Farmers critical of economic reform policy’s sequence

Press, 20 July 1988, Page 3

Farmers critical of economic reform policy’s sequence

By

DAVID LUCAS

A more balanced policy of economic reform would have put New Zealand in a much better position to take advantage of a boom in the world commodity trade, believes the president of Federated Farmers, Mr Brian Chamberlin.

He told the federation’s annual conference in Wellington yesterday that the sequence of economic reform had done serious damage to the export sector. In many respects the belated economic reform had been equally as disastrous as the earlier policies of protectionism and borrowing, said Mr Chamberlin. Devaluation and the floating of the New Zealand dollar had not been accompanied by the withdrawal of protection or a freeing up of the labour market and an unnecessary boom had therefore been created. A tight monetary policy was used by the Government to fight inflation, but this resulted in high interest rates and a strong New Zealand dollar. v Such policies were, until now, not accompanied by reduced Government expenditure or other reforms. This had resulted in huge damage to the export sector.

Farms had not been maintained and their production capacity had been impaired. The industry was unable to take full advantage of the present boom in the world commodity trade. The news, however, was not all bad as inflation was coming down and more people were realising that the farming industry was New Zealand’s best hope of paying off overseas debt. "Some of New Zealand’s leading industrialists have belatedly acknowledged that the only way to make farmers produce is to pay them a reasonable price for their products,” said Mr Chamberlin. “Hence the start of the long overdue rationalisation in the meat industry.” Mr Chamberlin said restructuring of the meat industry and marketing must continue if the industry was to regain international competitive-

ness. Farmers were not against sensible reviews of their operations but the senseless bureaucratic and intellectual attack on the producer boards must be stopped before further damage was done, he said. The huge debt load in rural New Zealand would require careful and sensitive management. Most farmers who were in trouble were not there through any fault of their own. “They are people who invested in increased production for New Zealand’s sake. Rampant inflation escalated the cost of this development way beyond its budgeted cost. “What were exciting, innovative projects became nightmares as farmers saw the fruits of their life’s work evaporate into thin air.” Mr Chamberlin said financiers would have to make some shortterm concessions for long-term gains.