DAIRYING AND DEFICITS

Otago Daily Times, Issue 23831, 10 June 1939, Page 12

DAIRYING AND DEFICITS

It is interesting and instructive that at a time when other sections of the primary production industry in New Zealand are seeking a way out of their difficulties there should be set squarely before them the example of the dairying industry, which accepted a guaranteed price as the means of economic salvation. The addresses to the annual conference of the South Island Dairy Association revealed that dissatisfaction with the operation of the State guarantee is general, indeed unanimous, among those engaged in the industry. No voice, save that of the Minister of Agriculture, Mr Lee Martin, who was exposed to a barrage of pertinent questions to which he returned no satisfactory replies, was raised in defence of the results obtained under the commandeer. The bourdon of complaint among the conference delegates was one that might be described as the theme song of the primary producers of the Dominion. High costs, extending from the milking shed to the port of export, and covering every aspect of the farmer's work and of factory operations, are making any benefit that the dairy producer may seem to obtain from a stabilised price for his produce illusory. An illustration of the extent to which the industry is loaded with extra costs was recently quoted, in the increase by approximately Jd a lb on butter from the farm to the ship's side. This added cost is computed to have amounted in three years to £2,700,000 on butter and cheese. To this must be added the farmer's higher working expenses, including wages and taxation, which have been estimated to bring the cost increase since the guaranteed price was introduced up to some £5,000,000. In return for this tremendous added liability, produced as a direct result of the Government's policy, the dairy farmer has received a guaranteed price for his produce. In the first year of the scheme's operation he was paid £272,109 more than his produce realised, the deficit being finally met out of the Consolidated Fund; in the second year his return was £555,000 less than the Government realised on dairy produce sales; and the Minister's estimate for the current selling season is that the total deficit will probably amount to £2,000,000.

This means that by the end of the three-year period the dairy industry will have received approximately one and three-quarter millions more for its produce than if it had been marketed without a guarantee, but against this figure must be set increased costs that more than cancel out the benefits. Meanwhile this huge sum represents, to a substantial extent, the State's deficit on its marketing operations. It remains either to be wiped out in future years through the accumulation of surpluses in the Dairy Industry Account, or as a charge against the Consolidated Fund. On that point Mr Lee Martin is not prepared to enlighten the industry, or the general public, which is vitally interested. The dairy industry, in spite of these dubious benefits, under the system of commandeer is experiencing difficulties in kind, if not yet in degree, as disturbing «a those confronting other

sections of the farming community. Dairy production is decreasing alarmingly, the guaranteed prices fixed by the Government having failed to provide the incentive to producers that was anticipated. And dairying interests have reached the conclusion, which was unavoidable on an analysis of the operations under State marketing, that the Government's fixed price is based on estimated market realisations for the produce, rather than in relation to the standard of living in New Zealand generally, as is ordainpd under the Act. This is a position which may be met in two ways, either by a substantial increase in the fixed price in the coming season, or by a reduction in the cost of production. The first of these methods, if adopted, would have the result inevitably of benefiting the dairy farmer at the expense of every section of the tax-paying public. As to the alternative, the best that Mr Lee Martin could say was that the Government is "doing everything possible to keep costs down." Since increased costs, affecting not only the farming industry but every enterprise and every individual in the country, are of the Government's making, his assurance contains little comfort for the people of New Zealand.