BUTTER SUBSIDY

Evening Post, Volume CXVII, Issue 65, 17 March 1934, Page 10

BUTTER SUBSIDY

MEANS MORE BUTTER

LESS PRICE OVERSEA

BUT MORE PRICE HERE

"Wheatfielder" writes to "The Post":— New Zealand dairy farmers call for higher prices, and they call for relief i until they get higher prices. But must not relief maintain, or increase, production? And is not reduced production the- only road to higher prices? SAVING THE MARGINAL PEODTTCEE. A.few weeks ago the British Government produced a scheme of financial relief for its own dairy farmers—a standby until the British Government is free to introduce the quota. In the end, probably, the British dairy farmer will secure both. That means that, although the British Government insists that its policy is "planned production" as well as "planned marketing," production, of milk within over-supplied Britain will not fall, and will probably rise. Likewise, in New Zealand, the dairy farmers' demand is for things that will save the marginal farmer and increase production. ' As each Government rallies to the support of its marginal producer, uneconomic production tends to increase, and prices to fall. Lately the "Sydney Morning Herald" wrote on the operation of this fallacy with regard to wheat. The article could apply, mutatis mutandis, to dairy produce. "The wheat grower is but one1 victim of the world-wide economic war, '.'■' writes the "Herald," and it adds: "Wheat exporters are producing more than world buyers, under the ■ doctrines of national. economic self-sufficiency, can absorb. Abnormally high tariffs in former wheat-importing countries have made it possible, even necessary, to grow wheat' or grain substitutes for home consumption at costs which, under conditions of free exchange trade in wheat, would be impossibly high. The correction of these insane restrictions upon trade is quite beyond the powers of any ■ one Government, as Canadian wheat-pool members have admitted." BUTTER PEICES—POLITICAL AND ECONOMIC. Compare with this the enormous differences between the prices of butter in London (655), in Berlin (184s), and in Paris (2385), quoted this week by /'The Times." Do the Berliners and the Parisians eat butter or "substitutes? How can internal price-support, in New Zealand, of New Zealand butter, alter thp policy of countries that make butter impossibly dear for their own people; or of countries which, while not doing that, yet operate similar measures for "relief" (and therefore for sustained production) as wo contemplate ourselves?

"In the United States (adds the 'Herald') the attempt to restrict production by. compensating farmers for acreage left unsown, arid to raise prices by artificial means, has so*far failed; and any reduction of yield effected is the result rather of poor seasons or the sheer inability of growers to carry on. So long as wheat-exporting countries will continue annually to: glut world marfiets with grain, no political action can avert the consequences; A senior official from the Commonwealth Department of Commerce gives evidence that the Australian f.o.b. price of wheat has fallen from a range between 6s 9d and 5s in the five years ended 1929, to 3s in 1930-31, and is now about 2s 7d. Since 1931 direct Assistance to growers afforded by the community through Governments in augmentation of low returns has amounted to about £8,500,000. Even that has not been enough." ' PRODUCTION: THE WRONG EFFECT. Tar from raising prices, this policy has raised production, arid the following is worth the attention of dahy farmers and of all other producers bent on treading the same road:—''Subsidising of wheat farming in this way cannot be continued, especially when it is revealed that in the depression period the acreage planted in New South Wales actually increased by 30 per cent. That entirely wrong movement has only made the general position worse than it need have been." But now. the New South "Wales Director of Agriculture has declared that planting in the State will be' reduced, this year by 25 per cent, in th^ acreage sown. The "Herald" comments:— ''On the statistics already quoted that would seem both essential and natural It is idle to bemoan the passing out of wheat on this surplus acreage; there is no other remedy for such over^planting. The efficient farmer has already begun to turn to sheep raising arid other lines. After all, this is precisely what, every industrial undertaking is obliged to do in its own sphere under changing modern conditions.'' ; . Those who wish to raise the internal price level (that is, to make the New Zealand consumer of butter pay more in order Jthat the oversea consumer of New Zealand butter shall pay much less) should listen to this obseryationon the proposed raising of the price of wheat in Australia:—"The. 'creation' of a domestic price at least 30 per cent, above that ruling today is propounded as a remedy. Even if that were possible, the effect could only be to maintain excessive production. If farmers have been induced to plant more wheat while the price was falling, how could they refrain from doing so on a rising market? - 'No Australian who cats bread, runs the argument quoted, 'should object to paying cost of production plus a fair profit to the farmer.' Maybe, but not for bread he does not eat—that is, for wheat exported at a huge loss. From that stand, also, many farmers would be forced out of business." STARVING—TO SEND FOOD TO - OTHERS. ■Highly protected consuming countries in Europe are eating margarine because they insist on "relief" for their own dairy farmers; but their dairy farmers at least sell for the most part in their own country, to those of their own people rich enough to buy. It would be still more absurd if the New Zealand consumer was forced on to margarine in order to allow his dairy farmers to feed not merely rich. New Zealanders, but to feed people, living far beyond our boundaries, at a losing price to ourselves! "