FARMERS WANT ‘TRUE VALUE’

Press, Volume CIV, Issue 30811, 24 July 1965, Page 17

FARMERS WANT ‘TRUE VALUE’

(N.Z. Press Association) WELLINGTON, July 22. Federated Farmers today adopted a Wai-kato-Auckland remit asking that in equity to farmers they should receive the true export value of their produce.

The mover, Mr W. R. Martin, distributed to delegates attending the annual conference a circular in which he claimed the sterling pound for which the fanners’ produce was sold overseas was worth, in terms of exchange value, approximately £125 to £lOO at which it was valued before its being arbitrarily reduced to parity during the Labour Government’s term of office in the late 19305. If it was admitted that the New Zealand exporting producer was being penalised by the fixation of exchange at parity, what did the Government propose to do to remedy the injustice? he asked in the circular.

The circular said the difference in costs of production between nations reacting on the terms of trade—export import balance—determined the relative exchange value of national currencies. For instance, New Zealand was borrowing each year to balance its export-import imbalance. The extent to which the New Zealand cost structure exceeded that of Britain was the degree to which New Zealand secondary industries demanded and received protection against overseas competition. A further illustration of the injustice the New Zealand exporter suffered from was evident in the difference between the exchange rates of Australia and New Zealand compared with Britain, the circular said. The Australian exporter received £125 for £lOO as against in New Zealand £lOO to £lOO.

The argument that such a readjustment would be cancelled out in increased costs was not borne out by Australian evidence.

“Not only can Australia compete favourably in the world’s export markets but the New Zealand manufacturers say that free trade between New Zealand and Australia would destroy many New Zealand secondary industries,” the circular said. There were only two alternatives to remedy the injustice of exchange at parity, the circular said. One was to reduce the farmer’s costs of production or to free the exchange rate which would then rise automatically to compensate for increased costs. “In taking office the Government accepts the responsibility of administering economic justice among all sections of the citizens. We ask for nothng more or nothing less.” said the circular. Talk of “subsidising” the farming industry while depriving it of approximately 25 per cent of its just returns was not only an insult, it betrayed economic ignorance, said the circular. It was an economic impossibility because it would in-

volve a proportionate reduction in the remuneration received by the community and would be politically impossible to enforce either through a direct payment from the consolidated fund or by taxation relief. If the Government was sincere in its desire to remedy the injustice, but considered a reduction in costs was the best course the federation would be happy to collaborate, said the circular. It was suggested that such a reduction could be achieved through the substitution of a payment direct to manufacturers in lieu of the existing tariff protection and the federation would be happy to discuss this with the Government “We believe the alleged inflationary effect of exchange depreciation would be overcome by the payment of the premium on sterling into a special fund which could be drawn on only for purposes of mortgage and overdraft reduction. fertiliser purchase and other expenses invoivec in increasing production,” the circular said.