Forecast of farm income rise

Press, Volume CXIV, Issue 33655, 3 October 1974, Page 3

Forecast of farm income rise

(New Zealand Press Association) WELLINGTON, October 2. Devaluation of the New Zealand dollar means that 1974-75 gross returns to farmers might increase about s9om and net returns possibly as much as ssoin, says Mr E. J., Stonyer, director of the Ministry' of Agriculture Economics Division.

But the Dominion president of Federated Farmers (Mr J. T. Kneebone) says that these figures are a “gross over-simplification.”

A sheepfarmer with about 2500 ewes and 100 cattle would probably have an increased gross income of $2500 as a result of devaluation, Mr Stonyer said in a statement today. The income from a 125cow dairy farm would rise i about $lBOO. I However, it was very difI flcult to estimate how much of these returns would go into net income and how much would go in on-farm costs, Mr Stonyer said. He emphasised that on specific commodities, estimates could only be made on the assumption of no reduction in prices paid by importing countries. 80c a lamb Based on the approximate cost structure that could be expected during the new season, the devaluation was likely to result in a rise in the lamb schedule of about 80c a head on pre-devaluation returns, said Mr Stonyer.

Beef schedules might increase 5c or 6c a kilogram, and mutton might be up about 15 per cent on prices ruling at the end of the export mutton season, he said.

“A 5 per cent increase in wool prices is expected, although this is an area in which predictions are not straight-forward.” The dairying fat payout had already been fixed, but dairy farmers were likely to receive an additional 8c to 9c a kilogram from solids-not-fat products sold overseas. This ignored any additional

payment made as a result of possible surplus in the trading account, said Mr Stonyer. Mr Kneebone said Mr Stonyer’s predictions might give the general public the impression that farming had been rescued from its precarious financial situation. But devaluation had not done this to anything like the extent suggested. In gross terms, the additional earnings from farm exports might amount to sl3om, but the increase at the farm gate was more likely to be only s6sm. Higher costs Mr Kneebone said it must be remembered that devaluation could mean substantial increases in farmers’ costs. He listed such cost increases as shipping, road cartage, killing and processing at freezing works, shearing, labour and all farm inputs such as weedicides, pesticides, fertilisers, fuel and fencing. All these would reduce any benefit farmers might gain from devaluation. “Only a month ago the economics section of the Ministry publicly stated that sheepfarmers’ incomes would be down 30 per cent this year. It is hard to reconcile this statement with the optimistic projections contained in the latest statement.

“While farmers are not faced with utter and irrevocable disaster, the picture is far from being as rosy as the economics section paints.” Govt’s share Mr Kneebone said he welcomed the statement yesterday by the former Deputy Prime Minister (Mr Watt) that, “To date, farmers have borne the brunt of the declining terms of trade, and their incomes are down this year. Other sections of the community must accept that they, too, will be subject to a slower income growth.” Mr Kneebone said he expected the Government to play its part in ensuring that the burden of falling incomes was shared by all sections of the community. Challenge Yesterday, the Under-Sec-retary of Agriculture (Mr Barclay) told a Feilding meeting that the 9 per cent devaluation should be reflected as an increase of more than 20 per cent in the net farm income of the average sheepfarmer. Farming spokesmen today said that they did not believe Mr Barclay’s statement, and challenged him to prove it.