DENMARK’S PLIGHT

Nelson Evening Mail, Volume LXVI, 9 April 1934, Page 2

DENMARK’S PLIGHT

EXPORT REDUCTIONS BRITISH MARKET CLOSING Tlie Danish Government refused the British GovernmenUs request to accept n voluntary reduction in the bacon quota. A writer in the “New Statesman” explains why, failing voluntarv acquiescence, compulsion was applied by Britain. Alter stating that Denmark, with a relatively unfavourable soil and climate, bail embarked on a costly and highly capitalised production for export to “tree’ Britain and receptive Germany, the writer continues: “Danish agriculture has been caught by the slump in its cruellest lorm. r l lie Danish farmer faces not only a drastic fall in prices, hut the prospects of a growing measure of exclusion from his only markets, the markets for which he has built up Ills industry, and oil which he has depended for nearly two generations. No hopeful alternatives present themselves either at homo or abroad. It is not surprising to learn that payment of interest loan instalments, and taxes have all slowed down, and that in a rough estimate, 20 per cent, oi the farms are actually insolvent. “Some adjustments have been attempted. A mere delay in the payment of all farm debts and fixed charges is r;o permanent or desirable solution. The use of savings has its limits. A reduction of costs by a reduced use of imported feeding stuffs, reduced feed ing and eonsequeud milk yield, with increased tillage is a genuine economy. The State has intervened to reduce taxation, to suspend for two years all payments due to credit institutions., and to reduce the rate of interest on farm loans. Thy benefit of the latter provision is somewhat lessched by tlie circumstances that the capital of credit institutions is principally derived from farmers’ deposits.

CO-OPERATIVE MARKETING

“So much for the farmers’- outgoings. On the other side of the account tlie Danish farmer has relied for many years past on a co-operative marketing system which is famous throughout the world. It may he said at once that, as a business institution, this system—admirably efficient and financially flexible —has withstood without a crack the strain of the last few years, and were its aims merely commercial and self-sufficing, ft might well continue to function unmodified. Its purpose however, is not its own business success, but the prosperity of its farmer members, and to preserve what remains of this a wholesale revision of production v. as needed. “Bacon was handled first. For some time a union of lwcon factories hud existed for advisory and general purposes. In November, 1932, it was laid down that all bacon exported to England must be sold through the union, which thus became tlie agent for sixtytwo co-operative and twenty-three private factories. Bacon was purchased at a fixed weekly price and the full quota .sold week by week to England, the remainder being disposed of, frequently at a loss to other countries, Sales on the home market were left untouched. “Such a scheme would he financially unworkable without tw-o further provisions—price equalisation and limitation of production. The first is achieved by a levy of two krone on every pig slaughtered, which is used to make the price of all exported pigs up to English level. Reduction of output was applied first to the factories, the quota being allocated weekly among them. Cuts were severe amounting sometimes to as much as 50 per cent, but seemed to be justified by an almost ecpial rise in prices. Regulation of factory output was not, however, sufficient if the individual producer was to he left unfettered, and in April of last Year a regulation was introduced fixing a permitted output for each of the 220,000 Danish pig producers. The figure is based in each case on eighteen different factors, including hist year’s production, value and area of farm, number of cow's kept, skim milk available, etc. Tickets are issued for every authorised pig, and pigs without tickets are accepted only at half-price, ft was hoped to provide in this way for a total reduction of about 20 per cent.

FINDING OTHER MARKETS

“The mechanical problems of adjustment have been handled with competence and speed, but there are limits —brought nearer with every successive shrinkage of the British market—beyond which mere adjustment cannot hope to secure the survival of the Danish farmer, or, more accurately, of the Danish dairyman-pigkeeper, who has for long been a valued citizen of the agricultural world. His survival turns upon three factors—the cost of production, the discovery of other than British markets, and the level of world ].rices. Something has been done to reduce costs by methods already described, as well as by (he work of cooperative supply organisations, but it is doubtful if the co-operative system of one country alone can reduce the price level of consumable goods —the combined living and producing costs—to a level which would make production profitable at the present level of world prices. “Tlie search for alternative markets abroad seems valueless at the outset,for there, too, the world price level rules. Something may and probably will be done with the home market, where a certain limited margin of margarine consumption and imported food may be eliminated to the farmers’ benefit. The limitation, however, is known, and there remains only tlie hope of a restoration of world prices to something approaching their old level. Failing that, Danish fanning, in tlie opinion of good authorities, may survive in its present form for per haps another two years. After that, change, lech ideal, commercial, probably also fiscal, is almost inevitable. Reliance on internationalism and free trade, more especially the free trade oiul internationalism of Great Britain, lias failed, and Denmark may yet see a reversion to subsistence farming, coupled with the intensive cultivation of a. Highly protected home market and a national economy approximating to that of the other. Scandinavian countries. Such a change would involve the scrapping of much plant, capital, acquired knowledge and experience, as well as much individual hardship.”