The Evening Star MONDAY, AUGUST 10, 1936. GUARANTEED PRICES.

Evening Star, Issue 22413, 10 August 1936, Page 8

The Evening Star MONDAY, AUGUST 10, 1936. GUARANTEED PRICES.

It is a matter for conjecture whether the Labour Party did not make a mistake iu tactics at the General Election in trying by its guaranteed prices proposal to win the support of the man on the land. Had Mr Savage and his lieutenants realised that there was going to be such a definite swing away from the Coalition Government it is doubtful if they would have been at such pains to placate the dairy farmer. Cabinet has made a rod for its own back. Give the producer less than London parity, as is being done at the moment under the scheme just launched, and he will be dissatisfied. If, on the other hand,’his return should be higher than the overseas price, the Dominion taxpayer will have to foot the bill. Though one or two small farmers’ unions in the North Island have endorsed the Government’s plan as revealed in the Budget, there is already evidence of strong dissatisfaction throughout the country among producers of dairy products. This was to be expected. In the Primary Products Marketing Act it is provided that prices of dairy produce exported from New Zealand on or before ■ July 31, 1937, shall bo fixed after taking into consideration the prices received in the Dominion in respect of dairy produce of the same or approximately the same kind, grade, and quality exported during a period of from eight to ten years immediately prior to July 31, 1935. In his address to the National Dairy Conference at Hastings in June Mr Nash went a little further than this by stating that the rate would be fixed at a fraction above the most generous interpretation that could be given to the Government’s promise. This instilled into the farmer the belief that he would get something more than the world price. Instead, he is getting less. In the circumstances he can hardly be expected to be inspired with a feeling of jubilation. Looking to the future, the Act provides that in fixing prices after July 31, 1937, regard shall be had to the prices fixed in respect of dairy produce exported before that date, and to costs of production and other relevant matters. It then goes on to say that the prices shall be such that any efficient producer engaged in the dairy industry under usual conditions should be assured of a sufficient net return from his business to enable him to maintain himself and his family in a reasonable state of comfort. By fixing the price at the figure announced last week the Government makes itself secure from loss for the first year, provided Home prices do not fall, but it is at the expense of the producer. The references to what will happen alter that are delightfully vague. Interpretation of the words efficient producer, usual conditions, normal circumstances, and a reasonable state of comfort will be no easy matter. Another point to remember is that if at any time the price for products is fixed higher than what would be realised in a free market speculation will occur in land, and values will naturally rise to a point that will cancel the higher returns for the produce. That is a development which the Government, according to speeches by Ministers, is anxious to avoid, for land booms are always followed by embarrassing results. Another danger under prices fixed higher than London parity would be that of over-production, which, if the plan was to be continued, would mean some form of restriction. The intention of the Government was to confer benefits and stability on an important t rural industry, but the scheme is full of snares and. pitfalls. Price fixing as opposed to free marketing is a highly dangerous expedient, as has been proved many times. Further, the satisfaction that the producer obtains of knowing what his return will be for twelve months ahead will be much more than offset by the rise in commodities, and particularly by the effects of the labour legislation which has been passed. Interlocked with the guaranteed price plan is the matter of mortgage legislation that the Government is to introduce, which, it is to be presumed, will affect the investments of many people in the Dominion. Labour’s policy, bearing on primary production, rural finance, taxation, and on the economic life of the country generally, will undoubtedly bring complications the effect of" which cannot yet be estimated.