Farmers Against Guaranteed Price For Meat and Wool

Manawatu Times, Volume 64, Issue 109, 11 May 1939, Page 2

Farmers Against Guaranteed Price For Meat and Wool

Decisive Vote at Feilding Rally

Threat of Collapse of Currency

A mass meeting of farmers at Feilding yesterday afternoon voted decisively against a guaranteed price for meat and wool. The vote was taken at the invitation of Mr. Lloyd Hammond, provincial group representative on the Dominion executive of the New Zealand Farmers’ Union, who, at the close of a brief and vigorous address, invited a show of hands from those present who favoured a guaranteed price for meat and wool. Three hands were raised from a audience numbering close on 400. “I respect your opinion,” said Mr. Hammond, who then invited a show of hands from those against the guaranteed price and his request was replied to with a sea of waving hands, a vote followed by enthusiastic applause for the speaker and the result of the vote.

The meeting was the outcome of au ( invitation by the Feilding branch of the Farmers’ Union to farmers throughout the district to meet Mr. W. W. Mulhol- j land, Dominion president of the Farm- i ers’ Union, who had something to say 1 regarding the difficulties facing primary producers. The response was clearly in dicative of the alarm felt among sheepfarmers regarding the mounting costs they are facing and the difficulties facing the country generally. Mr. H. D. Richardson, president of the Feilding branch of the union, presided and was supported on the platform by the Mayor of Feilding (Mr. T. L. Seddon), Mr. Mulholland, Mr. L. Hammond, Mr. D. G. Gordon, of Taihape (provincial president), and Mr. O’Shea, of Wellingtou, Dominion secretary of the union. The Mayor’s welcome to the visiting speakers is reported elsewhere. Fanner’s Position Examined. In opening his address Mr. Mulholland said that the primary producer was in au unfortunate position, not only in connection with his industry but from the fact that he had lost the sympathy of the city and town dweller. It appeared that the city and town dweller had been so much absorbed in other interests as to overlook the importance of the primary producer and it was therefore urgently necessary to win back that understanding and appreciation of the vital part played by the farmer in the national well-being of the country. He went on to deal with the economic plight of the farmer and in particular the sheep-farmer atlhough, he said, the dairy-farmer was facing just the same serious problems. There was something very compelling about the situation when mass meetings of farmers were being held throughout the country and it might be suggested that there was a certain amount of mob psychology- It was as well, therefore, to examine the position. Prices for the sheep-farmer’s products- could not be said to be on a level which could be called low enough although there had been a steady fall in the price of ordinary crossbred wool over the past three years, from 17d to IBd per lb. in the season 1936-37 to lOd to IOJFd per lb. for the season 1938-39. To obtain a comparison he had looked up the Court of Review’s figures based on a ten years average and found that the price for that class of wool had been fixed at 10d per lb. so that the current season’s price was on a par with the Court of Review price. Much the same applied to the price for meat, lamb and mutton. Lamb fluctuated between 7d and Sd per lb. and to-day was about 7d and ewe mutton moved between 3d and 4d per lb. and was round about 3d today. So that in examining the position prices were not wholly at a level as to cause disaster, yet the country was experiencing mass meetings of farmers. Why? It could not be doubted that that there was some compelling force behind it all. He was aware that many farmers could not meet their obligations this year and he had stated at Timaru that many farmers would have to vacate their farms in Canterbury in the next few months unless something was done immediately. The position was reflected in the trading banks * returns compiled by the Reserve Bank. In February advances to dairy companies increased from £1,135,000 in December, 1937, to £2,120,000 at December, 1938, an increase of roughly £1,000,000. The position of sheep-farmers was ascertained and indicated through the advances made to stock and station agents. These increased by £1,089,000 in the same period, rising from £1,029,000 to £3,015,000. Naming the Cause The cause of this paradoxical position was to be found in the economic policy of the last few years. Mr. Nash had stated that the objective of the Labour Party in connection with the farming industry was to secure to the farmer an income in accordance with the time, skill, energy and experience used by him in producing the commodity. This procedure, said Mr. Mulholland, was the

foundation of labour’s policy of guaranteed prices. It was the basis of the Labour Government’s policy of higher wages, shorter hours and large Government expenditure. In office the Government pushed on energetically with that part of its programme which represented increased costs to the farmer. “I have repeatedly, since becoming Dominion president of the union in 1936, warned the Government that failure to implement the whole of their policy—the raising of farmers’ prices as well as their costs —would create the conditions of a slump,” said the speaker. To date the Government had not taken any effective action in regard to export prices, either through lack of will or inability to find a way. The result has been after three years of record production, the Government announced in a time of alleged unparalleled prosperity that our expenditure as a nation had so far exceeded our income that, despite having started that period with a credit balance of more than £40,000,000 in London, w T e were in danger of not being able to meet our overseas commitments in the near future.

The cause, said Mr. Mulholland, was that while the economic policy of the Labour Party was a balanced policy—the inflation of both export prices and internal costs —the Government, in action, had carried out an unbalanced policy—the rising only of internal costs. This created two different pounds—the £ in which the exporter, the farmer, was paid, maintained rigidly at N.Z. £125 to £IOO sterling and a £ in which he had to pay his costs of unknown value but, certainly very much less in goods and services than the £ in which he was paid overseas for his produce. One effect of this difference in the two £’s had been that people were encouraged to import because their nioney was worth more outside New Zealand. This was a major cause in the depletion of our overseas funds. Another effect was the unsatisfactory condition of our primary industries in spite of prices which, in themselves, should not have caused serious difficulty. Instead of correcting the errors and omissions of its policy the Government made the still greater error of adopting import and exchange control to counteract one effect of its policy—an effect which must inevitably accentuate the other ill-effects and tend further to worsen the position. Mr. Mulholland went on to quote from a report by a League of Nations expert committee on the effects of exchange control and these revealed that export capacity would be reduced not because of expansionist money policy but because of the fact that it is combined with the maintenance of the exchange rate through control at a level higher than would have been the case if exchange had been free. Further, when costs rise in terms of domestic currency and the exporter was forced to sell at world prices and could only convert his foreign exchange receipts at the official rate, the exchange control was equivalent to a tax on exports. The experience of other countries was that while straining to deal with ono effect on an unbalanced policy, it tended to intensify the lack of balance, evidenced by the growing burden of costs on export producers. Manufacturers might whoop for joy over the exchange control, but they should not lose sight of the fact that they were dependent on the overseas receipts for export production to provide them with the raw material for their manufactures. The Government would have to deal with the cause and not with only one of the effects. If the Government had found that it was impossible to raise export

prices as its policy . required it to do, then it should have the courago to admit its mistake and proceed to reduce costs to a level at which export industries could maintain production. Producers Are Threatened. Primary producers to-day were certainly facing a position which threatened them very dangerously indeed, con tinued the speaker. Quoting from figures he had taken out dealing with weekly wages and retail prices as well as export prices, he said that out of his receipts from a product which he sold overseas on an average of 21 per cent, above the 1914 level, the farmer was called upon to pay general costs which had increased more than 100 per cent, in the case of hourly wages and b? round about 50 per cent, in many other cases. Supporting these figures Mr. Mulholland quoted the case of the freezing industry where costs had risen very considerably. In addition there was the increased Government expenditure whieh was a very material factor in increased costs. A Government expenditure of £56,000,000 was a very consid erable addition to the cost of primaiy production. Present day farming costs reflected the various additional costs which the primary producer was carrying. A Wairarapa farmer had taken out his costs over a period of years on the basis of costs per sheep and these revealed that in the year 1937-38 rates and taxes represented 7s 9d per sheep. With these greatly increased costs, said. Mr. Mulholland, it was difficult for

the farmer to look with any confidence towards the future. Mr. Nash had stated that he needed £2,000,000 for his Social Security scheme and with the ! fa.ll in Customs revenue and sales tax | due to the import control regulations, it was estimated that the Government would have to find about £8,000,000 by increased taxes to carry on with its schemes. It would be impossible to find this sum without it being reflected on farmers. It looked to the speaker that farming was being crushed out of existence through Government action. The farmer could not obtain increased revenue from abroad and could not pass his charges on, therefore it was imperative that he be relieved of taxation. Guaranteed Price Offer. Mr. Mulholland went on to deal with the proposal that the exchange should be allowed to go free as an aid to the position. New Zealand was dependent on its exports, consequently exchange control was one of the gravest evfc and could be mitigated if allowed to go free. A. free exchange would help the position while relief from taxes would be of very material assistance also. He was not very hopeful of securing both. He had to thank the Prime Minister for his offer of a guaranteed price for meat and wool and the farmers would have to decide whether they were prepared to accept that offer. The offer of ths Prime Minister and the experience of the dairy-farmer under guaranteed prices called for very carful considera-

prices cauea ror very canui consiaera-

“No man likes to be dragged out of his bed und forced to join a hilarious party in the small hours of the morning,” says a Magistrate. The same applies to oysters.

tion. "I say that the guaranteed price offer to sheep farmers means nothing but the realisations," said Mr. Mulholland. Last year Mr. Nash said that to accept the Advisory Committee's recommendation would have meant a deficiency of £l*ooo,ooo and that would have endangered the stability of tho Dairy Industry Account. Now the whole resources of the State were behind that account but Mr. Nash said it would be dangerous to pay the price recommended so he offered a reduced price which was expected to result in a deficit at the end of the current season of about £500,000. To place this year's returns for sheep-farmers on a satisfactory basis would require, said the speaker, about £5,000,000 but according to Mr. Nash the sheep and dairy farmer would have to share the £1,000,000 which Mr. Nash said was the limit the account could stand. With a production valued at between £60,000,000 and £70,000,000 the dairy-farmer was better off only to the extent of 1$ per cent. Such would not help the sheep-farmer but tho point to remember was that thfc scheme provided that deficits would be met out of future surpluses so that actually a guaranteed price amounted to nothing more than the payment of realisations. Suggested Free Exchange. Mr. Mulholland could not see any other way of raising sheep-farmers’ prices except by free exchange. "I know that any action in this matter will be useless unless there is a firm hand ou costs." (Applause.) "I say definitely tho soundest way is to reduce costs. I know that people are against this but costs at least must bo held. But if costs rise wo must inevitably arrive at a collapse of our currency. We must insist on a stabilisation of our costs. Some members of the Government are now realising this—perhaps a little late iu the day—still there is now a recognition of this. We must, however, not throw the whole of the responsibility on to the shoulders of the Government; it is the people who decide and it is the people who must realise that costs must be held," he concluded amidst applause. Dominated by Politics.

"We are unfortunately dominated by a political situation weighed against the farmeT," said Mr. Lloyd Hammond. Farmers had been asked to accept a guaranteed price for meat and wool but did it contain anything of a substantial nature that would meet the country's economic conditions? No farmer had ever asked for a guaranteed price; the dairy farmers had one thrust upon them under laudable promises which induced them to swallow the bait, sinker and line. Dairy farmers were among the hardest workers in New Zealand and to-day their wives and children were helping in the industry. He went ou to refer to what happened last year when it came to fixing the guaranteed price for the new season. "Now if the guaranteed price for sheep-farmers should fall down for tne sake of per lb. it is of no use. It is not a guaranteed price scheme but a scheme to commandeer our produce," he said (applause). When anything was to be guaranteed one naturally looked at the guarantor, continued Mr. Hammond. It was not a political issue—it was something which affected every farmer. If the guaranteed price for the dairy farmer had broken down what inducement was there for the sheep-farmer to put his head in the noose (Applause.) The Meat Board had done commendable work and if there was to be any control of meat and wool thon let the Meat Board do it. The board was elected m a democratic manner. The day was approaching when there would have to be some control and it looked at present that something like 45 per cent, of our exports would be held In store in January. If control was coming do not let us be controlled by the Government— Labour or National. Let us retain control ourselves (applause).

Mr. Hammond went on to thank Mr. Mulholland for coming to Fcildiug. "If | you knew the amount of work he is doing for farmers you would get up and i cheer him," said Mr. Hammond as the audience recorded its unanimous ap- 1 I plause. He hoped the day would not i come when farmers would have to depart from constitutional methods to obtain pustice. "It was always the last straw that broke tho camel’s back and if that last straw—Well, I will leave it at that. It is rather a dangerous topic. We have not arrived yet but when farmers are meeting all over the country there is something very wrong with conditions." Mr. Hammond then called for a show of hands on the guaranteed price question with the results indicated above. Costs Must be Reduced. Mr. D. G. Gordon emphasised the need to win the goodwill of citizens and that could only bo achieved by putting the position of the farmer plainly before them. He was concerned about the fate of tho mau on marginal land. Neither a guaranteed price nor a free exchange would, in his opinion, give immediate relief and immediate relief was what was desired. The efforts should be to reduce costs by the elimination of rates and taxes on the land. The situation had been accentuated by the quota on meat and tho problem of dealing with ewe mutton. He questioned whether it would be possible to get the Government enthusiastic over the idea of a free exchange because the Government was pledged to a high standard of living. However, he admitted that he had debated the issue with the ex-member for Rangitikei, Mr. Ormond Wilson, last year and Mr. Wilson had expressed the opinion that the Government might be forced to raise the exchange and possibly abandon the 40-hour week. (Applause.) After one or two questions had been dealt with tho meeting unanimously supported the resolution carried at the Timaru meeting which called upon the Government for immediate action in assisting primary producers. Tho motion was moved by Mr. B. McLeod and seconded by Mr. A. L. Brown. The meeting accorded an enthusiastic vote of thanks to Mr. Mulholland and the other speakers and the meeting con-, eluded with a vote of thanks to tho chairman.