H,— 3o,

On the basis of the basic guaranteed price of 13fd. per pound, and on the conversion formula mentioned above, the butterfat payment made to suppliers by butter-manufacturing companies, working under average conditions, should be 13-88 d. per pound. This price is represented by farm costs and allowances as follows Price per Pound Butterfat. Farm working and maintenance costs .. .. .. .. 5-07 d. Allowance for interest on capital .. . .. .. .. 3-06 d. Labour on farm .. . . . . . . . . . 7 ■ 29d. 15-42 d. Less return from pigs.. .. .. . . . . .. l-54d. 13-88 d. In order to cover the difference in costs of production and in returns from by-products in the case of butterfat for cheese, the purchase prices of cheese are so fixed that the average efficient cheesemanufacturing company will pay out to its suppliers on the basis of the basic guaranteed price of 7-54 d. per pound, and on the conversion formula mentioned above, 2d. per pound butterfat over the payout for butter, or 15-88 d. per pound. PREMIUMS FOR QUALITY. It will be noted that the basic purchase prices are subject to additions and deductions according to the quality of the butter and cheese as disclosed by the grade points awarded by the Government graders. The incentive thus given to maintain and improve the quality of dairy-produce has been appreciated by representatives of dairy-factory companies, and a definite improvement has resulted, as revealed by the following comparative grading figures:—

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

The quantities of butter and cheese purchased and paid for at the respective differential prices are shown in the following tabulations : —

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

8

Butter. Cheese. Finest. First. Second. Total. Finest. First. Second. Total. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. Per Cent. 1932-33 .. .'. 79-32 19-74 0-94 100-00 17-29 80-5 2-21 100-00 1933-34 .. .. 78-00 20-75 1-25 100-00 26-04 72-06 1-90 100-00 1934-35 .. .. 77-04 21-66 1-30 100-00 20-60 76-27 3-13 100-00 1935-36 .. .. 76-48 22-36 1-16 100-00 19-47 77-18 3-35 100-00 1936-37 .. .. 79-98 19-12 0-90 100-00 20-58 76-81 2-61 100-00

Finest Grade. First Grade. Grading Ports. Total. q , q „, 94 Points p " t 92 to 92J 90 to 91J Grade. and over. Points. Points. (.Basic i riee.) Tons. Tons. Tons. Tons. Tons. Tons. Auckland .. .. .. 105,086 25,504 56,430 12,369 10,481 302 Bluff .. ,. .. 616 4 147 196 171 98 Dunedin .. .. . . 735 133 495 62 25 20 Gisbome .. .. .. 2,909 1,699 965 216 29 Lyttelton .. .. .. 3,161 2,067 967 80 8 39 Napier .. .. .. 3,255 2,370 556 65 264 New Plymouth .. .. 11,111 6,564 3,179 909 458 1 Patea .. .. .. 2,180 278 861 517 519 5 Timarn .. .. .. 367 40 252 38 9 28 Wanganui .. .. .. 3,391 2,597 608 129 53 4 Wellington .. .. .. 16,999 12,588 2,257 969 1,175 10 Grand totals .. .. 149,810 53,844 66,717 15,550 13,192 507 Percentage of qualities . . 100 35-94 44-53 10-88 8-81 0-34