DAIRY PRODUCE SALE AND COSTS

Evening Post, Volume CXXIX, Issue 49, 26 August 1940, Page 6

DAIRY PRODUCE SALE AND COSTS

The new contracts for the sale of butter and cheese to the United Kingdom are on the same lines as the agreements which have regulated the disposal of the current season's produce, except that the quantities contracted for are greater. Moreover, it has been agreed that Britain will take as nearly as possible the maximum production of the Dominion. This is to continue for the war and a subsequent period to permit of the smooth return to normal marketing

arrangements. Prices are to be reviewed in May of each year, and for the current season there is no increase in price. The benefit to New Zealand of this arrangement is that a stable! market is assured for the war and immediate post-war period. Britain! accepts the responsibility of shipment and will bear any loss sustained by produce in transit. We have become so accustomed to expect this that we may not realise its value. We are far away from our market, with no accessible alternative market. If transport were interrupted for a time our produce would pile up in| our stores. In any case, we would have to bear the risks and costs of shipping in war. These are things to be remembered by those who think we are giving the greatest service by feeding Britain. It is a service, but we would be in a bad position if Britain did not take the produce. Sale agreements with no increase!

in price are in accord with the sentiment of the country, as Mr. Nash states. We do not wish to add to the heavy cost burdens already borne by Britain. But if the returns from the sale of produce are to be stabilised, costs of production should be stabilised also. Otherwise the generosity of the gesture to Britain is at the expense of the producers alone. The Government is brought face to face with this problem in the statement issued by the chairman of the Dairy Industry Council. A request is made by the dairy industry for an increase in the guaranteed price. This has been countered by the Minister of Marketing with a suggestion for a conference between representatives of the Government, the producers, the manufacturers, the Federation of Labour, and the Public Service to explore the possibility of securing a stay-put in wages and standardising costs in general. That is a most desirable aim, but, as the producers point out, wages have already been raised and their costs will reflect this increase. j

About eighteen months ago Mr. Nash proposed a general stop in rising wages and costs, and this was put into practice in fixing the guaranteed price (though farmers were then below what an expert committee held to be their proper level). Wages, however, have continued to rise. The 5 per cent, blanket increase accelerates and extends the process. It is becoming more than ever clear that the Arbitration Court's •recent decision failed to give due weight to the economic and financial factors. Now the Government is faced with the difficult problem of adjustments with respect to producers and to its own employees. And if it makes these adjustments there will either be additional pressure on unsheltered incomes or acceleration of dangerous inflation.