GUARANTEED PRICES

Press, Volume LXXIV, Issue 22336, 25 February 1938, Page 10

GUARANTEED PRICES

TO THE EDITOR OF''THE PRESS. .... Sir,—A good deal has been heard lately on the subject of guaranteed and compensating prices. The Labour Party’s policy has the former as its, foundation plank, guaranteed’ prices to the farmer, fixation of country wages based on them, and award wages in the cities, aiming at a care-fully-balanced economy, with an element of stability owing to the farmer in the first case having a basis of security.

For a start dairy produce has been put under the scheme, wool and mutton left alone. Dairy products actually realised within £338,000 on the market of “the amount paid out under the guarantee. But, as Mr Furniss put the matter, costs, as a result of legislation, increased enormously, leaving the dairy farmer,- as a net’ result, lamenting. In answering his complaints, Mr Nash claims that he has given the great benefit of security of price, so that he is no longer subject to .the vagaries of the market, and he asked the audience in Hamilton if they would like to go back to the conditions of 1931-32-33, when London prices for butter were from 66s per cwt up, and they had no guaranteed price. I believe that on an answer to this question' the Government policy may be judged. Had last year’s guaranteed price been in operation over those years, the deficit on the. dairy account would perhaps have, averaged £4,000,000 a year. If, in addition, wocl and mutton prices had been guaranteed, perhaps another £6,000,000 a year for three years would have been added. Such a position would have resulted in an immense deficiency in the guaranteed price, and the question would have arisen as to who in reality, is the guarantor. The Government, yes. but who is the Government but the people, who rely for the power to pay in the end on the primary producer. From another a’spect, guaranteed prices during 1931-32-33, to have meant anything real,' would have involved the maintenance of imports at a figure our low export prices could not have paid for, resulting in the currency farmers would have had to accept lacking the backing of a substantial sterling reserve in England. To-day, wool prices have fallen away from the high figures which were a big factor in bringing good times to the country. Our exports last year brought the high figure of £66,750,000 N.Z., our imports kept pace, £56,750,000 N.Z. So, in a boom year, we have, with interest, spent our income. With the_ reduction in exports likely this year will imports also recede, or is our general policy going to lead to a maintenance of expense, notwithstanding a likely reduction of spending power? It seems to me that the effect of our labour legislation has been to place greatly increased costs on the backs of our basic industry, for the sheep farmer, working on the actual export market, freezing, transport, wool charges, all wharfage costs, and the cost of all supplies, Have been increased as. a result of legislation. Last season’s prices enabled such increases to be carried. Those prices have fallen, so that to-day he is selling on . a world’s market and bearing fictitiously high costs. To overcome the difficulty would a system of internal guaranteed prices be effective? Or would it ultimately result in his payments lacking a basis for the currency he would be paid in? These are important questions, both to the farmer and to the general body of workers. These already find their : so-called increases in wages cancelled out by higher costs of living. . ~ To me, any system of guaranteed prices for • New Zealand, the main wealth of Which comes from the land, is as fantastic as-is that of a compensated price policy. Both bring you back, to your starting point, that the country has in the end to face facts and live within its real income. I 1 think both worker and employer would ultimately be better off if we accepted that position, relegated to the past all thq expensive and elaboi’ate machinery to alter it, and left free as far as possible both sides to make their own arrangements. I believe that all our activities would benefit and the worker find himself both with more real j -xAx. ;> i.: i; :1: \ x.?lv.v;.;.V( I.;;"!-.. ;

spending power and greater fields for employment.—Yours, etc., HILL COUNTRY. February 23, 1938.