GUARANTEED PRICE FOR DAIRY PRODUCE

Otago Daily Times, Issue 23005, 7 October 1936, Page 14

GUARANTEED PRICE FOR DAIRY PRODUCE

TO THE EDITOR Sir,—Permit me to request the indulgence of yourself and the general public for a further effort to defend the guaranteed price on dairy produce. I feel it necessary first to congratulate Mr Clark, of Catlins, on his promptitude and candour in revealing to your readers his identity. Still, 1 must say this for his efforts that to my mind he fails to grasp this basic fact! The debate was started on certain fundamental facts and to depart from those facts in any large degree will certainly keep us arguing and debating without finality. If Mr Clark wishes me to continue this debate—l think Mr Renton is out of the fightlet him present his case in a concrete form, cease to make sweeping statements of destructive criticism, and instead give us his idea of costs and revenue. The general public will see his figures and will have seen mine and can judge between the two. According to his letter of the 3rd inst., Mr Clark has certainly had a varied experience in the dairy business. He asks me to mention if, I get my revenue wholly from cows? I do not. I am farming on "ridgy" country not considered to be dairy land in any sense. Still I can say quite frankly that with crossbred wool at Bd, fat lambs at 7Jd, oats at 2s 3d, and wheat at 4s lOd, I can show a better net result from any stated quantity of land carrying cows and getting the guaranteed price now in vogue than I can from any of the other classes of farming. Mr Clark says my average of 240ib of butter-fat is too high, the average for Otago being much lower. Let me say this: It is unfair of Mr Clark to take all Otago cows and compare them with those of a dairy farmer whose entire energies are devoted to butterfat production. More than half the cows in Otago are fed and milked in small numbers—from three to six—and although they are part of the farmer's business they are only a side line and certainly not looked after as a dairy man ought to look after his herd. Mr Clark knows as well as I do that thousands of these dairy cows are allowed to run with sheep, and what chance has a cow to feed in a sheep pasture? These thousands of cows are included in the low average for Otago. The average of 2401 b was taken as being considerably below the average for the Stirling Herd-testing Association, and surely that is just and reasonable. Mr Clark writes of maintenance costs, and says that I neglected this. I certainly presented a case of maintenance costs

where everything I could think of was mentioned and provided for, and it worked out at £4 4s per cow. If Mr Clark will look up my letter of the 31st ult. there he will see this, and if he wants further evidence of costs and revenue for dairy produce I will give him some more figures, compiled by the Dairy Industry Commission which was set up by the National Government. On page 61 of its report the commission stated, inter alia: "The costs vary from 9.33 to 11.77 pence per pound, making an average of approximately IOJd." We will now take those figures and apply them to our 50-cow farm yieding 12,0001 b butter-fat at 13Jd. The net return to the farmer is therefore 3d per lb, making £l5O. If the farmer worked on the farm the commission must certainly allow him a wage equal to that of his assistant, say £l5O, or its costing would be futile. .If it arrived at the cost Without him working, then we certainly expect him to work, and he will dispense with a man earning £ 150, and we arrive at the same result. Mr Clark asks me to forward my budget to Messrs Williams and Lee Martin along with his statement—his was not a budget—and ask these men to comment on them. In reply I ask Mr Clark why he does not carry out his wish himself. Surely, to use the words of Mr J. M. Keynes, that is "muddled thinking." Why ask me to do a job which obviously it is his own duty to perform? Now, Sir, that is my case for the position of the dairy farmer working on a guaranteed price as against the 16s per day man in the city or on public works. There is one very im-. portant fact which the average farmer fails to recognise. Sixteen shillings per day with a depreciated currency are only equal to 12s per day in 1931 when our currency was on par with the English pound. The currency was depreciated to help the farmer and expand his revenue, and the 12s per day man of 1931, the 10s per week man in the slump, and the 16s per day man to-day are paying for that' consideration which was extended to the farming community. I was an advocate of the higher exchange, and I still think it was a very potent factor in bringing about the recovery which is apparent to-day. Still, as farmers, let us be honest and admit that the general taxpayer has had to foot the bill to put the farmer on his feet, and in many cases keep him on his farm. In conclusion, I would like to refer to labour costs, because it is on that point that Mr Kenton and I disagree. His carrying of milk to the factory is essentially a labour cost and perhaps he will be satisfied with the following quotation. Whether he does or not the general public will appreciate the soundness of the illustration. The figures are taken again from the report of the Dairy Industry Commission, which comprised friends of the party Mr Renton so loyally supports, and so he will not be able to throw at me such a remark as "I suppose they are 100 per cent, with the present Government." Here is what the conv mission said: "With improved herds and through more widespread use of labour-saving machinery, the general level of labour efficiency has been raised materially during recent years, and to-day 60001 b of butter-fat per male unit should be viewed as the minimum for machine-milked herds." Twelve hundred pounds of butter-fat being the return from 50 cows, two men can produce such an amount, according to the authority of the Dairy Industry Commission.—l am, etc., C. H. Taylor. Awamangu, October 5. TO THE EDITOR. Sir, —For some years past the dairying industry has suffered considerably owing to the exceptionally low prices which have prevailed for butter and cheese, and this in turn has been reflected throughout New Zealand. , Although the past Government did its best to improve matters, the result for various reasons could not be described as 100 per cent, success. Meantime experts in the Labour Party were also studying the position, and it was thus that the guaranteed price scheme was evolved —a scheme which would not have been possible without the aid of a State Reserve Bank. In a complete survey of the position it was seen that during the last 20 years the payment of butter-fat had varied from 8d to 32d per lb and, in accordance with these prices, land values had fluctuated, with the result of much land "gambling." The cost of butter-fat production was also investigated. Not only was the average cost on the whole ascertained, but the average cost also on the various types' of farms, and it was found that butter-fat could be produced more economically where large herds were milked under modern conditions than on the smaller farms. When prices slumped, farmers—particularly those who bought during the boom—found difficulty in carrying on and many had to abandon their farms. Through " forced " sales some of these farms were secured by speculators &- a very low figure, and later resold at large profits.. They and the commission agents were the only persons who benefited, while the loss had to be borne by someone. Based on a law of averages, Government experts felt reasonably assured, in arriving at the guaranteed price, that when taken over a period of years the dairying account would be self-balancing. They considered also that this price, particularly to farmers in the North Island, would allow dairying to be carried on profitably on the larger farms if efficiently managed and that to the majority of others it would be at least payable It was hoped* that the stable price would eliminate land speculation, and also that the farmer could estimate his return at the commencement of a season and thus apportion his expenditure without waiting for his product to be sold in order to do so. Together with the scheme was introduced the dairy farm workers' award, and now by zoning and amalgamation of factories it is expected that factory costs will be reduced. To me this scheme appears an honest attempt to deal with a very difficult situation and should be supported by dairy farmers. I do not say that it will appear very attractive to many, but so far no better scheme has been proposed by anyone. Had the guaranteed price been sufficiently high to ensure that in districts such as the Catlins the dairy farmers would get a commensurate return, the cost to the country might have been enormous. Of course, it may be argued that as money is created and is merely a book entry, etc., and as a matter of fact in this district at election time we were told However, we will forget it! I think that most farmers are of a sufficiently independent nature as to have no desire to be a burden on their country. Many dairy farmers, however, are feeling dissatisfied with conditions. They have lost heavily during the slump, and to-day they are faced not only with making a living at a disappointing price, but they will have to recondition their farms, which of later years were allowed to depreciate owing to lack of finance. It is galling to these farmers to have theorists tell the world just how much they can and will make under the guaranteed price, especially so if one of them happens to be a practical failure. These people, with their superabundance of enthusiasm for party politics, are merely making farmers antagonistic to the scheme. The devaluation of land is also annoying to many. We are told that this is a community-created value and must be lowered. The fact remains that a great ar%a of the best land in the Dominion has cost far more than its present-day value. The idea is that, in spite of rising costs, the consumer gets an article at a set price while the producer still makes a living. The rising costs on one side are counter-balanced by reduction of overhead costs on the other. This is done either by writing oft portion of the equity which the farmer has already earned on his farm or by writing off portion of the mortgage which might represent the savings of poor people. Though many farmers to-day are found bowed down with cares, struggling along a road which leads to failure or success, and unable, through graduated land taxes, guaranteed prices, and land devaluation, to determine just which way they are heading; they can still maintain a sense of humour, and I invite them to join with me not only in congratulating town folk upon many benefits which* they may have received, but also in hoping that more may accrue in the future—-

in fact, wishing them all the best which life affords. I hope that readers, whether they agree or disagree with my opinions, will have found this correspondence amusing, if nothing else.—l am, etc., W. M. Clark. Catlins, Oct. 2. TO THE EDITOR. X Sir,—l wish to draw the attention of . some of your correspondents to thefact that the guaranteed price is for butter, not for butter-fat. I know nothing about dairy farming; but I always had the idea that one could get 3201 b of butter from 2401 b of butter-fat. Therefore, if the figures supplied by Mr Taylor are correct the : net return to the farmer for his year's work would be about £383 off a 50cow farm.—l am, etc., G. B. S. Oct. 4.