‘Suicide’ faces economy, says farming leader

Press, Volume CXV, Issue 33966, 6 October 1975, Page 1

‘Suicide’ faces economy, says farming leader

New Zealand would continue on its path to “economic suicide” unless it allowed freetrade competition and gave organised labour greater responsibility, the president of Federated Farmers (Mr J. T. Kneebone) said in Christchurch at the week-end.

“Not only farming or tourism, but the whole country, is in a serious state of recession,” he told the annual national conference of the Travel Agents’ Association.

“This state of affairs has been disguised by massive borrowing and a continuation of the overprotection of industry that we have had here for at least the last 40 years,” he said.

“And it cannot last. Too many people still blindly believe that the present crises are only temporary, and that things will come right again. I believe they won’t. Things are going to get a lot worse unless we change our attitudes completely."

Mr Kneebone said that the world’s economic crises in the last few years could be traced to the buying in 1972 of huge amounts of American wheat by the Russians. “Little do people realise how important wheat is,” he said. “The phrase, 'wheat is our daily bread,’ is certainly not an idle one. Wheat is the world’s largest-traded commodity. “Back in 1972, the Russians, in a very astute move, bought vast amounts of American wheat through many agents throughout North America. They bought this wheat all in one day and all through different agents so that the American Government would not be aware

of the move until after the wheat had been sold.

“The consequence was shattering for Western economies, and it started the inflationary spiral that we still have not been able to get out of.

“Not long after the Russian move, the price of wheat jumped from $1.50 to about $5 a bushel. This also reflected itself in other commodities, and the oil-producing countries retaliated to these massive price increases by pushing up the price of energy.” Industrialised countries after World War II had relied on cheap energy, cheap raw materials, and cheap labour for their prosperity. New plateau These were now all things of the past. Energy and .raw materials would never be cheap again, and the cost of labour would continue to rise. The world had priced itself "on to a completely new economic plateau,” and had to adjust its attitudes accordingly. Inflation had left people with a lot less “discretionary money” — money that could be spent on non-essentials.

“And, strange as it may seem to New Zealanders, the products we have to sell —

meat, dairy products, and wool —are luxuries to people overseas; they are nonessentials, and people aren’t going to buy them if they haven’t got the money. “We are selling in a surplus market and, unlike the misconceptions of some, the E.E.C., the United States, and Japan are not going to reflate their economies simply for New Zealand’s benefit.

“People in this country are going to have to wake up to the hard fact that the view that we complement the economies of these countries is utter nonsense. We don’t complement their economies; we only supplement them — and then only when it suits them.” Chances missed Mr Kneebone’s biggest fear was that New Zealand would price itself off the world markets through unrealistic protectionism and lack of competition. "New Zealanders have become afraid of competition,” he said. “We have tried to insulate ourselves from overseas trends. We are the greatest exporters in the world per head of population, but this is not going to help us one bit unless we accept free and fair competition in labour, manufacturing, and trade. “The world doesn’t owe us a living. We’ve got to fight for it like everyone else, and until we wake up to this our standard of living will continue to decline. "To borrow as we have been, and also to allow this non-competitive cost escalation, will lead only to economic suicide. I’m not saying that there has been no need to borrow, but I think it is wrong that only a small fraction of this money has been channelled into productive industries for the future.” Mr Kneebone said that he felt frustrated about the many good opportunities New Zealand was letting slip by. It was imperative that the country diversify.

"We find it hard to understand that there are alternatives to the food we produce,” he said. “But as an example, when beef prices here were high some time ago, a lot of synthetic meat was used in New Zealand, either by itself or mixed with ordinary meat. “It’s a sad commentary on our state of affairs when the housewife finds it cheaper to buy an imported substitute rather than our home-grown product. “Yet New Zealand farmers produce the cheapest meat at the farm gate than any other country. It’s between the farm gate and the consumer that we get lumbered. “Lack of competition has contributed to this. This protectionism that we have got has given some industries unfair advantages and has allowed unrealistic price mark-ups. “The most important thing remains the ending of overprotectionism, allowing fair competition, and ceasing this isolationism which is blinding us to the realities of what is happening in the world.”