DAIRY CRISIS

Evening Post, Volume CXVIII, Issue 105, 31 October 1934, Page 4

DAIRY CRISIS

EMERGENCY BILL

COLD BECEPTION

LABOUR'S AMENDMENT

IMMEDIATE ASSISTANCE

The reception'accorded ..the Agriculture (Emergency Powers) Bill when it came before the House of Representatives yesterday for second reading was anything but friendly. Apart from the Minister of Agriculture (the Hon. C. E. Macmillan), who is in charge of the measure, there was only one other Government speaker, Mr. W. J. Poison (Stratford), and'he spoke strongly against the Bill, indicating that he would vote for the amendment moved by the Labour Party. The Labour amendment urged that immediate financial assistance should be given to the dairying industry. The debate was unfinished when- the House adjourned at 11.45 p.m. In moving the second reading of t!ie Bill, the Minister of Agriculture paid a tribute to the Commission for ilic comprehensive and capable report it had submitted to the House. Apart altogether from the Commission's report, he said, it would have been uccessary for the Government to have introduced some legislation for the purpose of having marketing properly controlled, and of bringing a measure of relief to the dairy fanner. The Government had reversed the usual process of introducing legislation and then referring it to the industry for consideration. It had set up the Commission for the purpose of finding out the ■ views of the industry, and had then framed legislation based on what the industry required. It had become increasingly obvious that some central body was required iv order to carry out improvements in the marketing of Kew Zealand produce. Powers to do this were not at present held by the various control boards. As an instance of this he referred to the recent lifting of the prohibition of export of New Zealand apples to America. When the embargo was lifted there was no organisation that could undertake the opening up of the American apple market. The Execu' tive Commission of Agriculture- would be armed with the necessary powers to do that. Mr. W. E. Barnard (Labour, Napier): Does that mean that the Fruit Export Control Board has failed in its duty? CO-ORDINATION OF EFFORT. The Minister: The various boards have been doing all they possibly could under the authority they were provided with, but they cannot do what the law says they cannot do. It is in the bet' ter interests of the farmers and the community generally to co-ordinate efforts to open up new markets, and to give extended powers to one board. I am convinced that the various boards will work harmoniously together in spite of what has been said to the coutrary. We found, also, that the Minister of Industries and Commerce discovered that there was "a possible trade for onions in Canada, but it was absolutely impossible for any private individual or farmer to carry on that trade except under some system of Government guarantee. A guarantee was given, and there has been quite a small measure of success. There is also a market in Uruguay for seed and table potatoes, but quarantine restrictions come into it. No private individual can possibly arrange quarantine regulations. MARKETS FOR BEEF. The". Minister went on to say that beef growers in the Dominion were getting very restive, and were asking that fresh markets should be explored. It would be the duty of the Executive Commission of Agriculture to explore those markets. It had also been said that there might be a considerable market for lamb in Canada, and '-iris was another point that could be investigated. They could at least endeavour to educate the people of Canada up to a taste in New Zealand lamb. Mr. H. !G. Dickie (Government, Patca): Why hasn't the Meat Board done it already? The Minister: The 'Meat Board nas not the authority. .The levy that the Meat Board collects is not sufficient to enable it to take up the question of new markets. The proposal in this Bill is to give the Government the right to make that up. Mr. A. M. Samuel (Independent, Thames): Must there be a Bill to do that? The Minister: Yes, there must be a Bill. Referring to the question of production, the Minister.said that it would be found that there was very little suggestion in the Bill or in the Dairy Commission's report that the conditions prevailing as between the Dairy Division of the Department of Agriculture and the dairy producer were being interfered with. THE DAIRY BOARD. Mr. Macmillan proceeded to outline the history of the Dairy Board. When tho Daiiy Board,was established in 1023, it consisted of nine elected members and three nominated members. The nine elected members were all pledged to absolute control. Mr. W. E. Parry (Labour, Auckland Central): Is that tho board that the Government smashed? The Minister: The Government did not smash the board. If the hon. gentleman will listen he will find how the changes occurred. In 1926 the board put absolute control into effect, and after thirteen months abandoned it. Mr. Parry: The Minister smashed it. Tho Minister pointed out that the suppliers had boon responsible for the changes. Today there was only one member of the board in favour of absolute control. Ho was not blaming the members of the board for the failure of absolute control; what had happened was that they had chosen an unfortunate lime to put it into operation. One of the biggest coal strikes in tho history of England was in progress, and us a result the purchasing power of thn English people was reduced t.n such an extent that, there was little domfind for butter. When absolute control wns abandoned, he had suggested that, all secretaries of dairy companies should submit their accounts to the board so that an analysis could be made showing the agents which had received the best prices for the producers. One of the biggest companies had refused to com© in, the scheme had failed, and a great measure of cooperation had bben hopelessly lost to tho industry. CRYING OUT FOR NEW BOARD. Tho Minister said thnt the facts which had come to his notice led him to the definite conclusion that the dairy industry was crying out for the reconstitution of the board. Of courste, there were those who held the opinion that there should be no Government representatives on the board, but his yieiv was that the proposals submitted

in tho Bill were such as would mset with tho general approval of those vitally concerned. Those people who objected to Government representation were apparently prepared to submit the rest of the people to taxation with-J out representation. To leave to itself an industry that held its own destinies entirely in its hands was quite in order, but when an industry was receiving assistance from the rest of the community, that industry had to submit to some measure of control. The people who were supplying the money should have a say in the conduct of the Industry. Mr. W. J. Poison (Government, Strut ford): It all depends upon how much money you arc going to find. Mr. Samuel: Docs not, the supreme council impose taxation on people who have no representation? The Minister: No, except in tho sense that the Government agrees to find, out of tho Consolidated Fund, money for the purpose of developing new markets. The Minister said ho was convinced that the method proposed in the Bill would give ;i considerably better representation than tho present method, lie wont on to say that there was a good deal of unnecessary alarm about tho functions of the supreme council, which, lie said, was to co-ordinate tha various boards. Mr. Samuel asked the Minister if the Bill held out any immediate assistance for the dairy fanner. The Minister: The hope of financial assistance is contained in several pages of-this Bill. 1 explained this the other night, but the member for Thames was not in his place. Mr. Samuel: I wasn't playing bridge. A JOB FOR NEXT YEAR. The Minister .said that a supplementary order paper would be brought down fixing tho interest that could bo charged by Government lending institutions on money advanced to fanners. The whole matter of mortgage relief would be gone into in the New Year. 110 had no hesitation in saying that 90 per cent, of the dairy farmers of the Dominion carried out their business quite satisfactorily, but there were 10 per cent, who did not. The Minister said that the provision of £500,000 for dairying improvements would be welcomed by a number of farmers who were not in a position to finance essential improvements to their property. Mr. 0. A. Wilkinson (Independent, Egmont): What will the rate of interest bo? Tho Minister: That is a detail I am not able to tell you at present. Mr. Poison: Rather an important detail. The Minister: It is most important to have conditions improve. Before the Minister concluded he was asked by Mr. Poison if he would clear up a point as to whether the central council could override the decisions of tho Dairy Board. The Minister: With the approval of tho Government it can. Mr. Poison: It has to consult the Government first? The Minister: Yes, I should say so. A HOSTILE AMENDMENT. The Leader of the Opposition (Mr. M. J. Savage) moved: — That this House refuses to give n second reading to a Bill which fails to make provision for immediate financial assistance to the dairy industry. Mr. Savage said that, while the Commission was entitled to praise 'for its extensive survey of the industry, it had overlooked the outstanding influence in tho economic development of the nations, namely, machine production. When tho nation:: faced up to the fact that in bygone days human labour was employed and paid for to a greater extent than it was today in the production of goods and services, there would be some hope for tho solution of the problems facing the farmers and others. Tho machine had multiplied its output many times in recent years, but at the same time it had displaced the purchasers of goods, and no serious attempt was being made to make it possible for tho people to buy the increasing product of the machine and science. Unless buying power equalled total production, there could be no solution of marketing problems. Although improvements in quality had been referred to as a means of increased marketing, it was difficult to believe that the disparity between the price of New Zealand and Danish butter was duo to quality alone. It seemed as if the increased rate of exchange, which limited the Dominion's purchase of British goods, was playing a major part to New Zealand's disadvantage as sellers in the British market. The Commission 1k«1 pointed out that in spite of increased productivity 50 per cent, of the dairy farmers were unable to meet their commitments. Surely the time had arrived for a complete transformation in the production and distribution of dairy products. It had been stated that tho general fall in prices had been due to the huge increase in supplies, but that statement covered only part of the story. No one would say that the British people wero fully supplied when it was realised that millions were getting loss butter and other necessaries than it took to make up a reasonable standard of life. The tragedy was that a substantial number of people thought that either production must be reduced to make it fit in with a short supply of money, or that a war must be started in order to provide an excuse for using the public credit to increase the purchasing power of the people. The recommendation that negotiations repecting trade agreements and tariffs should bo opened with Eastern countries was fraught with difficulties, owing to tho lower standard of living in Eastern countries. There- was ample room for increased trade with other parts of tho British Commonwealth. . INEVITABLE READJUSTMENT. Mr. Savago said that it was stated in the report that "tho Commission found early that the only available alternatives for providing substantial immediate relief to dairy farmers were either some form of subsidy or some form of refinancing." That conclusion had been reached once the Commission had agreed as to the inadvisability of further statutory reductions of principal. "It is quite clear to those who have given any consideration to the subject that at some time or another a completo readjustment of the relationship between principal and other aspects of the economic life of the dairy industry must take place," said Mr. Savage. ."Under present-day conditions the farmer may invest a substantial sum in his farm as well as a lifo of labour, and lose the lot because of the 'impropriety' of reducing tho principal of his mortgage. It apyears as if a readjustment is inevitable, and would be in the interests of both mortgagee and mortgagor." GUARANTEED PRICES. Tho Loader of the Opposition said that Ihe Commission contended that an equitable system of subsidy would involve costly machinery, but that costly machinery would also be necessary for the carrying out of its own recommendations. The Commission had rejected the proposal for a guaranteed price as inherently unsound, but it seemed strange that in a. country which guaranteed the salaries and wages of a large section of the community—up to as high as £5000 a year—they should .find it impossible to guarantee an income in sympathetic relationship to the services rendered by the primary producers.

"It is quite clear that unless thp farmers do receive some guarantee on

that basis," said Mr. Savage, "they and all others will soon be reduced to the living standards of their overseas competitors. It is also clear that the farmers and all others who play a useful part in the work of production can, and should, receive a guarantee of a standard of life commensurate with their collective power to produce. In the long' run they must rise or fall together. It is neither possible nor desirable to help one section of the people at the expense of the rest. Any piecemeal policy which leaves out of account the raising of salaries nnd wages in keeping with increasing production cannot provide any substantial guarantee to farmers; while i|. is equally important to remember that, unless farmers have some guarantee, the standards of other sections must fall. Guaranteed prices nnd wages will involve tho Dominion in complete control of the money system, but it is well that tho problem should be tackled in the open and at once." A BIG CRASH. Mr. Savage said that the Commission had gone some distance in the direction of monetary control in its recommendations relating to the establishment of a rural mortgage corporation. If the present mortgage with its high rates of interest was allowed to continue, a big crash was inevitable in the near future. The Government's deflationary policy had reduced thousands to a position which was little short of serfdom. The Commission-recommended a mortgage corporation, for. the purpose of dealing with the mortgages of those who were in difficulties, and curiously enough there was another recommendation for the socialisation of liabilities. The better class of security was to remain as at present —at least until the owners were faced with bankruptcy. The Commission seemed favourable towards assisting only those whose securities were not good enough for private lending institutions. Those who were in difficulties were to be assisted under cruaranteo by the State, while those who were still able to pay "an excessive rato of interest" would continue to do so, at least until they too were facing bankruptcy. Mr. Savago said that Parliament should not adjourn until at least temporary financial relief had been provided for those who were in difficulties. Even if that involved a departure from orthodox lines, Parliament should bo prepared to take any course which would serve the common welfare, rather than stick to the old methods which had outlived their usefulness. Any reshuffle in the membership of the control board was not going to make any difference to the average dairy farmer, said Mr. Savage. Financial readjustment, including the readjustment of mortgage liabilities and land costs, with guaranteed prices for butterfat, appeared to bo the commonsense way of facing the problem lhe Labour Party had pointed out that the only wav of' handling the problem wns to determine what the dairy farmer was required to produce and then pay him a price for his product that would cover tho cost, of materials used m production and payment for labour. LABOUR'S PLAN.^ "Brought down to simple' propositions," said Mr. Savage, "the Labour Party would introduce tho following 1110111*0(18 to maintain and extend the dairy industry:— (1) A guaranteed price for butter- " fat. (2) Security Of tenure to farmers competently using their land. (3) Readjustment of mortgages and land costs on the basis of guaranteed P (4) Negotiated agreements with Great Britain and other countries for the marketing of dairy produce with reciprocal contracts for the importation of goods which cannot, be economically produced in the ©igainion. •'With the substantial ft«s?stance which must, bo given to farmers, wages and salaries must be restored to higher levels. It is only from the increased income of the rank and file of the people that increased prices and subsidies can be paid." Referring to tho proposal to set up a Council of Production and Trade, Mr. Savage said thnt if any serious attempt were to be made in the direction of scientific planning of production and trade, co-ordination of the various parts of the national economy was essential. For that reason the Commission's recommendations for the setting up of a Council of Production and Trade should be seriously considered with a view to securing co-opera-tive action, but that did not justify the establishment of a dictatorship in the primary industries, such as would result from the passage of the Bill in its present form. WHAT OF CO-OPERATION? Mr. Poison said that primary industries were controlled more or less co-operatively in progressive countries. When one read the Bill, one might ask what was becoming of co-operation. The industry had been built up in New Zealand on co-operative principles. Would it not bo possible to provide that the principle of co-operation should be carried on to the peak so that the various co-operativo industries would be tied together in one central cooperative organisation? By that method the co-ordinntion of the whole of tho primary industries would be possible, and the object the Government had in mind would be attained. If the country had to come to the' assistance of the primary industry, then the country was entitled to representation, and he saw no objection to Government appointees on a central authority if the country was to provide a large sum of money. There should be some centralised 'co-ordinating control in the primary industry. Referring to trade agrees meiits, Mr. Poison pointed out- that Canada had made an agreement till 10.'i7 against New Zealand's agreement till i' 0155, to send 50,000 hogs a week into Britain, whereas at the present time only half that number was being produced. By 1936 it was suggested that the imports would hnve been so greatly increased that thrre would be no tiuota restriction. There were obvious weaknesses in the present marketing system, and the country had to seek new markets. KEEPING THE FARMER GOING. An authority was needed which would bind the State to tho primary industry so that new markets might be found, said Mr. Poison, lhs troubles of the dairy industry, ho contended, had occurred only since the fetate started to intcrfcrco. It was essential 'that the men right up against it should be succoured, and ho himself had suggested that those men should receive repnvablo advances, lie was anxious that c, should bo given to the dairy industry before the House adjourned. Ho had only one desire-to do something o keep the dairy fanner on the land, and he dirt not care what tho plan was, aSr^KS;?wmtheßilldo lt?Mr Poison: Of course it Won't. The Bill provided for all things to i-cep an industry running, but it did i" provide that amount of relief essenl^^^^oStSeS pralVoTstablish a c said gnored the civilised world, dttfrored co-operation, and attempted to t 6 the farmer to the wheels of high finanU'lL Bill did not give the, financial assistance that wss easentiftl. It wM like throwing a lollipop U> a drying man when he wanted a lifebelt. He

would have liked to have seen the personal covenant tackled. There would be little objection it* tho Government kept co-operative principles in mind, and saw that the Council of Production and Trade was not autocratic. CONTROL INEVITABLE. Mr. W. Nash (Labour, llutt) said that the Government should determine its policy in respect to each branch of primary production, and that objective should bo left to tho Commission to carry out. Control was inevitable, but the country was a long way behind because of the machinations or! certain persons in London some time ago. Unless Britain took the products produced from New Zealand soil, then she could not bo paid interest owing her. Regulation by Britain and other countries was the determining factor of what was worth while producing. Last year butter imports into Britain had increased 10 per cent., but the return in price was 2S per cent. less. In tho case of bacon, for 1902, the quantity increased by 32 per cent., and the price return was 50 per cent. less. That was inevitable under ilie existing economic system. To obviate control of tho local market the Dairy Board should determine what was a legitimate price for the local market. Mi-. A. M. Samuel (Independent, Thames) said that the Bill held no ray of hope for tho dairy farmer. He hoped it would be withdrawn, as he could not see that it would be of any help at all. Mr. R: Semple (Labour, Wellington East): It's worse than a fowl Bill. "I think tho Government will withdraw the Bill," said Mr. Samuel. The Commission had recognised the hopeless state of the industry, but had ignored the price factor. It was impossible to rehabilitate the dairy industry without some monetary reform, abroad or in New Zealand.* Reasonably controlled inflation would improve the monetary system. ' Mr. Barnard said it was an extraordinary thing that there had been no reply by the Government to the criticism which had been directed at the measure. . Perhaps the amendment moved by tho Leader of tho Opposition ivas an inconvenient one, and the Government was reconsidering its attitude towards the Bill. Mr. Barnard criticised the speech made by Mr. Poison. Mr. Poison: I am going to vote for tho amendment.! The best financial assistance which could be givpn the farmer at the present time, said Mr. Barnard, was guaranteed prices. The debate was adjourned on the motion of Mr. C. A. Wilkinson (Independent, Egmont).