THE New Zealand Herald AND DAILY SOUTHERN CROSS FRIDAY, JUNE 19, 1936 ASPECTS OF THE GUARANTEE

New Zealand Herald, Volume LXXIII, Issue 22449, 19 June 1936, Page 8

THE New Zealand Herald AND DAILY SOUTHERN CROSS FRIDAY, JUNE 19, 1936 ASPECTS OF THE GUARANTEE

Mr. Nash's explanation of the guaranteed prices scheme to the National Dairy Association has helped to give more body to his plan, lie was particularly explicit on the financial arrangements, which in certain respects should prove advantageous to the industry. For one thing the Government in taking over ownership of the produce when it is placed on shipboard will become responsible for all further charges until it is sold in the importing country. That will relieve the industry of financing after the f.o.b. stage the large proportion of its produce it has been accustomed to consign. Incidentally the trading banks will at the same time lose this end of the business to the Reserve Bank. It was known that the Dairy Industry Account was to be carried by the bank, but Mr. Nash has disclosed the interesting fact that a limit has been fixed for the overdraft. He says the expert committee determined the maximum amount likely to be required and then the Government arranged with the bank for the money to be advanced. This seems to be an entirely normal and regular banking arrangement for financing trade. If, after marketing the produce, there is a surplus in the account, Mr. Nash promises that it will be used exclusively for the benefit of the industry, which will be consulted as to its disposal. He made it Quite clear, however, that the benefit will not take the form of a bonus. From the beginning of the season, therefore, the dairy farmer will know what the full price is to be, his sole concern being with output and quality. One of life's little expectations will be removed and also the temptation to build too much on the bonus.

Mr. Nash was not so clear when asked what would happen if there were a deficit in the Dairy Industry Account. He said that would be the responsibility of the Government. His reply might mean that the taxpayer would have to make good the deficit, inviting the conclusion that the dairy farmer would benefit from profits but have no share in losses. Mr. Nash added, .however, that no section of the community would benefit at the expense of another section. How, then, are deficits to be met, unless it be by surpluses from previous or subsequent seasons] Mr. Nash should throw some light into this dark corner. He certainly does not lack courage for he told the delegates at Hastings that, if he could stop it, he would not allow higher prices to be capitalised in land values. " If," he said, " a farmer who sells his land gets 11101 e for it than he ought to get, I would take every penny off him that I could." In that way the farmer would be deprived of one of the most important elements in the fieehold —the right to profit by increments in the value of his land. The Government is already preparing to step in and take possession of the product of his land, so that he loses another freeholder's right. What is left to the farmer 1 Mr. Nash says the Government's objective is to help to the maximum every dairy farmer in the Dominion to be paid for the work he has done." So the farmer's position, under the guarantee, appears to be that of a paid wofker for the State. If that proves to be the effect of the scheme, farmers will not accept it for long. Mr. Nash has utterly mistaken their psychology if he supposes they expect no more from their labours than a working wage. If that were all, a great many would not exchange urban amenities and labour conditions for the unending struggle with nature on the land.

The Minister is on firmer ground when he says the guaranteed price will determine land values. That should be the effect so far as it is fixed, but it is to vary from season to season. Land values will swing with it and also the security of mortgages. Mr. Savage says that mortgages are to be adjusted by reference to the guaranteed prices. Does that mean annual adjustments, mortgages being placed on a sort of sliding scale 1 There is the further question of mortgage adjustment in respect of land not used for dairying. Mr. Nash says it is not proposed to bring any other than dairy products into the scheme this year. Is a different basis to be used in adjusting mortgages applying to the rest of farming land or are adjustments in these cases tu be postponed 1 It should he remembered that a great deal more than half the value of farm production is not to be included under the guarantee. The producers concerned must still take their chance of prices in the open markets and are faced with sharp rises of costs for labour and everything else, although they will not receive the allowance under this head promised to the dairyman. They are one class of " forgotten men " in the Government's policy and will suffer from rising costs and unsheltered prices, except markets develop a most generous buoyancy. Of course the dairy scheme may not work in practice. Mr. Nash has made it depend on the success of his negotiations for reciprocal trade with Britain. If he fails and the scheme collapses, other farmers will not repine at their exclusion. Tt is the possibility of failure or a change of policy that has caused the National Dairy Association to ask that established factory brands should be retained meanwhile—certainly a reasonable precaution.