling f.o.b. This price enables an over-all average payment to be made to freezing companies and exporters of 16-9766 d. per pound New Zealand currency f.o.b. The price also allows for payment for services to appraisers and for Marketing Department expenses. The purchase prices for greasy and slipe wool may be reviewed in May- of each year, at the instigation of either the United Kingdom or the New Zealand Governments. Agreement with Woolbrokers. The members of the Woolbrokers' Association operate as Government woolbrokers for the duration of the purchase agreement, and on the following main terms : — (1) The woolbroker to cover all wool for insurance risks after entry into store until such time as the wool becomes the property of the Crown. (2) The woolbroker to undertake storage and preparation of wool for appraisement and all other duties in this respect. (3) In consideration of these services rendered by the woolbroker the Minister of Marketing (acting on behalf of the New Zealand Government) to pay to each broker by way of remuneration a sum calculated at the rate of for every pound weight of wool appraised in the store of that broker. Agreement with Woolbuyers. The agreement covers the services to be rendered to the New Zealand Government by the members of the Woolbuyers' Association in the appraisal of New Zealand greasy, slipe, and scoured wools. The following are the main provisions of the agreement (1) The New Zealand Woolbuyers' Association to provide offices and a sufficient staff to enable it to undertake the examination, classification, and appraisement of all wool purchased by the Crown and all clerical, accounting, and other work ordinarily incidental thereto. (2) The New Zealand Woolbuyers' Association to perform the agreed services to the satisfaction of the Government Departments concerned. (3) In consideration of the services rendered by the New Zealand Woolbuyers' Association, the Minister of Marketing (acting on behalf of the New Zealand Government) to pay to the association a sum calculated at the rate of 0-053 d. for every pound weight of wool appraised. Agreement with Woolscourers. The agreement covers the services to be rendered to the New Zealand Government by the members of the Woolscourers' Association in the scouring of wools selected for that purpose. The quantity of wool named for scouring was 75,000 greasy bales, and the inclusive charge for scouring was fixed at per pound.

H.—3o.

PREPARATION OF SCHEDULE OF WOOL TYPES, YIELDS, AND PRICES. The sale to the United Kingdom Government having been made on the basis of over-all average payments to woolgrowers for greasy wool of 12-25 d. per pound New Zealand currency and to freezing companies and exporters for slipe wool of 16*9766 d. per pound New Zealand currency, it became necessary for the Government appraisers to draw up a type schedule setting out all the different types and qualities of wool under their different grades. Using the data available to them regarding the likely quantities of each type and the normal yields, the Government appraisers calculated a " clean on floor " limit which would bring the over-all average prices for the season within the respective figures of 12-25 d. per pound for greasy wool and 16-9766 d. per pound for slipe wool. In determining " clean on floor " limits, the Government appraisers worked 011 the relative peacetime values of the different types and qualities of wool. The type schedule for greasy wool covered 830 classes and that for slipe wool 460 classes. Some slight anomalies which were revealed in the early appraisals were avoided in subsequent appraisals, and on the whole the results of the appraisements are considered to be quite satisfactory. In order to avoid any danger of an overpayment to the woolgrowers for greasy wool and to freezing companies and exporters for slipe wool, it was decided to retain for payment at the end of the season 5 per cent, of the appraisement value of greasy wool and 10 per cent, of the appraisement value of slipe wool. Actually the over-all average of the appraisements for greasy wool was 12-15 d. per pound, or 0-82 per cent, below the over-all average payment of 12-25 d. per pound due to woolgrowers. The over-all average of the appraisements for slipe wool was 16-4811 d. per pound, or 2-92 per cent, below the over-all average payment of 16-9766 d. per pound due to freezing companies and exporters. These appraisement results reflect credit 011 the Government appraisers responsible for drawing up the schedule of wool types, yields, and prices, and for conducting the appraisals. PURCHASE AND SALE PROCEDURE. The terms and conditions governing the purchase of wool by the New Zealand Government are set out in the Purchase of Wool Emergency Regulations 1939. Payment for greasy wool is made to woolbrokers on behalf of woolgrowers, and for slipe wool to freezing companies and exporters. In each case payment is made fourteen days after date of appraisal. The appraisal values are calculated after allowance for actual tare, and when payment is made the retention moneys already referred to (5 per cent, in the case of greasy wool and io per cent, in the case of slipe wool) are deducted. In July, 1940, the final payments were made for greasy and slipe wool. These final payments represent the full amounts of the retention moneys on greasy and slipe wool, plus the differences in price necessary to bring the over-all average of the appraisement prices for both greasy and slipe wool up to the over-all average prices—l2-25d. per pound greasy wool and 16-9766 d. per pound slipe wool— represented by the sale prices to the United Kingdom Government. Accordingly the final payment on greasy wool totalled 6-136 per cent, of the appraisal values, and the final payment on slipe wool totalled 13-066212 per cent, of the appraisal values. Payment for wool (other than wool sold to local manufacturers) is made by the United Kingdom Government on appraisal at the sale prices of 10-55 d. per pound sterling for greasy and 13-75 d. per pound sterling for slipe, the amounts due being calculated after allowance for a flat tare of 10 lb. per bale. Payment by local manufacturers is made on " prompt " date at appraisal values, plus the standard charges of brokers, appraisers, and Marketing Department. The contract for sale of wool by the New Zealand Government is with the United Kingdom Ministry of Supply, but all instructions regarding shipment and accounting for wool are given by the Wool Control at Bradford. APPRAISAL PROCEDURE. In determining the points in the Dominion at which appraisals should be held, the New Zealand Government endeavoured as far as possible to maintain all woolgrowers on an equitable basis, having regard to their pre-war method of disposal of their wool. The woolbrokers are responsible for the preparation of wool for appraisal. The appraisers classify the wool as to type, and estimate the clean-wool content —i.e., the yield—of each lot. From these data the price is determined. All such estimates are later checked by the senior appraisers, and the price calculations checked by independent appraisers. The checked prices are subsequently issued to the brokers, who in turn issue them to the woolgrowers concerned. Woolgrowers have the right of appeal against appraisals if they consider their prices too low. The procedure governing appeals is laid down in the Purchase of Wool Emergency Regulations 1939. It is to be noted that during the season very few appeals were made.

H.—3o.

The following tables show the quantities and values of wool appraised at the various appraisal points. The figures do not represent a full year's operations, in that they exclude wool sold at the crutching sales during the months of July and August, 1939 : —

Greasy Wool.

Old Season's Scoured Wool.

Slipe Wool.

4—H, 30.

Purchased for Sale to Uuited Kingdom Ministry of Supply. Local Mills. Total Appraisals. Appraisal Centre. |r or Shipment in the Grease. For Scouring. Bales. Net Pounds. Bales. Net Pounds. Bales. Net Pounds. Bales. Net Pounds. Appraisal Value £ s. d. Auckland .. 74,954 25,930,592 7,718 2,999,780 630 229,269 83,302 29,159,641 1,410,670 6 2 Tokomaru Bay .. 6,351 2,330,253 756 301,822 354 124,924 7,461 2,756,999 142,686 0 8 Tolaga Bay .. 3,805 1,377,615 291 115,537 6 2,248 4,102 1,495,400 74,911 10 7 Gisborne .. 34,726 11,867,239 2,630 980,048 303 105,376 37,659 12,952,663 630,958 4 5 Napier .. 83,351 28,912,811 13,025 4,963,474 1,888 706,197 98,264 34,582,482 1,695,103 8 7 Wanganui .. 64,757 23,242,332 7,677 2,937,334 1,398 520,564 73,832 26,700,230 1,313,780 9 8 Wellington .. 92,624 33,279,323 9,438 3,672,412 3,830 1,425,624 105,892 38,377,359 1,959,303 17 4 Nelson .. 7,212 2,214,167 .. .. .. .. 7,212 2,214,167 113,735 12 4 Blenheim .. 16,538 5,151,201 686 247,191 479 150,971 17,703 5,549,363 294,532 5 5 Christchurch .. 65,848 20,893,578 10,605 3,713,390 8,904 2,780,295 85,357 27,387,263 1,445,428 0 11 Timaru .. 29,877 9,765,257 6,328 2,295,864 5,779 1,937,073 41,984 13,998,194 708,141 15 5 Oamaru .. 11,894 3,896,648 982 378,279 2,040 686,682 14,916 4,961,609 258,603 18 9 Dunedin .. 61,866 20,003,116 6,180 2,306,758 9,726 3,137,844 77,772 25,447,718 1,320,749 0 11 Inveroargill .. 54,911 17,808,431 3,961 1,396,658 2,092 696,630 60,964 19,901,719 1,031,930 2 10 Total .. 608,714 206,672,563 70,277 26,308,547 37,429 12,503,697 716,420 245,484,807 12,400,534 14 0 Additional (final) payment .. .. .. .. .. .. .. .. .. .. 140,831 3 11 ■ 12,541,365 17 II

Purchased for Sale to Purchaser! for Snip tn United Kingdom Ministry J/Urc t wm. Total Appraisals. of Supply. ij0cai mms ' Appraisal Centre. Bales. Net Pounds. Bales. Net Pounds. Bales. Net Pounds. Appraisal Value. £ s. d. Auckland .. .. 247 74,349 .. .. 247 74,349 4,518 2 9 Gisborne .. .. 315 96,495 .. .. 315 96,495 5,324 0 6 Napier .. .. 984 266,475 .. .. 984 266,475 19,157 15 1 Wanganui .. .. 342 91,245 .. .. 342 91,245 4,902 12 5 Wellington .. .. 337 91,198 .. .. 337 91,198 5,834 10 8 Blenheim .. .. 93 20,594 .. .. 93 20,594 1,510 2 8 Christohuroh .. .. 531 149,263 .. .. 531 149,263 11,997 17 7 Timaru .. .. 293 71,207 .. .. 293 71,207 7,161 3 0 Dunedin .. .. 71 17,398 .. .. 71 17,398 1,309 4 11 Invercargill .. .. 1,258 391,525 .. .. 1,258 391,525 29,275 0 5 Total .. .. 4,471 1,269,749 .. .. 4,471 1,269,749 90,990 10 0 Additional (final) payment .. .. .. .. .. .. .. .. 1,033 7 4 _ _ _ __ 92,023 17 4

Purchased for Sale to p„rnha»erf for Snip tn United Kingdom Ministry ""S Total Appraisals. of Supply. Jj0cal milla - Appraisal Centre. Bales. Net Pounds. Bales. Net Pounds. Bales. Net Pounds. Appraisal Value. £ s. d. Auckland .. .. 13,772 4,551,073 .. .. 13,772 4,551,073 298,650 9 0 Opua .. .. .. 993 342,431 .. .. 993 342,431 22,025 0 8 Tokomaru Bay .. .. 1,359 400,123 .. .. 1,359 400,123 23,689 3 4 Gisborne .. .. 4,671 1,591,125 .. .. 4,671 1,591,125 98,634 13 3 Wairoa.. .. .. 2,011 593,200 .. .. 2,011 593,200 38,345 8 10 Napier .. .. 13,639 4,605,853 .. .. 13,639 4,605,853 302,497 2 11 Wangatmi .. .. 8,105 2,866,552 .. .. 8,105 2,866,552 187,745 0 4 New Plymouth .. .. 2,684 1,095,583 .. .. 2,684 1,095,583 69,298 4 8 Wellington .. .. 21,403 7,774,904 .. .. 21,403 7,774,904 535,736 14 7 Nelson .. .. 0 1,374 .. ... 0 1,374 72 13 7 Blenheim .. .. 1,186 389,096 .. .. 1,186 389,096 26,294 5 11 Ohristchureh .. .. 16,210 5,629,919 21 7,211 16,231 5,637,130 404,180 11 0 Timaru .. .. 11,449 3,795,636 101 36,304 11,550 3,831,940 281,416 8 5 Oamaru .. •• 3,834 1,198,623 54 20,140 3,888 1,218,763 88,484 5 9 Dunedin .. .. 9,089 3,166,170 15 5,113 9,104 3,171,283 225,436 14 3 lnvercargill .. .. 10,642 3,704,422 .. .. 10,642 3,704,422 266,223 2 6 Total .. .. 121,053 41,706,084 191 68,768 121,244 41,774,852 2,868,729 19 0 Additional (final) payment .. .. .. •• •• .. .. 87,961 6 10 2,956,691 5 10

H.—3o.

SCOURING OF WOOL. The arrangements entered into with the United Kingdom Government provided for the scouring of 75,000 bales of wool at a cost of l|d. per pound greasy basis. The allowance of l|d. per pound covers transport to scouring-works, scouring charges, and delivery of the scoured wool to the point of f.o.b. ocean steamer. Actually under the contract 70,277 bales of wool were allotted for scouring up to 30tli June, 1940. Further allocations for scouring made during July and August, 1940, bring the total of bales scoured to 91,626 for the first twelve months. The quantities of wool allotted for scouring at the various appraisal points are shown in the table given under the heading " Appraisal Procedure." Stocks of scoured wool on hand for export at the time of completion of the contract with the United Kingdom Government were included in the contract, and amounted to 4,471 bales. SURVEY OF WOOL SEASON. Although it is not possible to submit an exact comparison of quantities of wool handled during the season under review with quantities handled in pre-war seasons, it can be said that the severe winter, with consequent increased flock losses, particularly in the high country of the South Island, led to a reduction in the total production of wool and to a general lightness in the fleece. It is estimated that production during the season under review was 10 per cent, below normal. Messrs. Dalgety and Co., Ltd., have published an estimate of comparative production as follows : — Ist July to 30th June, 1939-40. 1938-39. Bales. Bales. Greasy .. .. .. .. .. 756,071 803,831 Slipe .. .. .. .. .. 131,900 117,290 887,971 921,121 Stocks on hand at 30th June are estimated as — 1940. 1939. Bales. Bales. Greasy .. .. .. .. .. 18,865 28,868 Slipe .. .. .. .. .. 15,000 16,733 33,865 45,601 The decrease in the quantity of greasy wool produced in 1939-40 was due, as has been stated, to severe weather conditions in the immediately preceding winter months. The increase in the quantity of slipe wool is due to the greatly increased killings of sheep and lambs, and is also considered to be due to lambs having been withheld from slaughter somewhat later than is usual under peace-time conditions. The stocks of greasy wool at 30th Jane largely consist of crutching wools which were awaiting appraisal. SHIPPING ARRANGEMENTS. Immediately following the outbreak of war, the United Kingdom Ministry of Supply indicated its desire that shipments of wool should be made as quickly as possible. Appraisal and shipping arrangements were planned to this end, and the results were quite satisfactory. Prompt shipment of wool was assisted by the arrangements made by the United Kingdom Ministry of Shipping for vessels additional to those normally in the New Zealand trade. DESTINATION OF WOOL EXPORTS. The contract with the United Kingdom Ministry of Supply for the bulk purchase of wool provides that New Zealand's total exportable surplus is at the disposal of the Ministry of Supply. The New Zealand Government, whilst recognizing the needs of the Ministry of Supply, particularly for New Zealand's predominant quantity of coarser wools, desired as far as possible to maintain trade connections with other countries, notably Canada, Australia, and India. Representations were made by the New Zealand Government accordingly, and separate representations were made by the Canadian, Australian, and Indian authorities, resulting in the release of certain quantities for export to the countries named. These quantities are shown in a table which follows. The selection of wool for shipment to destinations other than the United Kingdom, is made by the Government appraisers in terms of their contract with the New Zealand Government. When orders are received, a New Zealand agent is nominated by the firm placing the order, and the agent advises the Marketing Department in regard to the appraisal types required. This information as to types is then given to the Government appraisers, and special wools suitable to the market concerned are selected by the appraisers most suitable for selecting in fulfilment of these orders. New Zealand has enjoyed a good market in Canada for wool, which has been supplied either direct from New Zealand or from the London sales. The requirements have been mainly paper felts, lambs' wool,.slipe wool, and. certain quantities of scoured wool. Some difficulty was experienced in meeting the needs of Canada owing to the lateness of the release of quantities by the United Kingdom Wool Control, which led to the shipment to the United Kingdom of certain wools which were desired for shipment to Canada. Owing to the fact that our wool was not so well grown as usual, being unusually fine, a number of orders for felts and for coarse wools could not be filled. However, even with these handicaps, our shipments to Canada must be considered quite satisfactory.

H.—3o.

The instructions from the United Kingdom Wool Control authority in regard to wool for France called for allocations of approximately 300,000 bales for shipment either direct to France or by transhipment from London. The greater part of this French allocation was to be transhipped at London, but instructions received towards the end of the season were to the effect that direct shipment should be made of approximately 110,000 bales, mainly greasjr wool, but including some slipe wool. Arrangements for these direct shipments were being completed at the time of the capitulation by the Bordeaux Government. Although Australia had taken about 52,000 bales of New Zealand wool during the season prior to the outbreak of war, the United Kingdom Wool Control released only 12,000 bales during the past season to this market. Apart from carpet wools 36/40's and a few orders for dag wool, Australia has not fully availed herself of these releases, presumably because of price considerations compared with the price of Australian-grown wool. Orders for shipment of wool to Australia are only approved on the understanding that the wool is for local use and not for re-export either as wool or in the form of a manufactured article. The market in India normally absorbs certain quantities of New Zealand wool either from direct shipments or as re-exports from Australia. Indian requirements were mainly 44/46's, which, during the past season, were in short supply. Consequently releases to India were somewhat restricted. It is considered that next season's arrangements will ensure a more ready fulfilment of Indian requirements. A number of indications were received from manufacturers and others in the United States of America and Japan that considerable quantities of New Zealand wool were required. Representations were made to the United Kingdom. Wool Control, but the reply was that all New Zealand's exportable surplus of wool was required for shipment to the United Kingdom or to satisfy releases to Empire or allied countries as already mentioned. New Zealand has had a good market in the United States of America for carpet wools and slipe wool, and in Japan for certain seedy types, locks, pieces, and crutchings, for which, apart from France, we have no other market. It is to be regretted that the circumstances of the war has temporarily denied these markets to New Zealand, but the Dominion Government readily acknowledges that the war-time needs of the United Kingdom are paramount. The arrangements for wool shipments other than to the United Kingdom provide that prices to be charged are determined by the United Kingdom Wool Control, the shipping arrangements, invoicing, and documentation being carried out by the Department. Details of Canadian shipments are settled in consultation with the Canadian Wool Administrator at Toronto. Australian shipments are arranged through the Central Wool Committee, Melbourne, and the New Zealand Trade Commissioner, Sydney. Indian shipments are arranged through the Central Wool Committee, Melbourne. The co-operation of these officials has been most helpful and is appreciated by the Department. The following tabulation shows the quantities of the past season's wool, and the destinations : —

The quantity of wool unshipped or held for scouring is 23,566 bales. ACCOUNTS. The wool accounts are shown in the accounts section at the end of this report, page 38, The accounts cover appraisals of wool up to the close of the wool year (30th June, 1940), and they comprise Purchase and Sale Account and Charges, Expenses, and Administration Account. It will be observed from the accounts that the purchase and sale transactions show a surplus of £106,838 after allowance has been made for all charges from appraisal to f.o.b. and for administration and general expenses. TALLOW. BULK PURCHASE OF 1939-40 SEASON'S TALLOW BY UNITED KINGDOM GOVERNMENT. The parliamentary paper H.-30b, 1910, " Food and other Supplies to the United Kingdom during the War," which is to be read with this report, contains a summary of the negotiations with the United Kingdom Government for the purchase of the 193940 season's tallow. This parliamentary paper also gives full details of the purchase agreement for tallow, and the complete schedule of the sterling c. and f. United Kingdom port prices agreed upon with the United Kingdom Ministry of Food for the various qualities and descriptions of tallow. In terms of the contract the Ministry of Food undertake to purchase all surplus tallow available for export from New Zealand of the 1939-40 season up to 30th September, 1940.

Destination. Scoured. Sooured ' Sli I> e - TotaI - Bales. Bales. Bales. Bales. United Kingdom and France .. 572,490 24,833 116,122 713,445 Canada .. .. .. 17,934 6,568 1,952 26,454 Australia 803 79 122 1,004 India .. .. .. 17,487 4,082 2,857 24,426 608,714 Old season's scoured: United 4,471 Kingdom Total .. .. 613,185 35,562 121,053 769,800

H;—3o.

PURCHASE AND SALE PROCEDURE. The procedure to be followed in the purchase of tallow by the New Zealand Government and the subsequent sale to the United Kingdom Ministry of Food was decided upon after consultation with representatives of the trade, and full details were given in Tallow Circular No. 1 regarding shipments, documentation, parcelling, grading, branding, prices and payments, and losses or claims. PRICES AND PAYMENTS. The f.o.b. (New Zealand currency) purchase prices payable to tallow-exporters are set out in the Schedule attached to the Purchase of Tallow Order 194.0. These prices are based on the sterling c. and f. sale prices agreed with the United Kingdom Government. The conversion is made at the current telegraphic transfer exchange rate of £124 7s. 6d. Ocean freight is deducted, and also an amount of 4s. 6d. per ton to cover Marketing Department expenses and interest. The terms of the sale agreement with the United Kingdom Government provide for payment on arrival in the United Kingdom or seventy days from date of bill of lading,, whichever is the earlier. The Marketing Department, however, pays exporters the full 100 per cent, upon shipment. Interest, which accrues against the Department until payment is received from the Ministry of Food, is absorbed in the 4s. 6d. per ton referred to. GRADING, QUALITY, AND PACKING. The general conditions governing grading, quality, and packing follow the customs in the trade and the provisions of the London Oil and Tallow Trade Association's form of contract, but the Department reserves the right to decide in which grade in the Schedule any particular brand of tallow should be placed for purposes of payment. At the outset of the arrangements there were a few differences of opinion between some shippers and the Department in regard to the classification of particular lines of tallow. In these cases the Department allowed shipments to go forward, subject to adjustments after examination on arrival in the United Kingdom. Exporters readily accepted this condition, and adjustments, which were few, presented no difficulty. The usual methods of packing in casks, barrels, or drums were adhered to, but in a few isolated instances the tares were excessive, resulting in a freight rate slightly higher than the average. In the event of any claims being sustained against the Department, such as for wrong description or classification, deficiency of titre, excessive impurities or free fatty acids, and for shortages in weights, the amounts of these claims are charged to the appropriate shippers or vendors in New Zealand. Shippers have the right to nominate a representative in London, so that such representative may, if necessary, be consulted by the Department's surveyor or arbitrator in the event of claims arising. STATISTICS. The following tabulation shows quantities of tallow purchased and. shipped to the United Kingdom from 28th March, 1940, to 31st July, 1940 : — Classification. Tons Net. Classification. Tons Net. First beef .. .. .. 380 Premier jus .. .. .. 28 First mutton .. .. 2,564 Stearine, superior .. .. 103 Good bright prime mixed .. 490 Hog grease ... .. .. 68 Good colour mixed . . .. 2,966 Lard, edible .. .. .. 52 Fair good colour mixed .. 1,580 I Pig fat inedible S.R. .. .. 153 Fair colour mixed .. .. 454 Hide grease .. .. .. 63 Good gut .. .. .. 2,301 Edible mixed .. .. 118 Medium gut.. .. 1,728 Low and no colour gut .. 907 13,955 The total value of the shipment quantities quoted above is £290,347 New Zealand currency. The following tabulation shows the quantities of tallow exported to the United Kingdom from New Zealand ports from 28th March, 1940, to 31st July, 1940: — Shipping Port. Tons Net. Shipping Port. Tons Net. Auckland .. .. .. 3,240 Opua .. .. .. 165 Bluff .. .. .. 2,050 Picton .. .. .. 35 Dunedin .. .. .. 765 Timaru .. .. .. 365 Gisborne .. .. .. 390 Tokomaru Bay .. .. 60 Lyttelton .. .. ..1,545 Wanganui .. .. 510 Napier .. .. .. 570 Wellington .. .. ..2,870 Nelson .. .. .. 45 New Plymouth .. .. 1,010 13,955 Oamaru . . .. . . 335 Shipping arrangements for tallow during the 1939-40 season have been quite satisfactory, and it is anticipated that the balance of the season's stocks will be cleared early in October, 1940.' SURVEY OF THE SEASON. The quantities of each grade of tallow appear to be normal with the exception of first-beef tallow. This grade is usually wholly absorbed by local manufacturers. This season, however, owing to heavy killings of cattle, an exportable surplus was available. It has been noticed that the price differentials according to grade have resulted in a number of producers improving the quality of some of their grades of tallow.

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TALLOW SHIPMENTS TO INDIA. The contract for sale of tallow to the United Kingdom provides that the New Zealand Government shall be entitled to export to India normal quantities of the special qualities sold previously to India, not exceeding 4,000 tons. These exports are made under export permits granted on application. From 28th March, 1940, to 31st July, 1940, 1,159 tons of fine white mutton tallow were exported to India. TALLOW REQUIREMENTS OF LOCAL SOAPMAKERS. Upon the completion of the contract for sale of tallow to the United Kingdom Ministry of Food arrangements were made through the Price Tribunal for the fixation of local prices for tallow conforming to corresponding prices for export. Local soap-manufacturers have been able to obtain their supplies without difficulty or delay from the firms or organizations with which they have previously been dealing. ACCOUNTS. The tallow accounts are shown in the accounts section at the end of this report, page 39. The accounts cover purchases of tallow by the Department up to 31st July, 1940, and they comprise Purchase and Sale Account and Revenue Account. It will be observed from the accounts that the purchase and sale transactions to 31st July show a surplus of £1,957 after allowance has been made for administration and general expenses. WOOLLY SHEEP-SKINS. The parliamentary paper H. -30b, 1940, " Food and other Supplies to the United Kingdom during the War," contains a summary of the discussions between the New Zealand Government and Dominion interests concerned in the preparation and export of woolly sheep-skins, and of the negotiations between the New Zealand Government and the United Kingdom Government for the bulk purchase of woolly sheep-skins. The parliamentary paper also records that the necessary authority to conduct the control, purchase, and sale of sheep-skins on behalf of the Marketing Department was given to Mr. R. C. Burgess, public accountant, Dunedin, by the Minister of Marketing pursuant to the Marketing Act of 1936 and the Marketing Amendment Acts of 1937 and 1939. The conditions attaching to the Control were advised to be— (1) The purchase and sale of skins would be carried out in such a manner as would ensure the maximum return to the producer, the prevention of the taking of excess profits by any person, and the use, as far as possible, of the normal channels of buying, selling, and processing: (2) In the allocation of any work to fellmongers and other persons for the acquisition and processing of sheep-skins a regard would be had for the services normally provided by such persons before the introduction of the Control: (3) The profits from the sale of the accumulated stocks at the time of the introduction of the Control would go to the War Expenses Account. The Sheep-skin Control year ends on 31st March, and the parliamentary paper contains the report of the Controller to the Minister of Marketing on the operations of the Sheep-skin Control from its inception on the 18th November, 1939, to 31st March, 1940. The report of the Controller should be read with this report. BULK PURCHASE OF WOOLLY SHEEP-SKINS BY THE UNITED KINGDOM GOVERNMENT. The following are the heads of agreement for purchase by the United Kingdom Wool Control (Ministry of Supply) of woolly sheep-skins : — Quantity. 1. The proportion of the total output of sheep-skins which is normally exported from New Zealand to be acquired by the New Zealand Government and sold to the United Kingdom Government, it being assumed that the export of woolled skins, other than those bought by the United Kingdom Government, will be prohibited. Price. 2. The purchase price to be in accordance with the prices for each grade in the New Zealand Sheep-skin Type-list Schedule. 3. The prices in the Schedule are net f.o.b. New Zealand port, packing and grading expenses included, and are based on—■ (а) Value of wool product of skin, in accordance with slipe wool limits in the New Zealand Table of Slipe Wool Limits, plus (б) Current value of pelt, less (c) Cost of fellmongering, calculated at 2 Jd. per pound New Zealand currency on the weight of the raw skins.

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4. The Sheep-skin Table of Limits has been calculated on the above basis to secure that the cost of the wool product of the sheep-skins shall correspond to the appraisement prices for slipe wool in the New Zealand Table of Slip Wool Limits. 5. Pelt values to be subject to quarterly review. Any modification to entail a corresponding amendment of the skin purchase prices set out in the schedule hereto. Profit on Sales other than to United Kingdom. 6. Any net profit on sales of sheep-skins not required for use in the United Kingdom accruing over the entire period of purchase, ascertained on such a basis as may be agreed between the two Governments, to be shared equally between the New Zealand Government and the United Kingdom Government. It is proposed that any export trade in skins surplus to United Kingdom requirements should be dealt with in substantially the same manner as the export trade in wool purchased under the wool agreement. The fulfilment of our requirements and those of our Allies would, of course, be the primary consideration. Period op Agreement. 7. The period of the agreement to extend to and terminate on the date of termination of the wool purchase agreement. Adjustment of Appraisal Values. 8. After 30th June of each year, if it is shown that the appraisement values in the New Zealand Table of Slipe Wool Limits are less than the values which would have been necessary to yield an average payment per pound equal to the fiat rate agreed to be paid for slipe wool under the wool purchase agreement, an appropriate additional payment to be made by the United Kingdom Government to the New Zealand Government in respect of the wool content of the purchased skins. Conversely, if the appraisement values are more than the values so necessary, the New Zealand Government to make an appropriate refund to the United Kingdom Government. QUANTITIES AND VALUES OF WOOLLY SHEEP-SKINS EXPORTED TO THE UNITED KINGDOM WOOL CONTROL. The following table shows the quantities and values of woolly sheep-skins exported to the United Kingdom Wool Control up to 31st July, 1940 : —

ACCOUNTS. The accounts of the Sheep-skin Control, covering the period ending 31st March, 1940, are shown in the accounts section at the end of this report page 40. The accounts comprise Trading Statement and Revenue Account. It will be observed from the accounts that the purchase and sale transactions show a surplus of £17,448 on handling and sale of stocks of skins taken over at the commencement of the Control, and a deficit of £2,941 on handling and sale of other skins purchased up to 31st March, 1940. In his report the Controller makes the following comment on this deficit of £2,941 :— " This is the ' loss ' on the purchase of skins from producers between 18th November, 1939, and 31st March, 1940. It means on the surface that the buying schedule was slightlyhigh. It is, however, largely covered by the surplus which will come from some 700 dumps sold to Canada and undelivered at 31st March, 1940. This surplus will come into the Control pool, as the United Kingdom Government advised that this would be so for all surpluses from sales made prior to the completing of the United Kingdom sale. The buying schedule operating from 18th November, 1939, to 18th March, 1940, accordingly turned out to be very correct, and in fact has returned to the producers almost exactly the full proceeds from the sale of their skins, less the Control costs." HIDES. The parliamentary paper H.-30b, 1940, " Food and other Supplies to the United Kingdom during the War," outlines the action taken by the Government at the outbreak of war in regard to control of export of hides and stabilization of prices of hides for local requirements at the prices which were ruling at Ist September, 1939. The parliamentary paper also reocrds the negotiations between the New Zealand Government and the United Kingdom Government in regard to the possible purchase of hides. The final decision of the United Kingdom Government was not to enter into a bulk purchase of hides. An outline is also given of discussions between the New Zealand Government and the various interests concerned in the production and sale of hides, leading up to the decision of the Government,

Number of Number of w . , , ,, , , T , Salo Value Dumps. Skins. Weight: Pounds Net. (New Zealand Currency)i £ s. d. 7,668 713,829 4,195,951 142,606 4 7

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in February, 1940, to arrange the equalization of values of hides for local use and for export by a levy on exports to even up the difference between local "standard domestic values," fixed at Ist September prices, plus 25 per cent., and export values. This procedure is embodied in the Hides Emergency Regulations 1940 and the administration of the regulations is entrusted to a Hides Committee, which operates under authority conferred on it by the Minister of Marketing. REPORT OF HIDES COMMITTEE ON OPERATIONS FOR PERIOD ENDING 31st JULY, 1940. The following report has been submitted to the Minister of Marketing on behalf of the Hides Committee by the Chairman, Mr. A. P. O'Shea :— " The Committee held its first meeting on Bth March, 1940. An interim equalization levy of 10 per cent, on the value of all hides for export was immediately fixed, pending full consideration of the exact amount of levy necessary for equalization purposes in terms of the regulations. On 12th March, 1940, the following rates of levy on all hides exported were approved : — Per Pound d. "Ox and cow hides .. .. .. .. .. • • I " Bull hides .. . . .. .. .. .. • • i " Yearlings .. .. .. .. .. .. • • I " Calf-skins (other than freezers) .. .. .. .. .. 1 It was agreed that prices should be calculated on the weights invoiced to overseas buyers, such weights to be declared on the Customs Department export entries. It was decided that in all cases where the Secretary of the Hides Committee was furnished with proof of completion of contracts for sale of hides prior to 16th February, 1940, such hides could be exported, although they had not been offered for sale by public auction or public tender. Approximately 37,000 hides and 6,000 calf-skins were exported in satisfaction of these contracts, yielding levy revenue of approximately £4,000. In view of the fact that no equalization payment accrued on these hides, the sum mentioned was available as a substantial contribution to the Equalization Fund. " Sale and export of hides proceeded smoothly in terms of the regulations, and the amounts of export levy accruing were regularly collected by the Customs Department and paid to the Committee. " Markets. " At the inception of the hides equalization plan, overseas market prices were in excess of the standard domestic values, and there were in consequence substantial claims on the levy fund. However, the development of the war from April, 1940, until July, 1940, resulted in cessation of exports to Continental countries. Surplus hides, which otherwise might have found Continental markets, were shipped to the United Kingdom market, with the result that overseas c.i.f. prices declined considerably, as shown in the following tabulation : —

" Reduction of Rates op Levy. " As a result of the sharp decline in prices to which reference has been made, New Zealand export prices have for some time been below ' standard domestic values,' with the result that there are now (September, 1940) no claims being made on the Equalization Fund. " As soon as sufficient funds were available to cover all equalization claims in sight, the Committee, on 13th June, 1940, reduced the export levy to the following rates : — Per Pound. d. " Ox, cow, and bull hides .. .. .. .. • • i " Yearlings .. .. .. .. .. .. f " Calf-skins other than freezers .. .. .. .. • • i " Later, on 28th June, 1940, the Committee decided that the export levy be further reduced, the new rates being— Per Pound. d. " Ox, cow, bull, and yearlings .. .. .. .. ■ • " Calf-skins other than freezers .. .. .. .. • • i

24th April. 8th May. j 22ncl May. 5th June. 19th June. 3rd July. 31st July. d. d. d. d. d. d. d. Ox hides: 48 lb. up 8 J 8J 7f 6f 6 5 J 5J Ox hides: Under 48 lb. .. 8-J 8 7|- OJ 5f 5J 5 Cowhides: 30/50lb. .. 8| 8£ 7| 5f 5£ 5 Cow hides: 51 lb. up 8| 8J 7J 6J 5f 5J 5 Bull hides .. .. Of o| 5f 5 4| 3f- 3f Yearlings— 9/10 lb. .. .. lli lli 10i 9J 9 8i 8i 17/30 lb. .. .. 10 9$ 9 8 7| 7 Of !

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" Hides Equalization Fund. " The following summary shows the position of the Hides Equalization Fund as at 31st July, 1940 :— £ s. d. £ s. d. " Levy received from Customs Department .. 11,187 8 3 " Less 2 per cent, collection charges .. .. 223 14 11 10,963 13 4 " Less claims paid to tanners, freezing companies, and exporters .. .. .. .. 9,867 15 8 1,095 17 8 " Expenses to date, 31st July, 1940 (including payment to the Marketing Department for rent and clerical assistance) — £ s. d. " Salaries .. .. .. .. 334 7 6 " Travelling-expenses .. .. 23 4 4 " Sundry expenses .. . . .. 49 17 3 " Petty cash .. .. .. 5 0 0 412 9 1 " Credit balance at 31st July, 1940 .. .. .. .. £683 8 7 " The total cost of administration by the Committee for the period up to 31st July, 1940, as shown above, is £412 9s. Id. Based on the quantity of hides handled during the period, this cost represents about one one-hundredth of a penny per pound. " The following table shows (for the period to 31st. July, 1940) the number of hides claimed by tanners for local use, in terms of the Hides Emergency Regulations, and the number freed for export:—

FRUIT. Shortly after the outbreak of war, inquiries were made of the United Kingdom Government as to whether they wished to purchase apples and pears. The reply received on 6th October, 1939, indicated that the United Kingdom Government had no intention of entering into a bulk-purchase arrangement, but endeavours would be made to provide some shipping-space for the export of apples and pears if shipping requirements for other products made this possible at the time fruit was available for export. The New Zealand Government decided that, in view of the uncertain conditions, it was necessary to assure the New Zealand fruitgrowers of some income for their produce, and accordingly agreed to buy all graded fruit, at assembly point designated by the Internal Marketing Division, at a price which was estimated would work out at ss. per case. The whole of the arrangements for purchase and sale within New Zealand are in the hands of the Internal Marketing Division, whilst shipment and sale of export fruit are in the hands of the Export Division of the Department. The Export Division pays charges from point of assembly to f.0.b., and subsequent freight and other charges connected with the marketing of the fruit, and the resultant surplus or deficit is at the direction of the Minister of Marketing. LONDON MARKETING ORGANIZATION EOR FRUIT. Following discussions between the Government and the Fruit-export Control Board, it was decided that the Government should take over the London organization of the Board as from Ist January, 1940. A Fruit Sales Division was created in London, and Mr. H. Turner, the London Manager of the Fruit Board, assumed the responsibility as head of the Fruit Sales Division for the marketing of export fruit. EXPORT OF APPLES DURING 1939-40 SEASON. Owing to the war-time necessity for conservation of all shipping-space for the more essential export commodities —meat, dairy-produce, wool —great difficulty was experienced in obtaining space for fruit. Eventually, however, the United Kingdom Blinistery of Shipping was able to allocate a proportion of the shipping-space for fruit which had been asked for. The space thus made available represented approximately 50 per cent, of New Zealand's normal fruit exports. It was decided that the space should be utilized for shipment of apples.

Calf-skins Ox Hides. Cow Hides. Bull Hides. Yearlings. (other than Freezers). Tanners claims .. .. 63,399 80,588 2,070 29,606 14,330 Freed for export .. 67,484 192,070 20,051 14,880 19,332 Total .. .. 130,883 272,658 22,121 44,486 33,662"

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Export consignments were restricted to the type of fruit estimated to produce the highest market return. The normal schedule of export varieties, grades, and sizes was closely examined, and a restricted schedule was compiled of apples estimated to produce a market return sufficient to cover the higher costs associated with shipping and marketing under war-time conditions. As the season progressed it was found that the crop did not contain the usual percentage of small sizes. Accordingly, quantities of the medium sizes of certain varieties were shipped in order to fill the shipping-space which had been allotted. Even with this extension of sizes, great difficulty was found in securing sufficient fruit of the selected types to fill the space available. The Department had some misgivings in regard to the extension of the export schedule, because of the danger of shipping fruit which might not produce a return sufficient to cover costs. The quantities of apples shipped to the United Kingdom amounted to 564,334 cases, and payment of the sum of £195,244, representing purchase price at assembly point plus charges to f.0.b., was made by the Export Division to the Internal Division of the Department for this fruit. Canada and South America usually take large-sized fruit, and there was plenty of this type available, but owing to shipping-space not being available shipment of only 18,552 cases to Canada could be made. Payment of the sum of £6,360, representing purchase price at assembly point plus charges to f.0.b., was made by the Export Division to the Internal Division of the Department for this fruit. Arrangements had been made to sell 60,000 to 70,000 cases of apples to Brazil, the buyer having chartered a ship for the transport of the fruit. However, the chartered ship was Danish, and shortly after the invasion of Denmark the ship, which was then en route to New Zealand, was diverted and was not available for this fruit shipment to Brazil. In consequence, these 70,000 cases of large Delicious apples intended for Brazil remained in New Zealand for sale on the local market. The following table shows the quantity of apples purchased by the Export Division from the Internal Division of the Department for shipment to the United Kingdom and Canada. The table shows the cost at assembly point, the charges to f.0.b., and the total cost to f.o.b. The average cost per case at assembly point is shown to be ss. 6-728 d. per case and the total cost to f.o.b. 6s. lid. per case : —

Average cost per case — s - d - At assembly points .. .. .. .. ..5 6-728 Charges to f.o.b. .. .. .. .. •• .. 1 4-28 Total cost to f.o.b. .. .. .. .. ..6 11-008 • Within the limitations imposed by war conditions, advertising in the United Kingdom to assist sales of fruit was continued, and in New Zealand every effort was made by supervision of conditions of storage and handling of fruit to safeguard quality. Inevitably under war conditions marketing difficulties were experienced by the Fruit Sales Division in the disposal of apple shipments. These special difficulties arose from uncertainty in regard to time and place of discharge of the fruit from steamers, overlapping of steamer arrivals, some deterioration in quality owing to the lengths of the voyages, and the influence on market prices of the swiftly moving developments of the war from April to July, 1940. On the whole, however, market returns have exceeded expectations, and the results under the circumstances are considered to be quite satisfactory. ACCOUNTS. The fruit accounts are shown in the accounts section at the end of this report, pages 40 and 41. Tha accounts cover export of fruit (apples) up to 31st July, 1940, and they comprise Consignment Account and Revenue Account. At balance date (31st July, 1940) there was a small quantity of apples unsold which has been taken in at the values realized subsequent to 31st July, 1940. Accordingly these accounts are final for the 1939-40 export season.

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Extra ™ . Total Fancy * an< ?* y Cost at Charges to Total Cost Destination. Boxe(j Grade Assembly Points. f.o.b. to f.o.b. i k i^OXGSf Boxes. £ s. d. £ s. d. £ s. d. United Kingdom .. 564,334 318,723 245,611 157,006 9 2 38,237 15 11 195,244- 5 1 Canada .. .. 18,552 10,589 7,963 5,057 6 6 1,302 10 2 6,359 16 8 Total .. 582,886 329,312 253,574 162,063 15 8 39,540 6 1 201,604 1 9

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SCHEELITE. The parliamentary paper M.- 30b, 1940, " Food and other Supplies to the United Kingdom during the War," contains a summary of the negotiations with the United Kingdom Government for the purchase of scheelite. The terms and conditions of the purchase of scheelite by the New Zealand Government from producers are set out in the Purchase of Scheelite Order 1940. BULK PURCHASE OF SCHEELITE BY UNITED KINGDOM GOVERNMENT. The following are the heads of agreement for purchase by the United Kingdom Ministry of Supply of scheelite :— Quality. 1. Scheelite or wolfram of good merchantable quality containing basis 65 per cent. W0 3 , maximum 1-5 per cent. Sn, maximum 0-2 per cent. As. Price. 2. Fifty shillings (505.), plus any premium obtainable from smelters, f.o.b. producer's port of shipment, per unit (22-4 lb.) of W0 3 and ton of 2,240 lb. net dry weight, subject to Contract "B " conditions as to penalties. Packages to be the property of the Minister. Period of Contract. 3. For one year from Ist April, 1940, or until the signing of an armistice or peace in the present war with Germany plus two months, whichever is the shorter period. Deliveries. 4. Deliveries to be made f.o.b. in monthly quantities, subject to availability of shipment. Shipment ex f.o.b. port of shipment to United Kingdom or France, to be arranged by the producer on consignment instructions from the Minister of Supply. The Minister will arrange for off-loading at port of discharge and delivery to final destination. Insurance against marine and war risks is not required to be effected by the consignor. Weighing and Sampling (including Determination of Moisture). 5. To be carried out either at port of discharge or (at Minister's option) at consumer's works by one of the firms referred to in the following clause, the Minister and the producer each paying half the cost. (If the ore is consigned to France, the operations will be carried out by a firm nominated by the French purchasing mission or other official body.) Assay. 6. To be carried out by either Mr. A. PI. Knight, of Liverpool; or Messrs. Benedict, Kitto, and Sons, of London ; or (in France) by a firm or body to be officially approved ; and (subject to Contract " B " provision for second assay should arsenic exceed 0-2 per cent.) to be final, the Minister and producer each paying half the cost. Payment. 7. Provision for payment of 80 per cent, of invoice value (on basis of 65 per cent. W0 3 ) to be made to New Zealand Government on receipt of cabled advice of shipment, specifying weight, and also value based on producer's assay. Balance of value to be paid after completion of assay, subject to deduction for proper charges —e.g., for sampling and assay. Freight to be paid in advance by the New Zealand Government, and the amount recovered when payment for shipments is made. Should a shipment be lost at sea the final payment for the ore will be based upon — (a) The average W0 3 contents per ton, net dry weight, found by final assay of the three immediately preceding shipments from the particular producer which have arrived safely (or if three shipments have not arrived, on the average assay of the three nearest shipments before or after the shipment lost which do arrive); and (b) Bill-of-lading weight, less the average moisture content and tares of the same three shipments. Other Conditions. 8. As standard wolfram contract (Contract " B "), except where inconsistent with the above arrangements. Disposal op Stocks in the Event op Cessation of Hostilities bepore Termination op the Contract. 9. If hostilities cease before Ist April, 1941, the tonnage of any orders for prompt shipment for commercial consumption received by the producers between the date of cessation of hostilities and the date of termination of the contract to be fulfilled by the sale of ore which the. Minister is under obligation to purchase but which has not been shipped from New Zealand and is not required by the Minister to be shipped to the United Kingdom for his account; and to be sold at prices to be approved by the Minister. Ore remaining on hand in New Zealand at termination of the agreement to be shipped to the United Kingdom unless the producers arrange with the Minister otherwise. Free storage in New Zealand to be provided for such ore as is to be disposed of as above.

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QUANTITY AND VALUE OF SCIIEELITE EXPORTED TO THE UNITED KINGDOM MINISTRY OF SUPPLY. The quantity of scheelite exported by the Department to 31st July, 1940, is 756 bags, containing 37 tons 6 cwt. 21 lb., and the provisional payment value in New Zealand currency is £8,025 16s. ACCOUNTS. The scheelite accounts, which are published in the accounts section at the end of this report, page 39, show a Purchase and Sale Account covering the operations for the period ending 31st July, 1940. To this account is charged the cost of administration of the purchase and export of scheelite, amounting in terms of the Purchase of Scheelite Order 1940 to 2% per cent, of the purchase price.

SUMMARY OF VOLUME AND VALUE OF EXPORTS BY THE DEPARTMENT FOR THE PERIOD ENDED 31st July, 1940.

GENERAL. In presenting this war-time report, covering the operations of the Export Division of the Department for the year ended 31st July, 1940, it is pleasing to record the mutually satisfactory nature of the negotiations between the United Kingdom Ministries of Food and Supply and the New Zealand Ministry of Marketing in regard to supplies of food and other products under bulk sale and purchase agreements. The arrangements of the 1939-40 season in respect of production, handling, payment, and shipment of the various products have proceeded smoothly, and all interests concerned have co-operated with a view to giving the United Kingdom the maximum support and assistance in the common war effort. I desire on behalf of the Government to thank the farming industry for their assistance in maintaining production of the various commodities at satisfactory levels, the management and staffs of the manufacturing interests, the storage and transport interests, the handling and loading interests, and the shipping interests for maintaining their respective services, which are all contributing factors to the success of the past season's operations. As Minister of Marketing, I wish to mention the assistance always forthcoming from organizations with which the Export Division of the Department is in daily contact —the Meat and Dairy Boards, the Freezing Companies' Association, the Overseas Shipowners' Allotment Committee, the woolbrokers', woolbuyers', and woolscourers' associations, and the Cool Stores' Association. The knowledge of the the representatives of these organizations has been freely given and has been most valuable to the Department and to the Government. In the light of the volume of the exports from New Zealand which have been transported and landed in the United Kingdom, it is fitting that tribute should be paid to the officers and men of the mercantile marine and the Royal Navy. The people of New Zealand are not unmindful of the hazards of this fine achievement, and are accordingly grateful. Finally, I desire to mention the New Zealand Government representatives in the United Kingdom : they have carried out their increased duties most efficiently, notwithstanding the difficulties of the present situation. Minister of Marketing.

6 —H. 30.

. TT , Equivalent Value f.o.b. in New 10 ' ° ume - Weight, in Tons. Zealand Currency. £ Butter .. .. .. 4,684,866 boxes 117,122 16,345,284 Cheese .. .. .. .. 1,190,596 crates 85,042 6,726,704 Frozen meat .. .. .. .. 256,396 14,907,564 Wool* .. .. .. 804,515 bales 123,195 15,811,704 Tallow .. .. .. .. .. 13,955 290,347 Woolly sheep-skins .. .. 713,829 skins 1,873 142,606 Fruit .. .. .. .. 582,886 cases 10,409 430,555 Scheelite .. 756 bags 37 8,026 Totals .. .. .. .. 608,029 54,662,790 * Figures to 30th June, 1940.

H.—3o.

ACCOUNTS. The following are the statements of accounts for the 1939-40 season covering the operations of the Marketing Department (Export Division) in respect of dairy-produce, meat, wool, tallow, woolly sheep-skins, fruit, and scheelite. Final statements of the Dairy-produce Purchase and Sale Accounts and Dairy-produce Revenue Account for the 1938-39 season arc also shown. The accounts are in terms of New Zealand currency. For convenience in publication, shillings and pence are omitted. DAIRY-PRODUCE. Final Statement or the Dairy-produce Purchase and Sale Accounts, 1938-39 Season. Creamery Butter. Dr. £ Gr. £ .Estimated deficit on 4,057,244 boxes shown in accounts Actual deficit on sale of 4,657,244 boxes .. 1,323,762 at 31st July, 1939 .. .. .. .. 1,315,712 Further deficit on realization of produce unsold at 31st July, 1939 .. .. .. .. 8,050 £1,323,762 £1,323,762 Whey Butter. Dr. £ Cr. £ Estimated deficit on 67,992 boxes shown in accounts at Actual deficit on sale of 67,992 boxes .. . 20,505 31st July, 1939 .. .. .. .. .. 20,398 Further deficit on realization of produce unsold at 31st July, 1939 .. .. .. .. . . 107 £20,505 £20,505 Cheese. Dr. £ Gr. £ Estimated deficit on 1,122,998 crates shown in accounts Surplus on realization of produce unsold at 31st. July, at 31st July, 1939 .. .. .. .. 1,216,819 1939.. .. .. .. ~ .. 58,891 Actual deficit on sale of 1,122,998 crates .. 1,157,928 £1,216,819 £1,216,819 Revenue Account, 1938-39 Season. Dr. £ Gr. £ Deficit— Balance: Deficit, 1938-39 season .. 2,514,889 Creamory Butter Account .. .. .. 1,323,762 £ Whey Butter Account .. .. 20,505 Cheese Account .. .. .. 1,157,928 1,178,433 2,502,195 Payments to manufacturers of special milk products under the Dairy-produce (Special Milk Products) Regulations 1938 .. .. .. .. 12,694 £2,514,889 £2,514,889

100

Administration and General Expenses Account: 1939-40 Season's Dairy-produce Purchased up to 31st July, 1940.

Purchase and Sale and Revenue Accounts: 1939-40 Season's Dairy-produce Purchased up to 31st July, 1940.

H.—3o.

101

TrYffil New Zealand. Total. I ! £ J£)r £ £ £ r ' 719 Salaries 5,324 5,050 10,374 Miscellaneous recoveries .. T1 " * * * * * " ** "* "" * * 'a* ' 'as Allocation of net expenses to Purchase and Sale Account — £ Legal expenses .. .. .. . • .. • • • • so • • 00 ~ r OQ Office rent, maintenance., cleaning, telephone, and sundry expenses .. .. 1,418 961 2,379 Creamery butter .. .. .. .. .. •'S.ybb Postages, cables, and printing and stationery .. .. .. .. 52 534 586 W ey u er .. .. .. .. .. "15 472 Travelling-expenses .. .. .. .. ■■ •• 27 20 47 eese •• •• •• •• •• •• > Subscriptions, donations, and entertainment .. .. .. .. 81 .. 81 Shipping inspection .. .. .. . . • • • • 723 256 979 Agencv expenses: Lyttelton .. .. . - ■ • . ■ . ■ . • 225 225 Audit fees .. .. .. . • • • • • • • • • • • 298 298 Depreciation .. .. .. .. . - - • • • 290 216 506 8,000 7,560 15,560 Advertising in United Kingdom .. .. .. .. .. .. • • • • 5,049 Miscellaneous expenses .. .. • ■ • • • • ■ ■ • • • • - - 91 Cost of remittances to dairy companies .. .. .. . • -. • • ■ ■ 9,280 Interest on overdraft at Reserve Bank .. . . .. .. .. • • 25,312 34,592 Subsidy, Public Service Superannuation Fund .. .. .. .. .. .. • • 486 £55,778 £55,778

. . . ; ■ flitter 7 Whey Butter - i Cheese. S Total. ! -— Butter. 7 Whey Butter - Cheese. Total. i i I ! ! ! ! Dr. £ £ £ £ Cr. £ £ £ £ Purchases net f.o.b. .. .. .. 16,095,886 249,266 6,629,958 22,975,110 Sales net f.o.b. to United Kingdom .. ; 15,813,837 249,535 j 6,718,033 22,781,405 Gross surpluses carried down .. .. 8,319 269 96,408 104,996 | To other destinations .. .. .. 290,368 .. 8,333 298,701 16,104,205 249,535 6,726,366 23,080,106 16,104,205 249,535 6,726,366 23,080,106 Administration and general expenses .. 38,965 621 15,472 55,058 Gross surpluses brought down .. .. 8,319 269 96,408 104,996 Surplus on cheese .. . - .. ■ • • ■ 80,936 80,936 Deficits on creamery and whey butter .. 30,646 352 .. 30,998 38,965 621 96,408 135,994 ] 38,965 621 96,408 135,994 Estimated payments to manufacturers of special milk products.. .. .. 150 Surpluses and deficits brought down — £ Balance, being surplus on 1939-40 season's dairy-produce purchased up to 31st July, 49,788 Surplus on cheese .. .. .. .. .. .. 80,936 j ' Less deficit on whey butter .. .. .. .. .. 352 80,584 Less deficit on creamery butter .. .. .. .. .. 30,646 49,938 49,938 49,938

H. —30.

MEAT. Purchase and Sale Account for the Period ended 31st July, 1940. Dr. £ £ Cr. £ £ Purchases— Sales— Lamb .. .. . 9,052,067 Lamb .. .. .. .. 9^097,172 Mutton .. ... .. .. 2,040,639 Mutton .. .. .. .. 2,058,080 Beef and veal .. .. .. 1,859,135 Beef and veal .. .. .. 1,875,979 Pork .. .. .. .. 1,364,403 Pork .. .. .. .. 1,371,749 Offals .. .. .. .. 593,055 Offals .. .. .. .. 599,732 Tinned meat .. .. .. 66,546 Tinned meat .. .. 66,617 14,975,845 15,069,329 Balance carried down .. .. ~ .. 93,484 £15,069,329 £15,069,329 Revenue Account for the Period ended 31st July, 1940. Dr. £ | Or. £ Salaries .. .. .. .. .. .. 3,685 j Balance brought down .. .. - .. 93,484 Office rent, maintenance, cleaning, telephones, and sundry expenses .. .. .. .. .. 818 Postages, cables, and printing and stationery .. .. 1,248 Travelling-expenses.. .. .. . . .. 36 Shipping inspection .. . . .. . . 1,100 Audit fees .. .. .. .. .. 310 Depreciation (office and departmental equipment) . . 61 Cost of remittances to freezing companies and others . . 4,036 Interest on overdraft at Reserve Bank .. .. 2,781 Payment to New Zealand Meat-producers Board .. 20,000 34,073 Net surplus .. .. .. .. ..59,411 £93,484 £93,484 WOOL. Purchase and Sale Account for the Wool. Year ended 30th June, 1940.* Greasy Wool. Slipe Wool. Total. Greasy Wool. Slipe Wool. Total. Purchases — £ £ £ Sales— £ £ £ Appraisal values .. 12,491,525 2,868,730 15,360,255 To United Kingdom 11,986,742 2,952,251 14,,938,993 Pinal payments .. 141,865 87,961 229,826 Wool Control To New Zealand mills 646,648 4,440 651,088 12,633,390 2,956,691 15,590,081 12,633,390 2,956,691 15,590,081 Charges, Expenses, and. Administration Account for the Wool Year ended 30th June, 1940.* Dr. £ Cr. £ Brokers' charges .. .. .. .. . . 642,565 Allowance in sale price for charges and expenses, and Appraisal costs .. .. .. .. .. 67,702 recoveries, including amount of wool levy .. 1,088,483 Wool levy paid on behalf of growers .. .. 20,666 Charges and expenses to f.o.b. .. .. .. 82,439 Scouring charges .. .. .. .. .. 167,911 981,283 Balance carried down .. .. .. .. 107,200 £1,088,483 £11,088,483 Dr. £ Cr. £ Salaries .. ... .. .. .. .. 3,677 Balance brought down .. .. .. ~ 107 200 Office rent, maintenance, cleaning, telephone, and sundry Interest .. .'. .. .. .. 8*351 expenses .. .. .. .. .. 882 Postages, cables, printing, and stationery .. . . 2,087 Travelling-expenses .. .. . . .. 41 Audit fees .. .. .. . . . . 310 Depreciation .. .. .. . . . . 61 Cost of remittances to brokers and others .. .. 1,655 8,713 N6tsurplus .. .. .. .. .. 106,838 £115 ' 551 £115,551 •The accounts do not cover a fuU wool year, as the wool submitted at crutching saleß in July and August,. 1989, was not handled by the Department.

102

H—3o.

TALLOW. Purchase and Sale Account for the Period ended 31st July, 1940. Dr. £ Or. £ £ Purchases .. .. .. .. .. 290,347 Sales .. .. .. .. .. 401,875 Balance carried down .. .. .. .. 3,439 Less freight .. .. .. .. 108,089 ——- 293,786 £293,786 £293,786 Revenue Account for the Period ended 31st July, 1940. Dr. £ Gr. £ Salaries .. .. .. .. .. 682 Balance brought down .. .. ... .. 3,439 Office rent, maintenance, cleaning, telephones, and sundry expenses .. .. .. .. 67 Postages, cables, and printing and stationery .. .. 117 Travelling-expenses .. .. .. .. • • 37 Audit fees .. .. .. .. .. • • 60 Depreciation .. .. .. . • • • 22 Cost of remittances to manufacturers and others.. .. 199 Interest on overdraft at Reserve Bank .. .. 298 Net surplus .. .. .. .. •• 1,957 £3,439 £3,439 SCHEELITE. Purchase and Sale Account for the Period ended 31st July, 1940. Dr, £ Or. £ Purchases .. . • • ■ • ■ • • 7,825 Sales .. .. .. .. .. 8, 026 Cost of administration .. .. ... ■ • 201 £8,026 £8,026 Note. The sale to the United Kingdom Government is at f.0.b., but the prices payable are to be based on the final analyses carried out in the United Kingdom. For the purposes of these accounts, analyses by the Dominion Analyst have been used, as final analyses have, not yet been received.

103

H.—3o.

NEW ZEALAND SHEEP-SKIN CONTROL. Purchase and Sale Account for Period from 18th November, 1939, to 31st March, 1940.

Revenue Account for Period ended 31st March, 1940.

Balance-sheet as at 31st March, 1940. Liabilities. £ Assets. £ Sundry creditors .. .. .. .. .. 17,386 Furniture and fittings .. .. .. .. 66 £ Stocks as per Trading Statement .. .. .. 67,494 Overdraft from Sundry Products Account .. 44,291 Sundry debtors .. .. .. .. .. 8,444 Less cash in hand .. .. .. .. 180 44,111 Profit on exporters'stock .. .. .. 17,448 Less loss on pool operations .. .. 2,941 14,507 £76,004 £76,004 R. C. Burgess, Controller. FRUIT. Consignment Account for the 1939-40 Export Season. Dr. £ £ Cr. £ £ £ Advances on Fruit .. .. .. 162,064 Sales .. .. .. .. 495,310 Charges to f.o.b. .. .. .. 39,540 Stocks* .. .. .. .. 109,613 201,604 604,923 Balance carried down .. .. .. .. 224,603 Less freight .. .. .. 162,432 Less insurance .. .. .. 16,284 178,716 426,207 £426,207 £426,207

♦All stocks at balance date (31st July) have since been sold and have been taken into account at net sale value.

104

Pool Operations. Pool Operations. Exporters' Tntnl Exporters' m . , Stocks. pell lofca1 ' Stocks. p .I Total * Skins 1611 ai,i„ 0 Fellsk n8 ' mongering. Sklns - mongering. Dr. £ £ £ £ Or. £ £ £ £ Purchases— Sales— Packed stocks .. 77,045 .. .. 77,045 Skins .. .. 180,991 64,380 .. 245,371 Loose skins .. .. 77,852 90,020 52,730 220,608 Pelts and slipe .. .. .. 29,512 29,512 154,897 90,020 52,736 297,653 274,883 Packing charges .. 6,824 6,035 .. 12,859 Stocks— Fellmongering charges .. .. .. 12,195 12,195 Loose skins .. .. .. 5,135 — Pi Q1/iiiu OK OT 161,721 96,055 64,931 322,707 Pellmongers'stocks !! !! !. 37J02 Gross profit .. .. 19,270 .. 1,683 "1 19,670 — 67,494 Lses gross loss .. .. 1,283 .. J 180,991 94,772 66,614 342,377 180,991 94,772 66,614 342,377

Exporters' Pool T , . I Exporters' Pool . . Stocks. Operations. lota1 ' Stocks. Operations. r ° tal> Dr. £ £ £ Cr. £ £ £ Salaries — Gross profit from Trading 19,270 400 19,670 Controller .. .. 74 136 210 Statement Deputy-Controller and Ap- 652 1,195 1,847 praisers Administration .. .. 409 748 1,157 Travelling-expenses .. .. 254 467 721 Postages and telegrams .. 38 70 108 Telephones and toll charges .. 130 237 367 Stationery .. .. .. 93 170 263 General expenses . . .. 23 4-3 66 Rent .. .. .. 51 95 146 Interest and exchange .. 98 180 278 1,822 3,341 5,163 Net profit .. .. .. 17,448 .. \14,507 Less net loss .. .. .. 2,941 J 19,270 400 19,670 19,270 400 19,670

H.—3o.

Revenue Account (Fruit) for the 1939-40 Export Season.

105

London. Kew Zealand. Total. ~ Gr. £ Dr. £ £ £ Balance brought down .. .. .. .. 224,603 Salaries .. .. .. .. .. .. .. .. 2,343 484 2,827 Office rent, maintenance, cleaning, telephone, and sundry expenses .. .. 1,049 5 1,054 Postages, cables, and printing and stationery .. .. .. .. 381 66 447 Travelling-expenses .. .. .. .. .. .. .. 524 .. 524 Subscriptions and donations .. .. .. .. .. . . 134 .. 134 Shipping inspection .. .. .. .. .. .. .. 243 150 393 Audit fees .. .. .. .. .. .. .. .. 149 145 294 Depreciation.. .. .. .. .. .. .. .. 40 .. 40 4,863 850 5,713 Interest on overdraft at Reserve Bank .. .. .. .. .. .. .. .. 267 Miscellaneous expenses .. .. .. .. .. .. .. .. .. 31 Balance (due to Internal Marketing Division) .. .. .. .. .. .. .. 218,592 £224,603 £224,603

H.—3o.

MARKETING DEPARTMENT (EXPORT DIVISION). Balance-sheet as at 31st July, 1940. Liabilities. £ £ Assets. £ Reserve Bank of New Zealand— Sundry debtors for produce and amounts accrued due.. 1,499,1)18 Dairy .Industry Account .. .. 2,445,663 Stocks . . .. .. .. .. .. 109,951 Meat Industry Account .. .. 577,891 Office and departmental equipment.. .. .. 5,564 Sundry Products Account— £ Advances to Sheep-skin Controller .. .. .. 80,302 Tallow .. .. .. 234,033 Dairy-produce Account— £ Sheep-skins .. .. 80,302 Deficit for 1938-39 season .. .. 2,514,889 Scheelite .. .. .. 510 £ Less surplus for 1937-38 season 576,724 314,845 Less surplus for 1939-40 season Less fruit (credit) .. 25,184 (purchases up to 31st July, — 289,661 1940) .. .. .. 49,788 626,512 3,313,215 1,888,377 Less Wool Industry Account (credit) .. 344,794 2,968,421 Less cash held in London .. .. 95,257 2,873,164 Sundry creditors for accrued charges and sundry credit balances .. .. .. .. 542,442 Net surpluses— £ Meat.. .. .. .. .. 59,411 Wool.. .. .. .. .. 106,838 Tallow .. .. .. .. 1,957 168,206 £3,583,812 £3,583,812 G. A. Duncan, Director. R. J. Wells, Accountant. I hereby certify that the several Purchase and Sale Accounts, the Administration and General Expenses Account, the Charges Expenses and Administration Account, the Fruit Consignment Account, and the Revenue Accounts, together with the Balance-sheet as at 31st July, 1940, have been examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed thereby, subject to the departmental notes enfaced thereon. Cyril G. Collins, Controller and|Auditor-General.

Approximate Cost of Paper.—Preparation, not given ; printing (2,170 copies), £BS.

Authority: E. V. Paul, Government Printer, Wellington.—l94o.

Price is.]

106

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