THE PRICE OF FARM LANDS

Dominion, Volume 16, Issue 156, 20 March 1923, Page 8

THE PRICE OF FARM LANDS

ARE THEY OVER-VALUED P Sir, —In The Dominion of March 2 appears a letter from Sir. Newman, lie gives a lull account of a dairy farm valuation by which he sets out to prove that Sir Harold Beauchamp and others are much too low in their valuation of farm lands.

Allowing nothing for labour and interest, Mr. Nowman has a very sound case. But had Mr. Newman other details which have been since supplied to me ho might not have been so sweeping in his remarks. The farmer in question went into tho property with £lO5O cash; for this Mr. Newman makes no allowance, though pt 7 ptr cent, compound interest for seven years it works out at over £6OO. When the farmer purchased tho property, his wife, his son of 11 years, and 41 daughter of nine assisted with the milking (which was then done by hand) and general work on rhe farm. For the past four years tho son has given full time to farm work. Allowing £2 10s. per week for wife’s, son’s, and daughter’s wages over' that period, and it shows that there is £9OO odd owing, which, with the £6OO for interest on capital, make a considerable reduction in Mr. Newman’s glorified £lBOO net profit. Sir Harold Beauchamp, being a man of business, makes allowance for these things when forming a valuation. Had tho capable farmer in question been running the farm on wages it would not have paid its way. Surely Mr. Nev. man must realise that the farmer a’i.l hi. family, as we 1 ! as other labourers. are worthy of their hire. Mr. Newman’s glowing account of tho sheepfarmers’ prospects are very misleading. Since the date of his writing there has been a drop of :ss. per head in breeding ewes end store himbi'. which takes some of the rilt off bis figures. , Hud tho farmers of New Zealand taken Sir Harold Beauchamp’s advice during the war there would l>«ve been fo ver farms back in the ■ iortgagees’ hands to-day. Sir Harold Beauchamp s advice was sound then and it is so today.—l am, etc., J. K. HARDHAM. Levin.

Sir, —Instancing a dairy farm of a size that requires tho minimum of paid labour your correspondent, Mr. E. Newman (in von issue of .2nd instant), defends the high value of farm lands in this country. To convince people that farms of high laud value are pay ing propositions i.s tho desire of your correspondent, and while many people are open t-o conviction on th s question, I suggest that he will achieve scant success unless he provides sounder arguments than the attractive generalities given so far. In this case of the dairy farm, could he obtain tl,e annual incomes and expenses for the period of the seven years mentioned? These fio-iircs should'admit no argument, and if they are ns favourable as has been inferred, the'- must carry conviction. Viewing these, high-priced farms pnrU’cularly dairying, from the national standpoint, what is their purpose? Arc they for comfortable porninnent s.-ttleinent, er are they merely stcpping-slone.s to higher things? An established, satisfied settler io one of

our greatest assets, and can these farms support such a farmer without him slaving at cows for the terra of liis life? If these farms are only temporary habitations, where men 'and families exist, while they add to their meagre capital and then step out leaving another mortgage representing the unearned increment during occupancy, I am desirous of knowing what the ultimate condition of these farms will bei and where the successive tenants will become absorbed? In certain favourable casss, if the unearned increment has been abnormally large, and if market conditions and taxation permit the succeeding tenant to pay his way, some ex-dairymen may retire. On the other hand they may take up sheepfarming, and the position of the new sheep farmer is worth studying. Your correspondent evidently regards the present high prices ruling for sheep as an argument to show that high-priced land can be made tt pay. I disagree with this vi«w, for I believe that the existing conditions are in favour of the old-established farmer only. The recent arrival on the- land is, almost without exception, under-stocked, and the resultant loss of efficiency in ’ all probability means that the whole of his income is absorbed by taxation and essential expenditure. The inadequate returns received by farmers during the last years cf the commandeer and during the slump, forced them to sell as fats more than their annual surplus, and so caused the shortage of sheep and the consequent under-stocking. In the depth of the slump, while sheep values were low, the new farmer could not obtain credit wherewith to buy sheep and fully stock up, and when values did rise, and the struggling farmer’s assets allowed him to be grafted credit, he found competition so keen amongst more stable pastoralists who were competing for the comparatively few sheep that were on the market, that bis credit was almost useless to him. Established . farmers have not carried their burden of taxation with ease the last few years, so we can appreciate the burden carried by the new fanners. The interest charge upon high-priced land has been a contributing factor in bringing about the above situation, and it -would appear that it is also a factor in maintaining the sheep shortage. To make their farms pay, farmers have beenforced to go in for fat lambs, Which means not only neglect of their own flock, but undue competition for the old ewes that come forward each year (bear in mind that this number of old ewes cannot be augmented or deducted from at will), not tr mention the pass : ng into this industry of I many fresh full-mouth ewes that could rear a “whit? face’’ lamb and so ro- ! duce the shortage to some extent. i The under-stocked farms are a ser- ' ions drag upon industry., and the fatI lamb industry does anything but assist lin improving the position. However, no matter with what care we observe these adverse movements in our midst we cannot arrest them by Act of Parliament. and we can only wait for economic forces to perform their functions. Nevertheless, we should not allow the advocates for the extension of the fat lamb industry, nor the advocates for high land values t-o go unchecked. Quite possibly good farmers may ! succeed in making high-priced land , pay, but how many farmers are “good”? Why not base our calculations on the farmer of average ability? If large interest charges and heavy taxation prevent a'n inefficient farmer from allowing himself to make every acre of his farm produce to its fullest capacity, the loss in the return from that acre is a dead loss to. the country, and in hill country this loss becomes progressively greater the longer the mismanagement continues. Today every under-stocked farm is contributing to this national loss. If the foregoing reasoning has been conducive to comprehension the land value question may be briefly described

There exists* a shortage of sheep, and some farms must he under-stocked. Which are they? Most certainly they are those that have changed hands within recent years. Furthermore this situation wll remain unaltered so long as the shortage exists, for it is only logical to assume that the old-establish-ed and more stable will fully stock their land before any of the late-com-ers, who carry extra burdens. In view of this fact, is it reasonable to expect the late-comers to pay their way on high-priced land? If farmers are unable to carry their taxation and other financial burdens—and their insistent demands for a reduction in taxation indicates that they are so situated —some portion of their burden must be jettisoned. Which is it to be, taxation or interest payment? Taxation does, and must show a tardy pace of reduction, so the only alternative is n decline in land values. The trend of land values after the shortage is made shortage being the paramount influence at present —will depend solely upon market conditions, and though contemplation of this future may encourage us to indulge in optimistic forecasts, we should avoid confusing the future with the present. O.ur financial authorities appear to be justified in their opinions concerning land values, but there are other considerations which I have attempted to illustrate, during the course of which 1 'hope to have not misinterpreted facts. , Apologising for this invasion of your spaoo,—l am, etc., H. 8. MONTGOMERIE. Wanganui: Sir, —The “oracle hath spoken” in the person of Mr. Edward Newman, an “experienced farmer’” of Marton, and'let other mere commercial men and bankers hold their tono-ues. The gist of his story in your issue of March 1 is an attempt to belittle opinions as to land values given expression to a month or more ago by Sir Harold Beauchamp, when it appeared the bottom had almost fallen out of our Home market for primary products, and consists of his own ideas of the future value of our grazing and other lands, supported by lengthy quotations from the report of a “reliable valuer on the West Coast” about a 50acre section. Most sensible men judge by results, but Mr. Newman poses as a “prophetic soul,” and gives his opinion as an “experienced farmer” as to what the future value of New Zealand land is likely to be. The public has suffered far too much in the past from valuations of this nature, and for the future men occupying responsible positions will be guided only by those capable of arriving at values other than by rule of thumb or soothsayers or old spry wives.—l am, etc,, ONCE BIT TWICE SHY.