FACING A CRISIS

Nelson Evening Mail, Volume LXVI, 20 April 1934, Page 5

FACING A CRISIS

DAIRYING INDUSTRY GOVERNMENT ASSUME RESPONSIBILITY OF PROBLEM STATEMENT BY PRIME MINISTER (By Telegraph— Special to “The Mail") WELLINGTON, This Day. The following statement has been made by the Right Hon the Prime Minister the Rt. Hon. G. W. Foibes . After giving very full and serious consideration to *ho conditions of the dairying liidustrv the Government aic iinnressed by the seriousness ot tin. position, by 'the uncertain and changing outlook for the future, and particulaily by the bearing of recent developments oh our relation with His Majesty s Covernment in the United Kingdom The New Zealand Government have decided to assume the full responsibility ot the problem, and all necessary steps will be taken in accordance with this elect pion. In the face of the crisis it » not possible to act effectively with divided and uncertain control The Government now accept the responsibility definitely and clearly. This is the decision ot Cabinet, and it is one that has not been lightly made. The difficulties which confront the Dairy Produce Board are appreciated, but the Government realise that the problem is not confined to the dairy industry, and is now .cxtendm in other directions and raising issues beyond the board’s jurisdiction. ' ; DECISION JUSTIFIED

. Tlie indication of the policy of the ImpeHft) ' Gbvemrhent, together with the nehr apptoAch of the Wrmination o the Ottawa agreements, justify the G°' ei ment’s decision to take such steps may be deemed advisable m the circum3&S. The public is swaro.genrfy that for well over a year an important question has been before the Dominion (kis lias been whether the New Zealand Government and the dairy industry should agree to the quantitative regulation of the exports of dairy produce horn New Zealand to Great) Britain. This situation has arisen owing to the glut o* dairy produce on the markets of Gical Britain, which followed the rapid expanS o! production in all-- torfflg" »f Empire countries, and the posing of al ternative markets by tariff and othei trade baiTiers imposed by all countries hitherto importing butter and cheese. The resulting serious fall mlj c level of dairy produce in Great But am, and its far-reaching influences, raised the problem of regulating _ supplies so that all producers supplying the United Kingdom market might be placed m a better position. The launching of the British milk marketing scheme brought in an additional factor, since it was -widely felt, that the scheme would be endangered should the Government not be free to put into operation their declared policy of regulated markets for overseas Sairy produce. The New Zealand Government referred tho matter *o the Dairy Produce Board, which expressed its opinion very .definitely against me suggestions of a policy of regulation, and the Government accepted aud transmitted the decision to the British Government. The British Government -thereupon accepted the situation, and m order to safeguard the operation ot the milk marketing scheme, arranged recently lor temporary financial advances to Bntish dairy producers by a subsidy scheme guaranteeing a fixed price level toi all surplus milk processed. LOSS OF GOODWILL It has become apparent,' however, that the refusal of the dairy industry to negotiate along the lines of the regulation of supplies has given nse to a straining of the hitherto friendly relations towards New Zealand of a huge section of the British public, and to a definite loss of, goodwill towards New eZalnnd and its export produce. lhe Government will approach the British Government with a view to restoring conditions to a mutually satisfactory basis for the future disposal of pur dairying products in the United Kingdom. in thus acting on behalf of the dairying industry and of the Dominion, the Government will endeavour to find some acceptable crrangemeiit The'Government recognise that the British Government’s policy as stated in their cable of the 22nd- December last must override any local considerations, and must be seriously taken notice of. We cannotallow any temporary misunderstanding to disturb the friendly relations wine., have always existed between the producers of New Zealand and those of Great Britain. It will be recalled that it was recognised by all parties at Ottawa as a guiding principle that the interests ot British producers should have first consideration on their owi) markets, and it was admitted' that tho interests of dominion producers should. come next in in order of preference, i.e., before foreign. The improvement of the quality and suitability of our products mid the necessary, co-ordination of authonty will be the keynote of the policy to be followed. ■ The quality factor must stand first in our considerations, and necessary expenditure in this connection will be a wise investment.

ROYAL COMMISSION TO REPORT In addition to re-opening negotiations as indicated above, the Government are of the opinion that urgent action is necessary in the direction of improvement in the conditions under which the dairy industry is operating within the Dominion, and in the development of additional markets for its produce. Accordingly they have decided to accede to the request of the recent dairy conference, and to set up a Royal Commission to report on whatever action may be deemed necessary, whether legislative, regulatory, or developmental, and to investigate, inter alia: (1) The economic administration of the dairy board. (2) The. methods and conditions of farm and factory production of dairy produce in their relation to quality as required by the consumer, and any practical, improvements in these methods. (3) The necessity or otherwise of affording further governmental assistance in'the immediate future for the maintenance and reasonable development of the industry, and the best means by which any governmental assistance should be afforded. (4) The economic practicability of the utilisation of raw dairy products for purposes other than the manufacture of the present standard lines of butter and cheese.

(5) 'The diversification of production of dairy lands. (6) The organisation of local marketing. (7) The adequacy of the provisions of the Dairj- Produce Export Control Act, having regard to the special conditions now afffecting the industry. EXTENSION OF MARKETS In regard to the extension of markets, the Government have already taken considerable steps to negotiate treaties to this end. This policy will be actively pursued, and the Government is further prepared to co-operate financially with the industry in establishing trade channels, and subsidising new avenues of trade abroad, including shipping to countries in any part of the world that offer opportunities for the sale of New

Zealand produce. Coiitlitions abroad are changing, and a passive marketing policy in the face of such changes will not meet- requirements. The Government will be prepared to co-operate with the industry in the development of existing and new markets where possibilities exist, and will be prepared to share in the establishment of such trade organisations as are shown to be necessary. The Government will have an investigation made in Great Britain into the causes that have led to the great discrepancy between the prices of New Zealand dairy produce and those cjf competing countries, and if found necessary will assist the industry in removing them.

PROBLEM AMOUNTS TO CRISIS The whole problem, which has arisen mainly as a result of developments outside of New- Zealand, is such as to amount to a crisis, and the Government have frankly taken the view that the. responsibility in tackling it must be accepted by fhem. The public of New Zealand will realise fully that the situation calls, for planned action. J his action will only ho effective and confidence restored if the measures proposed by the- Government receive the sympathy and practical help of nil concerned, directly or indirectly, in the conduct of the industry. The Government therefore confidently appeal For that co-oper-ation and support, without which no policy can be effective.

PROPOSALS BY BOARD

BEST AVAILABLE PLAN (By Telegraph—Press Association! WELLINGTON, This Day. In proposals recently submitted to tlio Government, the Dairy Produce Board expressed the view that if the Dominion were ftiecd with quantitative restrictions then the problem was of such national importance that it must be dealt with by the. Government and not by any section of primary interests. The Board reiterated the opinion that the best available plan Tor the dairy industry was to work on the following lines: INTERNAL (1) Pay subsidy on exports. (2) Reduce costs whereever possible. (3) Diversify production and cull inferior stock. (4) Maintain and improve quality. (5) Organise local market and stimulate consumption of milk, cream, and cheese on local market. To this end legislation is necessary. EXTERNAL (1) Improve and extend marketing wherever possible and do the utmost to negotiate favourable Reciprocal trade treaties. (2) Regulate shipments. (3) Stimulate United Kingdom consumption of New Zealand butter and cheese by advertising. (4) Co-operate with the British Milk Marketing Board to stimulate milk consumption in the United Kingdom.

COMMISSION FAVOURED

QUOTA AND IMPERIAL POLICY STRATFORD, This Day. Addressing a largo meeting of farmers at Wliangninomona, Mr W. J. Poison endorsed the Government's decision to appoint a Royal Commission to examine the whole economics of the dairy industry internally and externally, which the Farmers’ Union, including all sections of the organisation, had unanimously asked for. He agreed with the Government that the 'problem to-day raised the issues beyond the jurisdiction of tlie dairy board. The quota involved the wide question of imperial policy, and it seemed to him that just as it. was necessary sometimes to sacrifice a limb to save a tree, some unpleasant regulation of our major industry may be forced upon us not merely in the interests of the fanners of Britain, but in the interests of I lie nation. Tt was unpleasant to think of it, but the fact must he faced that Great Britain was no longer invulnerable. The command of the seas, even if retained, was not today sufficient to maintain a policy of isolation. Alliances were necessary.

Speaking without specific knowledge, Mr Poison said that the major policy of the British Empire may necessitate international agreements, which would involve a serious alteration in dominion plans of production. The proposed order of reference of the Royal Commission covered the whole field of thought. The Government’s policy was bold and courageous. Asked to explain the attitude of the Auckland Farmers’ Union, Mr Poison said he could not understand it. as the Auckland delegates on the Dominion executive had endorsed the demand for a Royal Commission, and, including the Auckland president, had taken part in the deputation to the Government asking for a Royal Commission.