COMPARATIVE RETURNS

Press, Volume CV, Issue 31042, 23 April 1966, Page 9

COMPARATIVE RETURNS

COME people on Banks ° Peninsula thought it was a good idea to invest their surplus funds off the farm—perhaps in stocks and shares, Mr A. T. G. McArthur, senior lecturer in rural education at Lincoln College, told farmers at a field day at French Farm last week, “You find that news of stocks and shares is more widely read in some cases than the farming papers,” he said.

Mr McArthur had been referring to a peninsula property where after five years of a development programme it was estimated that there would be an extra return of about £lOOO a year after payment of tax. To get an equivalent return from an “off farm” investment he said it would have to pay 40 per cent. Even basing his calculations on returns as low as 20s a head for lambs, he said that the return from the outside investment would have to be 17 per cent. Mr McArthur suggested that such a development programme would be as profit-

able for farmers in comparable situations on the peninsula, but it might not be worth it if extra labour had to be employed to carry the stock.

Mr McArthur was quoting the case of Mr D. Johns at Fishermans Bay. Here on a 430 acres property, he said, use of superphosphate had risen from nil at the start to 25 to 35. tons a year. Over a five-year period ewe numbers had risen from 650 to 950, cattle numbers had gone up from 20 to 40, some winter fattening of hoggets had been started with the number of these carried going up to 150 and wool production had doubled. On the basis of his calculations taking specified prices for lamb and wool —42d for wool and 40s for lambs etc.— it was shown that the property had made £l3OO less in the first year as compared with the situation if no development had been done, £7OO less in the second year, had about broken even in the

third year, was £2OO down again in the fourth year, but showed a gain of £l3OO in the fifth year and thereafter it was estimated that an extra £lOOO a year could be expected after tax.

Discussing the effects of various incentive schemes, Mr McArthur said that with the gradual depreciation of the value of money, so that it was today worth about half of what it was in 1950, the Government was gradually taking more money without altering the rate of tax and if it was to correct the incidence of tax in relation to the value of money this would have the effect of increasing the profitability of development.

This would not disasterously affect the returns to Treasury, as not a great many people earned a lot of money. The cost might be something approximating £sm which could be compensated for by increased taxation on items like cigarettes, whisky, beer and motor-cars.