SHEEPMEN’S CASE

Grey River Argus, 19 April 1939, Page 8

SHEEPMEN’S CASE

FOR STATE AID Decline in Income TEKAPO, April 17. The plight, of sheep-owners in New Zealand, most of whom were faced with considerable Josses, was described by Mr.. H. D. Acland, president of the New Zealand Sheepowners’ Federation, in an address at the high country run-holders’ conference with the Minister for Agriculture (the Hon. W. Lee Martin) to-day. Mr. Acland showed how sheep farmers’ incomes had declined and their costs had increased. He considered that their interests were just as deserving of the consideration of the Government as those of the manufacturers. Mr. James Begg, a member of the New Zealand Meat Producers’ Board, claimed that unless some help was given much of the run country would go out of production because sheep farmers found it impossible to carry on.

“The economic position of the sheep fanner affects the economic position of everyone else in New Zealand/' said Mr. Acland. “If the sheep farmer is in a bad position, the whole Dominion will feel the effect.

The present position of sheepowners in New Zealand is probably worse than at any time in the history of the Dominion, not excepting even lhe dark days of the depression period. Although average prices during that period were lower than at present, industrial and political conditions made it possible to reduce general costs sufficiently to balance the reduced* prices, at least to an extent which allowed producers to carry on production without substantial inroads into their capital. At present, prospects in the industry do not. hold out hope of the much improvement in our economic position. Fat ewes this year were only bringing roughly the cost of handling at. the works, plus freight, etc., leaving practically no margin of profit for export, continued Mr. Acland. Sheep sales during the autumn had shown the seriousness of the position for sheep farmers. To give a typical example, at the Tekapo ewe fair on March 4, the range of prices was from 6s 6d to 10s for two and four-tooth halfbred wethers. Cast merino ewes sold from 6d to 2s a head, With good to medium halfbred wether lambs, selling from 4s 5d to 5s 5d a head; the smaller half-bred lambs selling at 2s. These prices were lower than those paid for a similar class of sheep in the nineties, when cast merino ewes brought from 2s to 3s 6d a head with wether lambs selling at from 6s to 8s a head, but since then costs of production had increased on sheep stations by from 75 per cent, to 200 per cent. “Wool this season had so far realised a much lower Dominion average per lb. than that received for wool from the hill country 40 years ago. “To show the need for some adjustment, either in costs or prices, if the hill country sheep farmer is to continue production, I can give the position of a South Island sheep station for the year ending March 31, 1935, and its position on the same date in 1938. The costs of working in 1935 left a profit of a little less than £2,000. Costs in 1938, however, because of the amending legislation of 1936, were increased to such an extent that there was a loss of £7OO, with total receipts approximately the same in each year. This will show the proportionate position of other hill country sheep farmers under existing conditions, and the need for some form of relief by way of reduction in costs, and will also show that before the amending legislation passed in 1936 it was possible to make a profit on high sheep country, with wool receipts as at present, but that under existing conditions this is no longer possible, “In 1936 legislation arbitrarily fixed the costs of operation at a higher level than has been justified by the price received for the product of the labour on its market overseas,” Mr. Acland said. “I would once more stress the point that our wool and meat must necessarily be sold on an open world market in competition with other sources of supply. We | should not have to face arbitrarily fixed costs because of the impossibility of ensuring to ourselves a sufficient market for our export at a remunerative price. “In this respect we are not so fortunate as our New Zealand manufacturers, who, by reason of the import restrictions and other protective legislation, are able to raise wages substantially in anticipation of an agreement expected in conciliation shortly. We should be happy to increase wages in the same way as this, but unfortunately we cannot pass our costs on to the world at large, as is the case with our protected industries on their New Zealand market. I feel convinced that, if a decrease in costs is not made in our industry, the result will be a further need to reduce the number of hands employed, with a consequent reduction in volume and value of production. “Various remedies have been suggested, such as: (1) Allowing our exchange 'to run free to find its own level without control. (2) To lift the existing exchange rate sufficiently to restore the balance between high internal costs as at present, and low export prices. (3) Direct subsidies, such as guaranteed prices, fixed export subsidies on separate classes of produce for export, or on wages costs on the farm. (4) By giving authority to a Government department to deal with applications for relief by sheepfarmers where this is found to be justified, to enable the particular property to continue in production.

"This last may at first sight appear difficult of administration, but it would have the merit of ensuring that in those cases where no slackening in volume of production had occurred and where costs had outrun the market value, the farmer would be able to continue in business on a reasonable basis. This has been practically guaranteed by the Government to the secondary key industries. Surely sheep-farmers are entitled to claim equal consideration because of the disastrous effect on the country as a whole of a drastic reduction iii volume in production for export. This must result from a continuance of X

the present unbalanced position as between costs and prices in the sheepowning industry.” Mr. Acland said the only method by which a direct subsidy could be paid was from additional taxation. This would be added to all prices for both goods and labour in the secondary industries, and other services, and passed on ultimately to the producer for export, selling in the overseas market in open competition with other world sources of supply. The producer, of course, could not pass on his increased costs any further. If the position was not rectified, the exporting industries must contract, many producers be ruined, and severe hardship result to the great bulk of the community.

“Farmers should demand equal treatment with other sections of industry, and should object in the strongest possible way to having their prices lowered by a controlled or fixed exchange as at present to maintain an assured profit to producers supplying our domestic market, and a money wage standard for internal services far in excess of that which is justified by our average export prices,” said Mr. Acland.

“The real problem is an economic problem, and it has to be faced. Our costs of production must be less than our receipts, or the industry, which is the basic industry of country, cannot continue,” concluded Mr. Acland. Mr. Begg, who claimed knowledge of high country for 50 years, said that the farmers were there to assist the Government. They found themselves in an impossible position. Where wool was a by-product of lamb fattening its production need not be regarded as vitally important, but where it was an industry in itself, its production did not nearly pay expenses. “Is the production of fine wool worth preserving? is the question we ask,” said Mr. Begg. “We think that it definitely is. A runholder will produce £2,000 of overseas exchange, and it may be worth the Government’s while to obtain this overseas exchange, even if it costs £2,500 to produce it. Even a2oor 25 per cent, subsidy from the Government would not be more than the secondary industries, which add nothing to overseas funds, are getting.”

Wool formerly went into consumption all over the world, but national policies had altered that position, and the world’s wool market appeared to be more likely to contract than expand. Sanity might come to the world because not enough wool was produced to fill the demand. Nobody wore a wood fibre suit from choice.

Unless something was done, millions of acres would go out of production and would not only not produce rents, but would be a heavy charge on the State for keeping down weeds and vermin. At any cost, the Government must kee]7 this land occupied. The New Zealand system of leases was that on leaseholds the improvements belonged to the tenants, and the Government was drawing rent on those improvements. If those improvements —fences, buildings, and s 0 O n—were removed, nobody could afford the outlay to replace them. All New Zealand industries were protected in some form except sheepfarming. It was not. fair therefore to peg the exchange against the unprotected farmer; when farming, was, in addition, loaded with additional costs of all sorts.

“Unless something is done the Government will find the run country abandoned and back on its hands,” said Mr. Begg. “Even if it means remitting rent for five years, the Government will find it will pay handsomely to keep the runholders on their lands.”

Commission Promised TEKAPO, April 17. An indication that he intended to ask the Government to set up a commission to go .into the position of high-country sheepfarmers was given by the Minister for Agriculture and Acting-Minister for Lands (the Hon. W. Lee Martin) in his speech at the end of the conference of runholders held at Tekapo to-day. Mr. Lee Martin mentioned that at the recent Labour Party conference a resolution was moved asking for a moratoriuip for farmers, but he would not say whether the Government intended to act. in this direction.

The Minister said that he could not, of course, indicate at once the Government’s intentions. He was, however, sorry that more time had not been allowed for discussion. The invitation he received indicated that there would be opportunities for discussion. He had brought with him technical experts from the Agricultural and other departments, and he had expected that their presence would be made use of. “I recognise the importance of the gathering, and am anxious to get full details of all problems. We have problems in the North Island, and those problems, like the problems here, are not new,” the Minister continued. “The 1920 commission made a number of recommendations, but only one was given legislative effect. There has therefore been an accumulation of these problems since 1920. “Within recent, years large numbers of applications from hill country farmers in both Islands have been dealt with under the provisions of the Mortgagors and Lessees’ Rehabilitation Act, 1936, with further reductions in many cases involving Crown rental and mortgage indebtedness, notwithstanding tenure or whether the mortgagee is State or private.” The occupiers of deteriorated lands, whether freeholders or leaseholders, have been the subject of extensive farm relief for a considerable period, including some substantial relief in quite recent times.

“The land requiring to be considered may be set out as follows:— (a) “Land which recently has not been deteriorating, but which would deteriorate should there be any substantial fairly extended falling-off in the attention given to maintenance work. This comes within the scope of the present inquiry, because it is contended « by quite a num- , ber that on account of their present financial position many sheep farmers are being forced into a falling off in maintenance. (b) "Land which is in a process of deterioration, but which still contributes materially to our production. Some of this land is to ’ be found fairly extensively in every province. (c) “Land which was once farm-' ed but which has deteriorated

so much as to be no longer in production. This type of land occurs at various points in iolatively small blocks. Some of it almost certainly should be left out of farming permanently, and I hope it will- If can be used for other purposes. “According to official statistics, during the eight years ended in 1925, approximately 1,100,000 acres had reverted to worthless plants—fern, teatree, etc. It is considered that a further substantial acreage has similarly reverted since 1925, and that the sowing to grass of virgin land and the counter-attacks by way of clearing such weeds has not balanced the loss due to their inroads. This view is supported by the fact that the area in occupation and cultivation in 1937 was 407,000 acres less than in 1925.

“I don’t want to be a pessimist, but I don’t think we will see as high prices as we used to for wool. Years ago there was a clear field for wool, but to-day the position has changed entirely, as substitutes have made such huge inroads. The economic position of so many countries has forced them into the use of substitutes, and it will be years, if ever, before we gel hack to the old position.” “I want to assure all present that ' will go back to Wellington impressed with What I have heard and that 1 will do the very best I can with the problems that you have stated. We cannot deal with the problem unless we have statistics, and I thank those who have produced figures to-day. I would urge runholders not to leave things to the last moment, but to get figures ready to place befofe the commission that I am suggesting m the Government.” Mr. Burnett: Whom will the commission consist of? If there are no high country men on it, it will not be worth a spit. The Minister assured the meeting that that point would be attended to, but. he suggested that perhaps high country workers could also properly be included in some way.

“Three years ago,” said the Minister “the Prime Minister offered to the sheep industry a similar arrangement to that operating for the dairyingsl industry. Voices: We don’t wan! that.

“I know there is opposition,” said the Minister, “and here I mention the matter with’ some diffidence, because up to now at all events, it has been the attitude of sheepfarmers that thev preferred to handle this side of the business themselves. If, however, this very representative gathering cares to place any views on the subject before me, and especially if they .can be stated with some degree of unanimity, I shall be happy to convey those views to the Government.”

The Minister promised to place the problems of high country men before the Government, as an urgent matter. The meeting had given him plenty of ammunition to fire in XJieir cause. He assured the meeting that the Government would face the situation. Mr. Kidd: I want to ask the Minister to tell us now what he wants to do.

The Minister: lam only one of a Cabinet of 13, and it is not fair to ask me to take that responsibility. It is significant that at the recent Labour conference, a resolution was moved asking for a moratorium to assist -armers.

Mr. Kidd: Are you going to do it? The Minister: I can’t tell you before it is discussed by Cabinet.

LAND CLEARING COSTS.

TEKAPO, April 17. An assertion that the recent demonstration of land clearing on the West Coast had cost the Government thousands of pounds, made by a speaker at the runholders’ meeting here to-day, drew a sharp retort from the Minister for Agriculture, the Hon. W. Lee Martin, who was .present. Mr. A. J. Davey, vice-president, of the South Canterbury Farmers’ Union, who criticised the use of machinery on land on the West Coast when better laqd was going out of production in Canterbury, said that the thousands of pounds being thus spent could be better used to bring Canterbury land into operation again. The feeling of the farmers all over the country, he said, was one of hopelessness and helplessness, and was leading them to ask why they should work so hard for such a small return. “I regret very much the terms used by Mr. Davey concerning recent actions on the West Coast,” ' said the Minister. “There is no truth whatever in the statement he made. That demonstration did not cost the Government a single penny. The statement that thousands of pounds were spent in bringing in land on the ,West Coast has not a shred of truth in it. I am very sorry that that statement has been made here by a fellow-member of the Farmers’ Union.” WELLINGTON, April 17. The Pacific Defence Conference reassembled at 10 a.m. to-day, and continued discussion on its agenda. Having decided to refer various problems to several committees, the conference adjourned at 12.45 p.m. until the reports of the committees are available.