THE H.B. TRIBUNE WEDNESDAY, JUNE 17, 1936 PRICE CYCLES.

Hawke's Bay Tribune, Volume XXVI, Issue 156, 17 June 1936, Page 6

THE H.B. TRIBUNE WEDNESDAY, JUNE 17, 1936 PRICE CYCLES.

The average working farmer has, in both senses of the phrase, “little time” for the study of economics in the abstract. Still the number is undoubtedly increasing among them of those who pay some little heed to the conclusions drawn from history, research and observation by those who devote themselves specially to fossicking out facts over longperiods and then drawing deductions from them. Such are those who are responsible for the monthly Agricultural Bulletins issued by the Canterbury Chamber of Commerce, the May number of which deals with the theory of periodical cycles in the selling values of farm products. It lias, of course, to be recognised that, as the great bulk of these products is destined for oversea markets, variations in prices thai have to be noted depend very largely upon influences that may be at work in those markets. But, even giving this in, or perhaps to a great extent because of it, there is, as the bulletin says, “an uneven and unpredictable but definite tendency for a cycle of rising prices to be followed by a cycle of falling prices, progress being achieved not smoothly, but by a procession of ebbs and flows.”

In the nature of things appertaining to his calling it is not possible for the farmer producing our staple exports, butter, cheese, meat and wool, to adjust his activities with any great rapidity to the changing conditions in his chief markets. Even as among these products it is not easy for him to move at short notice from one to another of them. When he attempts this, too, his movement is likely to have the effect of further depressing values in the industry from which he seeks to turn to another. “By acting on the assumption that a slump will continue and therefore rushing to sell, and by reducing the number of young breeding stock or by refraining from buying, farmers tend to accentuate the slump. By acting on the supposition that a boom will continue and by rushing to buy and by holding young breeding stock or decreasing I sales farmers tend to accentuate the boom.”

All our main exports are pastoral rather than agricultural products, depending upon the breeding, rearing and development of suitable flocks and herds. These are processes that all take appreciable time and cannot very well be hurried, lienee the manifest need for looking ahead further than from one season to the next, and also for hesitating about making hasty changes because for the time being prices for one class of product have gone up and for another down. It is here that the long-view study of market fluctuations in the lip-lit of past experience is of greatest use as a guide to the future. Apart from those, just now unhappily too many, whose [circumstances leave them but

little choice, there are not a few who in slump periods take the view that prices will continue low indefinitely and are inclined to get out. Those, however, who take the lung view and buy in the slump period generally secure an essential appreciation in capital values, while those who buy in boom time on the assumption that it will continue are apt to prove the losers.

The bulletin quoted goes in some detail into the causes that operate to bring about, with respect to various products, price cycles of fairly measurable length. In conclusion, however, it has to be confessed that at the moment little dependence can be placed on the normal operation of price cycles, which most obviously arc affected by such artificial checks as quotas, levies, tariffs, trade agreements, fixed prices, wage policies and monetary policies, and the like. It is, however, suggested that, in considering the probable movement of selling values over substantial periods, ,thc stage of the general business cycle and also of the particular commodity cycle can with advantage be taken into account as an index to broad tendencies. But, of course, if our Government carries out its declared intention of paying guaranteed prices for all our exportable primary products and itself taking all the speculative risks of oversea markets, then our farmers, as mere producers, need not trouble themselves much about price cycles or anything of the kind. As taxpayers, however, they may, along with the rest of the community, have to bethink themselves as to how the Government’s losses are to be made good.