A WARNING TO BE HEEDED

Dominion, Volume 34, Issue 136, 5 March 1941, Page 8

A WARNING TO BE HEEDED

Plain speaking to New Zealand is contained in the circular letter (published on Monday) from the Reciprocal Trade Federation of the United Kingdom to various local bodies in this country. The letter is devoted principally to an exposition of the danger lying ahead of the present Government’s so-called “insulation” policy. It points out that the post-war adjustment of trade between Britain and the Dominions may involve New Zealand in a heavy fall in prices, particularly in respect to butter, and it suggests .in sb many words that the curtailment of reciprocal buying of British manufactured goods for importation into this country will discourage British consumers from going out of their way to swing over from low-priced, high-quality margarine to our butter. In one respect the views expressed in the letter fail to do justice to the spirit of Empire co-operation manifest in this country. In commenting on the dissatisfaction with which New Zealand dairy farmers .are regarding their position, sandwiched between fixed prices and rising costs, the letter states:

The British farmer gathers that the main grumble in New Zealand - dairy circles is the failure to increase the guaranteed price, and, from what can be gleaned here it looks as if what will happen is that Britain will be asked to pay New Zealand a higher price to meet increasing New Zealand production costs. This is not true; at least there has been no evidence of its truth. The farmers of New Zealand have never asked that the burden of their costs should be passed on to the British consume: in his time of travail. What they have asked for is that the Government should either increase the return to farmers in order that increased costs may be more equitably allowed for, or bring down internal production costs to a level commensurate with the fixed rate of return. The Government for its part continues, very properly, to accept the problem of rising production costs as a wholly domestic one, which cannot be met either fairly or safely by any attempt to readjust prices on the wartime market of the United Kingdom. The valid warning embodied in the letter concerns the future —the post-war —worth of our overseas dairy-produce sales. The Reciprocal Trade Federation argues, and probably soundly, that New Zealand will require to spend much more on advertising, and sell considerably cheaper, in order to regain her place in the United Kingdom market after the war; Such a programme would mean permanently reduced returns for our dairy produce and it may so happen that similar reductions of a more or less permanent character may affect other major exports, notably meat. These changes maj prove inevitable and unavoidable. And it should be our prudent duty, as a far-seeing community, to prepare for a reduced national income by instituting a greater restraint in our national spending in non-productive directions. A London balance, swiftly depleted a few years ago, has been partly restored by drastic import restriction. But this policy if carried into the post-war period may not only antagonize a new, warchanged generation of overseas customers, but also restrict our contacts with manufacturing and mass processing so severely that our living standard, by comparison with standards overseas, will be automatically reduced. The sound future way is not by insulation, which may threaten us in a changing industrial world with a very real isolation. We should prepare now for a time when we may be compelled by circumstances to enter a fiercely-competitive market for our products and to provide an equally competitive field for the products our neighbours are in a more favourable position to supply in cheap, improved form.