Farmers Concerned At Overseas Borrowing

Press, Volume CVI, Issue 31121, 26 July 1966, Page 12

Farmers Concerned At Overseas Borrowing

"The Press” Special Service WELLINGTON, July 26. After a five-year period of record earnings by the primaryindustries, New Zealand’s exchange reserves have had to be strenghtened by large-scale borrowing overseas.

“Whatever one’s political complexion, this state of affairs must give cause for concern,” said Mr E. W. McCallum, president of Federated Farmers of New Zealand, in his address to the annual conference in Wellington.

Mr McCallum said that the farming industries had earned £1736m in the last five years: £295m in 1961, £3o9m in 1962, £356m in 1963, £393m in 1964, and £3B3m in 1965. “With such a high level of foreign-exchange earnings, fanners are staggered when they are told today the country is in foreign-exchange difficulties,” he said. Mr McCallum complained that over-zealous and forced industrialisation in the last 10 years had placed too great a strain on New Zealand’s limited resources of capital, manpower, materials, and skill.

Dissipated Resources “We have tried to accomplish too much on too many fronts,” he said. “The result has been a large degree of over-full employment and inflation, and farming has suffered in the process.

”1 have often heard it said by experts from advanced countries that in trying to industrialise too fast, many of the emerging nations have dissipated their resources, and as a result their wholeeconomies, especially their agricultural sectors, have suffered. “I believe that the same problem has afflicted New Zealand,” Mr McCallum said.

In order to achieve the targets set by the Government’s Agricultural Development Conference, farmers had substantially increased their livestock numbers. Not only had this demanded increased effort by the farmers themselves, but additional demands on capital and manpower.

“Yet at the same time, through Government policies, increasing demands on capital and manpower are being made by other sectors of the

economy—who are often deliberately placed in a better position to bid for these same resources,” Mr McCallum said. “Obviously, both sectors cannot have the same capital and labour—and the usual result is that farming misses," he said. Internal Inflation

eign exchange earnings if the apparently inevitable results are balance -of - payments crises?’ They are also disturbed at the fact that when they expand output, costs (including taxation) increase, and tend to cancel out the gains in income.

“1 believe that each one of us has a moral duty to expand our farm output, but I am also'convinced that a responsibility devolves on the Government, and the nation generally, to help us and to make our efforts worth while. It behoves the Government to create the economic climate which rewards initiative and effort. If the primary industries have to survive in world competition, then it is unfair to give excessive shelter to other sectors.

On New Zealand’s financial situation, Mr McCallum said he was not opposed to overseas borrowing. “New Zealand’s development in the past 'was assisted greatly by such capital,” he said. “The burden of servicing the debt is today very much less than it was before the Second World War. I am. however, concerned that after a period of record earnings by the export industries, our foreign exchange reserves deteriorate to the point where we have to raise substantial loans merely to increase our reserves to a workable level.

“If the farming industries expand New Zealand's foreign exchange earnings, a responsibility falls on the Government and the Reserve Bank to ensure that the nation benefits from such gains—and maintains at all times an adequate level of foreign-exchange reserves. “As a recognition of the crucial importance of the export industries to the economy, the Government must ensure that they be not placed at a disadvantage in competing for scarce economic resources,” Mr McCallum said.

“Over the years, I , have shared the view with other farming leaders in our federation, that internal inflation in New Zealand usually has, as one of its results, an excessive demand for imports. Our present difficulties would confirm this, and now, not surprisingly, many farmers are asking themselves: ‘Are the primary industries really helping the nation by increasing their output of for-