BUTTER AND BACON

Evening Star, Issue 21636, 3 February 1934, Page 9

BUTTER AND BACON

DENMARK'S PLIGHT WORSE THAN HEW ZEALAND'S HOW CUTS WERE ALLOCATED In December last the Danish Government refused the British Government’s request to accept a voluntary reduction in the bacon quota. A writer in the ‘ New Statesman ’ (December 23) explains why, failing voluntary acquiescence, compulsion was applied by Britain. After stating that Denmark, with a relatively unfavourable soil and climate, had embarked on a costly and highly capitalised production for export to “ free ” Britain and receptive Germany, the writer continues: — “ Danish agriculture has been caught by the slump in its cruellest form. The Danish farmer faces not only a drastic fall in prices, but the prospect of a growing measure of exclusion from his only markets, the markets for which he has built up his industry, and on which ho has depended for nearly two generations. No hopeful alternatives present themselves either at home or abroad. It is not surprising to learn that payment of interest, loan instalments, and taxes have all slowed down, and that, on a rough estimate, 20 per cent, of the farms are actually insolvent. “ Some adjustments have been attempted. A mere delay in tho payment of all farm debts and fixed charges is no permanent or desirable solution. The use of savings has its limits. A reduction of costs by a reduced us© of imported feeding stuffs, reduced feeding and consequent milk yield, with increased tillage is a genuine economy. Tho State has intervened to reduce taxation, to suspend for two years all payments due to credit institutions, and to reduce the rate of interest on farm loans. The benefit of the latter provision, is somewhat lessened by the circumstance that the capital of credit institutions is principally derived from farmers’' deposits. “ So much for tho farmers’ outgoings. On the other side of the account the Danish farmer has relied for many years past on a co-operative marketing system which is famous throughout the world. _ It may be said at once that, as a business institution, this system—admirably efficient and financially flexible —has withstood without a crack the strain of the last few years, and, were its aims merely commercial and self-sufficing, it might well continue to function unmodified. Its purpose, however, is not its own business success, but the prosperity of its farmer members, and to what remains of this a wholesale revision of production was needed. “ Bacon was handled first. For some time a Union of Bacon Factories had existed for advisory and general purposes. In November, 1932, it was laid down that all bacon exported to England must be sold through the union, which thus became the agent for sixtytwo co-operative and twenty-three private factories. Bacon was purchased at a fixed weekly price and the full quota sold w r eek by week to England, the remainder being disposed of, frequently at a loss, to other countries. Sales on the home market were left untouched. “ Such a scheme would be financially unworkable without two further provisions—price equalisation and limitation of production. The first is achieved by a levy of two krone on every pig slaughtered, which is used to make the price of all exported pigs up to English level. Reduction of output was applied first to the factories, the quota being allocated weekly among them. Cuts wore severe, amounting sometimes to as much as 50 per cent., but seemed to be justified bv an almost equal rise in prices. Regulation of factory output was not, however, sufficient if the individual producer was to bo left unfettered, and in April of this year a regulation was introduced fixing a permitted output for each of tho 220,00 U Danish pig producers, Tho figure is based in each case on eighteen different factors, including last years production, value and area of farm, number of cows kept, skim milk available, etc. Tickets are issued for every authorised.pig, and pigs without tickets are accepted only at half-price. It was hoped to provide in this way for a total reduction of about 20 per cent. “ The mechanical problems of adjustment have been handled with competence and speed, but there are limits —brought nearer with every successive shrinkage of the British market—beyond widen mere adjustment cannot hope to secure the survival of the Danish farmer, or, more accurately, of the Danish dairyman-pigkeeper, who has for long been a valued citizen of the agricultural world. His survival turns upon three factors—the costs of production, the discovery of other than British markets, and the level of world prices. Something has been done to reduce costs by methods already described, as well as by the work of cooperative supply organisations, but it is doubtful if the co-operative system of one country alone can reduce the price level of consumable goods—the combined living and producing costs—to a level which would make production profitable at the present level of world prices. “ The search for alternative markets abroad seems valueless at the outset, for there, too, the world price level rules. Something may and probably will he done with the home market, where a certain limited margin of margarine consumption and imported food may be eliminated to the farmers’ benefit. The limitation, however, is known, and there remains only the hope of a restoration of world prices to something approaching their old level. Failing that, Danish farming, m the opinion of goad authorities, may survive in its present form for perhaps another two years. After that, change, technical, commercial, probably also fiscal, is almost inevitable. Reliance on internationalism and free trade, more especially the free trade and internationalism of Great Britain, has failed, and Denmark may yet see a reversion to subsistence farming, coupled with the intensive cultivation of a highly protected home market and a national economy approximating to that of the other Scandinavian countries. Such a change would involve the scrapping ot much plant, capital, acquired knowledge and experience, as well as much individual hardship.’’