Incentive plan could help sheepfarmers

Press, 29 July 1976, Page 4

Incentive plan could help sheepfarmers

The reintroduction of s grant. system involving i direct payments to farmers ito maintain sheep numbers, dis favoured by Mr J. G. ’(Pryde, research fellow in I agricultural policy at Lin--1 coin College, as a means of ’increasing investment in ■j Speaking to a meeting at : Waitara about how this : week’s Budget could encour- ' age an expansion in agricul- ; tural production, he said that inadequate investment ' was a major problem of the 1 sheep farming industry, and ‘ consequently means of in- • creasing the level of in- ■ vestment deserved full attention. A grant system along the lines of the sheep retention incentive scheme came to mind, Mr Pryde said. He would strongly recommend this, or a variation of it. It was criticised by some farmers, “but that should not deter us — if we wait to evolve the perfect incentive I nothing will ever be instituted and the industry will remian in a state of inertia,” he said. While the Budget would have special significance for farmers, Mr Pryde said that whatever decisions were made their impact on output

would not be immediate, but they could set the groundwork for much-needed expansion. “I have no hesitation in affirming that the greatest contribution any Budget could make to farming would be to include measures whose application would bring down significantly the present high rate of internal inflation. “If, for instance, the farming industry was given a substantial subsidy or grant involving considerable net additional Government expenditure this would not be in the best interests of the industry, unless equivalent reductions were made in Government spending in other sectors.” said Mr Pryde. The present grants andi allowances for farming were undoubtedly being reviewed,! he said. Queries would be' raised about the. high level I of Government support on! fertiliser, now amounting to! about SBOM a year. The! question was whether some; of this money would have a bigger impact on production if spent in some other way.

Those sheepfarmers who had replied to a questionnaire that he had sent out to more than 500 farmers seeking their attitude to expanding production had

a indicated a strong preferenct ’ for additional support. si Some scientists, on the other hand, had been sugrJgesting that the quantity oi ii fertiliser top-dressed on -Ifarm land over recent years fihad in some instances been i'excessive, and they cited the failure to achieve livestock ti targets as confirmation cl s this. But he was certain that no - farmers wished to waste 1 their money and he was t aware of the absence of ade vice from the scientists on J the optimum applications of - fertiliser. However, a Minister of - Finance had also to ask himself whether it was right to e provide an incentive to n encourage the application of a fertiliser to aid pasture e growth if the resulting grass I was ruined by pasture pests, t It was difficult to quantify - the damage done by insects t but there was no doubt that 3 in many areas it was sub- » stantial. If additional Gov-

- ernment expenditure was rez quired to hasten a break- - through in the area of a more effective control of 1 these pests, and there was ■ an over-all limit to the fint ance available, then a good J case could be made for some - of the money going towards ’ fertiliser being diverted to • pasture pest control. While there was need for another look at the promt 1 taxation system, Mr Pryde - said that as a group the farm sector, in total, did not ! pay a large amount in in- • come tax. It was a reflection ■ of the low profitability of ■ the industry. A case had been made for a system of taxation based on production for the in- ■ dustry, but quite apart from • the wisdom of senarpti- ■ out one sector and the small ' scope for worthwnile reuuc- ■ tions, there was the not ! unimportant question of whether the proposed sys--1 tern could be administered without massive litigation. It [had often been said that I economists did not agree, J but he had found that farmlers and valuers often had different opinions on the capacity of a (piece of land. I Some, he said, might bej (suggesting that as the econ-1 iomy appeared to be in a! chronic balance-of-payments I postion there was a good case for a further devaluation, but it was his view that a devaluation of any significance would have a destabilising influence on the economy at a time when everyone was hoping there would be a cooling down of inflationary pressures. It

would not provide the ‘■conomic climate that the farming industry required 1 In the past a preference had been expressed for across-the-board ass -lance for farming, but he believed that any future measures would be more selective They would aim at rewarding those who increased output, but a- the administration of such schemes could prove difficult the Government and its officials would have many headaches. It had been suggested that (there was scope for addijtional Government grants and subsides in transporting land processing primary proiduce. But Mr Pryde said he (believed that there were (dangers if the Government entered such areas. New (Zealand was liable to be accused of indulging in the (subsidising of its exports (and this could have serious repercussions in some mar|kets that were of major importance. | “Why not exempt all livestock from estate taxation?” (asked Mr Pryde in referring |to estate duties, which he (said were a real problem to some farmers. “This may seem a radical suggestion, but as livestock numbers are the key to future output a bold step is justified to help break through the plateau on which we have for too lone been rnnfinpd ’*