SHEEPOWNERS’ FEDERATION

Otago Daily Times, Issue 21986, 22 June 1933, Page 3

SHEEPOWNERS’ FEDERATION

THE PRESIDENT’S ADDRESS - FARMING AND ITS PROBLEMS MR H. D. ACLAND’S VIEWS. (Per United Press Association.) WELLINGTON, June 21. “ The past year has been one of very grave difficulty to sheep owners, the prices of wool and lamb having proved lower than those even of last year, while costs have proved to be rigid at approximately last year’s levels,” said Mr H. D. Acland in his presidential address to the conference of the New Zealand Sheep Owners and Farmers’ Federation to-day. “Heavy supplies from Australia and Argentine have depressed our lamb market, while apparently world conditions have not yet sufficiently improved to allow of a' rise in price for our primary products on the British market. “ We are still faced with the two major problems mentioned in my address last year, namely : 1. High internal costs, and 2. Low overseas prices. ■ “ We have cut our costs within the boundary fence to a point where, in niany cases, production has had to suffer, and not onlj have we been forced to live on capital in a currency sense, but we also have been forced to allow our farm lands to deteriorate owing to want of the necessary finance to rejuvenate our pastures by top-dressing, resowing, etc. , ■/ ■ “ This is mortgaging the future with regard to the productive value of our farms, but so long as the present: conditions remain with us, it would appear to be unavoidable. With costs on the farm nearly 50 per cent, above pre-war, and export prices approximately 20 per cent, below, there does not appear to be much immediate prospect of relief to us, so far as the Dominion itself is concerned. It would appear that we must look further a n e ld for relief, as it is generally admitted that the fall in the price of wool, meat, and butter overseas is the main cause of New Zealand's financial troubles. “ This deflation of the values of real wealth measured in currency has destroyed millions of capital values in farms all over New Zealand, and has brought ruin and bankruptcy to thousands of good men working the land. Our towns and cities are now feeling the full force ot slump conditions, as a result of the loss of purchasing power of the exporter, which previously was the measure of profit from the working of his farm. As we know, profit from this source is non-existent today. The export price fall compelled Parliament to pass legislation, reducing interest and giving relief to mortgagors. It has injured business and discouraged enterprise, and had created distress and despair from one end of the Dominion to tne other. . , , “The interference with currency and credits in 1914, and the attempt to retrace the position in 1925, coupled with the wild orgy of borrowing, resulted in a fictitious high price level and standard ot living, but this has been suddenly ended. The principal trading countries of the Old World, after trial of every national expedient, have (apparently) at last been made to realise that nothing short of international readjustment with regard to currency and the removal of tariffs, quotas, and other hindrances will suffice to restore stability, to world finance and trade. As you know, owing to the pressure of economic fact, the Government in January last .Was forced to come to an arrangement with the banks, raising, the rate of exchange to 25 par, cent. For some years prior to this arrangement, exchange had been artificially pegged against the farmerexporter by Government borrowing in London, and, for the 1932 season, by an Order-iu-Council, which legal opinion advised was invalid, forced upon the Government at ,the instigation of the banks. , ■ , ~ “Although exchange has depreciated the New Zealand ■£ by 15, per cent, since January in comparison with England, which is on a sterling basis, yet internally Within Now Zealand it is substantially correct to say, that the New Zealand pound has not fallen in value and the cost of living has not risen. The average exchange rate in countries competing with New Zealand on the London market up to last January were;—Argentina. 40 per cent.; Australia, 25 per cent.; Denmark, 245. per cent. This meant that on our overseas markets. New Zealand had to give each of these, countries -the equivalent of from 15 to 30 yards start in each 100 yards run in the"-race for the British market. Pegged low exchange in New Zealand in 1932 provided an immense advantage' to those countries in their overseas'trade in competition with New Zealand fanner-exporters. Since then, world prices for our produce have, further receded, and crossbred wool last March^ was, in terras of gold, selling at about 2id per “Do we not ultimately , always come back to the, fundamental cause of our trouble, namely, the demand for gold payments for war debts, etc., which has upset the world’s currency system? Great Britain did not boiTOw or receive gold from the United States, but goods. Then why is Great Britain not given an opportunity of -repayment on the same basis. Ihis isof course, an international matter, Dna would appear to be both simple and equitable, and we are all hoping that the London Conference will result in something being done to promote so eminently sane and practicable a method of adjustment. This admittedly will mean a lowering of tariffs and a free interchange of real wealth between the trading" nations and will be possible if the to the conference can arrange, a stable basis ot international currency measured in. terms of the gold content to be arranged for each nation’s coinage. Again, if war debts had been incurred in any private business, they would have been written oft or adjusted each year, but as this has not been done, a false capital asset to the creditor and a liability impossible to discharge by the debtor has been created. “Apparently, the world’s currency capacity for consumption has fallen to an extent which makes it ,impossible to absorb the increase in production of real wealth at the present level of prices. What has really happened to New Zealand as a result of currency alteration or deflation has been an alteration in the distribution of real wealth between various sections of the community—wealth has been taken from the owner of farms, houses, factories, and’ warehouses, and transferred to the rentier, mortgagee, or bondholder, in excess of the real wealth value of the mortgage as originally made. This has retarded the production of real wealth m New Zealand such as meat, butter, etc. But for this, there would have been a still greater increase in production, I think the nations are becoming weary from their efforts to establish themselves as selfsufficient economic units, while endeavouring to maintain their export trade on the old basis, and are realising that the only alternative in the interests of their nationals is a resumption of world trade on a properly balanced exchange. We all appreciate that even here in New Zealand our public debt service costs must be reduced if our industries are to survive on present standards of life, i “ There has been an increased export of 14,2 per cent, in quantity of wool and 11.9 per cent, increase in value for the four months ended April 30 last. This will give some indication of the continued slipping in values of the class of wool produced in New Zealand. It cannot be too often pointed out that the fanner mortfagor to-day is paying, or liable for, in iud (such us oats, lamb, wool, or butter), interest rates and taxes from two to four times as much as he paid or was liable for five years ago. He cannot pay it, and it is no good pretending he can. .In that respect, I would like,to point out what the relief wage as fixed by the, Government to-day in currency means in wool, butter, and meat, as compared with 1928 (all in New Zealand currency):—£2 weekly currency—£6 10g weekly if paid in wool, and approximately £4 if paid in butter or meat. Would it have been possible to pay 60,000 relief workers £6 10s or £4 a week in 1928? When it is remembered that costs are still approximately where they were four years ago, the hopelessness of the present position will be apparent. What farmers need is recognition of the principle that the service which they give entitles them to payment at rates which are equal with and dependent upon the returns which their labour yields. As a result of the action of financial institutions during recent years, there would appear to be no. question that legal obligations en-tered-into under quite different conditions of world trade and 'price levels a few years ago cannot be considered just today from an equitable point of view.

. “For instance, our legal obligation to pay Great Britain three times the amount of butter and lamb previously required to meet the interest bill cannot be justified on moral grounds to-day, and when We are told that even, at this level of price we are placed on a quota of quantity of goods in payment, the necessity for some positive action with regard to reduction of interest payments must be apparent. With the franchise as it is at present, both national and international finance cannot afford to ignore the facts, and these facts are that the greater bulk of the community in‘each’ country are to-day under a sense of injustice owing to loss of monetary equities in their properties which are the results of lifetime thrift, through the following out of a policy which has apparently not "taken into account moral, but statutory legal obligations only. “ In these days of forebodings as to onr economic position and doubt as _t° t “ e possibility of the successful continuance in operation of our present system, I feel that those who to-day. question the possibility of the successful continuance of our form of Go verlime h*' niay possibly be equally poor prophets. As mentioned in our annual report. New Zealand farmers are anxiously waiting for the results of the discussions now taking place in London, realising that the issues , are vital to their survival. Already, partly, I believe, as a result of the spirit of optimism and confidence which has followed the utterances of a few of the leaders in international affairs, nrices for some products have commenced to rise. I can only suggest to sheep owners that their best course at the moment is tp continue to produce to the maximum in quantity, maintaining the highest possible quality in their several products, and continue the hard struggle against heavy odds, maintaining the same high spirit in their efforts that they have demonstrated during the last few difficult, years. I believe that New> Zealand farmers have endeavoured to maintain the highest traditions of the Dominion during this difficult period, and I am of opinion that we must,, in the very near future, of necesejty, see a marked improvement in world conditions as a result of the deliberations between the nations’ representatives in London.”