GUARANTEED PRICES

Grey River Argus, 30 July 1935, Page 3

GUARANTEED PRICES

LABOUR’S PROPOSALS Mr. W. Nash’s Exposition Mr Waller Nash, M.P., President of the New Zealand Labour Party, replying to the statement of Mr A. J. Sinclair, re guaranteed prices, has written to the “Argus” as follows: Recognising the importance of the primary industries of the Dominion and thal their continuance was dependent on the farmer receiving an income sufficient to meet his costs, plus payment for his own labour, proposals have been worked out for a guaranteed price to be paid to the farmer for Ins production. The proposals are of supreme importance not only' to farmers but to all the people of the Dominion. My personal opinion is J hat the adoption of the guaranteed price is essential to the future success of our primary industries. Acting on this opinion, 1 approached Mr Morton, the Chairman of the National Dairy Association, and suggested that he should give an iipportunity for the proposals Vo b< explained to the members of the association. After consultation with his Executive, he stated that provision would be made for me to address the

Gonfore n ce. Acting in the spirit of th 0 courtesy shown by Mr Morton. I attended the Conference of delegates to the Naional Dairy Association at Palmerston North o n Thursday,. June 27 th. and explained in detail the necessity for. and practieabi’ity of, .a guaranteed price to the farmer. During the address I did no- use one word of criticism of the Governmen't. After describing in simple language iho conditions of the present world market, I self out in detail why the guarantees -were necessary and how thev could be achieved. At the commencement. I stated tie* objective, which was:— “To so stabilise the minimum in come of the farmer that he can meet his working expenses and enjoy a standard of living related to the time, energy, skill and experience used by him in producing the commodity necessary for 'the balanced progress of Vho Dominion,” and that “The stabilised income of th' farmer can only lie achieved by like treatment of all other sections of the community who render equ i service to that rendered bv the farmer. ’ ’ 1 pointed out the expedients that had been, and wcr e . being, followed to lift, prices: — 1. Destruction of Stocks: Oranges corn,, pigs, coffee, dairy cow-s, etc. Restriction of Production: Wheat, cotton, tobacco, rubber, tea, sugar, etc., etc. 2. I showed how New Zealand butter prices on the London market had ranged from 185 s 6d to 65s per cwt. du ling the past six years. 3. That butter prices in Europe ranged from 69 s 6d per cwt. in London to 268 s 3d in Switzerland. 4. That prices of primary products had no relation to cost of production. 5. That private monopolies were gradually extending their range, not for the purpose of covering producers’ costs nor satisfying consumer demands, but to ensure the production of the quantity that would give the maximum profit to the monopoly. Referring to the potential market for butter, I pointed out: — 1. That 'the consumption of butler in New Zealand is twenty-five per cent, below t'he quantity stated by Dr. Watt, Director-General or Health. ;to be necessary for lull physical development and maintenance.

2. That New Zealand s present per capita consumption of butler exceeded that of lireat Britain bj 5U per cent. 3. That the ultimate marker in Britain alone for butter was twice tne present consumption. 4. That margarine,. of whicn 1,000,000 tons was manufactured yearly, was the major competitor in quantity and quality. I then pointed out that- since 192829 the farmer had increased his production by 42 per cent., but his prices had declined by 51 per cent., with the result that In spite of increased production his income bad declined by 3 per cen.l. I then said that the maintenance of production was dependent on the upkeep of the farms and the payment to the farmer and his assistants of a sum sufficient to maintain jthein at a standard of living measured by the marketable production resources of the country, and that this could be achieved, and could only be permanently achieved, by orderly marketing and guaranteed prices. . Guaranteed prices, I said, would stabilise land values, extend the security of rural land as a source of investment;. reduce interest rates on loans, and act as a compulsory insurance scheme against bad years. 1 followed thi s up by showing:— 1. That during the war years our products had been sold alt a guaranteed price to the Imperial Government . 2. Japan had instituted a guaran teed price for its rice growers. 3. Schemes to ensure a reasonable price for butter were operating m Denmark. Estonia, Holland, .La.tvia Fin'and. Sweden. Australia, and the Irish Free Wtate.

4. In the United States, Three Party contracts fixing prices and quantites of tobacco, cotton and other goods were operating. 5. Great Britain had introduced a procedure which guaranteed farmers prices ?°r milk, j’igs, bacon,, hops, potatoes etc. 6. The major portion of prices charged in New Zealand for goods and services were fixed either by private monopolies or the State. 7. The wheat and fruit growers of the Dominion h.ad either legislative or administrative protection which ensured them prices covering their costs. 1 then pointed out that the Proposal could only be carried out after the completion of agreements with Great Britain and other countries to give us a market for a certain lon nage of butter or other products in return for a reciprocal .agreement *’o; utilise the credit received from the Male of the butter, etc. (after provision had been made for the payment of interest and redemption of Our overseas debt), for the purchase of goods for import to '.the Dominion. With the quantities provided for In these agreements phis fonnage required to meet the New Zealand demand, the Government would negotiate (with the dairy industry the price

to be paid for products, and the order would be placed for the given quantity at this price, the pay-out to be made on delivery to grading store. The case as I made it was an objective one, giving ithe advantages and difficulties that might be experienced in making the change. Irrespective of the merits and justice of the case for paying the farmer a fair and reasonable sum for his work. we. will in my opinion be compelled as a nation by the restriction policies of other countries, including Great Britani, to take the necessary steps to provide a market by negotiating between Government and Governmen't. May I say a few words with regard to the subsequent proceedings at the Conference. I was of opinion,, as iwas Mr Morton. that the proposal would be considered on its merits; hut Mr Sinc’ai.r immediately stimulated Party prejudice liy criticising the Chairman and Executive for allowing a member of the Labour Party to deliver an address to the delegates. He then misrepresented the position by saying 'hat ] had said tha- the success of the proposal depended on bulk purchase by Great Britain—a stabilised price in Great Brit.iin—which mean* i Labour Government in the Old Country. My statement was for an agreed market in Britain, not purchase, and I made no reference to a stabilised price overseas—that is a question for flie British Government—but even Mr. Stanley Baldwin has stated that if agreement could be reached bulk purchase would be better all' round. Another apponent at the conference —a Mr. Brechin —warned the farmers against guaranteed prices, saying that the milk department of the Wellington City Council, to which he was a supplier, “found it necessary to charge the consumer 260 per rent, more for his milk than it paid him (Air. Brechin) for his milk.” This statement was the grossest misrepresentation, as the return for the milk department for the year ended March 31. 1935, showed that the price ! paid by the Council to the farmer at his gate averaged 8.713 pence per galon, ir slightly more than Is 8d per lb. butterfat. That the cost of the milk per gallon at the depot in Wellington was 9.304 pence, the average selling price was 19.113 pence, tfap difference being 9.089 pence—which covered pasteurisation, bottles, bottling, delivery, and all overhead—and that on a turnover of £183,575 the net. profit was £4376, equalling less than two and a half per cent The manager of the <‘itv Council Milk Department on enquiry says that Air. Brechin’s name is not, and never has been, on their list of suppliers. The remit was defeated, not on a delegates’ vote (because well over three hundred were present), but in a factory vote, but even then 39 factories neither voted for nor against the motion. the actual result being: — For Guaranteed Prices 20 Against Guaranteed Prices 68 Did not vote 39

Returning to Air. Sinclair’s press statement, may I say that Mr. Alorton’s procedure was in my opinion correct, in that the objective to-day should be t» discuss proposals on their merits irrespective of their source. I did not intrude a single prejudice to bias the delegates against the proposal. Air. Brechin stated something that was positively untrue in his efforts to influence the delegates against the proposal. Air. Sinclair says that the farmers must accept world parity. Will he advise the industry how world parity is ascertained when all markets are restricted by tariffs, and many of them by quotas? Also, if world parity is to be the basis, what proposal has he for the farmer when world parity is below He says that “if the farmers ask for prices higher than world parity for the exportable surplus, the higher price must be paid by the people of New Zealand. ” There is no such thing to-day as “world parity,” but if the price paid to the farmer exceeds the price realised overseas, the difference must ultimately be paid by the •“'onle of the Dominion. *But to-day they are paying the fanner 25 per cent.

on the realised price, irrespective of whether the price covers cost or not, with the absurdity that as prices fall, the premium increases, whereas under guaranteed prices he would be paid a fair price for what he is required to produce. “A ‘fair price’ is the sum necessary to produce a lb. of butterfat on the average farm, which must include payment to the farmer for his skill, knowledge, energy and experience.” The price would bo fixed by negotiation between the industry and the Givernment. Mr. Sinclair says that wages must be increased to enable the people to pay the guaranteed prices. This is quite correct. The proposals are dependent on the people being able to purchase the goods which are produced. This implies wages equal in value to the price paid to the farmer for like work. He also comments on my not telling the conferece what was a fair guaranteed price for butterfat. The answer is, as previously stated—a fair price for butterfat is the working expenses plus cost of suitable land and payment to the farmer for his work. The difference between this scheme and that advocated by Mr. Sinclair in 1930 is that the farmer gets a positive price based on cost for his product instead of a speculative price. If the proceeds of the sale over the years do not meet the price paid then the account will be adjusted through the ordinary procedure; but a balanced economy will inevitably give a payable price for commodities. Let, us look at Mr. Sinclair’s guaranteed price proposal. He advocates that the minimum retail price for butter in New Zealand shall be fixed by a butter stabilisation committee, that presuming that this price is fixed at 1/6 per lb. and that the allowance for patting and distribution is 14d per lb. and the retailer’s profit is lAd per lb. with a f.o.b. parity price of lid per lb. the division of the 1/6 paid by the butter consumer in New Zealand should be as iollows! —

Retailer Butter Stabilisation Committee 4d Dairy Companies supplying local market 1 Total 1 6d The 4d per lb. would be distributed among all butter factories in proportion to their total output. The result of Mr. Sinclair’s proposal would be that tutter users would permanently pay 4d per lb. extra for butter to sub-

sidise butter exported. The proposal I submitted to the conference provided for ascertainment of quantity required, with payment to the farmer nf the '•ott of production including a reasonable sum for his own labour. That makes the nation resuonsible for the marketing of the butter with losses or gains, if any, to the nation. Another supporter of guaranteed prices is the president of the Farmers’ Union—Mr. W. J. Polson, M.P.—who in Parliament last year advocated that the farmer should be paid 10d per lb. for butterfat and that if the sales overseas did not realise this sum the difference should be made up by a payment from the Reserve Bank.

The question of ‘ ‘ guaranteed prices ’ ’ is of such importance and the correct understanding of the proposal so essential to the farming industry that within reasonable limits I will be pleased to meet and explain the proposals to meetings of farmers at any time by arrangement. The purpose of these meetings should be clear. “Will the proposals for a guaranteed price for farming products put the primary industries of the Dominion on a sound footing and ultimately lead to the balanced progress of the Dominion ’ ’ In brief, the proposal involves the following procedure;— 1. —Negotiation of reciprocal agreement with overseas countries for guarenteed markets for stated quantities of our primary products 2. —Ascertainment of <»ur internal requirements of the same products. 3. —Negotiations with primary producers for arrangement of price for products required at cost of production. including reasonable payment for farmers’ time, skill, knowledge and experience. 4. —Arrangement for payment of guaranteed prices through Reserve Bank of New Zealand 5. —Control of internal price level and minimum wages tn ensure consumption of the production the Dominion.