Milestone in farming history

Press, 9 June 1978, Page 16

Milestone in farming history

In recent years Governments have been increase ing their support of farmers in times of economic downturns. In 1972, there was the sheep retention payment, which was partly financed out of industry funds. In 1975 the Government again came down with a series of measures t— supplementing lamb prices, guaranteeing a minimum for wool, accept-

ing responsibility for meat inspection fees and subsidising fertiliser spreading. Last Thursday marked a further development in this process, except that Mr Muldoon’s Budget measures probably represented the most massive support yet given to farmers at the one time. He said that, not including any payments that the Government might have to make to lift produce prices to the minima that he had announced, the cost of farming measures would be about S92M this year and SIO9M in a full year. It is not often that following a Government announcement of measures in support of his industry that a farming leader is able to remark that from the point of view of the pastoral industry, at least, farmers could not have expected more. Federated Farmers were, in fact, calling earlier in the year in submissions to Mr Muldoon for support amounting to about SIOOM. In that respect, at least, their request has been met. The Government’s Budget amounts to a major reapportioning of resources in favour of the farming industry as the major export income earner. The hopes of manufacturing becoming a rival of farming in this area, strongly expressed in the days of the last Government, seem to have receded into the background for manufacturing exports in recent experience seem no more secure than farm exports, both being subject to economic conditions in overseas markets. If the farming industry needed a boost, then it has been given it, and the ball is now in the farmers’ court and they have a responsibility to see that the resources they are being given are used in the appropriate ways to ensure that the country reaps the reward. Many commentators have spoken about “handouts” to farmers, but in a way the various supports that have been given are rather like a wage order for the worker, which compensates him in part at least for cost of living increases. The Budget measures are like a higher wage for the farmer to compensate him for the erosive effect of cost increases and the effects of the recent drought and so ensure that he remains in business to earn the overseas echange the country so sorely needs. The 50c per head payment on sheep. $2 on beef cattle and $5 on dairy cattle provide the immediate injection of funds. The new high levels of minimum prices for major farm products for at least two years provide the longer term confidence, and there is a sneaking feeling that although these have been said to be temporary measures once established they may assume a certain measure of permanency. It is worth noting that the cash payments are subject to tax so that although they are across-the-board payments, where a farmer does not need them so badly lie is likely to return part of them to Mr Muldoon through tax. The increase in the basic fertiliser subsidy by $9.50 per tonne and in the subsidies on fertiliser and lime transport may not amount to as much as might be imagined on the surface, when the increased rail freight and removal of all but the aerial spreading bounty’ are taken into account. Then the net gain amounts to

something like $4 to $6 per tonne in a number of cases, and there is likely to be an upward adjustment in the price later in the year of fertiliser itself. However the over-all result of the Government measures should ensure that fertiliser usage is at least maintained and perhaps increased and this is important for the strong relationship there is between fertiliser usage and production. The abolition of not only the meat inspection fees but a whole range of other Government inspection fees removes a psychological as well as a sheer monetary obstacle, and again these actions are not likely to be all gain for as meat companies shoulder the part of the wage increase that is currently being met by the Government and other cost increases between now and the beginning of the next season, it is very likely that further increases in processing charges will materialise. The section of tuts year’s Budget relating io farming was much bigger than normal and almost every sub-section contained a positive action in support of the farmer. Even if it seems all very much like the farmer receiving what he was asking for, there are naturally’ some misgivings, especially among those who look back wistfully on the days when the farmer withstood the fluctuations of the markets and vagaries of the weather with little or no help. There are naturally' concerns that if the Government is to support farming so extensively it must also have more control of the industry’. There are concerns, too, that a country that supports its agriculture so openly and which is so dependent on its agricultural exports may be less favourably regarded in the market place where its products compete with home producers. It may be open to criticism of artificially inducing production and selling at less than the farmer receives. But in these days when nearly all countries are supporting their producers and tinkering with markets, the old independence of producers from supports and controls seems very much like a thing of the past. The support mechanisms could remove the producer from market influences but the minimum price system in New Zealand worked around averages for wool and certain benchmark grades for meat does allow even support prices to reflect market preferences for particular classes of meat and qualities of wool. There is, of course, the vital question whether a small country’ like New Zealand can pull its agriculture up by its own boot strings, like some of the bigger industrialised countries, for more than the briefest period. The home consumer is likely to feel the effects of price movements on the home market that reflect prices guaranteed for export production. This could be particularly the case for beef. Although prices have been moving up steadily for export beef lately, for the benchmark grades of prime beef and manufacturing beef schedule prices to the farmer are still well short of the minima announced by Mr Muldoon — about 5.5 c per kg away for the Pl grade of beef between 220.5 and 270 kg and 9.5 c per kg away for the manufacturing grade

of cow killing out of 140.5 kg and over. The minimum price which Mr Muldoon has set for the Pl grade between 220.5 and 270 kg at 80c per kg is only 3c below the trigger price ruling this season, at which level some of farmers’ returns would be removed, and for the M grade cow killing out at 140.5 kg and over, the new minimum price at 70c is actually 7c above this season’s trigger. At. the moment these grades are bringing 74.5 c and 60.5 c per kg respectively. How these sort of prices will affect calf prices next autumn is an interesting exercise and one man who has been looking at this estimates that calves next season could be worth from $BO to $lOO and possibly even more, or about double prices ruling in the season just ending. The sort of prices likely to be paid next season for beef could well persuade some of those with cattle still to market to consider holding them over if they have the feed to support them.