Hinted Shift In Economy ‘Topsy-turvy Thinking’

Press, Volume CVI, Issue 31120, 25 July 1966, Page 10

Hinted Shift In Economy ‘Topsy-turvy Thinking’

“Topsy-turvy” and “Alice in Wonderland” economics were terms used by Professor B. P. Philpott, professor of agricultural economics at Lincoln College, to describe the possibility that, if Britain joins the European Economic Community, the E.E.C. may make financial grants to New Zealand to help to shift the emphasis of its economy from agricultural production to secondary industry.

Professor Philpott was referring to statements reported to have been made to Commonwealth journalists visiting Brussels by Mr D. Behm, head of information to the third countries division of the E.E.C. Commission.

“I do not know on what authority Mr Behm made his statement, but I suppose it is wise to assume in this age of accent on public relations that Mr Behm has the ear of the boss and we must therefore take his comments seriously,” said Professor Philpott. Mr Behm was quoted as saying: ‘There has been some thinking all along of helping New Zealand to shift the main structure of its economy from agriculture to industry during a long transitional period.” Mr Behm said he based his remarks on a talk given to the Six by Dr. W. Hallstein, now president of the E.E.C. Commission, who had given this idea on the way in which New Zealand's difficulties could be overcome, Mr Behm said that the proposed aid to New Zealand would be in the form of financial grants. Professor Philpott said that the whole suggestion seemed to be topsy-turvy economics, for it amounted to the E.E.C. paying New Zealand to produce expensive manufactured goods and to stop producing and selling butter at 300 s per cwt, which the E.E.C. could not import because it would put out of business European farmers who required 600 s per cwt. “More Rational”

“I should have thought,” Professor Philpott said, “that it would be far more rational to use the proposed financial grants to reduce the size of the European dairy industry rather than New Zealand's, and at the same time get the benefit of importing the cheapest butter in the world.” Unquestionably there would need to be adjustments in dairying, whether or not Britain joined the E.E.C. It was implicit in the quota of 170,000 tons for New Zealand exports of butter to Britain that New Zealand’s extra dairy production be sold, as was already happening, in new, developing markets. Japanese Market

Big developments would be seen toward more diversified products in dairying and in the development of new markets, said Professor Philpott. Economic research had shown that Japan alone would, over the next decade, have a growth in demand for dairy products more than sufficient to absorb all that New Zealand could hope to produce, though of course selling these products to Japan demanded that this country should be prepared to engage in twoway trade. It had to be recognised, said Professor Philpott, that the E.E.C. problem as far as New ’ Zealand was concerned, was really confined to dairying. To infer, as Mr Behm had done, that New Zealand should discourage all agricultural production was a grave reflection on Mr Behm’s information, or lack of it. “Seiling Superbly Well” New Zealand's other agricultural products were selling J superbly well. In 1965-66 12 per cent more wool had been sold at good prices, even allowing for the fact that Britain’s economy and other economies were still subject to anti-inflationary restraints. Marketing of lamb and beef offered no problems at the moment, largely because of the beef shortage in the E.E.C. itself. Some agricultural economists had predicted some years ago the development of a meat shortage in Europe, basing their analyses on the same premises as those adduced by Mr I

Wyndham-White, director general of G.A.T.T., who had said New Zealand’s agricultural trading prospects were not as grim as some people thought. Europe, because its future was as an increasingly rich industrial area, would be very glad to take foodstuffs from outside Europe. Perhaps the same might

happen with dairy products as had happened with beef, said Professor Philpott. Who kneW?

“In my case, I prefer to base my views of the future and of desirable policies on the analyses of economists rather than on the uninformed economics of an information director,” Professor Philpott said.