Farmers again in the vice

Press, 30 May 1985, Page 12

Farmers again in the vice

As rapidly rising inflation erodes the temporary benefits of the 20 per cent devaluation of the New Zealand dollar, many farmers are again feeling the squeeze. The industry is preparing itself for a challenging period of uncompromising austerity as it tries to conform to the Government’s wish for rapid change. Clear signals of future hardship have been coming from many sources. To date, farming leaders have supported the Government’s policies, and urged acceptance of the pain they cause, in pursuit of wider goals of improvement to the economy.

The sectional interests cannot be ignored however, and more and more farmers are inclining to the view that the demands being made of them are not being made of other sectors of the economy. The strong words voiced yesterday at the annual conference of North Canterbury Federated Farmers showed this. The general feeling is that the industry is being asked to go too far too fast, and that too many adjustments are being made at once. The president of Federated Farmers, Mr Peter Elworthy, might well be right in his view that the general public is aware that the Government’s economic measures have been

more severe on agriculture than on other sectors. The Government cannot afford to ignore his warning that the industry is getting more lonely and bitter, even militant, every day.

Mounting inflation continues to be a prime concern for the industry. The Agricultural Review Committee has said that a rate of inflation no greater than New Zealand’s trading partners will have to be achieved quickly. The floating exchange rate might help to ease some of the effects of the imbalance between New Zealand’s rate of inflation and that of trading partners, but most often the net result is to increase imported costs to farmers one way or another.

Unless the Government’s economic measures begin to restrain inflation soon, the farming industry will be back in the familiar vice, squeezed between rising costs and falling incomes. The last time this happened, the previous Government felt obliged to subsidise farmers’ incomes heavily. The move was as unpopular with farmers as it was with urban taxpayers. The threat to the farming industry from rising inflation and interest rates could force this Government into the same unpopular measures.