Reduced support healthy: O.E.C.D.

Press, 27 November 1987, Page 5

Reduced support healthy: O.E.C.D.

PA Wellington Reduced support for agriculture and manufacturing should eventually lead to a healthier New Zealand economy, according to an Organisation for Economic Co-operation and Development report. The O.E.C.D. report is one of a series of national studies which detail how a whole range of policies can directly or indirectly affect agricultural trade. The removal of subsidies and price support for agriculture would lead to short-term adjustment burdens for the farming community but should result in a healthier industry once the big adjustments were completed, it said. "The current policy ob-

jectives are not to guarantee a reasonable standard of living to any commercial group.” A safety net for those truly in need, lacking in resources to help themselves would be provided through general tax and the welfare system, it said. The policy measures adopted by the Labour Government were endorsed by the O.E.C.D. The support of agriculture by previous governments was ad hoc and led to distortions as farmers were protected from changes in world markets, the report said. Government protection for pastoral agriculture ultimately accounted for 20 per cent of the indus-

try’s earnings, it said. “However, the net subsidy to agriculture when taking into account the full effect of manufacturing protection was probably low or possibly negative for most products,” The report acknowledged that adjustments for New Zealand farmers would not be so difficult if other countries would lower their assistance. The role of agriculture in New Zealand was expected to decline as manufacturing industries developed and expanded. Agricultural exports accounted for 80 per cent of total exports in the early 1970 s but declined to just over 60 per cent in the 1980 s.