IF QUOTAS COME

Hawera Star, Volume LIII, 26 August 1933, Page 7

IF QUOTAS COME

SURVEY OF POSSIBILITIES “DEATH OF INDIVIDUALISM.’’ MASSEY COLLEGE ECONOMIST’S PAPER. The history of the influences of varying marketing conditions on the primary industries of the Dominion, leading up to the establishment of quotas by the overseas market countries, was dealt with in a paper prepared by Mr D. O. Williams, of Massey Agricultural College, and read at the conference of the New Zealand Grassland Association held in Christchurch last week.

“In the first place let us be clear that a quota does not necessarily mean selling less to a given market than before (states the paper). It may mean that, and in the first instance it almost certainly will mean that. Later it may mean that overseas markets may limit the amount of our annual export increase. Conversely it could mean that a market may set out a programme for a progressive reduction in the amount it will annually buy from us. Obviously it matters a great deal to us whether a quota means a declining, a stationary, or an increasing demand from our consumers. And it matters still more if all our major exports become subject to quota control. It is evident at once, for instance, that a quota programme which .permitted a more rapid increase in frozen meat than in dairying would present a more difficult problem than one which reversed the order. Whatever form or direction quota control takes, however, the principle is unaltered: authority steps in as a new factor in determining output. Authority is added to .the normal determinants, which in farming are price and nature. “Viewed broadly, the general application of quotas would put an end or a limit to the process by which declining prices could be met by increasing turnover. If the net effect of reduced or limited production of necessaries was to raise their prices proportion atclv or more than proportionately, farming communities as a whole would be as well or bettor off. If this were the result, quotas would simply invert the process which has marked the course of events in recent years—they would put smaller turnover and higher prices in place of larger turnover and lower prices. “Much depended on how far quotas went and to what extent they represented a deliberate restriction of the volume of international trade,” continued the paper. “If they merely added one more impediment to world trade and aimed not merely at maintaining. the existing degree of selfsufficiency in the countries imposing them but at substantially increasing this self-sufficiency, then they hastened the day when the world as a whole must admit insolvency. They put the finishing touch on events which had steadily narrowed the volume of trade which had to carry an expanding body of debt. But if quotas turned out to mean that consuming markets gave orders for a planned increase of output, the basis of trade would be widened. The big difference between this type of expansion and the expansion to which we had been accustomed would be the substitution of a known and ordered expansion for a speculative and competitive expansion.

PRODUCTION TO ORDER, “Whichever direction quota development took, it could, not efficiently be met by individualistic competitive production. From New Zealand’s point of view as a producer unit, we had to adjust ourselves to the notion of producing to the order of our customers instead of producing competitively in advance and anticipation of demand. Was this so terrible, provided the orders were large enough? “The answer to that question seems to be this,” said the paper. “However large the orders, they represent a control and direction of our economic development "which can be efficiently coped with only on the basis of much more competent primary organisation than now exists in this country. If quotas come generally it will be impossible to deal with them except on terms of the fullest co-operatiou fmongst producers. The general application of quotas, whatever else it portends, means the death of unorganised, competitive, individualistic production and marketing. If our customers plan the volume of their orders for our products, we must, plan the organisation of production, processing, and marketing: “This at once raises the point: what authority will apply the quota to the industry? Obviously the alternatives are either forrthe 'State to work out detailed regulations to fasten on the industry, or for the industry to undertake the task itself. Any organisation within the industry must be much more comprehensve than the existing organisation if it is to work adequately. In other words the industry must -work out a planned economy itself if it wishes to avoid having one thrust upon it. “It. is impossible for this country hurriedly to change its economic structure, which, as we have seen, is based chiefly on the export of large surpluses overseas, mainly to the United Kingdom,” the paper concluded. “The inescapable task, therefore, is to market better. This means much more than regulation of shipments.- It means a thorough-going exploration of existing markets by a body competent to judge what production adoptions it is possible to make in this country; and on the basis of such an . investigation it means fuller experimentation in the direction of diversifying our primary exports; and to do both these it means a rationalisation of our primary organisation along ►the line? suggested, ’ ’