NATIONAL CRISIS

New Zealand Herald, Volume LXXI, Issue 21935, 19 October 1934, Page 13

NATIONAL CRISIS

BREAKDOWN THREATENED IMMEDIATE ACTION DESIRED NEW FINANCE PROPOSALS / GENERAL REORGANISATION * [by TELEGRAPH —SPECIAL REPORTERI WELLINGTON, Thursday The net results of its investigations concerning the present position are summarised by the Dairy Industry Commission in eight conclusions as follows: — (1) The conditions confronting the New Zealand dairy industry have assumed the. proportions of a national crisis. The gravity of the position is revealed in the present London quotations for New Zealand dairy produce, which are so low that farmers must expect a correspondingly lower pay-out for the current season than they received last season. (2) Those dairy farmers who found it difficult to carry on during the past two seasons with an average pay-out of approximately 9d per lb. will find it impossible to meet their full interest charges from a lower pay-out. The number of farmers who can produce butter-fat and meet wages and living expenses and provide any interest surplus on a substantially lower pay-out is negligible Meeting Overseas Charges (3) Unless early and effective measures are taken, the result will be a general breakdown of the financial relations of mortgagors and mortgagees in the Dominion, and consequently it will become difficult, probably impossible, for New-Zealand to meet in full its overseas interest charges. • (4) The critical position in regard to prices has been brought about through the flooding of the United Kingdom market by the dumping of subsidised dairy produce from the Northern Hemisphere and Australia, and by the increase in our own supply. (5) New Zealand's position is aggravated by the facts that no markets of importance outside the United Kingdom are available to tfs at present; that such new markets as might be developed could not possibly be immediately profitable, autl that the possibilities of increasing the local consumption of dairy products are. very limited. Diversified Production (6) Diversified and supplementary production on dairy farms offers little or no prospect of relief owing to the prevalence of external trading restrictions and quotas. (7) The general conclusion in regard to the external aspects of the present problem is that an early approach must be made by the Government of New Zealand to the Government of the United Kingdom to arrive at a preliminary understanding and provide a basis for further negotiations. (8) The general conclusions in regard to the internal aspects of the problem are that immediate action must be taken by the Government of New Zealand to stabilise the financial position of dairy farmers and that, as a means towards the evolution of a long-term policy of reconstruction, the industry must be' reorganised. For the rehabilitation of the industry the commission has summarised its recommendations as under: — A Mortgage Corporation There should be set up at an early date a Rural Mortgage Corporation, through which farmers will he able to obtain long-term mortgage credit at the lowest current rates of interest and on easy terms of repayment. The recommendation provides for existing mortgages being taken over by the corporation in exchange for bonds carrying a State guarantee for the payment of interest. It is recommended that the rates of interest payable on bonds and <;n mortgages shall be adjusted triennialU, in order to afford to bondholders the current rates of returns on Government securities and to give to mortgagors the benefit of the lowest possible current rates of interest. The recommendation makes provision for the takingover by the corporation of existing mortgages, and for differentiating between the sound and the less sound portions of mortgages taken over by the corporation. The setting up of expert bodies is recommended for the purpose of ascertaining which farming propositions are basically sound, and arranging compromises with mortgagees and Other creditors where necessary. In the beliei that the factors of efficiency of production and quality of product are of paramount importance in meeting competition in over-supplied markets, and building up an increasing preferential demand for New Zealand dairy produce, .it is recommended that early steps be taken to improve its

quality, and that the Government make available, at low rates of interest, to farmers and dairy factory companies, sufficient funds to enable farm and factory equipment and appliances to be modernised and rendered efficient for the production and manufacture of dairy produce of the highest possible quality. A comprehensive attack on animal diseases is recommended. It is further recommended that farm and factory instruction, research work and herd-testing be placed on a sound basis, with the object of giving the dairy industry all possible assistance toward efficient economic production. In order to provide part of the finance required for the improvement of quality, it is recommended that the Dairy Produce Control Board be empowered to control the local marketing of butter and cheese, and thereby to save, for the benefit of the industry as a whole, a large sum that is lost annually through wasteful competitive practices, which are considered to be specially undesirable in a co-operatively organised in- ! dustry. Wider Powers for Board In order that the dairying industry may be efficiently organised in all its phases and operations—instruction, production, manufacturing and local and export marketing—the setting up of a new Dairy Produce Control Board with a different constitution and wider powers than that of the present board • is recommended. It is intended that the new board shall be so constituted and be given such nowers as to enable it to deal effectively, in the interests of producers and of the State, with all the activities and problems of the dairying industry. With the object of providing an organisation competent to deal with the wider aspects of farm production and the marketing of primary products generally, the commission recommends the setting up of a co-ordinating body, which will function as a permanent executive Commission of Agriculture to advise the Government on all matters relating to production and marketing, and co-ordinate, (and where necessary control) the onerations of the different produce boards. It is recommended that a confidential investigation be made at an early date into the whole system of the marketing of New Zealand dairy produce in the United Kingdom, with a view to evolving a system that will enable the possibilities of that market to be more fully exploited, and an increased preferential consumptive demand built up for New Zealand dairy produce. The possibilities of foreign markets and of diversified production are to be further explored. Imports Into Britain The Government of New Zealand should take an early opportunity of conferring with the Government of the United Kingdom as to the extent to which it is desired that the production and manufacture in the. United Kingdom of dairy produce should expand, and that, after a preliminary understanding has been reached, the Government of the United Kingdom should be requested to arrange a conference of representatives of countries exporting dairy produce, in order to decide a course of action for the future. In the event of imports of Empire dairy produce being subjected by the Government of the United Kingdom to quota restrictions and/or customs duties, full representations should be made regarding the special claims of New Zealand for preferential treatment. The commission has also made recommendations regarding means for effecting economies in the collection of cream supplies for factories and for increasing the consumption of liquid milk and cream, etc. It expresses definitely the opinion that effect should be given to its recommendations without delay. It regards as urgently necessary that the suggested Council of Production and Trade should be set up at as early a date as possible, in order that problems requiring immediate action may be effectively dealt with in the national interest.