TWO PRICE LEVELS FOR FARMERS

Dominion, Volume 32, Issue 63, 7 December 1938, Page 12

TWO PRICE LEVELS FOR FARMERS

New Problems Appear

MORE HANDICAPS ON PRIMARY PRODUCER

Higher Internal Costs

The announcement of the Government's decision to control exchange, while not altogether unexpected, must be viewed with considerable misgiving by the farming community, says an official statement of the New Zealand Farmers’ Union last night.

“The Government's action means that the difficulties of the primary producer. particularly the sheepfarmer, will be still further increased,” the statement continues. “If the exchange rate remains at its present level there will be two price levels for the farmer —the present highly inflated price level in New Zealand, which can be expected to move still higher, and the price level for the farmers’ produce, which will be the overseas price converted to New Zealand currency at the official rate of exchange.

“It will be quite evident that if there is a restriction of imports, and the present rate of Government expenditure in New Zealand continues, the New Zealand price level must rise very considerably; particularly so when it is remembered that the Government intends to raise an internal loan (presumably the £14,0T0,000 loan for public works), which will have the effect of liberating still further purchasing power in New Zealand, which will have no outlet such as previously obtained in 'the purchase of imports. “Borrowing £14,600,000 internally will have a very adverse effect on the banking position in Now Zealand. It. will mean that it will be difficult for the business and farming community to get loans, and this will result iu severely restricting the undertaking of new enterprises. Government Spending. “In restricting imports, the Government should also curtail its own spending. Otherwise a degree of inflation must eventuate. This ultimately will impose hardship on all sections of the community. Further, the Government’s action also means that: New Zealand will be placed on the black list of overseas exporting countries, and it will be necessary for importers to provide cash for goods before shipment. This will further accentuate the rise in the internal price level. ‘“l’he sheep industry, which is our main industry, and which, it; should be remembered, lias provided £47,000,000 worth of produce for New Zealand in one year, will be subjected to the heaviest handicap of ail the industries, and this at a time when it is experiencing one of the worst periods it lias known. •“This accentuation of the present high cost, low price position of the sheepfarming industry will certainly not encourage that expansion of production which the Government states so earnestly that it desires. At the best, this course can be only a palliative. The problem should have been tackled at its root, anihcosts and prices brought into proper relationship. This will have to be done sooner or later if we are not to have a complete dislocation of the economic life of the Dominion.”

IMPORT REGULATION APPROVED Manufacturers’ Comment PROPER DISTRIBUTION OF DOMINION EFFORTS “It has always been the opinion of the New Zealand Manufacturers’ Federation that there should be a definite policy of regulating the importation of any goods from overseas which can be effectively made in New Zealand,” stated a comment on the regulations dealing with the control of imports and exports, which was made ou behalf of the .federation last night. "It is for the Government to decide upon the method by which this shall be done, and for the manufacturing industries to co-operate to the fullest extent. “We note that importation is prohibited except persuant either to licence or to an exemption granted by the Minister. We are gratified to observe that the Minister in his statement makes important reference to capital equipment and raw materials for the extension of manufacturing iu the Dominion. Accordingly, we presume that materials and plant required by the manufacturing industries in New Zealand. provided they are not available in the Dominion, will not merely be given a preference as to licence, but will be granted exemption under the regulations, so as to allow the greatest possible expansion of production in New Zealand for the utmost employment of New Zealanders and the general wellbeing of the country. “We feel that the work of the Minister of Industries and Commerce, Mr. Sullivan, for the fostering of the manufacturing industries will now, at last, achieve success, and the result will be a proper distribution of the productive efforts of the Dominion over the whole field of both primary and manufacturing production." IMPORTERS TO CONSIDER THEIR POSITION Invited last night to comment on the regulations as they affected imports, the president, of the New Zealand Importers’ Federation, Mr. G. W. Guthrie, said he wished to give the statement of ttie Minister of Finance and the new regulations detailed study before making tiny observations. It: is understood that the federation will meet today to consider their position