HIGH EXCHANGE.

Auckland Star, Volume LXIV, Issue 206, 1 September 1933, Page 12

HIGH EXCHANGE.

DAIRY BOARD'S REFERENCE. "CONSIDERABLE BENEFIT." Considering its importance to primaryproducing interests it was only to be expected that the Dairy Board should specially refer in its annual report to the rate of exchange New Zealand on London. The report states, "as a result of continuous pressure by _ producers' organisations the Export License order, 1931, by-which an exchange pool was formed, was revoked, and exchange on London, which was held at 10 per cent premium for telegraphic transfers and £8 10/ per cent for sight drafts, was raised to 25 per cent and 24 per cent premium respectively." The report states: —"While the board has consistently supported a 'free' exchange, it could not but admit that the situation as far as prices were concerned had become desperate, and some remedy was urgently required. Added to this, Australia, by virtue of her exchange premium of 25 per cent, had had the advantage over New Zealand in all selling markets." It is shown that the raising of the rate had the effect of increasing the rate paid out to farmers on butterfat by ljd per lb.

"The increased return," the hoard explains, "would have heen greater, hut for the fact that the hoard had of necessity undertaken to recompense the shipping companies for portion of the increased cost of remitting freight money to London. Accordingly the freight rates on hutter and cheese were raised by 13 2-3 per cent, "which increase is allowed for in the above-mentioned ligures. "It has to be admitted that while in the long run farmers' costs will rise and to some extent offset the benefit of the increased exchange, yet in the meantime the increase has heen of considerable benefit in enahling the dairy farmer to carry on." In its reference to the imposition hy the Government of a sales tax of 5 per cent, the hoard notes "there is a long list of exemptions, among which are included all exports, products sold hy farmers in their natural state, petrol, and a wide range of necessaries of life. Practically all materials used in the manufacture of dairy produce are free of the tax, together with many farm such as milk cans, farm machinery, insecticides, lime, manures, binder-twine, wind mills and so on.

"Generally, the community has recognised the inevitability of such a tax and submitted cheerfully to the inconvenience and trouble involved."