FREE EXCHANGE.

Auckland Star, Volume LXX, Issue 95, 24 April 1939, Page 11

FREE EXCHANGE.

FARMERS , PROPOSAL. LET RATE FIND OWN LEVEL BENEFIT TO PRODUCERS. (By Telegraph—Press Association.) WELLINGTON, this day. A sub-committee of the Primary and Ancillary Producers' Association, consisting of representatives of the New I Zealand Farmers' Union, and the Sheepowners' Union, met and further considered the situation of the sheepfarmer. The position of sheepfarmers was stated to be deteriorating with such rapidity that unless prompt and determined steps were taken to deal with the position a great number of farmers would be forced off their farms. A comprehensive report drawn up by a special sub-committee was considered and adopted unanimously. The report may be summarised as follows: (1) The present position and prospects of farming are worse than for many years past. Production is already declining and is tending to decline further. Unless the positiqn is improved production will fall further, and the effects on the Dominion may be disastrous. Costs and Prices. (2) The chief cause of the farmers' difficulties is the disparity between costs and prices. General costs are determined largely by wages throughout the industry as a whole and by taxation. Both have risen out of all proportion to the rise in export prices, out of which farm costs must be paid. (3) These difficulties can be solved only by lower costs or higher prices, or both. Hence the possibilities of both must be examined.

(4) Cost reduction on the scale required cannot at present be regarded as practicable, and even temporary palliatives in the shape of minor cost reductions would be difficult to secure and ineffectual if secured.

(5) Direct subsidies on wages, rates and taxes, or prices from the Government, or from consumers, by guaranteed prices or otherwise, appear equally unpracticable. The money would be hard to get, control schemes might be imposed, and the higher costs would largely be passed on to the farmers. General Rule Stressed. (6) Since the community as a whole depends so largely on the farming industry, and since it has always been a general rule that when the farmers are prosperous prosperity is general, and when the farmers are depressed depression becomes general, it is essential in the interests of the Dominion that prosperity should be restored to farming. (7) The surest, easiest and most practicable step towards this is to free the exchange rate from the point where it is now arbitrarily pegged. Then the rate would rise until it registered a level most appropriate to present conditions. The rise in the rate would not only benefit the farmers, but would remove the necessity for import licensing. It might attract back some exported capital, and so replenish the sterling funds. A rate free to rise or fall as conditions demanded would do more to restore the general economic balance, from the loss of which the farmers and the general community are suffering. (8) This would also enable a price to be paid to the dairy industry sufficient to meet their costs of productions, determined by committees which have, investigated it. It is recognised that if the course proposed were adopted, a corresponding upward adjustment of the guaranteed price for dairy produce would need to be made.