The Press FRIDAY, JANUARY 4, 1935. The Dairy Industry

Press, Volume LXXI, Issue 21363, 4 January 1935, Page 8

The Press FRIDAY, JANUARY 4, 1935. The Dairy Industry

The latest economic bulletin of, the Canterbury Chamber of Commerce, printed in full in "The Press" this morning, surveys with admirable coolness the situation and prospects of the dairy industry, which moved the Government to set up the recent commission, and in the same critical temper summarises and analyses the commission's recommendations and the measures adopted in the Agriculture (Emergency Powers) Act. Consideration of the mortgage proposals is reserved for a later occasion. It must be said that the . bulletin does a great service by correcting certain false or exaggerated views and by reminding the public of factors so obvious, perhaps, as to be easily forgotten. For instance, it is true that a tendency has developed to account for the disastrous slump in butter prices by reference to overproduction, together with deficient quality and faulty marketing; the bulletin swings attention back again to the prime cause—the world depression, to which primary products have been most severely exposed and which itself spread economic nationalism over Europe and closed the doors of market after market. To take another obvious but most important point, the bulletin insists on the fact that the demand for butter, which has been stimulated by low prices, might be seriously checked by a policy of restricting supplies to raise prices, and that very heavy restriction might be necessary to raise prices appreciably. There is here, in fact, the danger of a " squeeze" which would disrupt the New Zealand industry; but the argument, though impressive, is purely speculative, and the answer to it may be found in facts and figures, the want of which we have frequently deplored. There are passages, however, in which the bulletin seems to waver from its own balance into captiousness or out of a clear view of the facts. The argument in favour of a free competitive market, for example, ignores the fact that the normal victory of efficient and economical producers over others can be indefinitely delayed, if not prevented altogether, by subsidies and other devices; and it is surely a rather limp conclusion to the argument to add that, "it is doubtful" whether a free competitive market will be " permitted in' Great "Britain." Whether New Zealand likes or does not like the possibility of control, under quotas or tariffs, the commission and the Government and the industry were bound to consider the possibility and prepare for it. Again, the commission is said to have reported that, unless early and effective measures were taken, a general breakdown in mortgage finance was threatened, and it would become difficult, perhaps impossible, for New Zealand to meet overseas interest charges in full. The bulletin replies to this by general reference to the receipts from dairy exports, to the fall in costs, and to the improved and indeed reasonably healthy state of the national finances. But it remains true, nevertheless, that farmers who are piling up the nation's credits in London, plentiful enough to meet all claims, may be doing so at a loss to themselves which they cannot continue to bear. If an industry loses its motive to produce, the dangers of a breakdown in its mortgage system and of the failure of a source of export credits are certainly in sight; and it was in no fantastic apprehension of such dangers that the commission called for " early and effective measures." The bulletin closes with some really valuable comments on the legislation of last session, in which it sees disturbing potentialities and a want of connexion with the commission's recommendations and the visible situation. Applied within proper limits, this is sound criticism; but what is said of the powers conferred on the Executive Commission of Agriculture lays open the great and threatening weakness of the measure. "At one extreme," the bulletin says, "they might be " used to impose moderate and wise "regulation aimed to secure mini"mum standards of quality for "dairy produce; at the other they "might be used to impose complete " bureaucratic control over all agricultural and pastoral production " and trade." So far the country has no assurance at all, beyond soothing phrases, that these powers will not work away from the acceptable towards the intolerable extreme.