Manawatu Daily Times Sixpence That Became £7,000,000

Manawatu Times, Volume LIV, Issue 6622, 7 August 1931, Page 6

Manawatu Daily Times Sixpence That Became £7,000,000

The Aberdonian’s “saxpence” that “went bang” in London some years ago has held pride of place in the exploits of that modest but useful coin for many years. But so far as this

Dominion is concerned, the farmer’s sixpence—the loss of which this year has swelled to the huge total of £7,000.000 — is likely to hold the stage for a while. The story of the sixpence is a story of the price of butterfat, and it is thus told in the New Zealand Journal of Agriculture, by the Farm Economist of the Agricultural Department, Mr. E. J. Fawcett, M.A.: —

“From 1922-23 to 1929-30 inclusive, the price of butterfat has fluctuated between 15d and 19d per pound, with an average for all butterfat produced in the Dominion of 17d over the whole period. An anticipated pay-out of lid for 1930-31 therefore represents a reduction of 6d per pound, which entirely upsets the economic structure of the dairying industry as built up on the prices ruling during the last decade.” Thu's the sixpence per pound, followed cumulatively through all the pounds of butterfat New Zealand produces, becomes about seven millions sterling.

“The dairy fanners of New Zealand will receive £7,000.000 less from dairy factories than would have been the case had prices been maintained at the level on which the industry has been capitalised.” Including the above, the farmers’ gross income depreciates by £7,500,000. Again, “whereas dairy farmers would have received £12,000,000 as interest or for wages and labour reward, their income to meet the same items will be this season in the vicinity of £4,500,000.”

The words “as interest or for wages and labour reward” require some explanation, and other statements in Mr. Fawcett’s paper seem to supply that explanation. He assumes that the capital value of the dairy farms of New Zealand is represented half by mortgages and half by farmer’s equity. He estimates that the interest payable on both is £9,000,000 a year; therefore bplf (£4,500,000) is interest which the farmer should receive as interest on his equity, and the other half is interest which the farmer must pay to the mortgagee. But the loss of £7,500,000 makes it impossible for the farmer to credit himself with interest on his equity; so strike out £4,500,000 for interest on farmer’s equity, not earned this 'year.

That becomes three millions of the lost £7,500,000 looking for a lodgment, so it is deducted from the other item mentioned, “wages and labour reward.” Normally “wages and labour reyard” on dairy farms is credited with absorbing £7,500,00(k Deduct three millions not earned this year, and the only money left for “wages and labour reward” is £4,500,000, as stated. Labour reward means reward for workers on the farm, whether hired or belonging to the farmer’s family.

The above figures are for the dairying industry as a whole. In practice, the incidence of the loss, and the incidence of its allocation, varies according to the farm and the farmer. The farmer may not charge the debit to labour reward. He may take it out of a totally different farm item, namely, farm maintenance. Or he may do both:

“In an attempt to meet their capital liabilities, farmers are to reduce their living expenses, and in many cases the costs of maintenance and working have also been reduced. As fertilisers represent the only cost item of great moment which is within the discretion of farmers, it is natural that this should be curtailed. As fertilisers represent the greatest single factor in maintaining or increasing production and lowering the unit cost, a curtailment of their use at the present time is unsound from every .viewpoint.”