GUARANTEED PRICES

New Zealand Herald, Volume LXXIII, Issue 22390, 9 April 1936, Page 15

GUARANTEED PRICES

Sir,—ln my letter of March 18 i contended that the ostensible object of guaranteed prices was to benefit the producer by ensuring to him a better return for his produce than he would otherwise receive, and that it was indispensible that that principle be adhered to irrespective of whether the price realised proved below, equal to, or in excess of that guaranteed. In his first letter Mr. Levy admitted that my contention was justified if "present conditions as regards quality of product and marketing prevail," and then he introduced the side-issue of improved quality as a result of the proposed policy. In his second letter he takes exception to the inclusion of the third contingency as entailing a loss to the producer of the amount of tho excoss realised; and charges me with inconsistency and confused ideas. In order to prove his point he assumes that the producer and not the guarantor will get the surplus and, therefore, will suffer no loss; 1 presume that the producer will get, and can reasonably expect to get, only the guaranteed prico, thus losing the benefit of any unexpected rise in tho market. As he says, "let us get this point quite clear." If his assumption of what the Act will provide proves correct then the producer is going to be placed in a favoured and secure position at the expense of the rest of the community: if, on the contrary he is to got only the guaranteed price, then he suffers the loss. In either case nothing has been added to the welfare of the community as a whole, bearing out my contention that it is only another version of tho "vicious circle." Mr. Levy's suggestion that tho guaranteed price will bo a fixed one for a number of years, "hoping the realisation will aggregate tho guaranteed price for that period," does not alter the principle one iota; the final result would only determine who is to receive the socalled benefit and who is to "pay the piper." ltegarding butter quality, which Mr. Levy so strongly stresses, I would remind him that he has failed to face up to the problem I indicated in my last letter, viz.: Is the failure of butter prices to rise above the level of 30 years ago due to a lack of improved quality, or, granting that there has been a substantial improvement in quality, why has there not been a corresponding advance in price? Neither alternative will prove very helpful tc his theory, that the solution of our troubles is to bo found in higher quality. His assumption that the amount that Danish is bringing above Now Zealand butter is the measure of the difference in quality lands him in a similar dilemma. W. Johnstone.