'Farmers need short-term S.M.P.s for survival’

Press, 19 February 1983, Page 2

'Farmers need short-term S.M.P.s for survival’

Canterbury farmers needed payments under the supplementary minimum prices scheme to survive the next year, the executive of the meat and wool section of North Canterbury Federated Farmers was told yesterday. Although S.M.P.s were needed ■ until next year, farmers did not want them to continue much longer than that. The scheme was criticised because it was not marketorientated. Farmers were being paid' prices well above the market value. The chairman of the Executive, Mr E. W. Turrell, said the Government had introduced S.M.P.s as a floor price to support the drive for increased agriculture production. Farm profitability could not be maintained because New Zealand's inflation rate had pushed on-farm costs up 76 per cent in three years. “New Zealand’s inflation rate, at twice that of our trading partners, produced returns to farmers which

have prevented normal maintenance fertiliser application. which will very quickly show up in a rapid fall in production,” said Mr Turrell. “Unfortunately, this loss of production will take years to recover.”

He said the “single obvious correction” to the problem of no profitability in export industries was to devalue the New Zealand dollar. “This would remove both S.M.P. and export incentives, strengthen local industry, and reduce the demand for foreign exchange," he said. Other members of the executive were not sure if devaluation was the answer. Some said it could bring problems which would outweigh the benefits. Other possible answers suggested by members included a substantial reduction in interest rates and for farmers to be given a production incentive rather than a “hand-out." The vice-chairman, Mr R. W. Davison, said that farmers had had their backs to the wall for longer than most New Zealanders but the rest of the country was beginning to realise just how bad things were. People from the Government down needed to adopt a more reasonable attitude in their expectations. Wageearners needed to be more reasonable in making wage demands. In summing up the meeting, Mr Davison said the economic problems facing farmers and the country were wider than the issue of S.M.P. “New Zealand is going through a difficult period. Therefore we all have to sacrifice some of our principles in the short-term, otherwise the farmers will go broke.” he said.