LEVEL OF GUARANTEE

New Zealand Herald, Volume LXXIII, Issue 22448, 18 June 1936, Page 14

LEVEL OF GUARANTEE

DAIRY_PRICES MR. NASH'S SPEECH FIXING THE AVERAGE MOST GENEROUS POSSIBLE FINANCING EXPLAINED ./[BY TELEGKArH —SrECIAIi UErORTEII] HASTINGS, Wednesday A statement that tlie guaranteed price for dairy products would bo fixed at a fraction above tho most generous maximum on the averago for the past eight to ten years was made by 'the Minister of Marketing, Hon. W< Nash, ;n addressing the National Dairy Conference, which opened at Hastings to-day. "The objective of the Government," Mr. Nash said, "is te rempve tho fear of price falls and the ecstasy of price rises." Mr. Nash arrived at Hastings from Wellington by car early this afternoon and was the guest at a luncheoil tendered to him by tho Hastings Borough Council. Ho was accompanied by Mr. G. A. Duncan, ActingDirector of Marketing, and his private secretary, Dr. W. B. Sutch. Later the conference was officially opened by Mr. 'Nash, who was welcomed by tho Mayor of Hastings, Mr. G. A. Maddison. Previous Address Recalled The M a yor referred to the prosperous appearance of tho farmers who constituted the audience, and said he could only ascribe it to the fact that they were all hopeful of a good guaranteed price Reference was made bv Mr Nash to his address at the National Dairy Conference at Palinerston North last year, when he outlined the Labour Party.'s guaranteed price scheme. The general election, ho said, had brought into being a Government pledged to do what he had told them ho thought should be dono. "In the past," Mr. Nash continued, "all the regulations of the Dairy Board have not spread out to an oven point the price which the farmer can legitimately obtain for tho work he docs. The price that we propose to pay will be something more than the price received during tho past 12 months. It will be something more than the average for the previous 12 months, or even for the 12 months prior to that." Principles of Marketing Act Tho main principles of the Primary Products Marketing Act were explained by Mr. Nash, who said that the whole basis of the legislation was that there should be one man responsible for the marketing machine. The Department of Marketing would ultimately control the marketing of all primary products. When the imperative need was established for marketing from tho Dominion as a unit tho same procedure as that now set up for the dairy industry would be followed in respect of other commodities. It was not' proposed to bring anv more products within the marketing machine this year, although fruit exporters bfid already expressed a desire to be given the benefit of the marketing legislation. That was a question which would be further considered with representatives of the industry concerned.

Warm Tribute to Mr. Duncan A high tribute to the Acting-Director of Marketing, Mr. Duncan, was paid by Mr. Nash. He said that after the passing of the Act he had told the Government that he knew of no man better equipped for the position than Mr. Duncan. He had not met him until he became a Minister of the Crown, but he knew that Mr. Duncan had the confidence of the dairy industry. Similarly he had asked the other_ members of the Executive Commission of Agriculture, Sir Francis Frazer and Mr. David Jones, to take over the task of organising the new marketing machine. He was confident that no man in New Zealand understood the meat industry better than Mr. Jones. "Then wo come to the question of finding the money," Mr. Nash continued. "I had a discussion with the governor of the Reserve Bank, Mr. Leslie Lefeaux, and told him that we would require the money to finance dairy marketing. We had determined the maximum amount likely to be required, through the expert committeo which was set up in the first place to examine the scheme, and we have now arranged with the Reserve Bank for money to be advanced." Hopes of Trade Agreement

Discussing the question of overseas marketing Mr. Nash said the London staff of the Dairy Board would become the dairy sales division of the Department of Marketing, with the present London manager. Mr. H. E. Davis, still in charge. The Government, as had been stated previously, was prepared to co-operate fully with the best interests in the distributing trade in Great Britain. It was hoped before long to arrange a reciprocal trade agreement with Great Britain. That was part of the whole plan and the guarantee could bo based on the understanding that tho whole of tho money obtained from exports would be available for the purchase of imports. That was a principle which would probably be in general operation - within the next ten years. 'New Zealand had already received from the British Government an invitation to discuss arrangements regarding reciprocal trade. Mr. Nash said he did not know whether tho British Government would he prepared to discuss a bilateral agreement, but ho thought it would. New Zealand could take all her cotton goods from Britain willingly and profitably on a basis of reciprocal trade and not bother about importing those goods from Janan. It was not tho Government's desire to set nations against one another, but it could not be responsible for lifting tho standard of living of neoples in Eastern countries. On the other hand it had to be recognised that it was impossible to keep Eastern countries down permanently to a low standard of living. Taking Over Produce The procedure by which the Government will take over dairy products for export was also explained bv Mr. Nash. Tho dairy factories, ho said, would deliver their goods to the grading stations. After they had been graded and placed on board ship schedules would bo made out. Twelve schedules would give the export for each ship, separate schedules being made out for each of the trading banks for both butter and cheese. > For example, in one shipment the Bank of New Zealand might he tho agent of 30 different dairy factories. The names of those factories, with tho details of export, would appear on the Bank of New Zealand schedule and the branch of the Department of Marketing at the particular port of export would adviso the bank of the sum to be placed to the credit of the factories at tho guaranteed price. Tho next morning the money would bo available at the hank for the dairy factories and the bank 'would then obtain a cheque from tho Marketing Department »n return. "Is that better than the old procedure?" Mr. Nash asked. "I do not think there is anyone who would answer anything but 'yes' immediately the question was put to him."

The Minister reaffirmed that in the event of high overseas prices and a possible surplus in the Dairy Industry Account at the Reserve Bank, that surplus would bo used exclusively for the benefit of the industry. It would not bo touched until the industry had been consulted as to how it was to bo used. In detailing the questions to bo taken into consideration in fixing the price for dairy products after tlio first year of oj>eration, Mr. Nash said it was the aim of the Government to treat everyone fairly. If thoro was something not set out in the Act that ought to be legitimately taken into account in determining the price to the farmer, that factor would be considered. Need to Watch Market

Referring to the present rising price level for butter on the London market Mr. Nash said tho position showed the necessity for watching the market with the utmost care. Actually there had been a fall of 1 per cent in the butter imports into Great Britain, but that had resulted in an increase of 18 per cent in prices. Another point of importance was that the retail price had been more or less stabilised at about Is a pound. If the price went much abovo Is tho demand for the product immediately decreased. The incomes of tho majority of the British people were comparatively so low that too high a price would naturally result in a drift from butter to margarine. "Wo have discussed tho possibility of making tho guaranteed price known," said Mr. Nash, "but have decided for various reasons that tho time is not quite opportune. However, when the price is known to the farmer the value of his land will be determined. If the old procedure follows, and it will not if I can avoid it, every rise of a penny in price will bo added to tho land. If a farmer who sells his land gets more for it than ho ought to get 1 would take every penny off him that I could. The Government's Objective " We want to see no charge on tho land other than that charge which can bo sustained by tho price which we are prepared to pay. Our objective is to help to the maximum every dairy farmer in the Dominion to be paid for the work ho has done. W T o want to make it possible for him to pay his son, who may work with him, and we want to remove the necessity for his wife to go out and work in the fields." At the conclusion of his address, which lasted for just on an hour, Mr. Nash intimated that he would bo willing to answer questions. Mr. N. Campbell (Awahuri, Wellington) asked whether it was intended to pay differential prices for butter based on quality. " I have discussed the position with Mr. Duncan," the Minister said, "and although I cannot lay down any definite principles there is an idea of extending the existing three grades to five. There will probably be two grades of finest and two of superfine." The Basis of Payment Mr. .J. Kyle (Kairanga, Wellington) asked whether the Minister had considered " the iniquitous method " of paying out for cheesemaking on a butter-fat basis. The scheme already announced, whereby there will be a preferential payment of ljd per lb. butter-fat for cheese, was explained by Mr. Nash, who added that investigations were being carried out at Massey Agricultural College regarding a new-, method of cheese payments If the new method could be proved to be worth while it might be adopted, but meanwhile the old system would be retained. In reply to a question by Mr. W. Darrall (Tatua, Auckland), Mr. Nash said lie could not give the date on which the guaranteed price would be finally announced. However, ho did not think he would have to wait until the scheme became operative on August 1. Financial Accommodation

Mr. L. J. Fairbrother (Dalefield, Wellington) raised tho point of financial accommodation for producers and factories during the first three months of the season.

" Just for the moment we are financing marketing," Mr. Nash replied. " Some day we might finance the industry as well. We shall not ask the industry to pay interest on money that comes from the Reserve Bank to pay the guaranteed price. The trading banks do all the financing up to f.0.b., and as they have the necessary machinery it is only reasonable that they should continue to do so." In answer to further questions Mr. Nash said the work of the Executive Commission of Agriculturo regarding overlapping between factories would be continued. Tho Government wished to take all necessary steps to eliminate waste between the farmer and the consumer. The question of a local price had not yet been finalised. Several alternative proposals were before the Government, and a final decision would have to be reached before the end of the month. "If there is an overdraft in the Dairy Industry Account will it bo a charge on the dairy "industry or on tho Consolidated Fund?" asked Mr. It. W. Neal (Piopio, Auckland). " The dairy industry has nothing to do with tho Dairy Industry Account," Mr. Nash replied. " If there is a shortage in tho account tho responsibility is with the Government. The Factor of Rising Costs " There has been some uncertainty as to rising costs," said Mr. F. E. Cullen (Maungaturoto, Auckland). "In fixing tho guaranteed price, has the Government taken into consideration a possible rise in tho cost of production?" Mr. Nash.said the question of costs did not come within the average of eight to ten years, but on tho grounds that increased wages, for one tlnnc. would mean added costs the Government had taken that factor into consideration and had gone a fraction beyond the most generous possible interpretation of its promise for a guaranteed price. The possible effect of high wages for public works employees on tho availability of farm labour was raised bv another delegate. Mr. Nash said an agreement had been reached between the Government and representativs of the farmers regarding wages and conditions for farm labourers. However, if there wero men available who would not go to work on farms when it was offering tho Government would not pay them sustenance.