MARKETING DEPARTMENT (EXPORT DIVISION). ANNUAL REPORT (SIXTH) AND ACCOUNTS FOR THE YEAR ENDED 31st JULY, 1942.

Appendix to the Journals of the House of Representatives, 1943 Session I, H-30

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1942. NEW ZEALAND.

MARKETING DEPARTMENT (EXPORT DIVISION). ANNUAL REPORT (SIXTH) AND ACCOUNTS FOR THE YEAR ENDED 31st JULY, 1942.

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

CONTENTS.

Accounts — page Balance-sheet .. .. .. .. .. .. .. .. 26 Dairy-produce .. .. .. .. .. .. .. .. 21,22 Hides .. .. .. .. .. .. .. .. .. 25 Meat .. .. .. .. ~ .. .. .. .. 23,24 Scheelite .. .. .. .. .. .. .. .. .. 25 Tallow .. .. .. .. .. .. .. .. .. 25 War Office Contracts .. .. .. .. .. .. .. 25 Wool .. .. .. .. .. .. . .. .. .. 24 Woolly Sheep-skins .. .. .. .. .. .. .. 26 Contracts between United Kingdom and New Zealand Governments for the Third Year of War, 1941-42 .. .. .. .. .. .. .. .. .. 3 Co-operation of Boards and Organizations with Marketing Department .. .. 20 General .. .. .. .. .. .. .. .. .. .. 20 Reports— Dairy-produce— Accounts .. .. .. .. .. 10,21,22 Bulk Purchase of 1941-42 Season's Butter and Cheese by United Kingdom Government 4 Butterfat: Manufacture of Dehydrated Butterfat, and Contract with Ministry of Food 8 Completed Financial Operations for the 1941-42 Season .. .. .. 4 Costs in Manufacture and Delivery of Butter and Cheese to f.o.b. Overseas Steamers .. 9 Exports : Quantities of Butter and Cheese exported .. .. .. 7 Grading — Premiums for Quality .. . . . . . . . . . . 6 Quantities of Butter and Cheese graded .. .. .. .. 6 Quantities of Butter and Cheese paid for at Differential Prices .. .. .. 6 Guaranteed Prices — 1941-42 Season .. .. .. .. .. .. .. 5 1942-43 Season .. .. .. .. .. .. .. 5 Payments made by Dairy-factory Companies for Butterfat-supplies .. .. 9 Processed Milk . . . . . . .. .. . . .. 9 Production : Increased Production of Cheese for Shipment to United Kingdom, and Change-over in New Zealand from Butter-manufacture to Cheese-manufacture .. 7 Purchases of Butter and Cheese to 31st July, 1942 .. .. .. .. 10 HidesAccounts .. .. .. .. .. .. .. 25 Sale of Hides to Australia .. .. .. .. .. .. .. 18 Report of Hides Committee on Operations for Year ended 31st March, 1942 — Cost of Administration .. .. .. .. .. .. 19 Equalization Levy .. .. .. , . .. .. .. 18 Export Levy and Rates of Levy .. . . .. .. 18 Financial Report . . . . . . . . . . . . 19 General .. .. . . .. .. .. .. .. .. 19 Number of Hides claimed by Tanners and freed for Export . . . . 19 Sales of Hides to Australia .. . . .. .. .. 18 Linen Fiax — Sale, Terms of, to United Kingdom Ministry of Supply .. .. , .. 20 Sales and Shipments ~ ~ ~ ~ ~ ~ ~ ~ 20

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Reports—continued. page Meat — Accounts .. .. • • • • • • • • • • ■ • 15,23, 24 Bulk Purchase of 1941-42 Season's Meat by United Kingdom Government .. .. 10 Canned Meat .. .. ■ • • • ■ • ■ ■ ■ • • • .. 14 Completed Financial Operations for the 1940-41 Season .. .. .. .. 10 Dehydrated Meat, Manufacture of, and Contract with Ministry of Food .. .. 14 Prices .. .. • • • • • • • • • • • ■ 14 Purchase by United Kingdom. Government — 1941-42 Season .. .. .. • • •• • • •• .. 10 1942-43 Season .. .. .. ■■ • • • • • • .. 10 Purchase and Sale Procedure and Establishment of Meat Pool Account .. .. 11 Saving of Shipping and Storage Space by De-boning and Trimming of Export Meat and by Processing .. .. . • • • • • • • • • .. 14 Shipping }3 Survey of Season .. .. •• ■• •• •• •• .. io Scheelite — Accounts .. .. • ■ • • • ■ • • • • • • .. 25 Agreement with United Kingdom Ministry of Supply . . .. .. .. 20 Purchase-prices .. . • • ■ • • • • • • • • .. 20 Quantity and Value of Exports ~ .. ' .. ■ • • ■ ■ ■ .. 20 Tallow — Accounts .. .. • • • ■ • • • • • ■ • • 18,25 jp Qgg 1941-42 Season .. .. .. • • •■ • ■ • ■ .. 17 1942-43 Season .. .. . • • • •• • • •• .. 17 Purchase by New Zealand Government of 1941-42 Season's Tallow .. .. .. 17 Purchase by United Kingdom Government of 1941-42 Season's Tallow .. .. 17 Quantities purchased by United Kingdom Government and shipped from Ist August, 1941, to 31st July, 1942 .. .. .. • • • • • • .. 17 War Office, Sundry Supplies to — Accounts .. . • • • • • • • • • ■ • ■ • 25 Value of Products shipped .. .. .. • • • • • • .. 20 WoolAccounts .. .. • • ■ • • • •• • • •• Appraisal Procedure .. .. .. ■ • • • • ■ • • •• Bulk Purchase by United Kingdom Government and Purchase and Sale Procedure .. 15 Exports, Destination of .. .. • • • • • ■ • • .. 16 Prices 1941-42 Season .. .. -■ • • • ■ •■ • • 1 ' i k 1942-43 Season .. .. . • •• • ■ • • •• .. 15 Scouring of Wool .. .. • • • • • • • • • • j ® Shipping Arrangements .. .. • • • • • ■ • ■ ' " c Quantities and Value of Wool appraised .. .. .. .. .. .. 16 Woolly Sheep-skins — Accounts .. .. • • • • • • • • • • • • Report of Controller .. .. .. • • • • • • • • y Quantities and Values of Woolly Sheep-skins exported .. .. .. .. 17 Volume and Value op Sales by the Department of Products por Export for the Twelve Months ended 31st July, 1942 .. .. .. . . .. . . ..20

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REPORT.

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, 1942. This report, which is abbreviated to effect the maximum saving of paper, relates to the 1941-42 production season (the third year of war), and the transactions in respect of dairy-produce, meat, wool, tallow, woolly sheep-skins, hides, linen flax, and scheelite are reviewed under the appropriate headings. CONTRACTS BETWEEN THE UNITED KINGDOM AND THE NEW ZEALAND GOVERNMENTS FOR THE THIRD YEAR OF WAR, 1941-42. The contracts of purchase of wool and woolly sheep-skins by the United Kingdom Government run for the period of the war, and include the following season's wool-clip and production of woolly sheep-skins. There is provision in the contracts for review of prices in May of each year, but for the 1941-42 season prices remained unaltered. In the case of dairy-produce, meat, tallow, and scheelite, discussions on new contracts for the 1941-42 season were necessary. The accumulation in New Zealand by the end of May, 1941, of stocks of butter, cheese, and meat awaiting shipment caused some concern to the New Zealand Government, and led to discussions with the United Kingdom Government in regard to the handling of surpluses. These discussions were continued when the Right Hon. the Prime Minister visited London in June, 1941. Finally an agreement was reached, the terms of which are given in a paper issued by the United Kingdom Government as follows: — " Statement of Policy in kegabd to New Zealand Surpluses. " His Majesty's Governments in the United Kingdom and New Zealand, in consultation, have agreed upon the following statement of principles for dealing, on a basis of co-operation, with the surplus produce of New Zealand for the period of the war " His Majesty's Government in the United Kingdom fully recognize the grave difficulties created for New Zealand industries by the shortage of shipping. They are anxious to continue taking all the New Zealand produce that can be shipped. They also appreciate the serious effect upon New Zealand's economic and financial structure which these difficulties are causing. With a view to minimizing these effects and preventing the impairment of New Zealand's war effort, the United Kingdom Government are prepared to join with the New Zealand Government in co-operative arrangements to ease the burden falling on New Zealand during the war, framed on lines that will not prejudice the post-war position. " The two Governments have agreed that the following principles should be applied as a basis for such co-operation:— " (1) The United Kingdom Government to purchase the New Zealand produce that can be shipped and to pay for such produce at the price and upon such terms and conditions as are from time to time agreed with the Ministry of Food " (2) The New Zealand industries to make every effort to adapt their production to shipping possibilities—e.g., deboning, canning, or pressing meat. " (3) Alternative markets to be developed wherever possible. " (4) Reserve stocks of storable foodstuffs to be created up to certain quantities to be agreed. " (5) The quantities to be stored to be determined in relation — " (a) To probable demand during or after the war : " (&) To the importance of the industry to New Zealand. " (6) The financial burden of acquiring and holding these reserve stocks, pending their disposal, to be shared equally between the two Governments. " (7) The payments to be made for produce acquired, for the reserve stocks to be agreed between the two Governments. While it will be necessary to take due account of such matters as costs of storage, depreciation, &c., it is intended that the payments shall be fixed on such a basis as will so far as practicable achieve the objective of keeping the industry operating efficiently while avoiding the- creation of unmanageable surpluses. " (8) The detailed application of the above principles to be referred to competent representatives from the two countries. " The New Zealand Government will be ready to collaborate in any discussions which may be convened within the British Commonwealth or internationally to consider marketing or related problems." Note.—ln a letter addressed to the Right Hon. the Prime Minister, the Secretary of State for Dominion Affairs referred to the Prime Minister's desire that production in New Zealand should, so far as possible, be maintained at pre-war levels, and gave an assurance that the United Kingdom Government fully appreciated the importance which New Zealand attached to this point, and stated that within the limits of physical possibility the United Kingdom Government readily agreed that account should be taken of pre-war levels of production in determining amounts to be stored m accordance with paragraph (5) of the Statement of Policy in regard to New Zealand surpluses. A parallel agreement in regard to surpluses was concluded between the United Kingdom Government and the Australian Government. It should be. noted that the expectations of continuing large stocks in New Zealand of butter and meat during 1942 have not materialized, and at this date (31st August, 1942) liftings have been so satisfactory that stocks are below normal peace-time levels.

THE LIBRA??V BASTSRBURY UNIVERSITY COiXE6g

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In May, 1941, the Hon. Prank Langstone (accompanied by Mr. G. A. Duncan, Director of Export Marketing) went to the United States of America to inquire into the possibilities of shipment to that country and to Canada of surplus meat and butter. Mr. Duncan subsequently went on to London to take part, with the Prime Minister, in discussions with the United Kingdom Ministenes of Pood, Shipping, and Economic Warfare in regard to contracts for the sale of export products, particularly butter, cheese, and meat, and arrangements for dealing on a co-operative basis with surplus New Zealand products for the period of the war. The object of the discussions was to establish a basis or target figure of annual production of cheese butter, and meat for the period of the war and one year thereafter—this in order that farmers and the Government could plan for the future (subject to the inevitable exigencies of war) with some degree of certainty. The presence of the Prime Minister in London made possible discussions and decisions which came within the Ministerial sphere, and greatly assisted the securing of contracts for cheese, butter, and meat for the period of the war and one year thereafter. These contracts are outlined under appropriate headings in this report. DAIRY-PRODUCE. REVIEW OF COMPLETED FINANCIAL OPERATIONS FOR THE 1940-41 SEASON. The accounts presented with the report for the 1940-41 season covered purchases and sales of butter and cheese by the Department up to 31st July, 1941. These purchase and sale transactions showed a surplus of £130,799. The final results of the operations for the complete 1940-41 season were Surplus on creamery butter .. ■■ • • 29,866 Surplus on cheese .. •• 118,829 Less deficit on whey butter .. .. •• 110 110,740 Surplus on processed milk .. . . • ■ • • ■ • 3,067 151,681 Recoveries from manufacturers of special milk products • 308 Net surplus for 1940-41 season .. .. £151,989 The final accounts for the 1940-41 season are shown in detail on page 21 of this report. BULK PURCHASE OF 1941-42 SEASON'S BUTTER AND CHEESE BY UNITED KINGDOM GOVERNMENT. The short details of the contracts for purchase and sale of butter and cheese are as follows : Butter. (1) For the period of the war and one year thereafter New Zealand will aim to limit production of creamery butter for export to approximately 115,000 tons per annum, this figure to be reviewed annually in the light of the storage and shipping situations. The United Kingdom Goverment undertakes either (i) to lift this quantity as a Ministry of Food purchase, or (ii) to share responsibility under the agreed arrangement for dealing with surplus produce. (2) Prices for creamery and whey butter to be the same as those ruling for the 1940-41 season. The full range of these prices is given on page 6 of the Department's annual report for the year ended 31st July, 1941, the basic purchase price for creamery butter (Finest Grade, 93 points and over) being ] 12s 6d. sterling per hundredweight, delivered f.o.b. ocean steamer. (3) Payment to be made in London as to 90 per cent, on shipment and 10 per cent, within twenty-ei»ht days after arrival or estimated due date of arrival. (4) The New Zealand Government to be responsible for storing butter and for placing butter on board steamers. In the event of storage capacity being in danger of becoming full, the two Governments to consult on measures best adapted to meet the situation. Cheese. (1) For the period of the war and one year thereafter, New Zealand to produce for export and the United Kingdom Government to purchase 160,000 tons of cheese annually. In the event of unexpected shipping difficulties, this contract to be reviewed. (2) Prices to be : Finest and First Grade, 91 points and over, 70s. sterling per hundredweight, delivered f.o.b. ocean steamer ; Second Grade, 2s. per hundredweight less. These prices to be reviewed in May of each year, regard being given to changes in prices paid by the Ministry of Food to other sources of supply. (Note. —These prices represent an increase of ss. 9d. sterling per hundredweight on the prices ruling for the 1940-41 contract, the increase being granted to meet costs in New Zealand of the change-over of supply from butter to cheese manufacture to attain the objective of 160,000 tons of cheese for export.) (3) Payment to be made in London as to 90 per cent, on shipment and 10 per cent, within twenty-eight days after arrival or estimated due date of arrival. In the event of delay in shipment, the Ministry of Food undertakes to make payment amounting to 50 per cent, of the value of any cheese which has had to remain in store one month longer than would have been required by the agreed shipping schedules,'and to make a further payment amounting to 40 per cent, of the value of any cheese which has had to remain in store three months longer than would have been required by the shipping schedule.

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Other details of the contracts for purchase and sale of creamery butter and cheese covering grading, storage, insurance, and weights are in accordance with the contracts for the 1940-41 season. It should be noted that the Ministry of Food excluded whey butter and Second Grade creamery butter from, the contract of purchase, with a view to the processing of these butters into dehydrated butterfat in New Zealand for export to the United Kingdom. The development of the export of dehydrated butterfat is dealt with later in this report, and details are given of the contract with the Ministry of Food for the purchase if 10,000 tons in the period ending 31st July, 1943. GUARANTEED PRICES, 1941-42 SEASON. The guaranteed purchase-prices paid to dairy companies by the Marketing Department for butter and cheese manufactured during the 1941-42 season and exported were : — Per Pound. d. Creamery butter (basic price) .. .. .. ..14-89 Cheese (basic price) .. .. .. .. .. .. 8-42 Whey butter (First Grade) .. .. .. .. ..13-89 The full range of guaranteed purchase-prices according to grade of the produce, and the conversion formulae used, are given on pages 7 and 8 of the Department's annual report for the year ended 31st July, 1941. The purchase and payment procedure for dairy-produce was varied for the 1941-42 season, the new arrangements providing for payment to be made by the Marketing Department " in store " instead of at the point of f.o.b. ocean steamer as formerly. The terms of this new arrangement are as follows : — (a) Ownership will pass to the Government on the 11th day of the second calendar month after the month of grading, or on prior shipment; thus all August gradings not shipped before 11th October will become the property of the Crown on that date, September gradings on 11th November, and so on. (b) Payment in full to dairy companies will be made on the 11th day of the second calendar month after the month of grading, whether the relative produce has been shipped or not. (Note. —This arrangement represents, on average, payment eight weeks after grading.) (c) The procedure for payment, as it affects dairy companies, will be the same as that which operated in the past when making payments on shipment —i.e., remittances will be forwarded through companies' usual bankers and credit notes setting out full details of the payments will be posted direct to companies. The new procedure will not interfere in any way with obtaining of advances from banks on store warrants. (d) The Markering Department will assume responsibility for payment of all storage charges and costs of placing produce f.0.b., and will deduct from payments due to dairy companies the equivalent of the first two months' storage and f.o.b. charges. These charges will be calculated on the rates current at the port of loading during the appropriate two-monthly period. Note.—(l) The guaranteed purchase-prices to be paid to dairy companies by the Marketing Department for butter and cheese manufactured during the 1942-43 season and exported are*? Creamery butter (basic price), 15-39 d. per pound ; cheese (basic price), 8-73 d. per pound ; and whey butter (First Grade), 13-89 d. per pound. These purchase-prices represent increases for creamery butter of 0-sd. per pound and for cheese of 0-31 d. per pound, and they raise the standard resulting average payments by dairy companies to their suppliers for butterfat for the 1942-43 season to 16-49 d. per pound of butterfat for butter-manufacture and to 18-49 d. per pound of butterfat for cheese-manufacture. The increases in the 1942-43 season guaranteed prices which have been referred to were granted as a war-cost allowance on the following bases :— (a) Butter. |d. per pound on creamery butter represents 0-6ld. per pound of butterfat, of which 0-44 d. per pound butterfat is 5 per cent, on the labour-reward factor (8-84d'. in the guaranteed-price compilation), leaving 0-17 d. per pound butterfat to offset other costs incurred. (b) Cheese. —0-31 d. per pound on cheese represents 0-76 d. per pound of butterfat, of which 0-44 d. per pound butterfat is 5 per cent, on the labour-reward as in the case of butter, and 0-17 d. per pound butterfat is allowed for other costs incurred. The remaining amount of 0-15 d. per pound butterfat represents an increase in the allowance for cheese-factory costs from 3-sd. to 3-65 d. per pound butterfat. This adjustment has been made to maintain the 2d. differential payment on a butterfat basis between butter and cheese suppliers. (2) The conversion formulae used in the determination of the 1942-43 season prices as shown in note (1) above are :— Butter. —Ovefrun, 21-75 per cent.; costs of manufacture and delivery to f.o.b 2-25 d Tier pound butterfat. Cheese—Yield, 2-51 gross, 2-45 net; return from whey butter, 0-75 d. per pound butterfat costs of manufacture and delivery to f.0.b., 3-65 d. per pound butterfat. 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.

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The following tables show for the 1941-42 season the quantities of butter and cheese purchased and to be purchased and paid for at the respective differential prices. For comparison purposes the totals for the previous two seasons are also shown : —

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

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

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

BUTTER AND CHEESE GRADINGS.

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Finest Grade. First Grade. Second 94 Points 9 p*° nt 9 „ 3i 92 to 92J 90 to 91i Grade " and over. (Basic Price-) Points. Points. Tons. Tons. Tons. Tons. Tons. Tons. 1941-42 .. 100,432 40,497 40,106 9,507 9,043 1,279 1940-41 .. 133,337 43,569 63,470 14,828 10,757 713 1939-40 .. .. 128,274 51,624 51,004 15,437 9,570 639 Percentages of qualities— 1941-42 . .. •• 100 40-32 39-93 9-47 9-00 1-28 1940-41 .. 100 32-67 47-60 11-12 8-07 0-54 1939-40 .. 100 40-25 39-76 12-03 7-46 0-50

j Total. First Grade. Second Grade. Tons. Tons. Tons. 1941-42 3,123 2,974 149 1940-41 .. .. •• 2,855 2,695 160 1939-40 .. • • 2,095 2,063 32 Percentage of qualities— 1941-42 100 95-23 4-77 1940-41 .. •• 100 94-39 5-61 1939-40 .. •• 100 98-47 1-53 Butter figures calculated at 40 boxes to a ton.

Finest Grade. First Grade. Second 94 Points 93 to 93J 91 to 91J 6rade " and over. Points. (Basio Pr i oe-) Points. Tons. Tons. Tons. Tons. Tons. Tons. 1941-42 •• 150,127 1,051 28,097 69,703 38,676 12,600 1940-41 117,798 > 901 22,901 67,125 21,278 5,593 1939-40 92,508 951 16,820 56,071 15,274 3,392 Percentage of qualities — 1941-42 ..100 0-70 18-72 46-43 25-76 8-39 1940-41 .. •• 100 0-76 19-45 56-98 18-06 4-75 1939-40.. .. •• 100 1-03 18-18 60-61 16-51 3-67 Cheese figures calculated at fourteen crates to a ton.

Butter. Cheese. rn Increase or Decrease on Increase or Decrease on Ions. Previous Year. n ' Previous Year. Per Cent. Per Cent. 1941-42 .. .. 103,326 25• 90 (decrease) 153,074 28-74 (increase) 1940-41 .. .. .. 139,444 4-61 (increase) 118,899 26-90 (increase) 1939-40 .. .. 133,303 9-02 (increase) 93,696 14-96 (increase)

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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, 1941, to 31st July, 1942.

INCREASED PRODUCTION OF CHEESE FOR SHIPMENT TO UNITED KINGDOM, AND CHANGE-OVER IN NEW ZEALAND FROM BUTTER-MANUFACTURE TO CHEESEMANUFACTURE. In the Department's annual report for the year ended 31st July, 1941, reference was made to the request of the Ministry of Food for "even greater export of cheese." In response to this request, the Dairy Division of the Department of Agriculture, in co-operation with the dairy industry and the Dairy Board, made plans for increased production of cheese during the 1941-42 season, the production objective for export being 160,000 tons. It is a tribute to the excellence of the work and efforts of all concerned that a quantity of 153,074 tons was actually made available for export. Following discussions with industry representatives, the Government agreed that the following payments would be made to dairy companies and suppliers to cover extra costs caused by the change-over from butter to cheese manufacture : — (1) To suppliers who do not come within the provisions of paragraph (3) below, and who deliver milk twice daily —i.e., morning and evening—to a cheese-factory : |d. per pound of butterfat so delivered between Ist June, 1941, and 31st July, 1942. (2) To suppliers of a cheese-factory who deliver milk twice daily to a collection point for collection by a carrier : Jd. per pound of butterfat so delivered between Ist June, 1941, and 31st July, 1942. (3) To suppliers who have changed over from butter to cheese manufacture since Ist June, 1940, and who use a cartage service the cost of which is in excess of |d. per pound butterfat : 75 per cent, of the excess above £d. per pound up to a maximum payment of |d. per pound butterfat covering a total rate of cartage of 1 |d. per pound. This payment applies only to butterfat delivered between Ist June, 1941, and 31st July, 1942. (4) To suppliers Jivho are subject to special hardship which will not be covered by the foregoing payments the Minister to make an appropriate monetary grant. (5) Consideration to be given under the " hardship clause," paragraph (4) above, to claims for payment of Jd. per pound butterfat in the case of once-daily deliveries by suppliers who at the request of the company and with the approval of an officer of the Dairy Division deliver their milk at night. (6) Suppliers who by reason of having been suppliers to a cheese-factory before Ist June, 1940, are not eligible to receive an allowance under paragraph (3) above may have claims for such allowance considered under the "hardship clause" if, at the request of the company and with the approval of an officer of the Dairy Division, they made use of a cartage service provided or approved by the company for the use of suppliers who changed over on or after Ist June, 1940. (7) Compensation to butter companies which have lost supply by diversion of whole-milk to cheese companies (a) Where the costs to f.o.b. of a butter-manufacturing company for the season 1939-40 were above 2-25 d per pound butterfat, compensation payable will be the amount of the increase of the costs to f.o.b. for the 1941-42 season above the costs for the 1939- 40 season which can be demonstrated to have been caused by the diversion of supply to a cheese-manufacturing company. This paragraph is to read subject to the principle that no company should make a profit out of the change-over. (b) In the case of butter-manufacturing companies which have lost supply through the change-over to cheese and which are excluded under the basis set out in paragraph 7 (a) above, compensation will be payable at the rate of |d. per pound butterfat on the quantity of butterfat produced and delivered to a cheese-factory during the 1941-42 season by suppliers transferred since Ist June, 1940, it being understood that this is subject to the principle that no company should make a profit out of the change-over. In cases where it is considered that the payment of -|d. per pound butterfat would place the butter company in an advantageous position, the amount may be reduced or withheld entirely, the decision in all cases to rest with the Minister of Marketing on the recommendation of the Executive Commission of Agriculture. (8) Compensation to cheese companies for increased costs due to increased cheese-manufacture (a) Where the costs to f.o.b. of a cheese-manufacturing company for the season 1940-41 are below 3-sd. per pound butterfat, compensation payable will be the amount of the increase in costs to f.o.b. for the 1941-42 season above 3-sd. per pound butterfat which can be demonstrated to have been caused by the factors arising from the company's compliance with the request for increased manufacture.

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Great Britain. Other Destinations. Total. Percentage. Butter. Cheese. Batter. Cheese. Butter. Cheese. Butter. Cheese. Boxes. Crates. Boxes. Crates. Boxes. Crates. North Island .. 4,177,2251,727,356 94,566 1,001 4,271,791 1,728,357 98-96 88-49 South Island .. 44,865 224,840 .. 10 44,865 224,850 1-04 11-51 Dominion 4,222,0901,952,196 94,566 1,011 4,316,6561,953,207 100-00 100-00 totals

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(b) Where the costs to f.o.b. of a cheese-manufacturing company for the season 1940-41 are above 3-sd. per pound butterfat, compensation payable will be the amount of the increase in costs to f.o.b. for the 1941-42 season above the costs for the 1940-41 season which can be demonstrated to have been caused by the factors arising from the company's compliance witfh the request for increased manufacture. In addition to the foregoing payments the Government agreed— (i) That suppliers changed over to cheese-manufacture during the 1.940-41 season should be paid a sum of up to £20 (according to the amount expended), such payment to compensate for the likely redundancy loss on certain specified items of inilking-shed equipment. (ii) That suppliers changed over to cheese-manufacture during the 1941-42 season should be paid a sum of up to £27 10s. to cover the loss referred to in the immediately preceding paragraph (i). (iii) That dairy companies, if they so desired, could obtain advances from the Government for the purpose of financing approved expenditure on buildings and plant for the purpose of the change-over to cheese-manufacture, and that dairy companies would be compensated by the Government for the redundancy loss on such buildings and plant in accordance with the arrangements notified to the dairy companies concerned. Mention has been made of the increase granted by the Ministry of Food of ss. 9d. sterling per hundredweight in the purchase-price of cheese. The foregoing costs, and also costs or losses incurred by the Government in respect of houses for cheese-factory employees, provision of emergency cool storage, loss on account of whey butter through prohibition of export, stabilization of the cost of cheese-crates, storage, interest, and insurance on butter and cheese awaiting shipment, and subsidy on the collection of bobby calves to ensure the necessary supply of calf veils for rennet-manufacture, are to be met from the proceeds of this additional price for cheese (see dairy-produce accounts, page 22). MANUFACTURE OF DEHYDRATED BUTTERFAT, AND CONTRACT WITH MINISTRY OF FOOD FOR PURCHASE OF 10,000 TONS IN THE PERIOD ENDING 31st JULY, 1943. With a view to effecting a saving in shipping space, experiments were conducted in the conversion of butter into dehydrated butterfat for shipment as non-refrigerated cargo. The United Kingdom Ministry of Food interested itself in these experiments, and assisted by agreeing to take trial consignments of dehydrated butterfat, following the receipt of small samples of the product. The experiments in New Zealand in the preparation of dehydrated butterfat were conducted by the Dairy Research Institute, with the co-operation of the Dairy Division of the Department of Agriculture, and assistance was given by research officers in the United Kingdom. The immediate aim of the experiments was to find a means of disposal of whey and Second Grade creamery butters, which were excluded from the contract for shipment of frozen butter to the Ministry of Food. The trial consignments referred to opened up satisfactorily and resulted in a commercialscale contract being entered into. A plant has been established by the Internal Division of the Marketing Department which will manufacture the dehydrated butterfat for the Export Division. The butter for processing will be supplied by the Export Division, and the Internal Division will be paid a price for the resultant dehydrated butterfat based on cost of processing and packing ready for export. The details of the contract of sale of dehydrated butterfat to the United Kingdom Ministry of Food are as follows :— (1) The Ministry of Food will purchase 10,000 tons of dehydrated butterfat or such larger quantity as may be produced in the period ending 31st July, 1943. (2) Prices to be : Grade 1, IBOs. sterling per hundredweight delivered f.o.b. ocean steamer ; Grade 2, ss. sterling per hundredweight less. (3) Payment to be made, in London as to 90 per cent, on shipment and 10 per cent, within twenty-eight days after arrival or estimated due date of arrival. In the event of delay in shipment, the Ministry undertakes to make payment amounting to 50 per cent, of the value of any butterfat which has had to remain in store one month longer than would have been required by the agreed shipping schedule, and to make a further payment amounting to 40 per cent, of the value of any butterfat which has had to remain in store three months longer than would have been required by the shipping schedule. (4) The New Zealand Government undertakes that the moisture content of the butterfat shall in no case exceed one-half of 1 per cent., and that every effort will be made to reduce the moisture content to below one-quarter of 1 per cent. The New Zealand Government undertakes that the butterfat shall in no case contain, more than : Copper, 0-1 parts per million ; iron, 0-2 parts per million. (5) Quality : The grading of the New Zealand Government will bo accepted as evidence of quality and weight, subject to confirmation by a panel of experts co-opted by the Ministry of Food in London, on which panel the New Zealand Government will be represented. The New Zealand Government undertakes to maintain a suitable staff of qualified graders in New Zealand as well as properly qualified inspectors in the United Kingdom to deal with complaints as to quality after arrival. Claims on quality, if not capable of mutual adjustment, to bo decided by an independent umpire, selected by mutual agreement. (6) Storage : The New Zealand Government will be responsible for storing butterfat in suitable stores at suitable temperatures in New Zealand, and will be responsible for placing butterfat on board steamers for shipment as they become available.

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PROCESSED MILK. For the 1941-42 season contracts were concluded with the United Kingdom Ministry of Food for New Zealand's normal export of skim-milk powder and evaporated milk. Sale prices were : — Skim-milk powder .. .. .. .. £36 ss. per ton sterling f.o.b. Evaporated milk .. .. .. 19s. 9d. per case sterling f.o.b> The equivalent of these prices in New Zealand currency was paid to manufacturers, less § per cent, to cover the Department's administrative expenses. The quantities and values exported by the Department for the twelve months ended 31st July, 1942, were :—

PAYMENTS MADE BY DAIRY-FACTORY COMPANIES FOR BUTTERFAT-SUPPLIES. The following tabulation shows the average butterfat-prices paid to suppliers of butter- and choese-manufacturing companies. 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.

The following tabulation shows the average costs of butter- and cheese-manufacturing companies for the 1941-4-2 season. The New Zealand averages for the five previous seasons are also shown; —

Season 1941-42: Costs in Manufacture and Delivery of Butter to f.o.b. Overseas Steamers

Season 1941-42: Costs in Manufacture and Delivery of Cheese to f.o.b. Overseas Steamers.

2—H. 30.

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Cases. Weight. Value. Tons. £ Skim-milk powder .. .. 94,933 4,746 214,007 Evaporated milk .. .. .. 124,590 2,670 153,440 Total .. .. 219,523 7,416 367,447

(In pence per pound of butterfat.) Season 1936-37. Season 1937-38. Season 1938-39. Season 1939-40. Season 1940-41. Season 1941-42 Butter. Cheese. Butter. Cheese. Butter. Cheese. Butter. Cheese. Butter. Cheese. Butter. Cheese. New Zealand average 13-55sj 15-176 14-812 16-389 16-087 18-060 16-179 18-091 16-106 18-043 16-017 18-025 I '

(In pence per pound of butterfat.) W) _Q d *G • ® flSn •• ® TJ. a .2 5« i a S So 2 s «© — li if 1 if b il is i? S | |l Sf «« a P « a r « pq _ . New Zealand average— • 1941-42 season .. .. .. 0-438 1-091 0-091 0-064 0-409 0-213 2-306* 1940-41 season .. .. .. 0-405 1-023 0-077 0-063 0-437 0-192 2-197 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 " * Butter-manufacturing costs for the 1941-42 season were increased owing to diversion of milk-supply from butter-manufacture to cheese-manufacture. Compensation payments were made to dairy companies on this account; see pages 7 and 8 of this report.

(In pence per pound of butterfat.) I ! • * ~ Manu- Repairs Charges: „ , . ~ . ■ faeturing Depreciation. and Factory to . ,,, or e!U «r° Charges Maintenance. f.o.b. Char S es - Char « es - New Zealand average — 1941-42 season .. .. 2-372 0-141 0-170 0-647 0-270 3-600 1940-41 season .. .. 2.323 0-144 0-184 0-620 0-258 3-529 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

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ACCOUNTS. The dairy-produce accounts covering the completed operations for the 1940-41 season and the operations for the 1941-42 season are shown in the accounts section at the end of this report, pages 21 and 22. The completed operations for the 1940-41 season are referred to on page 4 of this report. After sale of the balance of the 1940-41 season's'dairy-produce which was in store at 31st July, 1941, the final result of the operations for the complete 1940-41 season is a surplus of £151,989. The accounts now presented for the 1941-42 season cover purchases of butter and cheese by the Department up to 31st July, 1942. The following table shows the quantities so purchased, the total season's production for export, and the stocks in store awaiting purchase at 31st July, 1942 :—

Note.—The season's production of whey butter amounting to 124,920 boxes was also purchased by the Department " in store " for manufacture into dehydrated butterfat. The accounts for the 1941-42 season comprise Purchase and Sale and Revenue Accounts, Administration and General Expenses Account, and Dairy Produce Account. It will be observed from the accounts that the purchase and sale transactions to 31st July, 1942, show a surplus of £186,846 after allowance has been made for administration and general expenses. The cheese " change-over " account shows a surplus at 31st July, 194-2, of £539,897, against which there are contingent liabilities (see page 22) of £284,000. The Dairy Produce Account at 31st July, 1942, shows a deficit of £997,070, subject to the contingent liability of £284,000 already referred to. MEAT. REVIEW OF COMPLETED FINANCIAL OPERATIONS FOR THE 1940-41 SEASON. The accounts presented with the report for the 1940-41 season covered purchases of meat by the Department up to the 31st July, 1941, and showed a deficit of £6,115. On page 23 of this report accounts are shown covering the purchase and sale transactions in respect of the 1940-41 season's meat, which took place after 31st July, 1941, and which showed a surplus of £127,203. Thus the final net surplus on purchase and sale of the complete 1940-41 season's meat was £121,088. BULK PURCHASE OF 1941-42 SEASON'S MEAT BY UNITED KINGDOM GOVERNMENT. The contract between the United Kingdom and New Zealand Governments for the 1940-41 season (the second year .of war) provided for the purchase of 248,000 tons of meat, shipped or unshipped, from the production year ending 30th September, 1941, and from the " carry-over " from the previous season. The actual liftings of meat under the 1940-41 season's contract were 268,650 tons, which left a " carry-over " in store at the end of September, 1941, of 77,902 tons of export meat. For the 1941-42 season (the third year of war) the United Kingdom Government contracted to purchase 190,000 tons of frozen meat shipped or unshipped, and 37,150 tons of canned meats. The equivalent in carcass meat of 37,150 tons of canned meat is 111,500 tons, so that the contract for purchase of frozen and canned meats represents a total quantity of 301,500 tons carcass meat. It was provided that if the Dominion should not succeed in canning the contract quantity of 37,150 tons, the surplus carcass meat would fall to be dealt with under the terms of the paper issued by the United Kingdom Government " Statement of Policy in regard to New Zealand Surpluses " (see page 3 of this report). Briefly, the terms of this surpluses agreement provided for a production objective for New Zealand for the 1941-42 season of 301,500 tons of meat, made up (as stated above) of 190,000 tons frozen meat, plus 111,500 tons of carcass meat for canning. The United Kingdom Government agreed to share equally with the New Zealand Government in the liability for the production of this 301,500 tons meat, but any production in excess of this figure would be the entire responsibility of the New Zealand Government. The United Kingdom Government undertook to lift additional quantities of frozen meat if freight became available. Increase in Prices for 1941-42 Season's Meat purchased by the United Kingdom Government. The general conditions of the 1941-42 season's bulk purchase contract, including the shipment and payment procedure, remained unaltered. Purchase-prices were, however, increased by fd. per pound sterling for beef and beef offals, lamb and lamb ofials, and baconer carcasses and cuts, and by -Id. per pound sterling for mutton and mutton offals and pork and pork offals . F rozen meat liftings have been substantially in excess of the contract quantity, and it is now anticipated that the total quantity of frozen meat liftings for the twelve months ended 30th September, 1942, will be approximately 297,866 tons, with a resulting " carry-over " of meat for export at 30th September, 194-2, of 40,567 tons. Included in this " carry-over "of 40,567 tons is meat reserved for the armed forces service requirements in New Zealand, Pacific Area, and Middle East, amounting to approximately 20,000 tons. Note.—For the calendar year 1943 the United Kingdom Ministry of Food has undertaken to purchase meat up to the total quantity shipped in the calendar year 1942. In arriving at the total tonnages, the calculation includes the carcass equivalent of canned meat, dried meat, and also shipments to the Middle East, and on this formula the figure of 328,000 tons was arrived at. as the

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Purchases up to 31st July, 1942. r , , m , , _ J In Store not yet Total Season s j purchased at Production for Shipped. j In Store. 31st July, 1942. Export. Boxes. Boxes. Boxes. Boxes. Creamery butter .. .. .. 3,583,640 319,971 113,669 4,017,280 Crates. Crates. Crates. Crates. Cheese .. .. .. .. 1,809,354 212,098 80,326 2,101,778

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estimate of total shipments in 1942. New Zealand is asked to produce the maximum quantity possible in the forms of canned and dried meat, in order to reduce the balance of the 328,000 tons for which refrigerated space is needed, to the lowest practicable figure. The agreement recognizes that circumstances may make it impossible to lift the whole of the balance of frozen meat ascertained in accordance with the formula set out above, and the Ministry of Food has therefore agreed to purchase this quantity whether shipped or not. PURCHASE AND SALE PROCEDURE AND ESTABLISHMENT OF MEAT POOL ACCOUNT. For the 1940-41 season the New Zealand Government undertook to purchase the normal exportable surplus, irrespective of shipping. This arrangement expired on 30th September, 1941. Proposals for the purchase of export meat for the 1941-42 season formed the basis of discussions between the Hon. the Minister of Marketing and the New Zealand Meat-producers Board, and representatives of the meat industry. Negotiations with the New Zealand Meat-producers Board, as representing the producers of meat for export, proceeded on the mutual recognition of the following points :— (1) The continued stability of the industry could be safeguarded only by a renewal of the Government's undertaking to purchase the normal exportable' surplus, irrespective of the implications of the new agreement to be made between the New Zealand and United Kingdom Governments. (2) The average weight of export lamb and mutton should be maintained as low as possible in order to ensure that, within a given tonnage, the greatest possible number of animals could be slaughtered and frozen for export. (3) It was in the interests of the industry as a whole that the export value of ewe mutton should not be allowed to fall to canning values only. In order to provide a'fund which would enable ewe-mutton values to be maintained at a fair and reasonable level, the producers agreed to make some contribution from the prices which they would otherwise have received for exportable classes of meat. Whilst these discussions were proceeding, advice was received from the United Kingdom Government of the increases in prices of export meat, applicable from Ist October, 1941, as mentioned above. These increases in prices materially assisted in the solution of the problem confronting the Government and the New Zealand Meat-producers Board, and after discussion an agreement was reached that in fixing the opening schedule buying prices the producers should receive substantially the same opening price this season as they did last season, but they would forego any increased prices which may have been available as the result of the increases granted by the United Kingdom Government or by increases at that time in the value of pelts. The Government on its part agreed to purchase the normal exportable surplus of meat, subject to any restrictions on killing that might be rendered necessary by shipping, marketing, or other difficulties, but it was agreed that any such restrictions would be made only after consultation with the Board., The agreement provided that the Government would establish a " Meat Pool Account " from the proceeds secured from the additional prices granted by the United Kingdom Government and from the agreed reduction in the Marketing Department's f.o.b. price schedule arising from adjustment of pelt values as mentioned above. The purpose of the establishment of this account was primarily to provide a fund for maintaining the value of ewe mutton and canning beef at a reasonable level, to meet interest, storage, and insurance charges on meat, and to provide for the capital liability on emergency cannery plant and buildings and cool stores. It was further agreed that if at the end of the emergency period a surplus remained in the Meat Pool Account, the Government and the Meat Board would consult to determine how any such surplus could be utilized for the benefit of the industry. Should there be a deficit in the account at the end of the emergency period, such deficit would remain the responsibility of the New Zealand Government. The arrangement also provided for consultation between the Government and the Meat Board in regard to the administration of the Meat Pool Account. The terms of the agreement subsequently concluded between the Government and the freezing companies and meat operators covering the purchase of export meat products for the 1941-42 season were recorded in a letter addressed by the Minister of Marketing to the Chairman of the North and South Island Freezing Companies' Association, reading as follows :— " I desire to confirm the discussions between us with regard to the procedure to be followed in connection with the purchase of export meat products by the New Zealand Government in respect of the 1941-42 season. The terms which are accepted as constituting an agreement between the freezing companies, the meat operators, and the Meat-producers Board acting on behalf of producers who wish to have export meat killed on their own account as vendors, and the Government as purchaser, will therefore be as follows:—* " (1) The Government agrees to purchase all meat and edible offals killed and passed for export during the 1941-42 season ending on 30th September, 1942, of the types, at the prices, and on the conditions contained in the now current Marketing Department Prices Orders and circular letters of instructions. Payment will be made as follows :— " (a) At the expiration of thirteen weeks from the date of killing (based on the weekly killing returns of each freezing company) the Government will effect purchase and make the appropriate payment to the owners, irrespective of whether such meat remains in store or has in fact been shipped. The payment by the Government of the full purchase-price thirteen weeks after killing is a compounding of an alternative payment procedure of 50 per cent, in two months and the balance in four months after killing. If any meat is destroyed oi damaged otherwise than by ordinary depreciation through long storage before the expiration of seventeen weeks after killing, or before placement to f.o.b. within that period, then the responsibility shall lie with the freezing company to the extent of its warranty as set out below, or with the owner, as the case may be.

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" (b) Payment will be made on weights in accordance with the normal custom of the trade as determined by the Primary Industries Controller. Companies will be responsible for condition and quality of all meat in store at any time whether before or after the date of purchase of the meat by the Government in accordance with the warrant given by the companies as follows " ' Warranty.- The companies will exercise all reasonable care and diligence in treating, freezing, handling, and taking care of the meat entrusted to them and in maintaining in good working-order the premises and plant used for that purpose. It is understood that goods held in refrigerated stores become stale as a result of lengthy storage,, and this factor must be recognized as an unavoidable source of deterioration of goods so stored for which the freezing companies cannot be held responsible. If any damage occurs or any defect arises as a result of a breach of this warranty, the freezing companies will pay to the Government the loss arising from that damage or defect.' " (2) The Government will assume reponsi'bility for all insurance risk, including war risk, on meat in store after the expiration of seventeen weeks from date of killing. " (3) Storage on meat suitable for export within the terms of the now current Price Orders which remains in store shall be payable by the Government after the expiration of seventeen weeks after the date of killing at a rate of per pound per calendar month. " (4) In consideration of the Government undertaking to purchase export meat products in terms of this agreement, all freezing companies and meat operators will agree jointly and individually to maintain buying schedules at the fullest possible rate, and to consult the Government before making any alteration in any existing price schedule payable to producers for export stock. In addition, freezing companies and meat operators to agree to provide the Department of Agriculture with returns showing the prices paid to farmers and what deductions have been made to cover intervening charges from farm to f.0.b., together with any further information required in order to enable the Department, in consultation with the Meat-producers Board, to decide whether the prices being paid to growers are fair and reasonable. " (5) The ' open door ' to farmers at all freezing-works to be maintained, subject to any conditions that may be laid down by.the Marketing Department involving the possible pooling of farmers' individual consignments. " (6) It is further agreed that the operations of freezing companies and buying operators shall again be subject to an audit by the Government in association with the New Zealand Meat-producers Board, either by the Auditor-General or by a private firm of auditors or by the Auditor-General and a private firm of auditors approved by the Government and reporting to it. The purpose of this audit shall be to investigate whether the prices paid and the various charges made by the trade between the farm and f.o.b. are fair and reasonable. The findings in the report by the auditors shall be taken into account when determining the remuneration of the freezing companies for their services in the season 1942-43. " (7) It is understood that the details of procedure in terms of this agreement will be settled by the Primary Industries Controller in consultation with the New Zealand Meat-producers Board and the Marketing Department. " (8) Any question to be settled or dispute arising under this arrangement will, if no other provision is made above, and if the parties cannot agree, be settled by arbitration under the Arbitration Act. " The object of this agreement is to enable buyers of export meat to continue to purchase in the usual way, and to enable freezing companies to continue to slaughter and freeze for export. This is made without prejudice to freezing charges. The export buyers and freezing companies therefore agree to give to the Government the earliest possible notice if changing conditions in any way prejudice the attainment of this objective. " The Government also reserve the right to apply any restrictions on the killing of export stock that may be rendered necessary by shipping, marketing, or other difficulties. Any such restrictions will be made only after full consultation with the New Zealand Meat-producers Board. " I trust that this agreement will operate satisfactorily, and will be pleased to receive early confirmation of acceptance by each freezing company and meat operator." The most important new features of this agreement were : — (a) Payment for meat thirteen weeks after killing, irrespective of whether the meat remained in store or was shipped. (b) Payment of storage on meat remaining in store after the expiration of seventeen weeks from date of killing. (c) Assumption by the Government of responsibility for all insurance risk, including war risk, on meat in store after the expiration of seventeen weeks from date of killing. It is pleasing to record that the procedure agreed upon worked smoothly and that the buying, slaughtering, and freezing of export meat continued in the usual way.

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SURVEY OF SEASON. Although the killings of export-quality meat during the season totalling 326,515 tons, did not quite reach last season's (1940-41) figure of 330,344 tons, on the whole a good fattening season was experienced in practically all districts, and quality was well maintained. Lamb killings at 11,049,772 showed a reduction of 190,229 carcasses from the record kill established last season of 11,240,001 carcasess. The killings of pigs and prime cattle showed a substantial drop, whilst increases were recorded in wether mutton, ewe mutton, and boner cows. A feature of the season was the extensive boning-out of meat which was necessitated by the decision to can all f.a.q. and boner cows and all ewes. In addition, all quarter beef continued to be exported in boneless form. The entire exportable kill of ewes was purchased by the Marketing Department on a carcass-weight basis, but instead of being exported these ewes were to be boned out for canning. An improvement in the shipping position has enabled approximately 25 per cent, of the ewe kill to be shipped to the United Kingdom in frozen telescoped form. The Meat Pool Account will therefore benefit to the extent of the increased returns from ewes exported in frozen form, compared with their use for canning. Boner cows were purchased by the meat operators on the basis of 20s. per 100 lb. delivered at nearest port works. This price took effect from 19th January, 1942, when the Minister of Marketing announced an increase in the price for canned beef (referred to later in this report) under the contract between the New Zealand and the United Kingdom Governments. The operators sold the resultant boned meat to the canneries at a price fixed by consent of the Primary Industries Controller. In regard to bull beef, the Minister of Marketing, after a conference with the Meat Board, announced a subsidy payment of 6s. per 100 lb. dressed carcass weight on all bulls slaughtered at freezing-works on and after Bth June, 1942, and passed by the Government Inspector as fit for human consumption. The subsidy of 2s. per head on " passed " bobby calves was continued during the 1941-42 season. The improved shipping position this year enabled bobby-calf meat to be saved for export, and the net proceeds from the sale thereof will be applied to offset the expenditure incurred by the Government in the subsidy payment referred to, after which the balance, if any, will be available for distribution to the producers of bobby-calf meat. PRICES FOR 1941-42 SEASON'S MEAT PURCHASED BY MARKETING DEPARTMENT FOR EXPORT. The f.o.b. New Zealand currency purchase-prices payable to freezing companies and meatexporters for the various classes and grades of frozen meat are set out in the Meat Marketing Order 1942. Purchases made by the Department from freezing companies and exporters for the twelve months ended 31st July, 1942, total £22,993,192 (New Zealand currency). Debits to the United Kingdom Ministry of Food total £19,558,267 (New Zealand currency) for the same period. The total weight of meat purchased for shipment was 400,616 tons, giving an average payout to freezing companies and meat-exporters of 6-15 d. per pound for all descriptions of meat and edible offals. The following table shows particulars of meat purchased during the twelve months ending 31st July, 1942, classified under main descriptions of meat purchased ■

- I I I SHIPPING. The Department lias continued during the season to allocate shipping space as equitably as possible amongst the freezing companies in proportion to their stocks of meat in store, consistent with the quickest " turn round " of overseas vessels, and with the best use of available shipping tonnage to prevent works from becoming congested. As recorded in last year's annual report, war conditions have created many difficulties in the planning of shipping allocations and shipping programmes. It is pleasing to record that, despite these conditions, it has been possible so to allocate shipping tonnage that no freezing-works has had to cease killing owing to congestion of freezing-works stores. The Department again records its thanks to the Overseas Shipowners' Allotment Committee for its ready co-operation, and to the New Zealand Railways Department for its continued assistance in organizing rail transport arrangements to provide main port loadings of ships.

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Class of Meat Tnns Purchase Value Average Price Currency), (N g^ y) . Frozen— I £ d. Lamb .. .. .. .. .. .. 213,152 14,757,892 7-42 Mutton .. .. .. .. .. .. 101,394 3,208,505 3-39 Beef and veal .. .. .. .. .. 53,844 2,610,709 5-19 Pork .. .. .. .. .. .. 23,459 1,784,416 8-15 Sundries .. .. .. .. .. 8,767 631,670 7-72 Total, frozen meat .. .. .. .. 400,616 22,993,192 6-15 Preserved— Corned beef and mutton .. .. .. .. 12,852 1,214,193 Tongues, &c. .. .. .. .. .. 735 157'713 " Total, preserved meat .. .. .. 13,587 1,371,906 Total, frozen and preserved meat .. .. 414,203 £24,365,098

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CANNED MEAT. The canning agreement with the United Kingdom Government for the 1941-42 season provided for purchase by the United Kingdom Government of the following quantities of canned meat for the production year ended 30th September, 1942 : — Tons. Corned beef .. .. .. .. .. .. 12,000 Corned and boiled mutton .. .. . . .. . . 10,500 Canned brisket beef .. .. .. .. .. 200 Ox-tongues .. .. .. .. .. .. 400 Bobby-calf tongues.. .. .. .. .. . . 200 Sheep and lamb tongues .. .. .. . . 1,200 Pig-tongues .. .. .. .. .. . . 400 Canning contracts covering these quantities have been allocated amongst the various canning companies in proportion to their productive capacity. Resulting from an increase in prices payable by the United Kingdom Government for canned beef, the Marketing Department's purchase-prices payable to canning companies were correspondingly advanced. The price payable by the United Kingdom for the 12 oz. corned-beef pack, whilst representing an increase of 9d. per dozen sterling on last year's contract price, was still out of relation to the price payable for the 6 lb. pack, having regard to New Zealand's production costs. After negotiations with the canning companies, agreement was reached on an adjustment of prices as between the two packs. Boneless cow beef is sold by meat operators to canners at a price fixed by consent of the Primary Industries Controller. This price is on the basis of 3-55 d. per pound at canner plants, and the cost of delivery, &c., is a charge against a railage pool operated by the canners. The agreement also provides that canners will operate on the basis of utilizing as far as possible the meat in a fresh state in so far as killings at their own works and Southdown Works are concerned. Frozen meat from other works is to be drawn in as equitable a manner as is practicable. In order that meat operators should not be unduly penalized, the Marketing Department arranged to purchase from them all boner cow beef held in store on the same basis as was agreed upon in respect of other classes of meat —i.e., payment after three months in store. In the case of ewe mutton, the Marketing Department purchases the ewes on a carcass-weight basis and, after paying freezing companies an agreed price for boning, sells the resultant boned meat to the canning companies at the price of 2-375 d. per pound delivered at cannery sidings. The resultant loss is debited to the Meat Pool Account, already referred to in this report. The increase in this year's contract quantities of canned beef and mutton from 6,000 tons to 22,500 tons has necessitated considerable reorganization of the canning industry, the purchase of new plant, and the erection of additional cannery buildings and accommodation. Finance for this work was arranged by the New Zealand Government under provisions similar to those relating to the erection of emergency cool storage (see page 23 of annual report for year ended 31st July, 1941). Canning companies which hitherto had manufactured little or no canned beef or mutton have been brought into full production as the result of a complete survey of the entire canning facilities of the Dominion. Overtime has been worked at most of the canning establishments, with a view to securing the additional production which is desired by the United Kingdom Government. The full range of prices payable by the Marketing Department for canned meats purchased under the current (1941-42) season contracts is as follows : —■ Per Dozen Per Dozen f.o.b. f.o.b. (N.Z. (N.Z. Currency). Currency). Corned beef— £ s . d. Brisket beef-— £ s. d. First-quality taper soldered 6's .. 3 33£ First-quality soldered 6's .. 517 7 Second-quality taper soldered 6's .. 3 0 2 First-quality soldered 4's ..431 First-quality round soldered 6's .. 3 3 3J Canned tongues — First-quality taper soldered 12 oz. .. 010 6£ Ox and calf— First-quality round sanitary 12 oz. 010 4 First-grade 6's .. .. 10 5 0 Corned mutton— Second-grade 6's .. ..979 First-quality taper soldered 6's .. 213 10 Sheep and lamb — Second-quality taper soldered 6's .. 210 8| 12 oz. .. .. .. 016 8 Boiled mutton — 1 lb. .. .. ..109 First-quality round soldered 6's .. 213 10 Pig 6's .. .. ..717 Bobby calf 12 oz. .. .. 0 19 1 SAVING OF SHIPPING AND STORAGE SPACE BY DE-BONING AND TRIMMING OF EXPORT MEAT AND BY PROCESSING. The economies in space detailed in last year's report were continued. The full effect of these economies has made itself apparent in space saving effected during the present season. MANUFACTURE OF DEHYDRATED MEAT,. AND CONTRACT WITH MINISTRY OF FOOD FOR PURCHASE OF 1,200 TONS PER ANNUM. The year has seen considerable development of the experimental work initiated last year in connection with the manufacture of dehydrated meat. A contract has now been secured from the United Kingdom Government for the supply of 1,200* tons of dehydrated meat per annum. It is estimated that this contract quantity is equal to 6,800 tons of carcass meat, and that shipment as dehydrated meat will save a corresponding amount of refrigerated space. Like canned meat, dehydrated meat is shipped in unrefrigerated space, and it has the advantage over canned meat that,

* Since increased at the request of the United Kingdom Ministry of Food as follows : (a) For shipment calendar year 1943, a minimum quantity of 2,500 tons of dried mutton and/or beef; (6) New Zealand to be prepared to increase the quantity to 5,000 tons in 1944; (c) preparation and pack 1943 contract to conform to Ministry of Food specifications, and price to be basod on the existing rate, subject to mutual adjustment in the light of experience.

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being more concentrated, it effects a considerable saving in tinplate. Preparations are now under way for the establishment of a commercial plant in the North Island capable of supplying the United Kingdom order. In the experimental and developmental work in New Zealand, care has been taken to adhere closely to the processing conditions and other requirements laid down by experts in the United Kingdom. Other details of the contract arrangements with the Ministry of Food arc : — (a) Prices to be paid by the Ministry are to be based on the frozen schedule prices for export meat, plus costs of processing and a contribution towards the capital cost of the plant at the rate of 20 per cent, per annum spread over the period of the contract—namely, three years. It has been agreed that if, at any time before the expiration of three years, New Zealand is asked to cease production the United Kingdom Government will make up its capital contribution to what would have accrued under the three-year contract. (b) The Ministry will accept the production risk, provided the Cambridge (United Kingdom) processing formula is followed and complete technical supervision is exercised in New Zealand. ACCOUNTS. The meat accounts covering the completed operations for the 1940-41 season and the operations for the 1941-42 season up to 31st July, 1942, are shown in the accounts section at the end of this report, pages 23 and 24. The completed operations for the 1940—41 season are referred to on page 10 of this report, the final surplus being shown as £121,088. The accounts for the 1941-42 season comprise— (a) Purchase and Sale Account, 1941-42 Season's Killings shipped up to 31st July, 1942. This account shows the transfer to the Meat Pool Account of £974,881, being the surplus on 1941-42 season's killings shipped up to 31st July, 1942, after allowance to the Department for administration and general expenses of | per cent, on sales. (ft) Administration and General Expenses Account, showing the allocation of expenses for the year ended 31st July, 1942, to the Purchase and Sale Accounts for the 1940-41 and the 1941-42 seasons. (c) Meat Pool Account to 31st July, 1942 (see page 24 of this report). This account shows a surplus at 31st July, 1942, of £794,801, against which items still have to come to charge, notably in respect of losses on meat for canning. (d) Meat Account, which shows a surplus at 31st July, 1942, of £150,599. WOOL. BULK PURCHASE OF WOOL BY THE UNITED KINGDOM GOVERNMENT, AND PURCHASE AND SALE PROCEDURE. The annual report of the Department for the 1939-40 season gives details of the bulk purchase and sale arrangements between the United Kingdom and the New Zealand Governments for greasy and slipe wool, and of the agreements between the New Zealand Government and the woolbrokers, woolbuyers, and woolscourers covering services to be performed by them respectively in the preparation of wool for appraisal, the appraisement of wool, and the scouring of wool selected for that purpose. 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 (5 per cent.) are deducted. In July, 1942, the final payments were made by the Department for greasy and slipe wool. These final payments represent the full amounts of the retention moneys, 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 appraisement prices—l2-25d. per pound greasy wool and 16-9766 d. per pound slipe wool- - which are represented by the f.o.b. sale prices to the United Kingdom Government. Accordingly the final payments made by the Department for the 1941 -42 season were : Greasy wool, 6-464927 per cent, of the appraisal values ; and slipe wool, 6-722473 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 f.o.b. sale prices of 10-55 d. per pound sterling for greasy and 13-75 d. per pound sterling for slipe. Note. —The United Kingdom Government has announced (May, 1942) an increase of 15 per cent, in the ex-store price of wool, not including the additions for storage and handling charges which enter into the total price paid. The result is that the prices which apply for the 1942-43 season are as follows, the previous prices being shown in parentheses :— Pbices foe 1942-43 Season. Greasy Wool. Slipe Wool. Per Pound. Per Pound, d. d. d. d. Appraisal prices (New Zealand currency) .. 14-0875 (12-25) 19-523 (16-9766) F.o.b. prices for sale to the United Kingdom Government (sterling) .. .. 12-027 (10-55) 15-797 (13-75) Payment by local manufacturers for the 1941—42 season was 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. The procedure for appraisal of wool outlined in the report for the year ended 31sfc July, 1941, was followed during the 1941-42 season.

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The following tables show the quantities and values of wool appraised during the years ended 30th June, 1941 and 1942 :— n tit

Greasy Wool.

Slipe Wool.

SCOURING OF WOOL. The arrangements entered into with the United Kingdom Government for the 1941-42 season provided for the scouring of 45,000,000 lb. at a cost of lfd. per pound greasy basis. Under this contract 160,025 bales (approximately 58,299,337 lb.) were allocated for scouring up to 30th June, 1942. SHIPPING ARRANGEMENTS AND DESTINATION OF WOOL EXPORTS. The United Kingdom Wool Control released quantities of wool for shipment to U.S.A., Canada, India, Australia, and Russia. Stocks of wool held in New Zealand at 30th June, 1942, arc loss than the stocks at the end of the previous season. The following tabulation shows the quantities of the past season's wool shipped to 30th June, 1942, and the destinations :—

ACCOUNTS. The wool accounts are shown in the accounts section at the end of this report, page 24. The accounts cover appraisals of wool up to the close of the wool year (30th June, 1942), 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 for the year ended 30th June, 1942, show a surplus of £88,737, after allowance has been made for expenses and charges, and for the agreed contribution by the United Kingdom Wool Control for abnormal storage and insurance on 1941-42 season's wool whilst awaiting shipment from New Zealand. The Wool Account shows a surplus of £133,607, which represents the amount of £88,737 already referred to, plus an amount of £44,870 which is the agreed contribution by United Kingdom Wool Control for abnormal storage and insurance on the 1940-41 season's wool. WOOLLY SHEEP-SKINS. Information regarding the terms of sale to the United Kingdom Ministry of Supply of the exportable surplus of woolly sheep-skins and of the manner of purchase and control in New Zealand has been given in the annual reports of the Department for 1940 and 1941. An alteration in the terms of sale to the United Kingdom has been made, in terms of which payment is now made on appraisal in New Zealand instead of at time of shipment of the woolly sheep-skins.

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Purchased for Sale to United Kingdom Ministry of Supply. , J Purchased for Sale to Local M1U9 _ Total Appraisals. Year ended. For shipment in the Greaso , For Scouring. Bales. Net Pounds. Bales. Net Pounds. Bales. Net Pounds. Bales. Net Pounds. Appraisal Value. £ s. d. 30th June, 1942 595,195 202,213,475 176,548 63,638,627 55,159 18,098,195 826,902 283,950,297 14,493,296 8 2 30th June, 1941 619.115 207,856,252 135,369 50,647,664 45,703 15,454,023 800,187 273,957,939 13,972,177 17 0 .

Purchased for Sale to a„i„ United Kingdom Ministry Local Mills Total Appraisals. Year ended. of Supply. Bales. Net Pounds. Bales. Net Pounds. Bales. Net Pounds. Appraisal Value. £ s. d. SOfch June, 1942 .. 157,875 51,716,786 716 225,828 158,591 51,942,614 3,674,195 19 5 30th June, 1941 .. 140,258 46,489,903 522 170,245 140,780 46,660,148 3,301,103 0 5

Destination. Greasy. Scoured. Slipe. Total. Bales. Bales. Bales. Bales. United Kingdom .. .. 237,017 22,659 67,128 326,804 Canada .. .. .. 112,313 5,190 8,994 126,497 Australia .. .. .. 3,061 .. .. 3,061 India .. .. .. 27,393 3,886 117 31,396 Russia .. .. .. 47,914 24,612 .. 72,526 U.S.A. .. .. .. 33,233 277 6,532 40,042 Total, 1941-42 .. 460,931 56,624 82,771 600,326 Total, 1940-41 .. 449,251 65,030 69,156 583,437 Quantity unshipped or held for scouring at 30th June, 1942 .. .. .. 284,567 Quantity unshipped or held for scouring at 30th June, 1941 .. .. .. 315,704

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REPORT OF CONTROLLER. " The Hon. the Minister of Marketing. " I beg to report to you on the operations of the Sheep-skin Control for the twelve months ended 30th June, 1942. " Accounts. —The accounts for the year show an addition to the Pool surplus of £5,904 19s. 6d., making it £13,101 ss. 10d., but the endeavour, of course, is so to fix the buying schedules that the Pool Account squares itself without surplus or deficiency. It is the variation in pickled-pelt values which makes this impossible with the need to correct differences from one buying schedule to another. " Buying Schedules. —Buying schedules in operation have been as follows :— " Seventh Schedule .. .. .. .. From 25th September, 1941. " Eighth Schedule .. .. .. .. From 28th February, 1942. The Seventh Schedule was amended to increase the price of lamb-skins only from 23rd December. The normal time for the change of the Seventh Schedule was early in December, but because of the uncertainties from the entry of Japan into the war the change was delayed until 28th February, 1942. No change has been necessary since then, because the variation in pelt prices downwards has practically been offset by the increase in the price of wool. " Statistics. —A table is given showing the quantities and values of woolly sheep-skins exported to various destinations on behalf of the United Kingdom Wool Control for the twelve months ended 31st July, 1942. " R. C. Burgess, Controller." QUANTITIES AND VALUES OF WOOLLY SHEEP-SKINS EXPORTED. The following table shows the quantities and values of woolly sheep-skins exported to various destinations on behalf of the United Kingdom Wool Control for the twelve months ended 31st July, 1942

ACCOUNTS. The accounts of the Sheep-skin Control for the year ended 30th June, 1942, are shown in the accounts section at the end of this report, page 26. TALLOW. PURCHASES BY UNITED KINGDOM GOVERNMENT OF 1941-42 SEASON'S TALLOW. In October, 1941, the United Kingdom Ministry of Food intimated that, whilst the Ministry was not inclined to make a contract for a period, they desired the first option of the 1941-42 season's tallows, with a view to making contracts from time to time for purchase of fixed quantities. The Ministry also agreed to discuss an upward revision of prices at the time of purchase. The wishes of the Ministry as outlined were met, and purchases of the following quantities were made, covering shipments from Ist August, 1941, to 31st July, 1942 :— (a) At the c. &f. sterling prices which applied for the 1940-41 season (see page 22 Tons. of parliamentary paper H.-30b, 1940) .. .. .. .. .. 15 119 (b) At a range of c. & f. sterling prices which average approximately £3 10s. sterling per ton in excess of the 1940-41 season prices .. .. .. .. 30,786 Total .. .. .. .. .. .. .. 45,905 Note. —The 1942-43 season production of tallow for export, estimated at 50,000 tons, has been purchased by the United Kingdom Ministry of Food at a range of c. & f. sterling prices which average approximately £8 10s. sterling per ton in excess of the 1940-41 season prices. PURCHASE BY NEW ZEALAND GOVERNMENT OF TALLOW FROM NEW ZEALAND MANUFACTURERS. The f.o.b. (New Zealand currency) purchase-prices payable to manufacturers remain as set out in the Schedule attached to the Purchase of Tallow Order 1940, with the exception of minor alterations relating to the grades stearine medium and pig-fat (inedible), and the addition of the grades edible mixed tallow and hide-grease. STATISTICS. The following table shows the quantities of tallow purchased by the United Kingdom. Government, and shipped from Ist August, 1941, to 31st July, 1942 :— Tons Tons (net). _ (Net). First beef .. .. .. .. 5,108 Superior stearine .. .. .. 537 First mutton .. .. .. 10,412 Medium stearine .. .. .. 32 Good bright mixed .. .. .. 4,136 Inedible lard .. .. .. 785 Good colour mixed .. .. .. 6,094 Hog-grease .. .. .. .. 296 Fair to good mixed .. .. .. 4,222 Edible mixed .. .. .. 1,018 Fair mixed .. .. '.. .. 1,678 Hide-grease.. .. .. .. 128 Good gut .. .. .. .. 7,296 Medium gut .. .. ..2,917 45,905 Low gut .. .. .. .. 1,246

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Destination. Number of Number of , „ Weight (^Zealand Dumps. Skins. (Pounds Net). 1 Currency). £ United Kingdom .. .. 712 51,235 407,030 22,868 Canada .. .. .. 7,153 516,602 4,181,552 184,743 U.S.A. .. .. .. 394,530 2,900,551 139,441 12,921 962,367 7,489,133 347,052

H.—3o.

Permits were granted to shippers to various overseas countries from Ist August, 1941, to 31st July, 1942, as under :— Tons. United States of America .. .. .. .... 856 India .. .. .. .. .. .. .. 566 Total .. .. .. .. .. ..1,422 ACCOUNTS. The tallow accounts are shown in the accounts section at the end of this report, page 25. The accounts cover purchases and sales of tallow by the Department for the year ended 31st July, 1942, and they comprise Purchase and Sale Account and Revenue Account. After provision of the allowance to the Department for administration and general expenses, the surplus on tallow, £125,520, representing the difference between purchase and sale prices, is transferred to credit of the Meat Pool Account (see page 24). The Tallow Account shows a surplus of £8,488, representing the difference between the Department's allowance for handling of tallow and the administration and other charges. HIDES. The report for the 1939-40 season gave details of the action taken by the Government in regard to control of export of hides and stabilization of prices of hides for local requirements, and equalization of value 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, 1939, 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. SALE OF HIDES TO AUSTRALIA. In October, 1941, arrangements were made between the New Zealand and the Australian Governments for sale to the Australian Hide Board, for military manufacturing purposes, of all ox hides 48 lb. and up and cow hides 50 lb. and up which were surplus to New Zealand requirements. The arrangment (which covered the period November, 1941, to June, 1942) provided for purchase by the Marketing Department of these hides on the terms set out in the report of the Hides Committee which follows, and for sale to the Australian Hide Board at New Zealand standard domestic values. The number of hides shipped to Australia up to 31st July, 1942, in terms of this arrangement was 53,513. ACCOUNTS. The accounts covering the foregoing transactions are shown in the accounts section at the end of this report, page 25. It will be seen that the deficit at 31st July, 1942, was £23,827. REPORT OF HIDES COMMITTEE ON OPERATIONS FOR YEAR ENDED 31st MARCH, 1942. The following report has been submitted to the Hon. the Minister of Marketing on behalf of the Hides Committee by the Chairman, Mr. A. P. O'Shea : — " I have pleasure in submitting the Second Annual Report and Statement of Equalization Fund for the year ending 31st March, 1942. There were no major problems during the year, and the work of the Committee continued smoothly. " Ex-port Levy —The following table sets out the particulars of the various changes in the rate of levy during the year :—-

" The amount of levy payable is calculated on the weights invoiced to oversea buyers, and such weights are declared, on the Customs Department export entries. " Owing to the heavy claiming of hides by tanners during the period September to December, 1941, and the corresponding reduction in the numbers freed for export, it became necessary to make the substantial increase in the rates of export levy shown in the above table. " Sale of Hides to Australia. —In accordance with arrangements made between the Governments of New Zealand and Australia, the New Zealand Government undertook to sell to the Australian Government all ox hides 48 lb. and up, and cow hides 50 lb. and up which are surplus to New Zealand requirements and are free for export in accordance with the Hides Emergency Regulations 1940 (No. 2). The arrangement provided for purchase by the Marketing Department from the regular exporting houses at the points of f.o.b. Australian steamer, the purchase-price to be export f.o.b. parity prices as fixed from time to time by the Hides Committee, there being no actual free sale of these weights to fix the prices.

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Rates of Levy. Dates of Changes : Calf-skins Effective on and after Qx Hides. Cow Hides. Bull Hides. Yearlings. (other than Freezer). 1941. d. d. d. d. d. 4th April .... § J f § 3 30th July .... | | | | 3 13th September .. 1|- l j | £ 3 23rd October 2 2 -J | 6 1942. 7th January .. 1J 1| {- § 6 9th February 1 1 | J 6

H.—3o.

" The Hides Committee appointed a sub-committee comprising Messrs. John Fraser (Chairman), J. P. Mackay, W. V. Watson, and G. A. Duncan to prepare a schedule of Marketing Department purchase-prices, and to vary these prices from time to time in accordance with market values. The sub-committee met monthly, and appropriate variations in prices were made. " Financial Report.—The following summary shows the position of the Equalization Fund as at the 31st March, 1942 :— 0 , x s. d. Cash in hand at Ist April, 1941 .. .. .. .. 153 n iq £ s. d. " Levy received by H.M. Customs .. .. .. 57,112 17 1 " Less 2 per cent, collection charges .. .. 1,142 6 1 55,970 11 0 , 56,124 8 10 " Less claims paid to tanners, freezing companies, and exporters .. 45,264 6 1 10,860 2 9 Expenses to 31st March, 1942— £ s . d. " Salaries .. .. .. .. .. 925 0 0 " Telegrams, stamps, and petty expenses .. .. 27 13 1 " Travelling-expenses .. .. .. .. 34 5 5 " Sundries (rent, phone, cleaning, &c.) .. .. 81 16 0 " Audit fee .. .. .. .. .. 20 0 0 " Bank interest.. .. .. .. .. 6 11 0 " Bank charge and cheque-book .. .. .. 2 10 2 " Cables .. .. .. .. .. 6 10 9 1,104 6 5 " Cash in bank at 31st March, 1942 .. .. .. 9,755 16 4 " To this must be added estimated levy due on hides which have not been shipped or for which payment has not been received from H.M. Customs as at 31st March, 1942 .. .. .. .. .. .. 7,250 0 0 " From this amount must be deducted claims which are finalized and estimated claims not yet completed . . 6,600 0 0 " Leaving estimated balance to be collected 650 0 0 " and leaving an estimated surplus in hand of .. .. £10,405 16 4 " The amount of surplus funds shown above (£10,405 16s. 4d.) is justified in view of the expressed desire of the Committee that the tanners should claim freely while the hides are available in order to obtain their necessary requirements to cover the period, September to December, when production of hides is low. " During the previous year the Committee endeavoured to keep the levy as much in line with market prices as possible, and to arrange that when hides realized higher price levels the levy was correspondingly higher. The Committee also endeavoured to carry as small a cash balance as possible, and this policy is reflected in the amount standing to the credit of the fund at the beginning of the year. " Experience showed that this policy was open to the objection that sudden changes in the rate of levy were necessary. The Committee therefore decided to strike a rate of levy which would, as far as possible, obviate the sudden changes, and it is considered that this policy is satisfactory to the meat industry, in that it has helped to avoid sudden and frequent changes in the beef-price schedule. " Statistics.—The following table shows the number of hides claimed by tanners and the number freed for export under the regulations :—

" Grand totals— " Tanners . . . . .. 414,620 hides and calf-skins. "Exporters .. .. .. 420,954 hides and calf-skins. 835,574 " Cost of Administration.—The total cost of administering the Hides Equalization Fund for the twelve months ended 31st March, 1942, is £1,104 6s. 5d., compared with £1,106 7s. 4d. for the period ending 31st March, 1941. " Based on the quantity of hides handled in terms of the regulations, the cost is again just under Jd. per hide. " General. —I desire to express my thanks to the Chairman and members of the Committee, to the Government Departments concerned, and to all sections of the trade for their willing assistance at all times."

uiouiuuuiuvv uit 4- H. 30.

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j Ox. Cow. Bulls. Yearlings. Calf-skins. Tanners claims .. 113,495 200,721 644 43,850 55,910 Hides freed for export 99,965 252,911 13,942 8,808 45,328 Totals .. 213,460 453,632 14,586 52,658 101,238

H.—3o.

LINEN FLAX. The annual report for 1941 sets out the terms of sale to the United Kingdom Ministry of Supply of New Zealand's export production of linen-flax fibre, this covering the period of hostilities between the British Empire and Germany. Shipments from Ist August, 1941, to 31st July, 1942, were 3,013 bales of linen-flax fibre and 1,918 bales of tow and pluckings, of a total weight of 926 tons 10 cwt., valued f.o.b. at £129,097 4s. 7d. (New Zealand currency). Sales of linen-flax seed were effected of 24,254 sacks, weighing 2,165 tons 8 cwt., valued f.o.b. at £47,933 12s. 2d. (New Zealand currency). SCHEELITE. The agreement with the United Kingdom Ministry of Supply for the sale of New Zealand's output of scheelite was renewed from Ist April, 1942, for a two-year period ending 31st March, 1944. The purchase-price payable by the United Kingdom Government was increased to 120s. sterling per unit and per ton, on the understanding that every effort would be made by New Zealand to substantially increase the production of scheelite. Other terms and conditions of sale were unchanged from those set out in the Department's annual report for 1940. The quantity of scheelite purchased by the Department for the twelve months ending 31st July, 1942, was 77 tons 16 cwt., and the provisional payment in New Zealand currency is £26,766. SUNDRY SUPPLIES FOR WAR OFFICE. As mentioned in the 1941 annual report, sundry foodstuffs have been supplied under contract to the War Office, mainly canned meats, service biscuits, oatmeal, and processed cheese. The value of the products shipped during the twelve months ending 31st July, 1942, is £(N.Z.)1,119,640. The accounts covering the purchase and sale transactions of the Department in connection with these United Kingdom War Office supplies are shown in the accounts section at the end of this report page 25. The deficit for the year ended 31st July, 1942, is £332.

SUMMARY OF VOLUME AND VALUE OF SALES BY THE DEPARTMENT OF PRODUCTS FOR EXPORT FOR THE TWELVE MONTHS ENDED 31ST JULY, 1942.

Note. —The volume and values of butter, cheese, frozen and canned meats includes produce paid for but not shipped at 31st July, 1942. GENERAL. In. presenting this report covering the operations of the Export Division of the Department for the year ended 31st July, 1942, it is pleasing to record that the arrangements of the 1941-42 season in respect of production, handling, payment, and shipment of the various products have proceeded smoothly, and all interests concerned have co-operated in meeting the difficulties inherent in the present war situation. I wish to tender the thanks of the Government to the farming industry, the manufacturing interests, the storage and transport interests, the handling and loading interests, and the shipping interests for maintaining so satisfactorily their respective services. I desire again to pay tribute to the officers and men of the Mercantile Marine and the Eoyal Navy who have been responsible for the transport of the large volume of exports from New Zealand and for the very satisfactory clearances of all export products which have been made. Finally, I wish to mention Government representatives in the United Kingdom and the New Zealand staff of the Export Division of the Marketing Department. They have carried out their increased duties most efficiently, notwithstanding the staff and other difficulties of the present situation. Minister of Marketing.

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Product. Volume. Equivalent Weight ■ Value f.o.b. (in Tons). (N.Z. Currency). £ Butter .. .. .. .. 4,620,942 boxes 115,524 16,209,429 Cheese .. .. .. .. 2,164,334 crates 154,595 13,330,120 Frozen meat .. .. .. .. 400,616 22,993,192 Wool* .. .. .. .. 929,618 bales 141,771 18,220,137 Tallow .. .. .. .. .. 45,905 1,178,767 Woolly sheep-skins .. .. 962,367 skins 3,343 347,052 Canned meats .. .. .. .. 13,587 1,371,906 Scheelite .. .. .. .. 78 26,766 Skim-milk powder .. .. 94,933 cases 4,746 214,007 Evaporated milk .. .. .. 124,590 cases 2,670 153,440 Linen-flax fibre .. .. .. 4,931 bales 927 129,097 Linen-flax seed .. .. .. 24,254 sacks 2,165 47,934 War Office contracts .. .. .. .. 1,306,825 Hides .. .. .. .. 53,513 hides .. 104,374 Totals .. .. .. .. 885,927 75,633,046 * Totals of wool appraised for twelve months to 30th June, 1942, at f.o.b. value.

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DAIRY-PRODUCE. Administration and General Expenses Account fob the Year ended 31st July, 1942. United -» T „ , „ Kingdom. ew Zealand. Total. o , • £ £ £ Cr. £ TYi *f"i* * •,*1 * -i ** "• •• 7,910 7,426 15,336 Miscellaneous recoveries ........ 2 284 P OS t:r-bie"tirnltd 2t otS° ne ' and SUndry eXPenS6S Ifl 1'32? llff <>f-t expense, to Purchase and Sale Accounts- ' Travelling-expenses .. .. .. ;; " 100 '?« 1940-41 season s produce- _ £ Subscriptions, donations, and entertainment .... 64 8 72 Whey butter " " " " " °' X ao Shipping inspection 1j751 515 2 266 Che J e tter " » :: 5 g p—ima .. :: :: ;; :: '-U Depreciation 290 239 5 29 1941-42 season's produce- ~ 6,890 Creamery butter .. .. .. .. .. 27 898 £11,252 £11,761 23,013 Whey butter .. .. .. .. .. 779 Advertising in United Kingdom ~ ~ .. 2 453 Processed milk !! !! 21 'goI Miscellaneous expenses .. .. .. .. .. £ * * • • • • * • OU4 Cost of remittances to dairy companies .. .. .. .. 5 4jg 51,148 Interest on overdraft at Reserve Bank .. ... .. . 2 g' 479 33 gg<7 Subsidy, Public Service Superannuation Fund .. .. .. 'Gog £60,322 £60,322 Final Purchase and Sale and Revenue Accounts, 1940-41 Season's Dairy-produce. Gutter! 7 Sitter. Cheese. Processed Total . I Creamery Whey ch Processed T ~ Purchases net f.o.b. after 31st July, £ £ £ T £ I Sales net f.o.b. after 31st July, 1941, to T T £ T 0r..,, surplus , lft „ ' ' ' 91 "•™° 3,304,46" United Kingdom •• •• ■■ 2,456,127 38,265 803,465 21,855 3,319,712 31et July, 1941, carried down .. ,4,3.6 74 18 ,511 155 a.QM * 9,,27 .. 3,701 £2,460,254 £38,265 £807,166 £21,855 £3,332,540 £2,465,254 £38,265 £807,166 £21,855 £3,332,540 Administration and general expenses £ 83 1*586 So « «Qr, G Ti on tactions after 31st .££ £ £ ~ Net surpluses on transactions after ' 3 6 ' 890 J <v. 1941, brought down .. .. 14,340 74 13,511 155 28,080 31st July, 1941 .. .. 9,151 9 * 11,925 123 21,190 £14,340 £74 £13,511 £155 £28,080 £14,340 £74 £13,511 £155 £28,080 ' — B D^rodlcfTcS" 8 ° n PUrChaße S3le ° f 1940-41 SeaS ° n ' S P roductior » ea ™ d to £ JjftS''wght'd^ 1008 9,f 5 l 9* 1 if 925 123 21f190 •• 151,989 Net surpluses and deficits on transactions up to 31st July, 1941 (as shown in accounts for year ended 31st July, 1941) 20,715 72* 106,904 2,944 130,491 Net surpluses and deficits on 1940-41 Production .. .. .. £29,866 £81* £118,829 £3,067 151,681 Recoveries from manufacturers of special milk products .. .. .. .. 308 £151 , 989 £151,989

* Deficit.

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DAIRY-PRODUCE— continued. Purchase and Sale and Revenue Accounts : 1941-42 Season's Dairy-produce purchased up to 31st July, 1942. Creamery Butter, Cheese, and Processed Milk. Dr . C -F C T T T Cr C=y ChCeSe ' ~ d TOtal " down U '183'272 ® ales^ et f ' o ; b " \°. United Kin g dom ■ ■ •• 12,305,634 10,247,000 22,908,471 1 ' ,000 IH6,ZU 1,651 237,215 To other destinations .. .. .. 290,638 46,799 12,303 349,740 Stocks in store awaiting shipment .. .. 1,109,638 1,201,150 .. 2,310,788 £13,i00,910 £11,494,949 £368,140 £25,568,999 £13,705,910 £11,494,949 £368,140 £25,568,999 £ £ £ £ = ===== ===== Administration and General Expenses .. 27,898 21,967 504 50,369 Gross surpluses brought down 51 fgfi 18V 272 2 -57 Net surplus earned to Dairy-produce Account 23,688 161,305 1,853 186,846 '* *>1,080 Lti3,ZlZ 2,00t Z37,215 £ol ' ot>6 £183 ' 272 £2 ' 357 £237,215 £51,586 £183,272 £2,357 £237,215 Whey Butter. £ S'f whey butter 363,835 Sales of butterfat, net f.o.b. to United Kingdom 115^65 Administration and general expenses 779 stocks in store .. .. g " " ;; Gross deficit carried to Cheese Change-over Account .. .. .. .. 73' 264 £364 ' 614 £364,614 Cheese Change-over Account. Deficit on whey butter brought down .. .. ? f c ° sts ° f " change-over" of supply from £ Payments to dairy companies and suppliers in connection with th# " change- " ' butter to cheese manufacture (ss. 9d. per hundredweight sterling) .. .. 1,028,006 over " of supply from butter to cheese manufacture— £ Suppliers' capital costs .. .. .. .. .. .. 80 650 Suppliers'recurring costs .. .. .. .. .. .. 61 748 Dairy-factory recurring costs .. .. .. .. .. 50'663 Government recurring costs— Cheese-crate stabilization .. .. .. .. .. .. 46 370 Storage, interest, and insurance .. .. .. .. .. 88 354 Subsidy on bobby calves .. .. .. .. .. . 87 060 w. * , • —' 414,845 iNet surplus earned to Dairy Produce Account .. .. .. .. .. 539,897* £1,028,006 £1,028,006 Dairy-produce Account. Deficit on 1936—37 season's produce .. .. .. 276 850 1 aaQa ~ n i a , £ £ Less payment from Consolidated Fund .. 276-850 1939-40 season's produce !! .'! ! Deficit on 1938-39 season's produce ~ 2,514,880 season's produce purchased up to 31st Ju1y,"1942 186! 846 1941-42 surplus on Cheese "Change-over" Account .. .. 539,897* t> 1 . . . . 1,517,819 .Balance, being net deficit from commencement of purchase up to 31st July, 1942 .. 997, 070 £2,514,889 £2,514,889 ♦Subject to contingent liabilities as under— £ Suppliers' recurring costs .. .. .. 13 qqq Dairy company capital costs .. .. *. "" 80 000 Dairy company recurring costs .. .. *' s'ooo Government capital costs .. .. .* " 150' 000 Whey butter .. .. .. .. " 25'000 Storage, interest, and insurance .. .. 11' 000 £284,000 ——

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MEAT. Administration and General Expenses Account for the Year ended 31st July, 1942. „ , . Dr - £ Or. £ salaries . .. 5,903 Allocation of net expenses to Purchase and Sale Accounts— Uftiee rent, maintenance, cleaning, telephones, and sundry 1940-41 season's killings .. .. .. 24 930 expenses . . .. .. .. .. 788 1941-42 season's killings .. .. .. .. 33526 .Postages, cables, and printing and stationery .. .. 1,176 Travelling-expenses .. .. .. .. 43 Shipping inspection and refrigeration supervision .. 1,500 Audit fees .. .. .. .. ~ 437 Depreciation (office and departmental equipment) ... 87 Exchange on remittances .. .. .. .. 5,629 Interest on overdraft at Reserve Bank .. .. 12,796 Payment to New Zealand Meat-producers' Board .. 30,000 Subsidy, Public Service Superannuation Fund .. .. 45 Miscellaneous expenses .. .. .. .. 52 £58,456 £58,456 Final Purchase and Sale Accounts, 1940-41 Season's Killings. Dr - Or. Purchases after 31st July, 1941— £ £ Sales after 31st July, 1941— £ £ Lamb .. .. .. .. 4,703,476 Lamb .. .. .. ..4 869 808 Mutton .. .. .. .. 1,265,940 Mutton .. .. .. .. 1' 350' 350 Beef .. .. .. .. 1,234,430 Beef .. .. .. .. 1'362'958 or k • • • • • • • • 481,159 Pork .. .. .. .. 4«g «()2 Offals .. .. .. .. 101,285 Offals .. .. .. .. 103,'883 Beef for canning .. .. .. 380,242 Beef for canning .. .. 307 926 Mutton for canning .. .. .. 103,401 Mutton for canning .. .. .' 27*403 8,269,933 Q 50q ton Charges on canning meat— ' ' Transport .. .. .. .. 2,379 Boning .. .. .. .. 2,862 5,241 Storage on frozen meat .. .. .. 16,493 Insurance on frozen meat .. .. .. 4,592 Loss on experimental shipments.. .. .. 4,459 Loss on disposal of unexportable meat .. .. 56,279 8,356,997 Gross surplus on transactions after 31st July, 1941, carried down .. .. .. .. 152,133 £8,509,130 £8,509,130 £ £ Proportion administration and general expenses .. 24,930 Gross surplus on transactions after 31st Julv 1941 Net surplus on transactions after 31st July, 1941, brought down .. .. ' iko iqo carried to Meat Account .. .. .. 127,203* " - 5 -1 133 £162,133 •From this surplus of £127,203 should be deducted the deficit of £6,115 on 1940-41 season's killings purchased un to list r.ilv itui whi„i, mTosT M(sat Account at 31st July ' 1941 ' Acc ° r| Miigly tile final net surplus on purchase and sale of the complete 1940-41 season's meat was Purchase and Sale Account, 1941-42 Season's Killings shipped up to 31st July, 1942. Dr- Or. Purchases— £ £ Sales— £ £ Lamb .. .. .. .. 6,479,033 Lamb .. .. .. 7 237 500 Wether mutton .. .. .. 298,909 Wether mutton .. .. .. 335 560 Beef .. .. .. .. 627,021 Beef .. .. .. .. 726'068 Pork •• •• .. 1,095,970 Pork .. .. .. ..1 148 531 Offals .. .. .. .. 597,704 Offals .. .. .. ~ '635*958 Preserved meat .. .. .. 1,254,026 Preserved meat .. . . 1 300'849 10,352,663 ii 004 Surplus on 1941-42 season killings shipped ' ' up to 31st July, 1942, carried to Meat Pool Account .. .. .. 974,881 Allowance for administration and general expenses (J per cent, on sales, £11,384,466), carried down .. .. 56,922 1,031,803 £11,384,466 £11,384,466 £ £ 1 roportion administration and general expenses .. 33,526 Allowance for administration and general expenses 56 929 Balanoe to Meat Aooount .. .. .. .. 23,396 " £56 > 922 £56,922

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MEAT—continued. Meat Pool Account to 31st July, 1942. Dr. £ £ Or. £ Loss on ewe mutton for canning .. .. 87,900 Surplus on 1941-42 season's killings shipped up to 31st Loss on bull beef .. .. .. 2,635 July, 1942 .. .. .. .. .. 974,881 Loss on dehydrated meat .. .. .. 2,787 Profit on canning beef killed during the period Ist 93,322 October, 1941, to 17th January, 1942 .. .. 9,727 Interest on frozen and preserved meat .. 13,770 Surplus on tallow sales .. .. .. .. 125,520 Insurance on frozen and preserved meat .. 4,687 Storage on frozen and preserved meat .. 8,081 Railage and sundry expenses .. .. 3,201 30,339 Amount written off capital cost of emergency cool stores, canning plant and buildings, being one-third of estimated cost (£575,000) .. .. .. 191,666 315,327 Balance, being surplus to 31st July, 1942 .. .. 794,801 £1,110,128 £1,110,128 Meat Account. Dr. £ Gr. £ Payment to War Expenses Account .. .. 68,633 Balance as per accounts for year ending 31st July, 1.941 68,633 Balance as at 31st July, 1942 .. .. .. 150,599 Surplus on 1940—41 season's killings purchased after 31st July, 1941 .. .. .. .. 127,203 Surplus on allowance for administration and general expenses on 1941-42 season's killings shipped up to 31st July, 1942 .. .. .. .. 23,396 £219,232 £219,232 WOOL. Purchase and Sale Account for the Wool Year ended 30th June, 1942. n- Greasy Slipe T t , n r Greasy Slipe T t , Ur - Wool. Wool. Jotal ' ■ • Wool. Wool. ■ Lotai ' Purchases— £ £ £ Sales— £ £ £ Appraisal value .. 14,284,045 3,611,981 17,896,026 To United Kingdom Pinal payment .. 209,251 62,215 271,466 Wool Control .. 13,549,159 3,657,691 17,206,850 To New Zoaland Mills 944,137 16,505 960,642 £14,493,296 £3,674,196 £18,167,492 £14,493,296 £3,674,196 £18,167,492 Charges, Expenses, and Administration Account for the Wool Year ended 30th June, 1942. Dr. £ Gr. £ Brokers' charges .. .. .. .. 739,454 Allowance in sale-price for charges and expenses and Appraisal costs .. .. .. .. .. 77,292 recoveries, including amount of wool levy .. 1,309,375 Wool levy paid on behalf of growers .. .. 23,965 Special allowance by United Kingdom towards cost of Charges and expenses to f.o.b. .. .. .. 227,180 abnormal storage and insurance .. .. 119,344 Scouring charges .. .. .. .. 265,373 1,333,264 Balance carried down .. .. .. .. 95,455 £1,428,719 £1,428,719 £ £ Salaries .. .. .. .. .. 6,246 Balanoe brought down .. .. .. .. 95,455 Offioe rent, maintenance, cleaning, telephone, and Interest .. .. .. .. .. 7,526 sundry expenses .. .. .. .. 1,136 Postages, cables, printing, and stationery .. .. 3,906 Travelling-expenses .. .. .. .. 160 Audit fees .. .. .. .. .. 220 Depreciation .. .. .. .. .. 87 Cost of remittances to brokers and others .. .. 2,447 Subsidy, Public Servioe Superannuation Fund 42 14,244 Net surplus for year .. .. .. .. 88,737 £102,981 £102,981 Wool Account. £ £ Transferred to War Expenses Account .. .. 115,987 Balanco at 30th June, 1941 .. .. .. 115,987 Balance as at 31st July, 1942 .. .. .. 133,607 Special allowance by United Kingdom towards cost of abnormal storage and insurance in previous seasons 44,870 Net surplus for 1941-42 season .. .. .. 88,737 £249,594 £249,594

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MARKETING DEPARTMENT (EXPORT DIVISION). TALLOW. Purchase and Sale Account for the Yeak ended 31st July, 1942. Dr. £ Cr. £ Purchases .. .. .. .. .. 1,041,415 Sales to United Kingdom .. .. .. 1,135,647 Allowances for administration and handling .. 11,832 Sales to other destinations .. .. .. 43,120 Meat Pool Account .. .. .. .. 125,520 £1,178,767 £1,178,767 Revenue Account for the Year ended 31st July, 1942. Dr. £ Cr. £ Salaries .. .. .. .. .. .. 696 Allowance for administration and handling .. .. 11,832 Office rent, maintenance, cleaning and telephone, and sundry expenses .. .. .. .. 224 Postage, cables, and printing and stationery .. .. 177 Travelling-expenses .. .. .. .. 20 Audit fees .. .. .. .. .. 80 Interest on overdraft at Reserve Bank .. .. 1,570 Cost of remittances to manufacturers and others .. 577 Net surplus .. .. .. 8,488 £11,832 £11,832 Tallow Account. Dr. £ Or. £ Transferred to War Expenses Account .. .. 2,048 Net surplus, period ended 31st July, 1941 .. .. 2,048 Balance as at 31st July, 1942 .. .. .. 8,488 Net surplus, year ended 31st July, 1942 ~ .. 8,488 £10,536 £10,536 SCHEELITE. Purchase and Sale Account for the Year ended 31st July, 1942. Dr. £ Cr. £ Purchases .. .. .. .. .. 26,098 Sales .. .. .. .. .. .. 26,767 Cost of administration .. .. .. .. 669 £26,767 £26,767 WAR OFFICE CONTRACTS. Purchase and Sale Account for the Period ended 31st July, 1942. Dr. £ Cr. £ Purchases .. .. .. .. .. 1,305,291 Sales .. .. .. .. .. .. 1,306,825 Gross surplus carried down .. .. .. • 1,534 £1,306,825 • £1,306,825 Revenue Account for the Period ended 31st July, 1942. Dr. £ Cr. £ Interest .. .. .. .. .. .. 1,018 Gross surplus brought down .. .. .. .. 1,534 Salaries .. .. .. .. .. .. 200 Deficit for the period ended 31st July, 1942 .. .. 332 Postages, cables, printing and stationery .. . . 521 Telephones, rents, sundry expenses .. . . .. 127 £1,866 • £1,866 HIDES. Purchase and Sale Account for the Period ended 31st July, 1942. Dr. £ Cr. £ Purchases at market prices for sale to Australian Hide Sales to Australian Hide Board at New Zealand standard Board.. .. .. .. .. .. 127,750 domestic values .. .. .. .. 104,374 Balance carried down .. .. .. .. 23,376 £127,750 £127,750 Revenue Account for the Year ended 31st July, 1942. Dr. £ Cr. £ Balance brought down .. .. .. .. 23,376 Deficit for period ended 31st July, 1942 .. .. 23,827 Salaries .. .. .. .. .. .. 100 Postage, cables, printing and stationery .. .. 98 Travelling-expenses .. .. .. . . 13 Telephones, rents, and sundry expenses .. .. 51 Interest on overdraft at Reserve Bank .. .. 121 Cost of remittances to brokers .. .. .. 68 £23,827 £23,827

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NEW ZEALAND SHEEP-SKIN CONTROL. PURCHASE AND SALE AND REVENUE ACCOUNT FOE TWELVE MONTHS TO 30tH JUNE, 1942. , Dr - £ Gr. £ Stocks, 30th June, 1941 .. .. .. .. 101,510 Sales of skins, pelts, and wool .. .. .. 715 256 Purchases .. .. .. 532,896 Stocks, 30th June, 1942 .. .. .. 56'979 Working-charges .. .. .. .. .. 118,688 Gross surplus .. .. .. .. .. 19,141 £772,235 £772,235 Administration expenses — £ £ £ Salaries .. .. .. .. .. 8,042 Gross surplus .. .. .. 19 X4l Travelling-expenses .. .. .. 1,454 Postages and telegrams .. .. .. 377 Telephones .. .. .. .. 595 Stationery .. .. .. ~ 558 Exchange .. .. .. .. 201 Interest .. .. .. .. 661 Sundry expenses .. .. .. .. 619 Rent .. .. .. .. .. 592 War-risk insurance .. .. .. 137 13,236 Net surplus .. .. .. 5,903 £19.141 £19,141 Balance-sheet as at 30th June, 1942. • £ j4.sscts Sundry Products Account .. .. .. .. 127,294 Fixed assets (cost less depreciation)— £ £ Sundry creditors .. .. .. .. 37,137 Furniture and fittings .. .. .. 359 _ £ Motor-car .. .. .. .. 197 Pool Account .. .. .. .. 5,905 556 Add balance, Ist July, 1941 .. ..7,196 Floating assets— 13,101 Stocks .. .. .. 66,989 Sundry debtors .. .. .. .. .. 109,789 Woolpacks Account .. .. .. .. 3 Cash on hand .. .. .. N . 195 £177,532 £177.532 R. C. Burgess, Controller. MARKETING DEPARTMENT (EXPORT DIVISION). Balance-sheet as at 31st July, 1942. Liabilities. £ £ Assets. £ Reserve Bank of New Zealand— Sundry debtors for produce and amounts accrued due 1,968,942 Dairy Industry Account .. .. 3,935,199 Stocks .. .. .. .. ..8 340 489 Meat Industry Account .. ... 4,944,495 Office and departmental equipment .. .. ' 4'723 Sundry Products Account .. .. 327,753 Advances to Sheep-skin Controller .. .. 143,936 Advances on produce .. .. .. .. 29,235 r ... ,T , , , 9,207,447 Dairy-produce Account .. .. .. .. 997,070 Less Wool Industry Account .. 105,011 9,102,436 Less cash held in London .. 42,663 „ , , 9,059,773 Sundry creditors for accrued charges and sundry credit balances .. .. .. 1,361,286 Meat Pool Account .. .. .. . . 794 goi Net surpluses on administration allowances— Meat Account .. .. .. 150,599 Wool Account .. .. .. 133,607 Tallow Account .. .. .. 8,488 292,694 Less deficits— £ War Office Contracts Account 332 Hides Account .. .. 23,827 24,159 268,535 £11,484,395 £11,484,395 G. A. Duncan, Director. J. G. McDonald, Assistant Accountant. I hereby certify that the several Purchase and Sale and Revenue Accounts, Administration and General Expenses Accounts, together with the Balance-sheet as at 31st July, 1942, have been examined and compared with the relative books and documents submitted for audit, and correctly state the position as disclosed thereby. The values of the sheep-skin control stocks have been fixed by the Sheep-skin Controller.—J. P. Rutherford, Deputy Controller and Auditor-General.

Approximate Cost of Paper—V reparation, not given ; printing (1,260 copies), £62 10s.

By Authority: E. V. Paul, Government Printer, Wellington—l 943.

Price 9d.)

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