RETURNS AND EXPENDITURE PER SHEEP

Press, Volume XCVII, Issue 28701, 26 September 1958, Page 7 (Supplement)

RETURNS AND EXPENDITURE PER SHEEP

(All types of sheep farms averaged)

By producing and exporting more of these products, will we not drive the price lower still and perhaps find ourselves producing more for a lower total return? Taking the meat market first: there are only four countries in the world which consume more than 201 b of mutton and lamb a head annually—the United Kingdom, Australia, Uruguay, and ourselves. Only one of these is an importer. This means that we will continue to have for a long time a high degree of dependence on the United Kingdom meat market, since lamb and mutton account for two-thirds of our meat exports by value. It is now widely recognised that the threat to our meat market is coming, not from Australia or even our old bogy the Argentine, but from United Kingdom home production itself. We must convince the British taxpayer (out of whose pocket the subsidies to British farming are paid) that New Zealand’s policy is to increase meat production as fast as possible; that we can send large supplies of meat at reasonable prices; that we do not want to solve our problems by shutting out British manufactures and building up protected industries of our own. If on the other hand we take fright, and try to cure our problems by slowing down on agriculture and speeding up >ur secondary industries, we would be giving Britain a good reason for encouraging further expansion in her protected agriculture But in the short run we may have to accept lower prices in order to preserve our long-run position. New Markets We must also pursue our search for other markets “The weight of New Zealand meat on the United Kingdom market has already been reduced by ' the energetic pursuit of markets elsewhere." said a member of the Meat Board recently. The statistics certainly bear out this statement

For instance, in 1953-54, the last year - of bulk purchase, we ; Bent 10 per cent, of our meat to destinations other than the

United Kingdom. In 1954-55 the figure was 13 per cent., in 195556, 17 per cent; in 1956-57, 19 per cent; and we estimate that this year the proportion will be about 25 per cent With regard to the European Economic Community and the proposed Free Trade Area, the position is somewhat obscure at the moment, but there is no doubt that the Western European market is going to be a lucrative one. For us to secure even a foothold in it, however, will require considerable negotiation, with some painful decisions to be made on New Zealand's part in connexion with protection of our secondary industries. Summing Up To sum up the meat situation then, prospects for an improvement in prices in the United Kingdom are not very good. Beef exports to the United States have saved the situation this year, but it would be too much to expect these record beef paces to be permanent

But New Zealand must avoid a standstill policy and even if it hurts somewhat in the short run we must keep up the flow of meat to Britain, and expand the flow to such other markets as we can, notably the United States, Canada, and if at all possible, West Germany.

With wool, the situation is rather different Wool is a truly international commodity and as such, is subject to the same sort of fluctuations as other commo-

dities which enter largely into world trade, such as copper, tin. lead, zinc, jute, rubber, etc.

All these commodities have fallen in price over the last 12 months, and it seems we must expect these fluctuations to occur in the price of wool just as long as there are cyclical fluctuations in overseas economies. The main reason for the present fall is the recession in the United

States, but basically there is nothing in the present wool situation to suggest that the fall in prices has been the result of an excess of supply over demand. Analytical work has shown that in the long run New Zealand has everything to gain by expanding wool production as fast as possible, because by keeping wool prices at a reasonable level we lower the inducement to synthetic fibre producers to expand their production.

If we do not keep the world well supplied with our product, we can be sure that the higher prices which will be brought about by a shortage of wool-type fibres will induce an even faster expansion of synthetics than there has been over the last decade.

The conclusion to which this article leads is that New Zealand’s policy should be to produce meat and woo] at the highest level possible, for we have more chance of keeping out- established markets and finding new ones if we have the goods ready, than if we wait for markets to become available first. If we are well informed as to the economics of our meat and wool industry and if we have the intelligence to -devise action in the light of our knowledge and the will to take that action, then we should be able to adjust our farming economy—and if need be the whole national economy—to changing conditions as they arise.