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(4) Messrs. F. 0. E. Phillips and R. A. Candy, representing the New Zealand Dairy Board and the New Zealand Co-operative Dairy Co., Ltd. ; (5) Mr. C. H. Courtney, representing the Eltham Co-operative Dairy Factory Co., Ltd. ; (6) Mr. J. W. Butcher, Government Statistician ; (7) Messrs. E. J. Fawcett (Acting Director-General) and W. N. Paton, of the Department of Agriculture ; and (8) Messrs. F. S. Smith (Deputy Commissioner) and H. A. Smith, of the Land and Income Tax Department. The Valuer-General forwarded, a statement regarding values of land suitable for dairy-farming in the different land districts. A number of communications were received from dairy-factory companies concerning local cheese sales, low cheese-yields in certain districts, the provision of a sliding scale of costs allowances for cheese-factories according to volume of output, the probable reduction in the number of dairy cows, and the difficulty of obtaining labour for dairy-farms and cheese-factories. REPORT UNANIMOUS. The Committee submits a report unanimous on all points. The evidence, both general and statistical, was carefully and closely scrutinized and analysed, and the knowledge possessed by the members of the Committee of the Various phases of the dairying industry in the different parts of the Dominion enabled apparent conflicts of evidence to be reconciled and the influence of local conditions to be allowed for. The members of the Committee realized the desirability of deciding on standards of efficiency and of costs' measurement which, though probably not applicable in detail to any particular farm, could, nevertheless, reasonably be applied as general standa,rds to an efficiently managed farm in any part of the Dominion. With regard to many matters of detail, evidence of facts was available, on which a decision could be reached after each item of evidence had been given its proper value. In respect of some other matters, however, insufficient factual data were available to enable a decision to be based upon them. These were largely, and of necessity, matters of opinion, and the members of the Committee freely exchanged their views and the reasons for those views, and finally reached decisions that they all could unreservedly accept. FUNCTIONS AND PROCEDURE. (a) Interpretation. The order of reference of the Committee is set out in subsections (4) and (5) of section 20 of the Primary Products Marketing Act, 1936, which are as follows (4) In fixing prices under this section in respect of dairy-produce exported after the thirty-first day of July, nineteen hundred and thirty-seven, regard shall be had to the prices fixed under this section in respect of dairy-produce exported before that date, and to the following additional considerations, namely— (a) The necessity in the public interest of maintaining the stability and efficiency of the dairy industry : (b) The costs involved in the efficient production of dairy-produce : (c) The general standard of living of persons engaged in the dairy industry in comparison with the general standard of living throughout New Zealand : (d) The estimated cost to the Department of marketing the dairy-produce concerned, and also the cost of the general administration of this Act: (e) Any other matters deemed to be relevant. (o) Due regard having been paid to the several matters mentioned in subsection four hereof, the prices fixed in respect of any dairy-produce exported after the thirty-first day of July nineteen hundred and thirty-seven, shall be such that any efficient producer engaged in the dairy industry under usual conditions and in normal circumstances should be assured of a sufficient yet return from his business to enable him to maintain himself and his family in a reasonable state of comfort. In view of the many considerations involved in the legislation, the Committee thinks it desirable to make a detailed examination of its order of reference. Subsection (5) contains the overriding consideration, and for that reason is dealt with first It is to be noted that the requirement is that an efficient producer, engaged in the dairying industry under usual conditions and m normal circumstances, is to be assured of a net return sufficient to maintain a reasonable state of comfort. What constitutes a reasonable state of comfort is to be ascertained by reference to the state of comfort for the time being of the community generally, for a reasonable standard of comfort is related to the size of the fund available for distribution throughout the community and to the shares of that fund enjoyed by other sections of the community performing comparable services It is to be regarded as a standard higher than that which provides merely for the necessities of existence or the necessities of efficiency ; but the extent to which it exceeds such a standard cannot be laid down m fixed and final terms, but must necessarily depend upon the. rate and amount by which the national income expands. Consideration must be given to all relevant circumstances before arriving at a conclusion as to what may be considered a reasonable net return for the efficient producer described in subsection (5) « tl l ls J c ° lln J ectlo n regard must be had to the protection against world market fluctuations that is aflorded to dairy-farmers by the guaranteed prices system, which is designed to provide a " buffer " between the market and the producer by fixing economic prices for the producer and assuming a collective responsibility for the payment of those prices. It is necessary to consider, too, the relative

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