FARMERS' ADVANTAGES

New Zealand Herald, Volume LXX, Issue 21641, 6 November 1933, Page 11

FARMERS' ADVANTAGES

MARKET CONDITIONS BENEFIT OF EXCHANGE PRODUCTION COSTS DISCUSSED [BV TELEGRAPH—OWN CORRESPONDENT] WELLINGTON, Saturday Reference to the position of the New Zealand farmer in regard to tariffs was made by Mr. A. E. Marnier, representing the New Zealand Manufacturers' Federation, in presenting the final statement before the Tariff Commission to-day. "it has been stated that New Zealand fanners have to buy in a protected market, and sell in an unprotected market, and, that this places them at a disadvantage in world competition," said Mr. Marnier. "One needs only to point out, to refute this, that the New Zealand farmer sells his dairy produce in Britain under the protection of a tariff of 15s per cwt. on all the butter and 1") per cent on all the cheese sent to that market by his foreign competitors. This is not selling in an unsheltered or unprotected market. Moreover, the New Zealand farmer receives for his exported produce an additional 25 per cent through exchange, and he receives this 25 per cent extra, as export parity, also for what he sells in New Zealand.

"1 mention these facts, together with the fact that farmers receive many very substantial subsidies through the Railways Board and otherwise," said Mr. Mander. "They pay no land tax on farms, if subject to mortgage, of any value up to £7500 unimproved, while there is an exemption of the first £SOO unimproved value of land not subject to mortgage, with a tax of only Id in the pound payable on the balance. They pay no income tax unless their farms are valued at over £3OOO unimproved. "Practically all farmers' requisites are exempt from sales tax and alsb from customs duty. They are granted State loans at low interest from funds raised by pledging the taxpayers' credit. They can now obtain free and subsidised labour costing the Unemployment Board roughly £150,000 a year. The general taxpayer bears the cost of numerous unprofitable branch railway lines which serve only the farming community. "With all these subsidies, exemptions and concessions, which can be met only at the expense of the cities and towns, and by increasing the burden upon urban industries, and now with the benefit of high exchange, which is equivalent to a bounty giving the farmers a return 25 per cent higher than the much-talked-of 'world price' of their produce, I submit that the farmers arc the last people who should object to a tariff which affords protection averaging less than 25 per cent to their fellow-producers, the manufacturers and industrial workers in the towns."

Dealing with farm production costs, Mr. Mandcr said in these difficult times many farmers were, admittedly, obliged to sell their produce at prices which did not cover their costs of production. It should be noted, however, that, in regard to farming, the term "cost of production"' was used to include interest on borrowed capital, which was recorded by the Government Statistician as more than 33 per cent of the cost of farm production. In manufacturing industries the return on shareholders' capital was not treated as an item of "production costs"—it had to come out of net profit. "I think the average usual net profit in manufacturing industries will turn out to be between 4 per cent and 7 per cent on most ordinary standard lines," said Mr. Mander. "In addition, there are usually interest charges on overdraft, debentures and mortgages, but together these rarely amount to as much as 4 per cent of the production costs. The total capital charges, on share capital, debentures, mortgages and overdraft, usually account for less than 10 per cent of the price at which the manufacturer sells his goods. The capital charges on farm production amount to 33 per cent. There is an enormous difference between this and the 10 per cent average in the manufacturing industries. "I do not believe that our protective tariff makes as much difference as 1 per cent to the costs of farm production," said Mr. Mander.