COMMERCIAL “Farmers should control their own stabilisation schemes”

Press, Volume CXV, Issue 33741, 14 January 1975, Page 16

COMMERCIAL “Farmers should control their own stabilisation schemes”

Zealand Prete Axjociation)

LEVIN.

Unless there is a marked increase in farm commodity prices, or speedy action by the Government to allow the Rural Bank to refinance farmers, then stock and station compaies will have to impose severe restrictions on farm lending.

Mr R. B. Weii-, managing director of the New ton King group of companies, said this in an address given to the Levin South Rotary Club yesterday.

Already companies had been forced to tighten up their lending considerably and they could be forced, because of the present liquidity situation, to take even more stringent measures. '

“Some form of income ■stability for farmers is ob- : viously needed,” said Mr I Weir. “It is no longer feasible to cater for farm financing on a basis of 140 c a kilo for wool one year and 80 to 90c the next, or for lamb to be up to $l2 one year and $5 to $6 the next, while costs on the other hand continue to escalate. The same also holds for many more farm servicing industries such as top dressing companies, farm-based transport companies, stock remedy firms, meat companies and so on, the losses made by some meat com-

panies this year are staggering and no firm can continue to make such losses like Borthwicks’ or the Gear Meat Company’s,” he said. Need for stability Mr Weir said the basic aim must be to narrow the gap between the peaks and valleys of farm income by I scooping some of the fat off in good years and bringing (the income back in lean (times. | “If we can narrow down (the effect of large variations in the money flow into and (out of New Zealand, as well' las better controlling liquid-i lity within the country, then' I we have more effective con-j Itrol over our economy,” he I (said. i “The only method of achi ieving a greater degree of ( stability in farm income will •be to introduce some mecha(nism which enables farmers’ i returns in bad years to be boostered and those in very good years reduced.” Huge debt burden Mr Weir said the necessity of having greater stability in farm incomes was transparent. By October 31, 1974, combined stock firms had more than $2OO million on loans to farmers, a substantial and increasing propor-

tion being long-term hardcore debt.

“It is a quite commonly held belief that already many many farmers are in a position that they will take half a lifetime to overcome the huge debt burden which has built up, either with their stock firms, banks, Government, insurance companies or wherever. Today the stock and station companies’ role of providing seasonal finance is being inhibited by the growing amount .of hard core debt caused by the sharp fall in income.” Better management Reduced fluctuations in I farming income would de-, crease variations in demand ■ and economic activity throughout the farming sec- • tor as well as the economy in general, said Mr Weir. A reduction in these fluctuations would also enable many farmers to handle I their business and personal I expenditure better and (should encourage better over-all farm management. ‘ “Perhpas, most importlantly of all. a prices-incomes stability package would give the centra) Government more ability, and more weapons, to keep the New Zealand ship of state on an even keel.” General agreement The question was one of whether the farmers would be prepared to accept income stability, and do the job themselves, or whether the Government stepped in and did the job for them.

“Secondly and just as essential, such a move to control farm income to a limited degree, must be met by agreement in other sectors, particularly the labour movement, that they will accept

■some form of income control,” said Mr Weir. An essential factor was that in good times the amount of money which was allowed to flow in the economy did not reach abnormal levels, and income then must be put aside which could be used in times of natural downturns in prices to increase the nation’s and the fanners’ money flow. “As I see it the most effective way of achieving some degree of stability — and let me emphasise yet once again we are talking about limited stability r— the most effective way is to control the level of return the farmer receives from the sale of his produce rather than having a total income Government-controlled exercise,” said Mr Weir.

“This reinforces my belief that the farmer-controlled Statutory Boards already in existence should be the organisations to carry out any systems. “As a close observer of Government - controlled boards in this country and overseas I have no hesitation in plumping for Producer Board-control; the huge stockpiles of dairy produce and more recently beef in Europe, were created by a Government-controlled 'system which, at its foundation, must bow to the demands of the electorate. “The stupidity of the present New Zealand Government over the statecontrolled price of wheat is another example, and there are many others. It is clear the dead hand of a Government Primary Marketing Department must not be allowed to develop. “As I see it a regulated price for farmers means a vastly more active role for the statutory bodies already in existence,’’ Mr Weir said.,