HIGH EXCHANGE RATE.

Auckland Star, Volume LXIII, Issue 226, 23 September 1932, Page 3

HIGH EXCHANGE RATE.

U FARMERS SHOULD BE CAREFUL." EFFECT ON COMMODITY PRICES. "This is a subject which I think the farmers should be very careful in dealing with," stated Mr. J. E. Makgill, chairman of directors of the Auckland Farmers' Freezing Co., Ltd* in touching on the rate of exchange at the annual meeting of shareholders to-day. Mr. Makgill continued: "It is almost certain that even with a measure of improvement in price levels for our products for export, which I think can gradually be looked for, they will not come back to anything approaching the price levels of a few years back. This being the case, our essential objective must be to achieve a due balance in the cost of production, handling and transport of our products with the new price levels for these commodities. Unduly hi<*h rates of exchange between ourselves and the countries purchasing our products must tend to raise commodity prices here and thus increase the cost of production, handling and transport, and therefore tend to retard the readjustment of our costs to the price levels of our products. It is. of course, true that for the moment our lower rate of exchange, as compared with other competitive producing countries, such as Australia and South America, puts our produce at a disadvantage, in an overstocked market especially, but my belief is that in due course we will achieve more quickly a sounder and more advantageous position tlirough avoiding, if possible, unduly high exchange rates."

Although ho liad felt that the bottom of the depression liad probably been reached, Mr. Makgill added that there was then no sound reason for that belief apparent. However, there was evidence now that pointed to an upward movement in prices of food products in vario js countries. "Why this should be seems as yet rather obscure, with the large proportion of unemployment evident throughout the world, but yet it is there, and may be the beginning of a recovery and towards establishing a sound economic basis of prices for our main products. We must not look for sensational movements upwards, and it will take time to achieve. There will be probably many fluctuations before stability is arrived at, but I believe the farmers are now past the worst, and can look forward with some confidence to brighter within a reasonable time,"