REDUCING FARM COSTS

Hawke's Bay Tribune, Volume XXII, Issue 175, 9 July 1932, Page 10

REDUCING FARM COSTS

THE VALUES OE LAND. Sir Lennon Raws, who returned to Australia recently after a business visit to New Zealand, said that the Dominion had not yet suffered so severely as Australia from the reduction of capital expenditure, which was due to the cessation of overseas borrowing. The Ne* Zealand Year Book devoted a chapter to mortgages. This showed that the value of land and improvements increased between 1878 and 1902 by about 50 per cent. In the succeeding 18 years the total valuation more than doubled, and from 1920 to 1927 unimproved values increased by more than £50,000,000, and the capital values by £148,000,000. Mortgages in 1929 relating to farm lands represented £115,000,000, or 75 per cent, of the unimproved value. Mortgages on areas from one to 15 acres averaged £55 an acre, and those on areas from 40 to 50 acres averaged £23 an acre. In 1930 interest on mortgages represented one-third of farm expenditure, and no doubt there had since been a large increase. One who believed that the greatest need in Australia and New Zealand was for the re-estab-lishment of equilibrium between internal and external prices, and between costs and prices, found the question of interest on farm mortgages a tremendous difficulty. It was apparently recognised that some reduction of land values was inevitable. This did not necessarily mean that the mortgagee should bear the loss, but it was obvious that the mortgagor should regain some equity in his land. A reduction in values had, of course, been effected in Australia by means of the lowering of the rate of interest. He had expressed the opinion in New Zealand, however, that Australian experience in varying nominal wages according to a cost of living index figure suggested that some similar relationship between mortgage interest and farm prices might be advantageous. Reduction in costs was as important in restoring equilibrium as a rise in prices.