Evening Post. FRIDAY, OCTOBER 19, 1934. JUDICIAL AND THOROUGH

Evening Post, Volume CXVIII, Issue 95, 19 October 1934, Page 9

Evening Post. FRIDAY, OCTOBER 19, 1934.

JUDICIAL AND THOROUGH

Initial scanning of the Dairy Commission's report left us, as we noted yesterday, with an impression of a task carried out with conscientious thoroughness and marked capacity. Closer study of the Commission's handling of controversial issues dgepens this impression. The Commission had about seven months to make its investigation and prepare its report. But the industry lias such wide ramifications —ranging from questions of stock health to table taste and world trade policy—-that even earnest and able men comprising the Commission^ with the help of a highly skilled secretariat, must have worked with unremitting diligence to cover the ground.- But the Commission brought even more than capacity and industry to the completion of its task. The report .throughout reveals a well-balanced judicial faculty which, we believe, will influence the Government, the industry, and the public to accept the recommendations which are made. The importance of this characteristic of the report can scarcely be exaggerated. Had the Commission endorsed any single sectional programme it might have expected a sectional reception for its proposals. As it is. there is clear evidence that all interests have had due and fair consideration. There is no tendency to sacrifice the farmer, the. financier, or the consumer. The industry is viewed as a national industry* to be organised nationally for the national welfare. From some of the recommendations we feel it necessary to express a qualified dissent, and for others to' advise caution in adoption; but we freely acknowledge that the report, in its general tenor, should, and we hope will, command confidence. The Commission has guarded against 'sectionalism. Parliament and the public should follow this good example. For the dairying industry (embracing production, manufacture, and marketing) the most important recommendations made are those which deal with internal control. The Commission has reported frankly on the weakness of the Dairy Produce Control Board as at present constituted and with limited powers. There can be no denial, we think, of the revealed fact that dissension has hindered the adoption of a firm and definite policy. To remove this weakness the Commission .suggests that the constitution of the board should be altered." A different method of election will help, and the appointment of four out of eight members by the Government should provide a solid basis for team-work. With a board so constituted dairy farmers may accept without misgivings the greatly increased authority with which it is proposed to clothe a body which will give leadership to the industry. The powers suggested far exceed any hitherto exercised. They will enable the board to discipline the careless ior inefficient farmer, as well as instruct him, to control manufacture and marketing, and, in a word, to guard against the trouble which may come from individual selfishness or failure to work for the common good of the industry. This is drastic action, but the. Commission proposes to apply extensive powers of State to aid the farmers; and it is essential that there should be no suspicion of this aid serving as a cloak for inefficiency within the industry. With such reorganisation and extension of control through the Dairy Board one may be doubtful at first of the proposal for a permanent executive Commission of Agriculture which may seem to overlap the board. The explanation given of the functions and powers of this Commission, however,* shows that it is primarily intended to serve as a connecting link between the various produce boards, between those boards and the Government, and, most important of all, between the producing industries and overseas markets. There can be no doubt that producer control has discouraged the merchant whose business it is to find and develop new markets. Unless full freedom and encouragement are to be given to. the merchant some organisation must undertake the work which he did in years past. It is reasonable that the organisation proposed for this purpose should represent all forms of export production and that it should have authority to influence local production. But we would suggest these points for consideration:. (1) Are the overriding powers proposed desirable 2 especially at the outset? (2) Should the Government bear the large part suggested of the cost, or should this, at least eventually, be a charge on the industries served? (3) If this new council is to be constituted should it not replace or absorb some existing departments and bodies set up to deal with similar iratters? We do not wish to suggesi that the work should not be undertaken. It must be clone, and there is evident need for expert guidance in negotiations to preserve existing markets or make new selling bargains. The local market comes in a dif-

ferent category. The Commission itself appears to have been interested in this chiefly as it may be affecled by the rationalisation plan. There are, we feel sure, possibilities for expansion in the local demand for milk, cream, and cheese. The Commission, no doubt, expects that a reconstituted Dairy Board would give this its attention. Rationalisation of butter marketing would not increase consumption, but would, presumably, partly eliminate competition and price-cutting. The Commission has not approved of a Paterson Plan for subsidising export and it expressly states that its scheme would operate "without material alteration of the local price level in relation to London parity." Nevertheless the scheme is to yield £240,000 annually to finance work for the dairy industry. Elimination of wasteful competitive methods may yield part of this, but we do not. see how all of it can be accounted for without some alteration of price. The Commission itself recommends that when butter reaches 100s a cwt in New Zealand currency the consumers should have the whole or part of the saving— a recognition that the consumer will, in the meantime, be subscribing to the fund. We admit, that the proposal is moderate compared with the Australian example and some plans that have been put forward. Yet we dislike it. If London parity is once abandoned, even though the alteration be not "material,", who is to prevent a greater departure? The board fixing wholesale prices, it must be remembered, will be dominated by direct representatives of the dairy industry and will have no consumer representation whateven There will be no possibility of outside competition. The financial proposals of the Commission are most far-reaching. They will affect not only dairy-farm borrowers, but all other mortgagors and all other investors. Full examination of the principles and possible results cannot be made in a short space, but attention may be briefly directed to the . following points: The element of compulsion is to be maintained, as the mortgagee's right to object to the transfer of his security will hold only for a year. This compulsion is extended' by empowering the Court to divide the security, part being pronounced sound and part possible of liquidation if transferred' to a suspense account (but without a guarantee of liquidation). Budgetary supervision will be imposed on mortgagors who have the benefit of this provision. A check on speculative selling will operate by making all Corporation mortgages due on transfer unless the Corporation approves the transfer. Interest on bonds and mortgages will be revised triennially to keep bond-value at par (not according to the return from produce). A Government, guarantee and initial Government subsidy and grant are necessary to establish the scheme. This means that farmers' debts will be, in effect, written down, with some hope held out of recovery of part of the sum written off, but no certainty. The Government will charge itself with heavy expense and heavier liability by becoming the guarantor of every rural borrower (for this scheme cannot be restricted to dairy farmers). The Commission has recognised objectionable features inseparable from compulsion and refinancing under Government guarantee, and has endeavoured to remove them. Nevertheless, when, as frankly .admitted, compulsion has contributed so much to the present difficulties, it is gravely doubtful whether more compulsion will correct them. And when the Government has incurred heavy liabilities by extensive lending is it likely to rehabilitate itself by guaranteeing even more?