BUTTER PRICES

Evening Post, Volume C, Issue 91, 14 October 1920, Page 7

BUTTER PRICES

INCREASE TO 2s 3d LB. CASH

SUBSIDY FROM CONSOLIDATED ' FUNB

TO STAND UNTIL 31ut MARCH,

(1) That in view of the fact that no restriction has been placed on the prices of wool and other products of the Dominion, it is of opinion that the dairy farmers are entitled to the full benefit of the market price of butter, and recommends that a. sufficient quantity of butter (to be taken from the whole Dominion) should be requisitioned for the requirements of ' the population at two • shillings and sixpence per pound, f.0.b., this being the amount of the Imperial Government's offer. (2) Having carefully considered the price to be charged to the consumer, recommends that the retail price be fixed to the 31-st day of March, 1921, at 2s 3d (two shillings and threepence) per lb for cash, and 2s 5d (two shillings and fivepence) booked. Note.— The estimated cost of fixing the price on this basis will be £600,000. (3) That it does not recommend an export tax on butter. (4) And having considered the question of the introduction of margarine, resolved to make no recommendation thereon. The Butter Prices Inquiry Committee, to which was referred the question of the present and future prices of butter in the Dominion, made the above recommendations to the House of Representatives yesterday. "The increased price of butter does not improve the dairy farmers' position from the producing point of view," said Mr. J A. Nash (Palmerstcn North), in presenting the report, "because the cost of production is now more than double what it was before the war." Mr. J. M'Combs : "That is not the finding of the committee." Having traversed the evidence given before the committee, Mr. Nash said the question of an export tax had been considered by the committee, and a number of witnesses who spoke from the point of view of the consumer had been strongly in favour of such a tax for butter Then would follow a similar tax on cheese and other products. The committee had decided to report against any imposition being put on the farmer in that respect, and .he personally hoped such a thing would never be done in New Zealand. Witnesses from the producers had been unanimously of opinion that the farmer should get the full market price for his butter; that was, the price offered by the Imperial Government. . The findings of the committee had , not been unanimous, and, unfortunately, four members had been unable to be present at the final meeting; that morning. The Minister of Finance had not been prepared at first to find the required amount for subsidy, but he had a happy knack of finding a way in the end, and he had done so on this occasion. Mr. L. M. Isitt : "Take it out of the totalisator." NEW ZEALAND'S POSITION. Mr. Nash : "I will leave it to the Minister of Finance to tell you how he intends to get it." To show that New Zealand would still be better off than other countries in regard to the price of butter, quoted the following prices ruling in other countries :—Great Bri iain, imported butter 3s, home-made 4s 6d; Canada, 3s; Western Australia, formerly 2s 6d and 2s 7d, now 2s lOd ; Victoria, and Queensland, with its Labow Government, and New South Wales, all 2s lOd. New Zealand, as usual, was on top at 2c 3d. The new price fixed was until 31st March. Being 2s 6d a lb f.0.b.. it meant 2s S^d at the factory, while the £600,(00 the Minister had agreed to find reduced the factory price to about Is ll^d. That would leave a good margin of profit- for the retailer. The committee had also considered the question of introducing the use of margarine. Margarine in Great Britain represented 75 per cent, of the consumption of edible fats. It had been suggested that margarine might be introduced in, New Zealand with 15 per cent, of butter for cooking purpose?, but the committee had reported adversely on this. It had been reported to the committee that there was still some 19,000 boxes of free butter in the cool stores. Instructions had been issued that this was to be sold at the prices ruling lastseason. "LACK OF FORESIGHT." The Leader of the Opposition (Mr.,T. M. Wilford) contended that the cause of the high cost of butter was primarily the high price of land, and they might turn that about .and say thf:t the high price of land was caused by the increased price of produce due to war conditions. That applied especially to land purchased after the war began. The, present necessity for a raid on the Consolidated Fund was caused by the want of foresight on the part of the Government in failing to take a substantial contribution from the profits made in the *sale of land, and establishing therewith a stabilising fund to use in such cases as this. The Government should have taken a part of the proceeds of the sale of land at increased prices clue to war conditions. Mr. Massey : "Absolute nonsense." Mr. Wilford : "I don't expect the Prime Minister to agree with anything I say, and we may as well take it as read that he considers it absolute nonsense." , Mr. Massey : "It is." Mr. Wilford went on to say that the failure to take a. contribution from those who went out of farming—not those who came in—meant that the whole of the burden had to be borne by the present farmers. There was nothing to be done now but to meet the present position ac it was proposed by the Committee; but the necessity for tha.t arose only from the absolute want of foresight on the part of the Government and the fact that the I Government was bankrupt of constructive statesmanship. It was an economic- ] ally unsound policy to take grants from the Consolidated Fund in this way; but no one could deny that it was necessary, to follow this course now. There should, if the policy he outlined had been adopted, have been no tax on the man who continued to farm his land, but as soon as he. sold it he .should pay. He believed that the price recommended by the Committee was still too high. It should not be more than 2s. The Hon. W. Nosworthy : "Make it Is 6d and stop the argument." Whatever money was required to enable the people to obtain the butter, continued Mr. Wilford, shoiild 'be taken from the Consolidated Fund ; but he repeated that tin's necessity should not haw urispii if the Government had not been lacking in foresight. LESSER Ol>' TWO EVILS. The Prinio Minister said that Mr. Wilfovd's statements were extraordinary. Everyone knew that the high price of butter was due to tin? extraordinary demand from Gre.it oritaiij. As to the allegation of the lack of constructive statesmanship and foresight, the Government had -done a. very greui deal to

keep down the prices of necessaries. It was owing to tne foresight of the Government in making arrangements ahea,d for the supply of butter for the winter months that the people of the country had been saved no leas a. sum than £253,----454.

Mr. Veiteh : "That was not foresight. It was a late autumn."

Mr. Massey : "I am surprised at the lack of intelligence shown by the people of Wanganui m sending -a man who can express that opinion to represent them." (Laughter.), Mr. Massey said he was not inclined to disagree with Mr. Wilford's opinion that it was load economic policy to make such grants from the Consolidated Fund. As Minister of Finance, he did not like it. Great Britain two years ago was paying £50,000,000 per annum to keep down the price of bread. He did not iike the policy, but it was the lesser of two evile. He commended the work done by the Butter Committee, and especially the chairman. The Committee had collected a great deal of valuable information, showing the people the long hours that the farmers had to work and the low rate of return they received for their labour. He believed that, speaking generally, even with the higher price of butter, the dairy farmers would be the worst paid of any people in the community.

Mr. Forbes : "What about the price of land, £200 an acre? Has that nothing to do with it?"

The Prime Minister said that the price of land for dairying had gone up, and some of it had been sold, he believed, at more than its value; but the great bulk of the butter produced for this countrywas not produced on that high-priced land-

Mr. Isitt: "Then the farmers ought to get sufficient without the increase.' *. The Prime Minister said that the price of butter had very little to do with the high price of land. Dried milk had been a more important factor in raising the price of land. He did not know whether that was going to be the success that some people believed. He hoped the farmers would come out of it all right. With regard to the price of butter, tine farmers, as well as everyone else, desired to obtain the full market valuie for the produce of their labour, and they were entitled to it. It was in the interests of the country that they should have ifc. In the early stages of the war a- price for wheat was fixed. The farmers wanted r free market, and though he- thought the price was a fair one, it had discouraged the growing of wheat, and ever since the Dominion had bean unable to supply its own requirements. If they attempted to interfere with the market price of butter, the same thing would happen, and in half a dozen years they mignt be importing butter, instead of exporting it. EXPORT TAX UTTER FOLLY. An export tax had been suggested, said Mr. Massey, but in. a. country that depended on its exports, such a thing would be utter folly. An export ta.x discouraged production. There were 4500 returned soldiers *settled on dairy farms. Would any member of the House say that those men were not entitled to the full value of their produce? Another suggestion was that they should stand by and leave the market to find its own leyel. He did not like interference, bub in" this case he thought it was necessary.» -There was only the one course left, and that was to grant a subsidy. He had looked forward to a redaction' in taxation, but the prospect was steadily growing less. Revenue would have to be found to meet this subsidy, arid ha hoped to impose the taxation in a way that it would not be passed on. He had consulted the. head of the Treasury, and believed that a way could be found of doing this. The contract with the Im--perial authorities was to the end of March, but. it was probable that the Government would havt to continue the subsidy for some time after that, though perhaps in a modified form. The £600,----000 proposed would, be the contribution! for twelve months. It would mean that the Government would divide the increase with the public. Increased taxation, he wished to point out, was generally passed on to the public in some way or other. Mr. Masters : "Put it on the death duties." The Prime Minister said that no one, seemed to grumble about the price of milk, though so much was said about the price of butter. There was immediately a chorus of dissent from city members. Mr. Fraser : "It was the price of butter that put up the price of milk." Mr. Massey : "Isn't it the price of milk that has put up- the price of butter?" (Laughter.) He understood that the Wellington City Council was paying about Is 7d a gallon % for milk. Taking the price at Is 6d. a, gallon, that was equivalent to a prim'of 3s 8d alb for butter. The City Council was prepared to pay Is 7d,"and he understood that the Hospital Board was paying even more. He did not doubt that the council and the board had done, their best for the public, but the fact remained that they were prepared to pay this., which meant morei than the return for butter.

Sir. Fraser : "It was based on the butter-fat price, with a halfpenny a, pound more."

The Prime Minister said that he did not wish ta go into the details. He had only quoted that as an example. He concluded by stating that it was his desire to see every man get the full value for his labour, whether he worked on the wharf, in a mine, or on a dairyfarm, and the price of butter was the dairyman's wage. He was giving instructions at once to the Dairy Division to carry into effect the recommendations of the committee. He did not know whether the arrangement coufd be made in a day or two, but there would be no unnecessary delay.

Mi. J, M'Combs (Lyttelton) said that he had proposed to the Committee a scheme under which the retail price of butter should bo Is 9d per Ib, or packed and delivered Is lOd, and that an Equalisation Fund should be created by a levy of S per cent, addition to land and income tax. and an increase in stamp and death duties calculated to produce the equivaJent of 5 per cent, on the total stamp and death duties. Under this scheme, said Mr. M'Combs, he had produced a scale of the amounts that would be paid. A man with £1000 a year income would only pay S3 10s 8d to this fund, and other incomes in proportion. Mr. M'Combs said that the opinion expressed by the Chairman of the Committee on the cost of production were his own deductions from the evidence of witnesses, and not those of the Committee. As a matter of fact, the Committee had npt gone into that matter, The balance-sheets showing the cost of production had teen so varied and so divergent that it had been useless for purposes of any reliable expression of opinion. A great deal of the fluctuations had been the result of the inflated pre-sent-day values of land.

The debate was interrupted by the dinner adjournment. Subsequently the Prime Minister announced that he would allow the debate to be resumed this afternoon.