The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun. THURSDAY, OCTOBER 18, 1934. DAIRY COMMISSION'S REPORT.

Auckland Star, Volume LXV, Issue 247, 18 October 1934, Page 6

The Auckland Star: WITH WHICH ARE INCORPORATED The Evening News, Morning News, The Echo and The Sun.

THURSDAY, OCTOBER 18, 1934. DAIRY COMMISSION'S REPORT.

For the cause that lacks assistance, For the wrong that needs resistance, For the future in the distance, And the good that tee can do.

The gist of the recommendations of the Dairy Industry Commission is that the business of producing butter and cheese and other products of milk in this country shall bo virtually socialised. Xot only does the Commission favour the setting up of a Rural Mortgage Corporation to issue bonds against existing mortgages with a State guarantee for the payment of interest-, but it proposes new powers for the Dairy Produce Control Board "to enable it to deal effectively, in the interests of producers and of the State, with all the activities and problems of the dairying industry," and the creation of a permanent executive Commission of Agriculture, to advise the Government, and to co-ordinate "and where necessary control," the operations of the various Boards that manage exporting. The Dairy Board would be empowered to control the local marketing of batter and cheese, and the Commission considers that it could thereby save "a large sum that is lost annually through wasteful competitive practices." Over this Board and all other similar bodies would be the supreme executive authority of the Commission of Agriculture, appointed by the Government and reporting through the Prime Minister.

11 This summary is sufficient indication of l the momentous nature of the findings. The Commission emphatically 'would have the country move much further'along the road of State control of the industry. It is the way of the world these days. Canada, for example, proposed recently to place the whole of its exports under the control of one Board. • Our economic "welfare, as the Commission points out, is delicately poised, and conditions ; affecting the dairy farmer have reached a ' crisis. He has practically only one market, and that is flooded by the world. It is not surprising, in view of these facts and : such -weighty considerations as the New Zealand farmer's mortgage load, that the Commission should recommend that the industry be further organised from without. But these recommendations require the most careful study. Take the question of rural mortgage bonds. The Corporation is to take over existing mortgages, but to differentiate between the sound and the less sound undertakings. Mortgages against which bonds cannot be issued —the bonds, remember, are to be guaranteed —are to be placed in a suspense account, "and the farming operations of tliosp mortgagors whose surplus indebtedness is so dealt -with will be efficiently supervised in their own interests and in the interests of their creditors." In other words, the farmer who cannot pay his way. will be supervised by a kind of receiver-expert. To put such a scheme into operation would involve an immense amount of work. Think of the adjustment of principal that would jje necessary if the transfer was to be fair to the State. Exactly what this' would entail in assumption of liability by the State is apparently not disclosed, though at first reading one cannot be sure exactly what the report does or does not contain. It is stated, however, that the dairy farms in debt to the Department of Lands and Survey have a first debt charge of more than £10,000,000, and that similar farms under the State Advances Department carry £11,000,000. It has been estimated, roughly, that the total mortgage liability on rural lands is £167,000,000. The crucial question that such a Mortgage Corporation would have to face would be the extent of the writing down of principal. There is, of course, a great deal to be said for long term mortgages on easy terms of repayment, but the State has already, lent' a deal of money on such conditions. It is most important to note, also, that the Commission recommends variable rates of interest for these long-term loans. This would be a new and very important departure. The State has through force of circumstance broken agreements between borrower and lender as to the rate of interest; it has not yet formulated a policy of borrowing on a contract that provides for variation of interest according to the rise or fall of the market. Yet before long this practice may be fairly general as just to both parties. The report is a full and very valuable one, and the thanks of the country are due to the Commission for having investigated at express speed so vital a problem. The Commission speaks plainly. At least half of our daily farmers, it says, cannot meet their commitments, and 9d a pound is about the economic minimum at which a farmer can carry on. Various other recommendations, affecting the technique of manufacture, the development of side-lines, and methods of marketing, aie made. The Commission considers that a confidential investigation should be made soon into the whole system of marketing in Biitain. This is a highly important and delicate question. The record of the Dairy Export Board in this respect does not command confidence. Recently, despite dissent by a large section, it imposed export regulations on the industry, and to.-day a certain factory states that had it enjoyed a free market recently its advances to its suppliers would be higher. Moreover, it is of the utmost importance that the British market should not be antagonised by too much control from this end. The report, of course, must receive the most careful consideration from all parties. The position of the industry is critical, and possibly it can be saved only by measures that will deprive farmers and their organisations of a good deal of freedom. A vital problem of the age will again be presented —how to preserve a fair measure of individual liberty in a world in which control is being widely extended. • '