"REDUCE COSTS."

Auckland Star, Volume LXI, Issue 141, 17 June 1930, Page 8

"REDUCE COSTS."

HIGH PRICES UNLIKELY. PROSPECTS OF THE FARMER. MR..POLSON'S ANNUAL REVIEW. (By Telegraph.—Own Correspondent.) WELLINGTON, this day. "The chief feature of the past year," said Mr. W. J. Poison, M.P., president of the New Zealand Farmers' Union, in his address to the Dominion conference of the union to-day, "were the decline in the prices of wool, butter, cheese and meat, and the continuous and persistent numbers of unemployed." In looking into those matters in detail, Mr. Poison pointed out that fashion demands had been for face cloths, and for. those crossbred wool had been in demand. Eighty-five- per cent of New Zealand's wool was of the crossbred class, so that fashions were favourable to the New Zealand product. Finance in Japan, Germany and France had been unsettled, resulting in the absence of a foreign demand. In Britain the export trade for textiles had been stagnant for a long time, with the result that there had been no market. During 1929-1930, 468,708 bale's of wool were offered from New Zealand. Of these only 391,043 bales were sold, the result being an export, decrease, of 122,426 bales, °or 22.33 per cent for the year ending March 31. The value of the bales exported was £10,010,979, as compared with £18,576,291 for the previous year. Those who were able to withhold their wool from sale were wise to do so. The British buyers were not operating because they expected industrial troubles. The situation called for Government assistance, and the lack of a method of financing the holding of the wool clip had cost the Dominion a great deal. • ° Butter ana Cheese. ; "At the beginning of the season," said Mr Poison, "butter fared well, but the market weakened in sympathy with the weakening of markets . generally and with world conditions. Some co-opera-tive factories wisely held off from throwing their product on the market when to have done so would have increased the difficulties of the situation and deferred the chance of recovery. "New Zealand exported 1,599,379cwt, valued at £12,022,330, this year ending March 31, as compared with 1,005,565cwt ™]»ed £13,141,494, in theprevoua year. The same situation prevailed in regard to cheese. The cheese exports went down to 1,015,537cwt, valued £6,180,213, this season, compared with 1,709,167cwt valued £7,296,804, last season. Era of Lower Prices. "It must be borne in mind that a return to a high level of prices cannot be looked for. The level of prices started to rise about; 1895, and has gone on fairly consistently ever since until the recent setback and that in 1921. When prices are on the up-grade primary produce benefits more than manufactured articles. That period lias, however, now gone. The reverse process is now in operation. Primary produce will tend to decline faster than manufactured articles. The margins of profit on farming operations will, therefore, in the future, be an uncertain quantity.

"It 4s here that a spectre arises. With decreasing returns from farming operations the poorer class lands will go out of use. It will not pay to farm them. With a reduced agricultural and pastoral acreage there will be a tendency to decline in output, which may or may not be offset by improved farming methods on the better class lands. But every acre that goes out of use means a corresponding loss to the Dominion, entailing a'decline in the demand for services in the towns and in consequence an increase in the ranks of our unemployed.

"Our unemployment problem, our fanning problem, cannot be met by borrowing money only, which increases the burdens of the country. These two problems, farming and unemployment, can only be met by reducing the cost of production so that a profit will be available at the lower levels of prices which will doubtless prevail in the years immediately before Uβ.

Difficult to Reduce Costs,

"Reducing the.costs of production is not an easy thing to do, but it can be done. Nay, it must be done. The present situation demands that it be done. Economic factors will bring this about, but the full effects of the shock can be cushioned by the intelligent handling of the situation. No other road is open to us. This does not mean the first thing to do is to tush out and proclaim a general reduction of wages.

"That would only do harm, because it would bring about a reduction in the efficiency of the workers. That simple etep would also cause feelings of resentment among many of the people, who would feel they had been wronged. We should have labour troubles throughout the Dominion, and, taken all in all, we may dismiss the proposition as both impracticable and undesirable.

"But while we have no desire to eee real wages reduced, when this reduction entails a lowering of living standards, we must be resolute in the face of attempts to increase production costs. To increase production costs in the face of decreasing prices is to walk down the road to disaster—disaster not for the farmer only, but for the Dominion and everybody in it. If wages are not to be reduced then farmers are entitled at least to have something for their own labours. "Wage Increases Injurious. "While we are discussing wages, therefore,' let us say frankly that every wage increase, every reduction of output; goslow and 'ca canny' are directly causing unemployment. Every taxation increase, every social surcharge tends to increase unemployment, because the higher production costs are the fewer the products that will be made and the smaller will be the profit, resulting in a reduction of our national income. "New Zealand must produce more at lower cost to sell at lower prices and thus make possible a larger consumption of her export products. "The credit of the Dominion must be preserved. .-The estimated national wealth of the Dominion is set down at £920,500,000. Land and improvements comprise two-thirds of the national wealth, £631,454,676, half of which, £335,217,075, represents the unimproved value of the land. Our national credit, therefore, is based one-third upon .land i only and two-thirds upon land and improvements taken together, i "One of 'the chief .objections to the J : super-land tax introduced last year was i that it reduced the value of our chief j asset —land. -It is necessary to break i up those large estates which are suit- .1 able for closer settlement but this must i be,done without depreciating the value 7 of farming land." • ' s