GRAVE POSITION

Evening Post, Volume CXVIII, Issue 94, 18 October 1934, Page 20

GRAVE POSITION

COMMISSION'S FINDING PLIGHT OF FARMER

UNABLE TO CARRt] ON

Although the summary of conclusions arid recommendations f{!ven at the end.'of the report, does : note by any moans cover all- the points ...fl £jalt -with by the Commission, sufficient .as stated to give an indication of 11k. serious view taicen'by the Commission a of the plight of the dairy industry. j*The Commission states that the conditions confronting the New Zealand d:|iry industry have assumed the proportions of a national crisis. I The Commission reaches (the following conclusions:—- , j i. The conditions confronting the New Zealand dairy industry' have assumed the proportions oi? a national crisis. The gravity of (-the position is revealed in the present Juhndon quotations for New Zealand'dairy produce, which are so low that faijuiers must expect a correspondingly jfower pay-out f6r the current season; (Jaau they received last- season. / 2.. Those dairy farmeijs who found it difficult to' carry on a firing tho past two seasons with aa (average pay-out of approximately 9d |>er pound will find it impossible to njjteet their full interest charges from /a lower pay-out. The number of farmers who can produce butterfat and mpet' wages nnd living expenses and 'provide any interest surplus on a substantially lower payout is_ negligible.;"' / ' 3. Unless early flnd effective nic.'isures are taken, ihe result will bo a general brcakdif>vn-of tho financial relations, of mor*ygagors and mortga-

gees in the Dominion, and consequently it will become difficult, probably impossible, for New Zealand to meet in full its overseas interest charges. .4. The critical position in regard to prices has been brought about through the flooding of the United Kingdom market by the dumping of subsidised dairy produce from the Northern Hemisphere and Australia, and by the increase in our own supply. 5. New Zealand's position is aggravated by the facts that no markets of importance outside the United Kingdom are available to us at the present time, that such new markets as might be. developed could not possibly be immediately profitable, and that the possibilities of increasing the local consumption of dairy products are very limited. 6. Diversified and supplementary production on dairy farms oifers. little or no prospect of relief owing to the prevalence of external trading restrictions and quotas. 7. The general conclusion in regard to the external aspects of the present problem is that an early approach must be made by the Government of New Zealand to the Government of the United Kingdom to arrive at a preliminary understanding and provide a basis for further negotiations. 8. The general conclusions in regard to the internal aspects of the problem are that immediate action must be taken by the Government of New-Zea-land to stabilise the financial position of dairy farmers and that, as a means towards the evolution of a long-term policy of reconstruction, the industry must be reorganised. The major recommendations of the Commission are as follows:— 1. We Te'commend the setting up at an early date of a Rural-Mortgage' Corporation, through which farmers will bo able'to obtain long-term mortgage credit at the lowest current rates of interest and on easy terms of repayment. The recommendation provides for existing mortgages being taken over by tha corporation in exchange for bonds carrying a State guarantee for the payment of interest. It is recommended that the. rates of interest payable on bonds and on mortgages shall be adjusted triennially, in order to . afford to bondholders the current

rates of returns on Government securities and to give to mortgagors the benefit of the lowest possible current rates of interest. The recommendation makes- provision for the taking over by the corporation of existing mortgages, and for differentiating between the sound and the less sound portions of mortgages taken over by the corporation. It is proposed that the portions against which bonds cannot be issued be placed in a suspense account, and that the farming operations of thoso mortgagors whose surplus indebtedness is so dealt with be efficiently supervised in their own interests and in the interests of their creditors. The setting up of expert bodies is recommended fof the purpose of .ascertaining which, farming propositions are basically sound, ' and arranging compromises with mortgagees and other creditors where necessary.

2. In the belief that the factors of efficiency of production and quality of product are of paramount importance in meeting competition in oversupplied markets, and building up an increasing preferential demand for New Zealand dairy produce, we recommend that early steps be taken to improve its quality, and.. that the Government make available, at low rates of interest, to. farmers and dairy factory companies sufficient funds to enable farm and factory equipment and appliances to be modernised and rendered efficient for the production and manufacture of dairy produce of the highest possible quality. We also recommend a comprehensive attack on animal diseases, which at. the present time are the cause of considerable direct loss to the industry and have a bearing on tho quality of dairy produce. We further recommend that farm and factory instruction, roseareh work, and herdtesting be placed' on a sound basis, with the object of giving the dairy industry all possible assistance towards efficient economic production. In order to provide part of the finance required for the improvement of quality, wo recommend that the Dairy Produeo Control Board be empowered to control the local marketing of butter and cheese," and thereby to save, for the benefit of the industry as a whole, a large sum.that is lost annitalIly through wasteful competitive practices, which are considered to be spc-

cially undesirable in a co-oporativcJy organised industry.

o r In order that the dairying industry may be efficiently organised in all its phases and operations—-instruction, production, manufacturing, and local and export marketing—we recommend the setting up of a new Dairy Produce Control Board with a differeni constitution and wider powers than that of the- present board. It is intended that the new board shall be so constituted and bo given such powers as to enable it to deal effectively, in tho interests of producers and of the State, with all the activities and problems of the dairying industry.

4. With tho object of providing an organisation competent to deal with the wider aspects of farm production and the marketing of our primary products generally, we recommend the setting up of a co-ordinating body, which will function as a permanent executive Commission of AgricultUße, to advise the Government on all matters relating to production and marketing, and coordinato (and where necessary control) the operations of the different produce boards. Co-ordination of effort is necessary in matters such as the penetration of. new markets, in which all our primary industries have a common interest, and it is equally necessary in matters such as restrictions "on tho \ export of bobby veal, boned beef, and pig meats, in which the interests of two or more primary industries may conflict. Should other trade negotiations fail, the council will be an appropriate body to assist in negotiating barter agreements . with other countries. ' '

5. We recommend that a confidential investigation be mad' at an early date into the whole system of the marketing of New Zealand dairy produce in- the United Kingdom, with a view to evolving a system tha*- will enable the possibilities of that market to be more fully exploited, and an increased preferential consumptive demand built up for New Zealand dairy produce. We recommend also that the possibilities of foreign markets and of diversified production be further explored. 6. Wo recommend that tho Government of New Zealand take an early opportunity of conferring with tho Government of the United Kingdom as to the extent to which it is desired that the production and manufacture in the United Kingdom of dairy produce should expand, and that, after a preliminary understanding has been reached, the Government of the United Kingdom should be requested to arrange a conference of representatives of countries exporting dairy produce, in order to decida a course of action for tho future. In the event of imports of Empire dairy produce being subjected by the. Government of the United Kingdom to quota restrictions and/or Customs duties, we recommend that full representations should be made regarding the special claims, of New Zealand for preferential treatment. .- . 7 Tho foregoing paragraphs summarise our principal recommendations. We have also made recommendations rogarding means for effecting economies in the collection of cream supplies for factories, for increasing the consumption of liquid milk and cream, and for other matters. These have been dealt with in appropriate sections of this report. . 8. In the opinion of the Commission, it is necessary, that these recommendations should be regarded as interrelated and interdependent and that eflect should be given to them without delay. It is recognised that some time must necessarily elapse before a new Dairy Produce Control Board can function, but it is regarded as urgently necessary that the suggested Council of Production and Trade should be. set up at as early a date as possible in order that problems requiring immediate action may be effectively dealt with in the national interest.