PRODUCTION COSTS

Evening Post, Volume CX, Issue 135, 5 December 1930, Page 4

PRODUCTION COSTS

MUST BE REDUCED

COALITION ADVOCATED

DAIRYMEN'S VIEWS

An analysis of the position of the dairy farmer was given by Mr. "W. Goodfellow, managing director of Amalgamated Dairies, at the annual meeting of the New Zealand Dairy Council yesterday. He said that it was absolutely essential that production costs should be reduced, and stressed the need for a strong Government which would cut down national expenses right and left. The council passed a resolution urgmg the Government to endeavour to arrange for the British Government to tax foreign, food exports, New Zealand agreeing in return to a reduction of duty on British goods. The council also decided to call on the London exporters and devise methods to prevent ■unnecessary marketing weaknesses, and strongly favoured the organisation of the marketing end of the industry with Amalgamated Dairies, or adopting some other marketing scheme. SIX SUGGESTIONS. ■ Mr. Goodfellow said that a reduction 5n costs could be accomplished by:— (1) An all-round reduction in Government, municipal, and county council expenses; . (2) A reduction in the duty of all (dairy factory and farmers' requirements, some of which were now levied as high as 20 and 30 per cent.; ';. (3) The establishment of the railways under independent commercial control, to avoid the annual deficit, whose burden, was borne by the wholo community; . (4) By suspending'the Arbitration Court and allowing a natural basis to J)e established; . (5) By removing the -duties on wheat and flour, thus reducing the cost of living, and permitting the expansion of .essential industries, such as pig and poultry production; and (6) By the establishment of a strong (coalition Government. In view of the heavy reduction in the prices of all primary produce, it was imperative that the three-party system should be terminated in order that a ptrong Government.might take office. INFLUENCE OF GOLD. . 'Mr. Goodfellow said that there was still room for considerable expansion of butter consumption in the United Kingdom, provided the price was competitive with margarine, and it was hoped that a satisfactory tariff adjustment would be made with Canada. There was no question, however, that ■tie problem facing the dairy, industry exceeded in magnitude any previous problem which had confronted the industry. There was the difficulty created by dairy production throughout the 'world racing ahead of consumption, and the further difficulty of a general collapse in world's values of all commodities. The reason for this world-wide depression was attributable to three main causes, viz., (1) the shortage of gold; (2) the restricted purchasing power of 25 per cent, of tho world's population; and (3) the adoption of exclusion tariffs by certain countries. Tlife gold shortage was due to the abnormal accumulation of gold by the United States and France. The world supply »f gold was estimated at £2,200,000,-, 000. Of this the United States and France between them held £1,200,----000,000. It was generally expected that the present Government in England would shortly go out of office, and if and when the Conservative Party was returned to power there was every probability of their tariff policy undergoing a radical change. In that event free trade would be discarded, and the policy of protection introduced, which would result in specifically reducing the importation of foreign goods by Empire countries, and go a long way toward making the Empire a prosperous, self-contained unit. . The restricted purchasing power of 25 per cent, of the world's population was;duo to-the tact that approximately .600,000,000 people in China, India, and Bussia-- to'buy imported goods, thus restricting consumption and supply.;1 :,-• One- cause •-'of.'; the- existing sluiap: was: that China was in a state of revolution, India because ■of tho Gandhi movement was boycotting Britistkgobds, and the Russian .Empire was in. ;a".etate of, chaos.' . ■ •'; ... . ■ The/adoption . of tariffs for-the exclusion of goods, not only by America, but also, in Europe, meant that practically, the whole world since the war had adopted ;a policy which' diverted world, trade into numerous watertight compartments. These tariffs had been necessary in many instances to enable foreign countries to increase their -exports sufficiently to allow them to meet the heavy. war debt ■ pi/'ments to. the United States. Such tariffs had the direct effect of excluding British goods, and at the same time allowing foreign countries to dump their surplus production, into Britain, the only free market of the world. The effect of this was that there were now at least 2,000,000-unemployed in the United Kingdom, who were costing her over ■£100,000,000 annually, thus adversely affecting New Zealand's market for primary produce. ' HOW LONG WILL IT LAST? What the dairy industry, of course, would like to know, said Mr. Goodfellow, was how long the present world depression, was "going to last; Some authorities indicated that a specific improvement could bo looked for in the ; United Kingdom in about two years' time, but there was no doubt, in Ms opinion, that the future prosperity of New Zealand would depend very largely.upon .the ability of this country to set her house- in order. In 1921 the slump was short lived, due to a.world shortage of food supplies. On this'occasion, however, the markets are amply supplied, owing to increased production! . ' The further increase in production, although'desirable in New Zealand, would only; accentuate the difficulty. The question that vitally concerned the-dairy- industry was; how it was to overcome these difficulties. "He was definitely of the opinion that the industry'- would again regain prosperity if it were given a chance to do so. That chance, however, depended upon three conditions: (1)-The definite cutting of tho cost-of production; (2) the more efficient marketing of the producers' goods; and (3) the establishment of Empire preference.