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WHAT MILK HAULAGE RI FES SHOULD BE

27th April 1940, Page 46
27th April 1940
Page 46
Page 47
Page 46, 27th April 1940 — WHAT MILK HAULAGE RI FES SHOULD BE
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Which of the following most accurately describes the problem?

Some Extraordinary Figures from Wales, Showing That an Advance of 15 per cent. Which is Offered Will Not be Sufficient to Meet War-time increases

in Costs

RATES for milk haulage are the easiest of any to calculate. They also appear to be the most difficult to obtain. The fact is that the work is so unevenly distributed. Whilst one haulier, at prevailing rates, may be making a profit, a dozen others, in the same district and operating for the same return per gallon, cannot make ends meet. The one man has a short round, easy collection and a large gallonage per mile run, whereas the others are operating under conditions which are the reverse.

Rationalization of collection is suggested as the remedy, but as this means that the man with the profitable round is to share the losses of the others, with the result, in the majority of cases, that all will bear a loss, it hardly seems as if the remedy will be any better than the disease.

Inadequate Increases to Meet War-time Costs of Operation

Matters are in a deplorable state in West Wales, as some of the following, almost unbelievable, figures will show. There, the case of milk hauliers is so bad that the advance of 15 per cent., which is what the National Farmers' Union and the Milk Marketing Board appear to think is adequate to meet war-time increases in operating and other costs, will not meet the case, by a long way.

The trouble then is, that the Milk Marketing Board, presumably, when asked for more, on the ground that the increase is insufficient, because the previous rates were uneconomic, is bound to answer: "You have been content with the old rates for long, so why, at this juncture, try to make the war an excuse for an exorbitant increase?" Mind you, the Board has not, so far as my knowledge goes, made that retort, but I can well imagine it doing so.

Take these examples of actual figures. In one case, a haulier with nine vehicles has been collecting an average of about 1,200,000 gallons of milk per annum, for which he has been receiving Id. per gallon, which is £3,125 per annum. His costs, including overheads as well as all vehicle operating costs, and, in my opinion, an insufficient allowance for depreciation, average £86 per week, which is £4,472 per annum, thus showing a loss of £1,347 per annum.

That is nearly £150 per annum per vehicle and means that, with those vehicles, when they have finished the milk round, he must earn a net profit of £3 per week merely to make up the losses on his milk haulage—an utter impossibility.

In another case, four vehicles carry 760,000 gallons per annum at id. per gallon, bringing in\ a revenue of £1,583. The total cost averages £35 per week, which is £1,820 per annum, showing a loss of 1237 per annum. In this case, therefore, each vehicle must earn a net profit of about 23s. 6d. per week on other work merely, again, to make good the losses of milk haulage.

The above figures for cost, incidentally, are pre-war, gathered during the past year, so that the loss must be much greater now. Actually, the second of the above hauliers told me that on the Sunday just previous to my visit to Wales he had sent out one of his lorries to collect 250 gallons of milk. The journey occupied over 7 hrs., so that the driver's wages, at statutory Grade 2 scale, totalled 16s. The revenue from the collection of the milk, at id. per gallon, was 10s. 5d. He said: " I gave them the lorry for nothing, and paid something towards the driver's wages out of my own pocket, so that the milk could be collected."

Enlightening Figures from Another Example Here is another case. The figures are given in some detail, and are unchallengeable as to their accuracy. This operator's standing charges per month are £210, made up as follow:—Tax and insurance, £63; wages, £138; interest, £5: rent, £4. The monthly mileage totals 10,516, so that the standing charges are equivalent to 4.79d. per mile.

His running costs per mile are:—Fuel and oil, 2.9d.; tyres, maintenance and depreciation, 2.4d.; total, 5.3d.. per mile. The total of vehicle operating costs alone is thus 10.09d. per mile.

His receipts for June, 1939, were 10.8d.. per mile, but for December of the same year, only 4d. per mile. Those who have experience in milk haulage will not need to be told the reason for the vast difference between the summer and winter receipts. It is due to the fact that

there is much less milk to be collected in winter. The haulier, nevertheless, has to cover the same mileage and incur, owing to winter conditions, a greater expense per mile in running costs. His revenue per gallon remains unaltered, being fixed, as a rule, by a contract extending over a year.

This operator made the following comments on the situation, having in mind the fact that the figures of cost set out above are, in the main, those prevailing in peace time.

Milk supplies available for collection are likely to be less because of the shortage of feeding stuffs and because, as the result of the scarcity of butter, farmers will be retaining a bigger percentage of their milk for butter making. The loss of supplies, due to these two causes, will much more than offset any benefit gained through rationalization which, in his view, is by no means so advantageous in practice as it appears to be on paper.

War Price Advances that Have Greatly Affected Costs

The costs shown in his figures must be considerably increased as the result of the war. Petrol, for which at the time the figures were compiled, he was paying Is. 2icl. per gallon, now costs Is. Sid. per gallon. Spare parts have risen in price by 20 per cent. and some of them are unobtainable even at that, thus making for further increase in expense. He states that he has in dock, at the present time, a lorry which has been waiting four weeks for a new crankshaft.

Tyre prices have risen by 10 per cent. and, again, by 10 pet cent. The increase in wages is from 4s. to 10s. per week, according to the district. Labour for maintenance is scarce and dear, because of the call for men to. work on munitions. Insurance costs, too, have increased by 20 per cent, due to the increased risks_ of operation during black-out.

Another factor which has a bearing on the charges which must be made, if a profit is to be shown, is the change in conditions brought about partly by petrol rationing. Prior to the introduction of that measure, it was the custom for milk hauliers, having brought milk into Carmarthen in the morning, to be able to pick up a load of feeding stuffs from Swansea in the afternoon, or to undertake some other odd job of haulage. None of that is now possible, with the result that milk hauliers must look entirely to the revenue from milk. The question which most people will be inclined to ask, and which will certainly be put by those who are asked for the considerable increase in the rates, which I shall show to be necessary, is, how did the rates come to get so low? The answer is a tale which must be told often in the annals of road haulage throughout the country, and especially in the south and west of Wales. There is a side of it, however, peculiar to the milk industry, which fully justifies its repetition on this occasion.

The tale goes back to the period preceding that at which the Milk Marketing Board took ot harge of milk distribution. Then, there was keen competition amongst buyers of milk, who went very far afield to obtain supplies, and were willing to adopt any expedient to obtain bigger supplies of milk than their competitors. That brought about a demand for road transport and the buyers, in furtherance of their schemes to obtain more and more milk, subsidized the hauliers who carried it. The result was that the farmer paid one rate, but the hauliers received another and higher one.

Rates Stabilization Comes After a Bout of Rate-cutting In those days there was money to be made in milk haulage, until those hauliers who were not in the game heard of it and butted in. With the perspicacity of their kind, they adopted the one and only expedient for muscling in—rate cutting. Others came after them, with the same plan and, when the rates were at their lowest, the Milk Marketing Board came along and stabilized them.

Moreover, wages and other costs, but particularly wages, were at their lowest in Wales, especially in farming areas, where it is not unknown for a ploughman or agricultural labourer to take to lorry driving for a few shillings a week and his keep.

Now comes the war, rising prices and, worst blow of all, the Road Haulage Wages Act, which, in some cases, has increased wages by 100 per cent. That has brought these operators who were so keen to cut prices to a sense of the realities. That is the cause of the trouble to-day. The question that now arises is how to justify a request, not for a percentage increase on the current rates, but for an entirely new and economic rate? That is what I propose to set out in the next article. S.T.R, (To be continued.)


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