Compensated Price Discussed by F.U. President

Northern Advocate, 14 July 1938, Page 9

Compensated Price Discussed by F.U. President

\por Proas Assoctauon. Copyright. I WELLINGTON. Tuesday. Many references to “Plank 2—Compensated Price" in the Farmers' Union policy were made by the Dominion president, Mr W. W. Mulhollnnd, in his address yesterday. “One of the most urgently necessary planks in our platform is that one which states our policy in regard to the relationship of costs and prices," he said. This stated: (a) That while the Farmers’ Union policy is still that the soundest method of closing the gap between farmers costs and prices is by a reduction of costs, we insist on its complete closing by a reduction of costs, or by an increase in prices. Such adjustment must:—<a) Enable farmers to pay competitive rates of wages; (b) allow them reasonable interest on the capital invested in their farms and stock; (c) enable them to meet the increased costs imposed by legislation, including tariffs; (d) allow them a remuneration commensurate with the service they render, and wita that obtained by other members of the community who render equal service. Compensated prices are not to he brought about by inflation meaning by inflation an increase In the general price level due to an increase iu the amount of money put into circulation.

■This,’’ said Mr Mulholland. ‘‘is what has come to be known as the compensated price policy. It is stated in the form that it is, in our policy, because the people at the last general election decided against a reduction of costs as a way of correcting the economic position, and the Labour Party promised to meet the increased costs, which its policy for rectifying the economic position required, vyilh increased prices. It is, therefore, first of all an emphatic demand that the Government carry out their pre-elec-tion policy."

What is the Compensated Price? It was true, as Mr Nash had said, that if the prices of dairy produce were fixed on all the considerations mentioned in the Primary Products Marketing Act, the requirements of the compensated price would be met so far as it referred to dairy produce. But it had already been pointed out that elsewhere the Act provided that the price fixed by the * Government could not be challenged. The 1937-o8 price had been fixed on the market prospects. The principle of paying a price divorced from the market value of the produce had been abandoned. “It is a frequent question, ‘What is the compensated price?’ ’’ said Mr Mulholland. “Mr Nash says it is the same as the guaranteed price. Perhaps! Mr Fraser at Dunedin says it is an attack on tariffs. Perhaps! Others say that it will mean a tribunal to fix all farm prices. Well, perhaps! If the Government is going to fix prices, then on the experience of the Primary Products Marketing Act, it will never be done satisfactorily, unless some independent tribunal with access to all relative information is definitely instructed to fix prices on the policy indicated in our plank and in the Act."

State Fixation Opposed

While they recognised that they must bow to the will of the people and accept the policy which they dictated, the compensated price did not express concurrence with Government fixation of prices, whether by tribunal or otherwise. “We recognise that such a fixation of prices must eventually result in bureaucratic control of our farming industries, which is intensely repugnant to the farming community. The demand in our policy is not for

;:n adjustment of prices, but lor an adjustment oi price levels. Iv is a principle that can be implemented in various ways, depending upon the policy of the Government in power. Tne twitting of supporters of Ihe compensated price by members of the present Government on the ground ihal they have no plan is an admission of the Government's own inability to carry out their own policy, laid down before the election, which was artificially to inflate farmers' pricer, (all expert prices, not only dairy produce prices) sufficiently to balance artificially inflated cos.s. which. 1 agree with Mr Nash, would have put into operation the principles of the compensated price in accordance wit!, the present Government’s policy. “The compensated price is essentially an attack on two standards of value in one community, one standard for those who supply goods and services for local use. and another for these who supply them for export. We cannot indefinitely continue to have two standards of value for services and individual freedom to choose where wo will serve. We will need far-reaching restrictions of this nature if we are to keep up our production under the present conditions."