The Crisis in Dairy Industry

Northland Age, Volume 4, Issue 5, 2 November 1934, Page 5

The Crisis in Dairy Industry

sought by the Commission and placing costs where they belong should be contingent upon the will of the person or class concerned to incur the cost. In any case the paragraph suggests considerable increase in costs over and above those given in actual money figures. Paragraph 226 suggests that in

addition to the very large sum of money elsewhere recommended to be expended on the establishment of service laboratories, factories should provide equipment and assistance in their own factories for the carrying out of simple routine tests, etc., this to be done by a assistant. At least this means the cost of a junior assistant.

Another paragraph requests the dairy companies to pay the expenses of all their managers to attend certain annual courses of a week’s duration, and it is followed by the suggestion that scholarships to men working in factories to take advantage of Massey Agricultural College courses. A paragraph suggests the Dairy Control Board taking over one or two factories in each of the chief dairying districts to train young workers and to be run as experimental factories, stating that the only additional expense would be the employment of skilled special managers and well-skilled first-assistants, to

act as instructors. At least these are additional expenses. A paragraph deals with labour conditions and labour supply in the factories, asking for (a) employment of larger staffs, (b) use of smaller vats, (c) a six days’ week for assistants, (d) better living accommodation, bathrooms, facilities for washing clothing, better meal arrangements, and (e) continuous employment. All these things mean extra expenditure to be borne by the industry and, however desirable, they mean a reduction in the butterfat payments. Incidentally, whilst it can be fully agreed that dairy factory workers should have the very best conditions which the industry can afford, the Commission’s allowance of £2 per farmer as a weekly compensation for dairying is rather at variance with its considerateness where factory employees are concerned.

The above is not to be taken as by any means inclusive of all the odd extra charges which are to be loaded on the industry if the Commission’s recommendations are given effect to. They are merely a few taken by chance. Farm Finance The key note of the Commission’s approach to the question of re-financ-ing farmers will be found in the last part of paragraph 129 : “The adoption of this or a similar scheme will make it possible to withdraw the protection of the relief legislation in cases in which, owing to the inefficiency of the farmer, or the unsuitability of the land, or both, there is no possibility of re-financing. In cases such as these the true position is either that the mortgagor has been potentially insolvent from the beginning, through having purchased, with insufficient capital and at an unduly high price, land that could, not pay its way if produce “prices did not remain at a consistently high level ; or that he has been incompetent or extravagant, and has not built up a reserve fund in the years of high prices and prosperity.” Earlier in the same paragraph it is stated that a clear line of demarcation has to be drawn between the efficient and the inefficient farmer,

and between land that is hopelessly over-mortgaged and land that can be re-financed, the intention being, it is stated, to enable the protection of relief legislation to be withdrawn from the latter.

The method proposed is to divide mortgaged farmers—who are nearly all farmers—into two classes : those

who can be expected to carry on under the existing circumstances at a slightly lower rate of interest, and into those who cannot carry on. The latter class are blamed in several parts of the report for their remissness, but it can be pointed out that the advice has been given for many years and from the highest quarters that farmers should make the land their bank and it is this which is responsible for the absence of monetary reserves. The Commission’s objections to subsidies are very weak.

To say that a subsidy which makes no difference between those farmers able to pay and those not able to pay is inequitable, both to the recipients and to the tax-payers, is untrue, because in the existing circumstances a subsidy to farmers is merely a return to them of what the incidence of indirect taxation and the protection of secondary industries has deprived them of by raising costs of all descriptions or preventing their fall in consonance with world prices. The Commission’s statement that any subsidy which is virtually a sustenance payment would be viewed with disfavour by the United Kingdom can be compared with the statement in paragraph 67 dealing with the London Committee’s evidence “on the question of a probable re-action in the United Kingdom to any plan of direct subsidy to producers or of indirect subsidy through raising the local price of butter, the Committee did not express its own opinion, but stated that all witnesses agreed that no adverse re-action need be anticipated.” The suggestion in paragraph 157 of a variable interest rate for rural mortgages is put forward as one necessarily advantageous.

It is pointed out that it is just as likely to work the other way and in the hands of unsympathetic administration to be an instrument for getting the last ounce out of the industry with the least possible reward to producers. Whilst the advantages of amortization are great and the benefits of agricultural banking as the proposals of the Commission in intention may be described, are also undoubted, such value and benefit depend upon control, and the other suggestions with regard to a Rural Mortgage Corporation linking it up with the Reserve Bank and the Council of Production and Trade are the reverse of reassuring.

Particular attention is drawn to paragraph 164. This specifically requests that the Mortgagors and Tenants Relief Act should be closed down. Paragraph 161 virtually makes it essential that all farmers shall apply to the corporation if they are under any mortgage. This will raise many a question between mortgagor

and mortgagee which need not be raised. Mortgagors will be afraid that the removal of protection under the Mortgagors’ and Tenants’ Relief Act will mean that their expired mortgages will become alive, and in applying to the Court they will arouse many sleeping lions among their mortgagees.

Tuberculosis Campaign

If this country were one in which the incidence of tuberculosis were high, where the milk was sold raw and where the industry was in the position to stand the cost of a campaign, something might be said for the proposals of the Commission. As it is, there will be no doubt in anybody’s mind, except the most biased, that there is something more than a desire to get rid of t.b. In effect the slaughter of about 200,000 cows, if it stops at that, will be the compulsory application of a quota, and it is impossible to avoid the suspicion that this is the real reason for the suggestion.

The industry is in no shape at present to stand the enormous costs which would be involved and which would fall with varying force on individuals. There could be no adequate compensation to a man who lost nearly the whole of a highproducing herd built up during long years of careful labour. There is no guarantee of continued immunity, no proof that New Zealand under healthy conditions is not somewhere near its minimum t.b. point. There is indeed no argument for the campaign, and the Committee hardly attempts to put forward any serious argument.

The argument that t.b. will infect pigs is another absurdity, seeing that the proposed destruction of cows will cost much more than all the pigs in the Dominion.

Of all the suggestions in the Commission’s Report this is not only the most expensive, but the most absurd, and the Report appears to be ashamed to attempt to justify it.

Lack of time and not lack of material for comment necessitates the closing of this memorandum. There should have been no lack of time to deal with such a vastly important subject. If there was time to put the Report into the Lands of those who drew up the legislation put before the House, the Report could have been in the hands of Members of Parliament and of the industry for consideration. To attempt to rush through Parliament measures which mean the removal of democratic control of dairying, however inefficient this may have been made by outside interference, and to substitute therefore control by persons the majority of whom will not be in the industry, is one which cannot be too strongly condemned. Also if Parliament decides that a quota should be applied to the dairying industry, it should be done by direct legislation in the full light of public opinion and after due discussion, not worked by a pretence of eradicating tuberculosis.