Guaranteed Price Discussed By F.U. President

Northern Advocate, 13 July 1938, Page 6

Guaranteed Price Discussed By F.U. President

1 Per Press Association. Copyright, i WELLINGTON. This Day. “AF THE GUARANTEED PRICE PLAN OF THE LABOUR PARTY, THERE NOW REMAINS NOTHING BUT THE STATE OWNERSHIP AND CONTROL OF THE MARKETING OF DAIRY PRODUCE, AND THAI SEEMS TO BE THE ONLY PRINCIPLE WHICH THE GOVERNMENT WILL NOT ABANDON,” SAID THE DOMINION PRESIDENT OF THE FARMERS’ UNION, MR W. W. MULHOLLAND, IN HIS ADDRESS AT THE ANNUAL MEETING OF THE UNION YESTERDAY.

Mr Mulholland said the disbursement of the credit balance in the Dairy Industry Account was a complete abandonment of the most vital principle in the guaranteed price plan—the establishment of an equalisation fund. It had been abandoned to political necessities.

President’s Regret

“I regret the abandonment of the long-term price stabilisation attempt represented by the guaranteed price as originally planned by Mr Nash.” continued the president. “The Primary Products Marketing Act was very admirably designed for the purpose for which it was intended, except for the one very serious flaw, which has pi’oved fatal —Ministerial control. It was not certain that the scheme would succeed, but 1 was in company with most farmers, I think, in wishing the Minister well, and hoping for his success.

Disappeared From Picture

“I had thought that the promise of the Prime Minister, MiSavage, and of the Minister of Marketing, Mr Nash, to have a price fixed by means of a tribunal might have been a reinstatement of the principle of an artificial price unrelated to the market but related to farmers’ costs, but the opportunity to abandon that proposal was very readily seized, and it has disappeared from the picture.”

The statement that the 1937.-38 price had not been fixed on the cost of production, the president claimed, was fully justified. He could not understand the pretence being continued, as . had been done by the Minister of Marketing when announcing the Id. per lb. extra payment.

Insulation Methods.

Mr Mulholland said there seemed to be some idea of meeting the effect of a fall in prices by still further raising wages and embarking upon a huge Government spending programme by utilising the public credit. Such a policy would accentuate the disequilibrium, unless it was accompanied by the artificial inflation of export prices. This would have to be so great that the devaluation of the New Zealand pound would gravely endanger the Dominion’s financial stability. In spite of the Prime Minister’s brave words, there was no evidence that he had any real plan for insulating New Zealand. The possibility of an effective spending policy, as a corrective to depressed conditions, had been largely dissipated by the Government’s present activities. A stabilised price had a considerable appeal, but stabilised income was more important really to farmers, the president continued. In this, two essential factors .were costs and a reserve fund. Farm loans on the table mortgage system provided one of the most effective ways of establishing an individual reserve.

Interest on Sliding Scale

If, in addition, the rate of interest was arranged on a sliding scale connected in some way with the farmer’s returns, the stabilising effect would be greatly enhanced. Mr Mulholland suggested that the Dominion's more important State and private lendinginstitutions should investigate this aspect, and could well make it a feature of their usual mortgage contracts. But, helpful" as such a policy would be, it would not insulate New Zealand from the effects of a world fall in, prices. In a time of prosperity, the Government’s course should have been such as would have tended to check prices and costs from rising too rapidly and restrain too-free spending.

Compensated Price

■ The president said ,it was not sufficient for the farmers that political parties introduced the compensated price into their policies. It must be given effect to.

Independent Tribunal Imperative,

If the Government was going to fix prices, it would never be done satisfactorily unless some independent tribunal was definitely instructed to fix prices on the policy indicated by the Farmers’ Union and in the Act. Mi 1 Mulholland denied that the offer of a tribunal had been turned down. The question illustrated the danger to the farmers of having a large number of separate and independent conferences dealing with the'iv business. The Government had seized the opportunity of an apparent difference between conferences to back out of their acceptance.