EXPORT PARITY

Hauraki Plains Gazette, Volume 58, Issue 4105, 25 February 1949, Page 9

EXPORT PARITY

BOBBY CALF SKINS MR NASH REPLIES LOCAL MARKET COMES FIRST Persistent and strenuous efforts have been made by the central executive of bobby calf pools for an export parity price for supplies of calf skins to the local footwear industry through tanners. In reply to representations made by the Dominion president of the Federated Farmers, Hon. W. Nash, M.P. replied that in pursuance of the Government’s stabilisation policy and the price structures approved for the sale of goods in New Zealand were based on actual costs of production or importation plus a reasonable margin of profit.

The Government, he said, considered that the firs|. call on all local production—clothes, shoes, butter, radios, furniture, etc. —was the domestic market, and until the requirements of the local market had been satisfied it could not be said that an exportable surplus existed. The principle adopted in fixing the local cost was based upon the cost of production in New Zealand and not upon prices on the overseas market.

“ I cannot agree, therefore, with your contention that the primary producer is subsidising the consumer,” continued Mr Nash. “If the primary producer were granted a return on his local market supplies based on export parity it would be equivalent to giving him an advantage over all other suppliers to the local market. The primary producer would be receiving for that portion of his produce used on the local market a price in excess of cost of production, while all other suppliers to the local market would be held down to the cost of production basis. Such a position would clearly be unfair and would constitute a deviation from a basic principle of stabilisation in New Zealand.

“ You will appreciate,” -said the Minister, “ that if primary producers were allowed export parity prices for, goods supplied to the local market, it would be equally right for other sections of the community (wage and salary earners, manufacturers and retailers) to claim ‘ world parity ’ prices for their goods and services. Such a concept is clearly incompatible with a stabilisation policy and would inevitably build up a high cost structure for the primary producers themselves.

“ Where, in pursuance of the Government’s stabilisation policy, the local selling price of an item is held at below cost of production (e.g. butter), the difference is made up by subsidy from the Consolidated Fund. This is in accordance with the policy that a producer is entitled to his cost of production on all his produce, but it is entirely different from subsidising up to export parity, which is something in excess of cost of production.” References had been made that the prices received by the dairy industry since 1939-40 had increased by a greater percentage than the increases received by the sheep farmer, the inference being that, as a result, the dairy farmer was in a better position than the sheep farmer. “ Increases granted to these two industries have, as far as possible, been related to proven increased costs of production,” continued Mr Nash. “ The percentage increases granted, therefore, merely reflect the relative cost increases in the two industries over the period and do not, as implied, reflect the relative position of the net income,” he concluded.