Brighter long term outlook despite Government hostility

Press, 17 June 1988, Page 16

Brighter long term outlook despite Government hostility

Arable farmers could look forward to a positive future in spite of the present grim picture of their industry, believes a Federated Farmers’ leader. Mr Graham Robertson, chairman of the federation’s arable section, told his annual conference in Wellington this week that prospects for the industry were sound because of its internationally competitive productive base. The immediate problem for farming families was to survive so they could take advantage of the good times when they return, said Mr Robertson criticising the Government for “half-pie” restructuring policies which were hostile to farmers. ■ New Zealand had a mix | of soils, climate and farmer expertise that made it competitive with other arable systems in the world, particularly for specialist cropping. Poor cropping seasons and low commodity prices

had caused problems for the New Zealand arable industry, but major damage had been done to the industry by the Government’s policies. The wheat industry was dropped into a totally free market without an adjustment period and at a time of low international prices. In the first year of deregulation, milling company balance sheets were bloated with windfall profits made from purchasing wheat cheaply. Although the economy was supposed to be market related, farmers still had to buy certain farm inputs at tariff inflated prices, and the Accident Compensation Corporation’s efforts at cost containment were slovenly, said Mr Robertson. “It acted as though employers had a bottomless pit of money to underwrite the corporation’s voracious appetite for expenditure.” High shipping costs ef-

fectively denied New Zealand grain farmers a market in their own country. New Zealanders were held to ransom by a labour cartel which ensured that the only vessels plying New Zealand’s coastal waters were those crewed by members of the New Zealand Seamen’s Union at manning

scales which seemed to be related to the days of sailing ships. “The net result is that we pay many times more for the shipment of bulk cargoes around New Zealand than the equivalent journey anywhere else in the world.” The Government’s excise duty on fuel was another unfair charge on farmers, but probably the biggest difficulty for the industry was the Government’s interest rate policy which was inflicting serious damage on the productive sector. The Government and the banks were blaming each other for the sorry state of affairs, said Mr Robertson. “Both parties must take responsibility and do something about the situation before the productive sector bleeds to death.” In spite of the difficult times, Mr Robertson said New Zealand’s internationally competitive arable industry had a bright outlook in the

medium to long term. Market prices were likely to improve and the New Zealand dollar would eventually devalue. The owners of foreign capital will realise that New Zealand was no longer a sure bet as an investment and they will discover that the current value of the kiwi dollar was based on the same fundamentals as the sharemarket was before the crash in October. “In hindsight, the value of the New Zealand dollar will be seen to have been unsustainable. Once sentiment moves against our dollar the effect will be an undervaluation of significant proportions that will deliver windfall profits to exporters.” Mr Robertson said the fundamental basis of agriculture world wide — the family farm — would continue as the foundation of the New Zealand industry, for a long time. Corporate buyers of farm land would soon move out of the industry.