As export source farmers should not be worse off

Press, 15 June 1979, Page 10

As export source farmers should not be worse off

Last year’s Budget was something of a milestone in fanning history. There must have been very few occasions when there was so much for farmers in the Minister of Finance’s statement.

These measures included the cash grant to farmers on livestock to help offset the effects of the drought of early last year, the introduction of supplementary minimum prices to ensure higher base prices for wool, meat and dairy produce and the Government’s assumption of responsibility for such service charges as meat inspection and seed testing, etc.

Of course it will be argued with a good deal of logic by farmers that much of the benefits of Mr Muldoon’s docurr ent, which resulted in an early restoration of confidence among farmers, was lost by the erosive effects of massive increases in, particularly, meat processing charges. The question now arises as to what Mr Muldoon’s next Budget, to be presented next Thursday

evening, will have in it for farmers.

While it might be expected that under present economic circumstances it will be very much of an expenditure cutting exercise to ensure that the country gets a little nearer to living within its means, one of the main objectives of the Government must still be to stimulate exports and export income as a solution to the country’s problems, and in that respect in one way or another farmers should expect to come off no worse.

There has been a good deal of pious talk in farming circles in recent months about the need to restructure the economy and about farmers’ dislike of being the recipients of extensive Government subsidies.

The implication of all this is that if the Government takes steps to ensure that the farmer gets a greater share of the economic cake — of the returns for the produce that emanates from his land — he would be in a position where he would not need so much Government support. This, ’however, implies that some other sectors of the economy must take less or restrict their demands for more, and there must be some question as to how far that is practically possible, human nature being what it is these days.

Farmers themselves, however, are not much different from other sectors in seeking Government support when things are not going smoothly — the recent problems over the harvest are a case in point.

Lacking any useful progress along the road to restructuring farming leaders will, therefore, want present levels of support for fanning to be maintained.

There could, however, be some change in the Budget in just how that support is given. Last year the Government broke new ground in coming in with its supplementary minimum prices

support scheme. According to the Dominion president of Federated Farmers, Mr A. F. Wright, at a meeting earlier in the year convened by the federation, at which the chairmen of four producer boards, including the Apple and Pear Board, were present, it had become quite clear that they were only agreeable to such a scheme so long as it was related to market returns.

As far as meat and wool is concerned it has been clear this season that the Government scheme has come up to that criterion — it has been little called on — and there is scope for the Government to lift the prices at which it would pay supplements to sustain confidence in the coming season, but a rather different situation applies in the dairy industry where at its floor of 180 c per kg for milkfat it is already subsidising the industry to a considerable extent — possibly about SI6M in the current .season — and the calls on it are likely to increase more if the Government should agree to the much higher minimum price that producers are now understood to be calling for — about 197 c per kg.

If the Government advances its support levels then it may see fit to trim direct subsidies.

There may be some change in the balance between direct and more indirect support through the pricing mechanism. The recently announced reduction in Government support for weed control could be a hint of such a change or of some restructuring. In their submissions to Mr Muldoon earlier in the year the federation urged that the Government should help With the levies that are paid on lamb and dairy produce entering the E.E.C. and said to cost farmers some SI6OM. It can be argued that these charges should not just be the responsibility of one section of the

country. Help in this direction would directly increase farmers’ returns.

At the very least, the federation would like to see farmers who raise their stock numbers and increase their output, as sought by the Government, are not disadvantaged through having to give up by tax much of the extra earnings.

Speaking to the annual conference of the North Canterbury province of Federated Fanners recently Mr Wright indicated that of one thing he was pretty certain — that was that the Government would make some adjustment to estate duties. The federation has, in fact, recommended their abolition. This would be a contribution to stimulating extra production by reducing the extra burden faced by farming families through the death of the owner.

The disclosures by the Opposition in Parliament that the Government is thinking of upgraded incentives to promote exports and export income can be taken as a good omen by farmers that as the principal source of exports their interests cannot be overlooked oil Thuresday evening.