FARM INCOMES AND COSTS

New Zealand Herald, Volume LXXIII, Issue 22512, 1 September 1936, Page 15

FARM INCOMES AND COSTS

Sir, —According to a statement appearing in the Herald on, August 24, Sir William Hunt, after three years trial and error, appears convinced of three important facts. First, that the purchasing power of the New Zealand farmer is his ability to produce farm products; second, that the value of the New Zealand pound as an instrument of exchange is of greater importance than the quantity; third, henco ho tells us that what interests the farmer most, is not the price in money ho gets for his products, but the exchange parity in the goods and services the farmer requires. Thus a farmer, who, in 1931 sold 100 lambs, valued for the purpose of exchange at 100 New Zealand pounds (of sterling parity) and received his payment from the proceeds of the sale of £IOO worth of imports (sterling), was immeasurably better off than he is today when he receives 125 New Zealand pounds devalued by 4s in each pound, for a similar line of lambs, because of the fact that the loss of value sustained by the New Zealand pound carries with it into farm costs the additional loss of a wholesale and retail profit on the lost value, plus sales tax, a 25 per cent increase in freights and banking and insurance, and his share of national and local body increased overseas commitments. So to insure the same actual value to-day in goods in exchange for his lambs, the farmer must produce from 140 to 150 lambs, against 100 in 1931. Thus wo have .the enormous increase in farm costs referred to by Sir William Hunt, amounting from 16 per cent to 25 per cent after allowing for the bonus of 25 devalued New Zealand pounds. If wo add to this the handicap of the tariff, which adds another increase in costs of say, 20 per cent, the primary industry is hardly worth whilo. Sir William Hunt next refers to the stable and moderately satisfactory position shown by the index figures relating to farm cost and income during the years 1901 to 1914, compared \vith 1914 to 1935. The reason, of course, Tvas that gold controlled the value of the New Zealand pound through sterling and we had a stable, moderate, well defined tariff from 1901 "to 1914. Strangely enough farm costs also included a graduated land tax. 'For New Zealand to receive the fuil return of wealth from the rest of the world for what she gives, and thus maintain the highest standard of living and prosperity of her people, she must restore the value of her pound to at least sterling parity, then remove all tariffs from all imports from all countries. Every other substitute has been tried over the past five years and proved miserable failures.#

J. Hislop