THE ECONOMICS OF FARMING.

Press, Volume LXVII, Issue 20244, 23 May 1931, Page 15

THE ECONOMICS OF FARMING.

STABILISATION REQUIRED. MR ADAW HAMILTON'S ADDRESS. Maintaining that a means of stabilising the farming industry was to safeguard the income ■of farmers on the land, Mr Adam Hamilton, M.P. for Wallace, delivered an address on the general conditions existing in the country at the present time from the economic aspect, to a gathering of farmers at Ashburton yesterday. The president of tho Mid-Canterbury Provincial Farmers' Union (Mr G. H. B. Lill) presided. Mr David Jones, M.P. for Mid-Canterbury, and Mr T. D. Burnett, M.P. for Temuka, were also present. The chairman of the Ashburton County Council (Mr H. C. B. Withell) extended a welcome to Mr Hamilton. Economic Crisis. "New Zealand, in common with other countries, is passing through an economic crisis, although all countries are affected in different ways," said Mr Hamilton, "and even those in authority on the question, such as bankers, economists, and politicians, are not in agreement on tho cause. However, unemployment seems to be the common malady." In some countries farmers-seemed to be in a favourable economic position, while in others, including New Zealand, they were in a most unenviable position. Those classes who had to depend on export prices for their goods appeared to be the worst affected in nearly every country. In.Ncw Zealand about 95 per cent, of our exports came from tho land, hence the farmers were the greatest sufferers: Financial and commercial people who clung to orthodox economics were also disturbed, even though the New Zealand farmer's pound sterling, when measured in terms of 1914 payments, was worth only about 12s. There appeared to be general fear lest currency should become inflated, and the pound note bo inflated as to be worth actually less than 20s.

"But should not our sympathy; be •with the person whose goods or property has become of loss value rather than the person whose money may become depreciated?" Mr Hamilton asked.

The rapid rise in prices shortly after the war to 55 per cent, above the 1914 level made farming a profitable investment, because prices and wages in other walks of life rose much more slowly. It was the advantage gained by farmers over tho rest of the community that caused the lan,d boom. Higher prices were received by farmers in 1924 and 3925, but by this time prices and wages 5n other sections had risen as high or higher compared with the price in 1914. In 1928 and 1929 again, fantterg obtained fairly good prices, but since then matters had gone from bad—to worse until to-day, the average price of farm produce stpod at. about 14 per cent, below the 1914 level, . while farmers' costs anrl fixed charges generally in New Zealand remained round about 60 per cent, above that level. Farmers would have no real grievance if tho sacrifice was equal. Farmers had responded well to the re.qnest for more production, but with disastrous results.

Standard of Living. , , The standard of living in Vew* Zealand had been fixed on the basis of a, national income from exports of over £50,000,000; About .£10,000,000 of that amount was- required, to pay interest on loans, leaving about. £40,000,000 to distributo equally among the people of town and country.. Our national income had dropped to- about ; £30,000,000, and after-paying interest charges £20,000,000 was left to pay fixed charges of the non-farming section. Nothing,- therefore, remained for the farmers, who v had reason >' to complain when they sold their raw ■ material below 3914 prices and were compelled to pay about 100 per cent, above that level for material and implements. The various points made by Mr Hamilton were illustrated by graphs, which explained his contentions very clearly. He continued that the movement of British wholesale prices gave conclusive, evidence that the depression had every indication of continuing for some time. -

"Pernicious Pallacy." ''An endeavour is being made manj* quarters to draw a red-herring across the scent by many speakers, and writers, who. are -trying to make the, public believe that the causes of the farmers' troubles are the bigli price of land and the excessive ■ interest bill. This is a popular though most pernicious fallacy. More than 50 per cpnt. ,of the farmers are on the same .farms as. befgrc the war. Values generally depend on earning capacity, and that earning capacity is destroyed to-day mainly through unjustly high costs," said Mr Hamilton. Another pernicious fallacy was that land settlement proceeded more quickly when land values were low than when they were high. "Low land values wore brought about when the earnings of -the farmers- were Jow. For settlement to proceed naturally, the earning capacity of farmers "must be at least equal to similar interests in other ways of life.: If New Zealand wanted its second and ; third-class land improved and developed, it must see that, the, farmer was able to earn reasonable interest for his improvement and reward for service. ; Mr Hamilton showed diagrams indicating that as land values fell second and third-class land on the margin of cultivation went out of value and occupation. Unless steps were taken to enable the farmers to balance their accounts, further land settlement would be impossible, and many farmers would still have to abandon their holdings. Either the price of farm produce must be subsidised to give the farmer equality with the sheltered sections of the community, or costs .must be lowered to enable the farmer to receive his rightful share of the national income, _ "As to ways and means of righting this injustice," continued Mr Hamilton, "if it was not difficult it would have been done long ago. It has been done for the wheat-farmer. It is equally important that it should be done for the exporting farmer-rindeed, more important. It is a strange democratic fact that democracy will assist an industry bv protection, thus raising the price, but it will not submit to a reduction of costs, even though each brought about the same result.

Hope for the Future. The .only hope for the future was for the farmers to organise to make their voices ana weight effective in the legislation of New Zealand. The problems were economic, and could . be solved only by legislators, and this would b,e done either when the present -slump became more acute or when the farmers organised and demanded tlieir rights. A number of questions were answered bv Mr Hamilton. ' ".Messrs Jones and Burnett also briefly addressed the meeting, stressing: the