Agriculture ‘best Govt investment’

Press, 10 May 1980, Page 23

Agriculture ‘best Govt investment’

The Government would be better off investing in agriculture than industry, according to the chairman of the dairy section of North Canterbury Federated Farmers, Mr O. W. Thomas. The cost of building a new aluminium smelter in Southland was about $2500 million, creating 800 new jobs at a cost of about $2 million each, he told the section’s annual conference. This investment was about 37 times the average for jobs in New Zealand and Britain he said. A recent report had also shown that for every $3 invested in a smelter only $1 was returned in foreign exchange. The cost of creating a farming job in New Zealand was much closer to the national average and the return for every dollar invested was about $3. “If someone offered a farmer $2 million for every job he created he could retire tomorrow, yet this is precisely what is

happening in the industrial sector,” Mr Thomas said. The value of exported manufactured goods had risen 204 per cent in the last four or five years but in the same time the value of dairy exports only had risen by 61 per cent. There were several reasons for this, including steeply rising costs which were often not recouped because farming, unlike other industries, did not work on a cost-plus-profit system. The weather during the period had often been unsympathetic to dairy farming and many suppliers had left the industry. In 1973-74 the Tai Tapu Dairy Company had 345 suppliers but this season it had only 140 who were struggling to maintain the same supply as in previous years. Statistics showed that the dairy farmer was achieving only a marginal profit. If it was not for the “free” labour of this family he would in many

cases be in a difficult nation. The high price of electricity was a sore point with the South Island dairy’ farmer. This was not helped by the provision of low-cost power to the smelter. Comalco now paid 0.76 c a unit for electricity but. according to a report by Professor Paul van Moeseke, a professor of economics at Otago University, the price should be 2.5 c a unit to cover the “marginal cost of power.” Federated Farmers had approached the Government six weeks ago to seek lower charges for dairy farms but the Minister of Energy, Mr Birch, had still not replied. If the Government was determined to spend the huge amounts of capital it had talked about then, apart from energy projects, there could be no better return than from farming in the medium and long term.