EFFECT ON MEAT TRADE.

Press, Volume LXVIII, Issue 20712, 24 November 1932, Page 13

EFFECT ON MEAT TRADE.

HIGHER local PRICES. HELP FOR THE PRODUCER. 'ihe question of exchange ' 9 being strongly debated, and in this connexion it may be pointed ouc that the Australian and Argentine farmer cat l ' J ' fi meat at 5d in London, and yet receive a better return for his lamb than the •New Zealand farmer with a price of 6;1. The difference ot' 15 per cenl. in exchange givey a bonus ofld alb to the lamb grower in Australia iui<l South America. With a market over-,sun-plied, and nt;ar saturation point, the question how long the New Zenlantl producer can stand against such competition.'' ■the above statement 'ffti.-J ma do >».y the chairman of directors of the North Canterbury Farmers' (Jo-operative Freezing, Export and Agency Co., Ltd. (Mr -T, IT. Black well), a* the annual meeting of the shareholders of tlie company yesterday. ''lhe economic position ot producers and of .New Zealand generally i 3 undoubtedly worst) than it was twelve months since. The severe drop in prices of our primary exports has cut almost in half the income of our farmers, and the direct and indirect results of them have reduced the income of .New Zealand by 10 per cent. Every industry and trade itj languishing as the result, and we have deplorable unemployment on a scale which three years hince wo should not have dreamed to be, possible. .l'ossibly worst of all is the fact that so many of the rising generation of yuunjj peoplo arc finding ;.u opening in industry. The volume of production in quantity has materially increased, and many economics have been made, but it has not been possible to balance the severe deilut.ion of income by similar detlation of operating costs. Lower prices keep down tlie nti» tion.il income, and the lower the income the higher is the percentage of overhead fixed charges, rents, interest, etc., and the Trime Minister told us only on Tuesday that the position in this respect will be even worse year. "A Grave Hoapoiujibllity." "Tho imperative need ia a rise iti national income, which can come only from a higher price level for our primary productions. Increased returns from exports mean increased purchasing power for farmers, which would be quickly reflected through every branch of local industry and trade, absorbing labour and reducing unemployment. Other countries have found a high rate of exchange essential to this end, sin] in tho competition for marlcots New Zoaland farmers, with a low rate, tiro severely handicapped. In view of its effect in raising price levels and main* t tuning the value of securities which havo been pledged against debts, a gravo responsibility Tests on thoso _ in authority who are this week considering this question of a higher exchange rate, and tremendous interest will be taken by the country in general, and producers in particular, in their decision. "World trade is c:t present very sick, and general improvement must ta.;e place before New Zealand can again relv on better days. ft is profoundly to be hoped that 1033 will see universal sincere statesmanlike cooperation to remove fear, and restore confidence to the world, rvhtch is the only stable foundation to our economic and national welfare."

BENEFITS OF STABIIYiTY.

\ HANKING COMMENT. Liisiurt'U'.g reactions which might -follow a rise in the exchange rata urn mentioned in the October summary of Australian conditions issued by the National Bank of Australasia. Tho bank agrees that tha .small decline in tho value of Australian exports in recent months and the expansion in import figures, compared with tho totals for the corresponding period o£ last year, may load to a revival of tho demands for an increase in the exchange premium on London. But tho problem is not as simple asi it might appear. A rise in the exchange premium 011 British lulls, which is tho same thing as a depreciation in thu exchange value of Australian currency, would doubtless induce a prompt increase in local pricey of export commodities. The position of the primary producer would be improved relat/ivo to,other sections of the community. But there would be no addition to the amount of British csrrency we would receive for our currency. Australia would be no better off in its relation to the rest of the world. Disturbing Reactions. "in fact,'' the summary statos. "a rise in the exchange premium would set in motion various disturbing reactions here, affecting all tactions of community effort. In particular, it would reduce the real value of each pound paid in wages, rent, and interest. Beyond these shores it would have some tendency towards reducing price levels in general. With world finance and commerce in their present disturbed condition, it would be unwise to do anything likely to further depress price levels of Australian export commodities. Though tho action may bo relatively small, the result cannot be determined in advance. The depredation in the exchange value of the currencies ' of great nations which are off tlic gold standard i.as been accompanied by a marked decline in wholesale prin-j.-i-Nearly c, year after England's departure from the gold standard, sterling prices wero actually lower than they had been before that step was taken, though the decline in exchange was about 28 per cent. "A heavy Australian export season j* in close prospect, while an Increase m imports should naturally accompany the improvement in trading condition* noted during recent mouths. A pronounced change in the balance of trade may Tesnit and may prompt a renewal of outside attempts to influence a change in the current exchange premium on sterling. Any such agitation should be severely deprecated, as temporary trade movements provide an insufficient cation to the real position. in t.ncu, such movements may be more thtui onset by invisible item.-;. The exchange market is much more sensitive than 1 used, -to be. and traders are watening ehungca iu conditions more closely th«n in the punt. They prefer exchange stability, and this can best be asr.uu i. by leaving the ci.nl rolling authority 10 carry out'its task free from carping »»»" uninformed criticism or the dis ui ia,_, influence? of political or proy.i ganda. , ... Effect on National Credit.

"On, import,'int outcome of tnc strcnt'tli of the Australian exchange rate, 'following Hie reduction in -ho e.tehange premium on sterling from M to '>» per cent, eleven months ago, the bank adds, "ha* been ita effect in

adding ro our national credit nt a time when one of our oversea loans was fipproaeliirif; maturity, There is goml reason for Baying tliat, had the exchange been allowed to depreciate, it would liare been almost impossible for the Australian Government. successfully to convert the ■£ 1'J,360,000 whh-'i matured in l-oiidon on Norr<mbor Ist." AN ADVERSE RESOLUTION'.. •J'illCii .'.tiSOCUTIOX TSSUUJcUII...' WELLINGTON, November On (lie niotion of the chairman C. .J, H, Nonvooc]) the Wellington Harbour Board passed a resolution this evening opposing any nrtiileial alteration to tiie exchange rate. motion met some opposition from Messrs M. A. Elliott and V. . ' '■ E'.taliorbert, f.io country members, who thoughb the l!uard should not express an opinion on the subject. The resolution was carried by a largo majority.