GUARANTEED PRICES

Greymouth Evening Star, 19 May 1938, Page 5

GUARANTEED PRICES

' FARMERS’ COSTS PROBLEM. [pee pbebs association.J • AUCKLAND, May 18. "Having achieved 1 its main object, the guaranteed price scheme is now in very bad' odour in every dairying district in New Zealand,” said Mr A. J. Sinclair, secretary-manager of the Te Awamutu Co-operative Dairy Company, Ltd., in an address on the guaranteed' and compensated price' schemes, which he gavd to the New Zealand Society of Accountants. Mr Sinclair, who was a member of the guaranteed price committee set up by the Government last, year, said a determined' effort would undoubtedly 1 be made to present the scheme in a. more palatable form before the farmers went to the ballot bo?; in November.

The main object of the scheme had been the stabilisation of the farmers’ gross income. ’ As a result of its operation, he knew to a penny what additional revenue he would 1 ' receive if he increased his butterfat production by 10001 b. This was a. great advance on anything the farmer had! hitherto experienced-, for at one time it had not been unusual for him to find his income reduced by 25 or 30 per cent, in the space of a few weeks.

However, said Mr Sinclair, stability of income without stability of costs' was embittering the dairy farmer. During the last, two years there had been brought home to him the fact that gross income l in business might mean" nothing at all. The only criterion of success in any business was the net profit for the year, and in this respect the guaranteed price scheme was not coining up to expectations. Lack of stabilit.v of costs, however. was not the main factor which had disillusioned the dairy farmer, and which caused the guranteed price scheme to stand condemned in his eves to-day.

The main factor was the inability of the scheme to give him a. return 1 which, would enable him to pay his workers a. wage which would attract labour to the farm. Dairy farms were being steadily denuded of the best class of labour.' The problem was very acute in every dairying district, and if something "as not done it would wreck the scheme and those who were behind it. A man who earned .£4/11)/- for a week of 40 hours on a Public Works Depart incut, job refused to work anything from 70 to 80 hours a week on a "dairy farm for £3/2 / / 6. “Prom th© very outset. cl’ccluicct Mr Sinclair, "this difficulty was with the industry. It was strongly emphasised to the Government by some of ns who were in a position to do so effectively at the proper time, and nothing has done more to prejudice the farm‘' ,| 's’ o’l'.iook on flic guaranteed pi/co scheme than the labour problem Ho is purchasing farm machinery. tractors, and other mechanical aids, not because he is wealthy, but in a, desperate effort to see him through, and the only solution which many fanners see to-day is to get out of dairying altogether. -It has been expounded to daiij farmers throughout the whole of New Zealand,” said Mr Sinclair, of the compensated price scheme, and it has been well received. It I be ot great interest to observe whether the guaranteed price or compensated price secures the dairy fanners 1 ’ support at the next election. ’

PRODUCE IN STORE AUCKLAND, May IS. Dairv companies' are seriously peiturbed'at the heavy accumulation ol produce in store awaiting shipment, according to Mr. A. J. Sinclair, secre-tarv-manager of the Te Awamutu Cooperative Dairy Company. Ltd., in an address to the New Zealand Society ol Accountants. For some years, he said, it had been established ipolicy to spread shipments over the flush months; but either this policy was being carried out more drastically than usual, or shipping had been very eria,‘Many dairy companies of medium size.” he said, “are paying interest today of four and a-half per cent, on overdrafts of more than £20,000 to linance their monthly pay-outs, and heavy bills for storage must be met when the produce is ultimately shipped. There is a provision in the Act which enables the Government to take over the' produce at any time, and as credit is obtained through the Reserve Bank at one and a-quarter per cent., the dairy companies contend that the Government should pay lor the produce after, say, six weeks 1 in store, since the Government gets' the surpluses which accrue from this policy. If the surpluses were ultimately paid to the farmer, this grievance would be minimised; but it is one of the minor difficulties Avhich the Goternincnt could easily adjust, thus making for smoother running of the guaranteed price scheme. ’