The Press TUESDAY, JANUARY 14, 1975. Down on the farm

Press, Volume CXV, Issue 33741, 14 January 1975, Page 12

The Press TUESDAY, JANUARY 14, 1975. Down on the farm

All New Zealanders will suffer if the incomes of farmers decline so drastically that the productivity of farms is also reduced. Productivity will decline if farmers become so straitened for cash that they have to sell stock or abandon plans for development. Ten members of the New Zealand Association of Economists have recommended that the Government act immediately to boost the incomes of farmers. If aid to farmers as substantial as that proposed by these economists is not to have an inflationary effect, it will have to be given at the expense of other members of the community. This may arouse resentment, especially in the major cities. Urban New Zealanders should resist the temptation to judge the plight of farmers by the condition of the finances of those comparatively few well-established farmers; but most farmers will not weather the present crisis without genuine difficulty, increased indebtedness, and some retrenchment. In recent months the rest of the community has accepted with little complaint the considerable assistance the Government has extended to farmers to curtail the effects of the drop in prices being paid overseas for New Zealand farm products and of higher costs on all sides. The Meat Board and the Wool Marketing Corporation guarantee prices for the most important commodities. Neither of these measures is at the expense of the taxpayer and the guarantees do not ensure the profitability of farming. The Government has increased the fertiliser subsidy, provided more funds for the Rural Banking and Finance Corporation, and allowed generous repayment terms for loans taken out under the seasonal finance support scheme. Although it was not specifically undertaken for that purpose, devaluation in September prevented farm incomes from declining as seriously as they would have otherwise. Recently, the Government decided to help some of the major rural servicing industries.

The. proposal to make a taxable livestock maintenance grant to all farmers is likely to be the most controversial of those made by the economists. Such a grant would certainly encourage farmers to hold stock that they might otherwise decide to sell, thereby depressing the market further. The retention of stock is essential if productivity is to be maintained.

Fanners may be able to sustain a difficult year or two, provided that no permanent damage is done to the industry. Farmers do not seem to have spent extravagantly or unwisely during the last two years when they have enjoyed relatively high incomes. But the prosperous years have deflected attention from the need to consider and accept schemes to stabilise farm incomes. The unrelenting increase in domestic costs should have made many farmers respond more favourably to ideas that would even out the inevitable fluctuations in produce prices. Other sections of the community may be less willing in future to see farmers bailed out by the Government whenever world prices for farm products decline if farmers fail to make suggestions to avoid periodic rescue operations. But the rest of the community should not baulk at the implementing of any scheme in which farmers get a share of the national income which makes their individual operations regularly profitable.»