LINE OF ACTION

Auckland Star, Volume LXXV, Issue 182, 3 August 1944, Page 6

LINE OF ACTION

WHEN PACT MADE

FARMERS , AGREEMENT

(0.C.) WELLINGTON, this day. "The farming community in NewZealand has given its support to the principle of stabilisation," said the Prime Minister, Mr. Fraser, in addressing the Dominion Dairy Conference to-day. "Its leaders took part in' the conference of 1940, which made far-reaching recommendations to the Government, and when the full force of the stabilisation policy was finally brought to bear on the economy of New .Zealand,, the Farmers'. Federation . agreed last year on the course of action to be followed when increased prices were received from the United Kingdom. "It was essential to the stabilisation policy that some such agreement should have been made," said Mr. Fraser. "Clearly there could be no stabilisation if the prices in New Zealand for farm products, - which occupy such an important place in, our whole price structure, were to increase as a result of unstabilised conditions in other countries. Efforts to Avoid Slump "The farmers' leaders have stated on previous occasions that they would be happier to see farm costs held than to have prices ever increasing. The farmers, as well as others, have only to recall the situation which followed in the wake of the last war to realise the benefits- of keeping prices stable. Prices moved up during the last war and skyrocketed immediately afterwards, but, like a spent rocket, plunged downward later. The distress of the dairy- industry became steadily worse until it reached its depth in the'great "depression. "It is the determined policy of the Government to shield as far as possible the primary producers and the Dominion as a whole, from a repetition of such circumstances," said Mr. Fraser. "No such catastrophe as a land boom and a slump will occur if the stabilisation policy is supported by the; primary producers and adhered to. Without stabilisation of prices, costs and wage rates, the farmer would once more find that he would be, among the .most handicapped persons in the community. He would have great difficulty in bridging the gap between the prices for his produce and raoidly increasing costs. ■ In the interests of the New Zealand farmer in the postwar period it is essential that his prices and costs are kept at the lowest level. This will place him at an advantage in competing with countries whose prices and costs have risen. It will also help him in meeting the competition of lowcost. countries and the challenge of low-priced margarine. Recouping Stale Subsidies "The costs to producers and the prices paid to them in New Zealand are at present governed by the stabilisation policy, and not by external conditions. In the stabilisation agreement with the Farmers' Federation, reached last year, it is provided that, into the Stabilisation Account for any produce will be paid any increase in price received from the sales overseas for that product. From these accounts appropriate State subsidies will be recouped. "Another clause in the agreement," said Mr. Fraser, "provides that if any increase paid from. overseas for any product is paid for any general national purpose, such as to maintain < sterling balances to offset general import price increases or Government expenditure in holdings costs, the bal- i ance, after recouping subsidies, will ; be credited as the Government determines when the time arrives for the : closing of the stabilisation accounts. ; Any credit, after recouping the sub- ; sidies incurred in holding costs, will i be used for the benefit of the indus- :

. try after consultations with representatives of the industry, and no payment' will be made out of the account in these circumstances, except with the consent of the producers' organisation dealing with any products concerned. Furthermore, agreement as to the final disposal.of these balances is to be reached within twelve months of the closing of the account. < .

"I wish to state clearly and definitely," continued Mr. Fraser, "that this agreement, signed by the Minister in Charge of Stabilisation, will be honoured in every particular, in letter and in spirit by the Government. As a corollary to the arrangement to hold prices to producers, it has also been agreed with the Farmers' Federation that the prices of an extensive list of articles entering into farming costs shall be stabilised, and this has been done. The list that was drawn up was not regarded as final, and the Government Has always been open to hear representations from farmers if they considered that the coverage of farm cost items required extension.

"In the widest sense," said Mr. Fraser, "farm costs are stabilised. In addition to the list of items entering into working and maintenance costs, stabilisation is also effective in holding rent, the general level of interest, wages, transport costs, fuel and light and power charges and the cost of living.

"So far as the dairy, industry was concerned," said Mr. Fraser, "by special arrangement farm costs were taken back to- the level of 1938-39 by an adjustment, which was regarded by the industry as satisfactory. Another important aspect of the stabilisation plan so far as it affected farmers is that prices for the main farm products during the stabilisation pepiod will not be allowed to fall 'below the level of prices ruling at the date, December 15, 1942, when stabilisation became effective, irrespective of the effect of internal or external markets.

"Towards this end the Government has entered into the four-year-agreement," said Mr. Fraser. "This is a guarantee to the farmer against any slump in prices as long as the stabilisation policy lasts. An entirely new principle for the benefit of the farmers was established in the provision that, if the workers generally received an increase in wages because of the cost of living, the farmer would also receive an adjustment in price."