STABILISING PRICES

Ashburton Guardian, Volume 51, Issue 86, 22 January 1931, Page 3

STABILISING PRICES

BULK PURCHASE SCHEME. EFFECT ON'DOMINION PRODUCE. (Special to “The Guardian.”) CHRISTCHURCH, This Day. All existing organisations for the marketing and distribution of produce would bo cut adrift if the bulk purchase scheme as favoured bv the British Labour Government were put into operation, according to a lengthy memorandum drawn up by the Dominion secretary of the Farmers’ Union * (Mr J. Pow). The secretary’s report on the probable effects of the working of the Empire-wide scheme was received by the North Canterbury provincial executive of the union vesterday afternoon. The president of the executive (Mr Colin Mclntosh) stated that the scheme was a revolutionary one. It might work all right when New Zealand had conti'acts for supply of all its-produce, but if the Dominion failed to gain the contracts disaster would follow. The scheme, tho speaker thought, was too risky to be undertaken. Assured Demand for Produce. The report stated that the present British Labour Government, which was opposed to tariffs, was giving its support to a bulk purchase scheme based on the results of war-time experience when wool, meat, wheat and other primary products were purchased by a central authority, and by it distributed to manufacturers and distributors. The British Government’s proposal was to establish public utility undertakings on the lines of the B.A.W.R.A. to buy the whole of certain staple commodities produced by the Dominions, with the declared objects of (a) giving an assured demand for those goods producible at world’s price, and (b) assuring the supply at stable prices. As it would have all imported supplies under its control, it would be in a position to smooth out the fluctuations in prices which disorganised the business of agriculture, and it would secure to the farmer a stable market in which to sell his products, and bring corresponding advantages to the general body of consumers. The proposed financing of the scheme for the various Dominions’ producers was (1) to pay a fixed proportion of the world’s price for produce on delivery or shipment, and (2) to pay instalments according as progress was made with realisation. Channels of Export. The channels of export for New Zealand would probably be the same as at present, namely, the Meat Producers’ Board, the Dairy Produce Board, the Fruitgrowers’ Federation, and others, with, perhaps, an amalgamation of all into one to deal with all the Dominion’s primary produce. If the Imperial Government bought through the Empire Marketing Board or an Imperial Import Board, the whole of New Zealand’s primary produce would be sent direct. There would be no need for wool sales or wool buyers, and all buying agents of dairy produce and fat stock would disappear. It could be readily seen that under this system overhead expenses would be considerably reduced, but at the same time the change-over would be too revolutionary to be possible, and would be resented by those firms already in the export trade. Through the Empire Marketing Board Great Britain would have to buy the whole output of the Dominions. Any deficiencies between the production of the Dominions and what would be required would have to be . secured from non-British countries, duty free, thus eliminating the chance of increasing the cost of food products. Any excess of food supplies from foreign countries would have to he prohibited altogether, or penalised by an excessive tariff.

Prices for the various commodities would probably be determined byt a separate board for each commodity and would be based upon (a) the grading of each commodity, (b) the world’s parity prices extending back over a number of years and (c) the present ' costs of production. The prices would be fixed for a number of years so that farmers could plot out their farming policies several years ahead without any worry over prices, and production would increase in a sound, healthy manner. Little consideration seemed to have been given to the scheme at the recent Imperial Conference, as most of tho Dominions were strongly adverse to snch a proposal. At the present time hundreds of factories and looms in Britain were idle and hundreds of thousands oi men were out of employment. If New Zealand, and to a greater extent Australia, South Africa and Canada, were to buy more manufactured goods from tlie Motherland, trade would increase, factories would reopen, and unemployment would decrease. Britain would then he able to pay the prices for brapire produce by tlie Empire Marketing Board; at present slie could not afford to pay anything but low unces. History of B.A.W.R.A. The British Government did not use all the wool it bought from the end of 1916. anddn July, 1921, it was found that there was a surplus of nearly two and a quarter million bales to be carried over. In addition to this there was the unsold portion of the 1920-21 clip still on hand, totalling about 700,000 bales, and there was the 192122 clip just coming along which was estimated at 2,400,000 bales. This made the enormous quantity of over five and a quarter million bales on the market, or just coming on to it. Naturally this quantity caused a panic among the buyers, and wool prices slumped, j A companv known as the B.A.W.R.A (British and Australian Wool Realisation Association) was formed to dispose of the war surplus. By an agreement with B.A.W.R.A. and tlie wool-selling brokers the market was carefully rationed and the wool was gradually taken into consumption. The British Labour Party had taken the wool and meat commandeer as its precedent and pattern, and maintained that the principle could be extended to all kinds of primary produce. There was no doubt that B.A.W.R.A. did well but it must be remembered that it operated in years of rising prices, whent there was a real shortage of the material under its control. Whether it could operate with equal success in periods of falling prices would be quite a different problem to solve. The Pros and Cons. Tlie following points appeared favourable in the scheme: —(1) Producers would know what prices they would get for their produce and would be assured of a. reasonable price. (2) Overhead expenses would be reduced; that in time would react beneficially on the cost of production and on the cost or living. (3) Trade with tlie Motherland would increase, and any increase in, prosperity would be distributed over the Empire. The most weighty arguments against the scheme were:— (1) It appeared, to be too Utopian

and too Socialistic to be put into practice. i (2) It savoured too much of ‘•'Government in Business.” (3) It would almost discard the law of supply and demand in its assessment of price levels. (4) There was nothing in tlie scheme to indicate that produce from the 'Dominions only would be purchased. (6) If put into practice, all existing organisations for marketing and, distribution would be out adrift—a. step too revolutionary to be put into practice. (6) It would probably mean dearer food to the inhabitants of Britain. (7) If the scheme failed and; the Government held large unsold stocks of primary produce fhe world’s market Would be paralysed. In the absence of definite information from England about the proposed working of the scheme it would he unfair to condemn it altogether. On tho face of it the scheme looked somewhat attractive to primary producers, but the weight of evidence was decidedly against the introduction oi _ such a 'revolutionary proposal. Primary producers as a whole would agree that some sane form of “price stabilisation” was necessary if they were to exist.