King Country Chronicle. Wednesday, May 18, 1938. DAIRY INDUSTRY ACCOUNT.

King Country Chronicle, Volume XXXII, Issue 4641, 18 May 1938, Page 4

King Country Chronicle. Wednesday, May 18, 1938. DAIRY INDUSTRY ACCOUNT.

At the National Dairy Association Conference at New Plymouth on June 26, the Hon. W. Nash is to announce what the Government proposes to do with the. surplus of £530,683 which has accumulated in the Dairy Industry Account. What he has then to say will be very interesting, for he will be torn between the desire to give way to political expediency, and the desire to carry out the Government's policy of maintaining a guaranteed price. In announcing the surplus, Mr. Nash referred to the fact that during the depression years the dairy farmer had received as little as 9d for his butterfat, and that in 1934 the Dairy Commission had stated that one-half of the dairy farmers could not meet their commitments. Then Mr. Nash compares the position today, when farmers are assured of an average butterfat return of 13.68 d and 15.18 d for butter factory and cheese factory suppliers respectively. What he did not add was that they are only assured that return at the discretion of the Government, and that the Government only has the power to give the assurance if prices overseas are sufficiently high, if general revenue is sufficiently buoyant to meet a dairy account deficit along with its other commitments, or if there is a sufficient credit in the Dairy Industry Account to cover any losses made. The first matter is one beyond the control of the Government. The second alternative appears only likely to be employed to a very limited degree. Already it has been used, for Mr. Nash has told the people that the £300,000 deficit in the Dairy Industry Account for the first year would not remain a charge against that account, so that this much the dairy farmers have gained. Were a substantial fall to occur in overseas prices for butter and cheese, however, it seems impossible that general taxation could meet the deficiencies. That leaves us with the third alternative, of building up a reserve. Through an unexpected recovery in prices overseas, Mr. Nash now has the chance of beginning to build up that reserve; but his party also has an election to face in November, and the average farmer would rather have his share of the money right away, rather than see it in the dairy account. Particularly will this be so of those whose herds and flocks have suffered in the facial eczema epidemic. So Mr. Nash will have to decide whether to distribute the surplus—and the demand for this will be great—or to retain it as a reserve. Then if prices are to continue on a fairly high level, he will have to decide whether to raise the guaranteed price to an estimate of the return likely to be received, or keep it at the present level and court unpopularity among dairy farmers. If the surplus is distributed, and the guaranteed price is once again fixed on an estimate of returns for the coming season, this course of action must be construed as an admission by the Government that the returns the dairy farmer will receive will depend on the overseas market.