HELP FOR FARMERS

New Zealand Herald, Volume LXX, Issue 21404, 31 January 1933, Page 10

HELP FOR FARMERS

STIMULATING PRODUCTION

better prices essential BENEFIT FROM EXCHANGE SIR JAMES PARR'S VIEWS [by telegraph—-own correspondent] OAMARU, Monday The action of the Government in pegging the rate of exchange was referred to by Sir James Parr, Leader of the Legislative Council, at the opening of the Waitangi Bridge over the Waitaki River today. Sir James said that tho outlook for wool and other primary products was better than for some time past. Prices were higher, due largely to the rise in the exchange from £lO to £25. There was already an improved psychology of hopefulness among men on tho land, and this spirit would have its reflex action in the cities as well. He regretted that the Government did not take steps to peg the exchango at 25 per cent a year ago. They would all have been better off if it had been done then. Those who had successfully opposed h'gh exchange a year ago had done the whole country a serious disservice.

The position had got steadily worse since a year ago, . continued Sir James. A policy of deflation, such as cuts in wages and salaries, interests and rents had failed to bridge the gap between costs and prices. The immediate peril to New Zealand at present, was the impending insolvency of the farmer. He could not go on at present prices. At all costs farm production had to be stimulated. Last year the farmers of New Zealand brought in a cheque of £36,000,000 to the country for the sale of their products in Britain. In the final result all New Zealand lived on this cheque, but would farmers any longer continue to bring in the cheque at a loss to themselves ? If production fell everyone would go under. Welfare of Every Interest

The vital thing for every interest was that the country's export prices, upon which everyone depended, had to be kepi' at a payable level. Some of the cuts might havo been justified, but that policy had been unsuccessful. The only alternative was limited control of exchange, and tho speaker thought the Government had done right to raise the exchange. It would enable small farmers to hang on and increase production, which was going to save the farmer. A few months ago on a visit to Australia Sir James had witnessed Australia working under the 25 per cent adverse exchange. No one had seriously talked of reducing it, and there could be no question that high exchange had enabled the Australian farmer to stay 011 the farm and produce exports totalling £90,000,000 a year in viilue. In short it had saved tho country. It had also given the Australian farmer material advantage over his New Zealand competitor. Australia was beating New Zealand in butter which brought, in the biggest cheque from England. For the first time lier total export exceeded that of New Zealand. Australia was New Zealand's keenest competitor in butter. The reason m Sir James Parr's opinion was that tho New Zealand dairy fanner had been at a disadvantage of 3s in the pound sterling on exchange and had no Paterson bounty to help him. He suffered in unequal and unfair competition. Tho higher exchange would put him on something like level terms in fighting his Australian competitor in the London market.

Difficulties With Budget While Sir James admitted all tlie disadvantages of the high exchange, and these were obvious, he was not- convinced that in the hour of crisis they would outweigh the enormous benefit to primary producers and consequently to tho whole country. There would be serious Budget difficulties it would cost over £1,000,000 more money to send overseas interest on London. It was folly to regard that or loss of customs as net expenditure so far a;> :;he Budget was concerned. It was clearly a gross item offset in a large measure by the fact that the State's revenues were sustained, because a high exchange rate kept up export prices. Some critics said that if allowed to swing free New Zealand's exchange with England would be about parity with sterling, but where would this land everyone ? With exchange at parity, said Sir James Farr, prices of exports would be nearly £8.000,000 or £9.000.000 lower than •thev were at present. The value of rural productions, instead of being about £55,000,000, would be £44.000,000. or only half of what it was in 1929, and such a drop would so affect the community that the national income would fall by probably £20,000,000. All industries and interests would be affected by that huge reduction in local purchasing power. The demand for secondary products would decrease, the general level of unemployment would increase, and a new and severe deflationary movement would begin. All that would happen if some people had their way and allowed exchange to go to parity, which, they said, was justified by the favourable trade balance, but in the process New Zealand would be ruined.