The Dominion. MONDAY, FEBRUARY 8, 1937. DAIRYING COSTS AND THE GUARANTEED PRICE

Dominion, Volume 30, Issue 114, 8 February 1937, Page 8

The Dominion. MONDAY, FEBRUARY 8, 1937. DAIRYING COSTS AND THE GUARANTEED PRICE

In fixing the guaranteed price for dairy produce the Government considered the market fluctuations over a period of years. 1 rices have been fixed,” said the Minister of Finance in his Budget speech last session . to ensure that dairy-farmers supplying factories working under average factory conditions will receive the average butterfat return of the past eight to ten years. In addition, an allowance has been made for increased costs in the industry. Mr. Wash added that in ascertaining the average prices the most complete statistical information from the industry and Government departments was made available to the Dairy Advisory Committee. This information no doubt covered costs as well as prices. The guaranteed price was fixed for the current season only, but while the Government may have had the facts relating to costs over the past eight to ten-year period, it could not possibly have been in a position to estimate the effect of its industrial legislation and its. new taxation on present dairying costs. It is evident that these are higher than the farmers themselves had reckoned upon when considering the Government’s price for their produce. In The Dominion on Saturday there was published a resolution by suppliers in the Waikato district protesting against the action of the freezing workers in flouting an Arbitration Court award, and pointing out that .while the Government appeared to be willing to override the court s award, it had “definitely refused to review the guaranteed price although costs of production have advanced considerably since the price was decided upon.” .... , • , In the resolution the unfairness of the position is thus emphasised: “While the freezing workers were parties to the award and had full opportunity to bring evidence to. support their case, dairyfarmers were neither consulted on the fixation of the guaranteed pi.ice nor were parties to the decision arrived, at.” This is one illustration among many of the complications arising, and were inevitable, from Government interference with industry in pursuit of its policy of socialising the means of production, distribution and exchange. But the complications which have already appeared will.be nothing to those certain to arise in future dairying seasons. “For future years,” said the Minister in his Budget speech, “the cost of production, the standard of living of the farmer as compared with other sections of the community, and the stability of the industry, will be taken into account in fixing the guaranteed price.” On the present evidence of increased costs the dairy-farmers no doubt consider that they will have a strong case for raising the scale of the guaranteed price, and present demands accordingly. The vicious circle which in other industries forces wages up as costs rise will of a certainty appear in the sphere of guaranteed prices also. The guaranteed price is in effect an industrial award, with the difference pointed out in the resolution above quoted. The Government, however, may be able to control arbitrarily the guaranteed price to the New Zealand dairy-farmer, but it cannot dictate to the overseas markets.

At this point the New Zealand taxpayer conies in: “If,” said Mr. Nash, “the proceeds of the sale of this produce do not cover the guaranteed price, then the deficit is not the responsibility of the dairyfarmer, but of the Government”—i.e., the taxpayer. “If, on the other hand, the proceeds of sale in the first year are greater than the amount guaranteed, this surplus will be used for the benefit of the dairy-farmer and the industry after consultation with its representatives.” The dairy-farmer may think he is safe both ways. But he should remember that he is also a taxpayer. As a taxpayer he will be called upon with others to shoulder the burden of such guaranteed price deficits as may occur in the future. He is already sharing the load of increased costs.