“MUST BE RAISED”

Poverty Bay Herald, Volume LXIV, Issue 19376, 14 July 1937, Page 3

“MUST BE RAISED”

THE GUARANTEED PRICE “AGAIN AND AGAIN” I’AU-M KR I’RHSIi.MvNT’S VIEW KEEP PAGE WITH COSTS (Stpecinl In IJie HernUl.) WELLINGTON, this day. If the guaranteed price is to keep pace with costs, it must be raised again and again, in the opinion of the Dominion president of the Farmers’ Union, Mr. W. Mulholland, when speaking at the annual conference to-day.

It was undoubtedly in the Labour Party's mind, tie said, to raise farm prices before raising wages and other farm costs, but the opposite had happened.

The Primary Products Marketing Act was purely a marketing measure, and would pay out in the long run only what it received. For a marketing measure, (lie president declared, that policy was sound and admirably adapted for its purpose of stabilising the price of farm products over a period of years, but it did not raise farm prices in accord with rising costs, a necessity emphatically insisted by the lion. W. Nash, Minister of Marketing.

It had been clearly indicated by Mr. Nash that the raising of farm prices should be carried out by some form of monetary manipulation, but (lie separation of the marketing proposals from inflationary proposals, the president: continued, was sound. If market fluctuations could be ironed out it would be a splendid achievement, and the Primary Products Marketing Act was ably devised to make the attempt. A £22,000,000 Fund "In order to get some idea of the amount of money that would be involved in such an attempt to form an equalisation or stabilisation fund and of the problems incident to the financial aspect of such a scheme," ho said, "1 have calculated from the export quantities and values given in the Year Book the sum that it would have been necessary to have paid out to have made the price up to the guaranteed price of 117 s ltd per owl. for butter and (ills 7d per cwl. for cheese in the six seasons ending June 30, 1931, to June 30, 1930. It would have required £22,000,000. For the other primary exports there is no basis for calculation, but as their proportion to butter and cheese is about three to two it would be conservative to say Hint it would have required at least ,050,000,000 to have maintained (lie prices of our main exports during those six vears at the level envisaged by the Act.

"Is it possible to create such a large fund from the surplus receipts in years of high prices? Where could it be held? And what would be the effect of withholding such a large sum from circulation? Undoubtedly, the withholding of this money would have a considerable deflationary effect which as high prices are usually associated with a tendency towards inflation might he advantageous outside New Zealand. Can politicians be trusted not to use it for this purpose under stress?

“While the control of the scheme remains in the hands of a Minister, political pressure will make it impossible to build up an adequate reserve fund, if, indeed, it is possible to build up any at all. The guaranteed price will never achieve its object, unless the control is restored to the industry where it rightly belongs. "Apart from that, is it, in practice, possible to maintain a difference between the prices received by the pool for the sale of its produce, and the prices paid to producers, that is between the selling and buying prices, sufficiently large to enable the necessary fund to be built up? I doubt whether the Minister for Marketing lias ever considered this phase of the problem, yet it should have been the major consideration in fixing the level at which to stabilise prices." Internal Price Movement It was essential, he added, that export prices should move to the extent necessitated by the internal price movement. Allowing for the necessary movement of prices within the bounds of stabilisation, could sufficient funds be obtained to establish the necessary reserve?

Despite the statement by the Minister of Agriculture, the Hon. W. Lee Marlin, that the Government could not go on raising the guaranteed price again and again, Mr. Mulholland said that this must be done if the Government's policy was to be carried out. Otherwise the Government must stabilise all other New Zealand price levels on the basis of the guaranteed price. If the Government proposed to maintain the present level of farmers' costs it must maintain prices for export commodities at the 1928-29 level at least. If costs were to be increased farmers’ prices must be increased "again and again,” and the policy of the Minister of Marketing definitely anticipated this. The Farmers’ Union agreed that a reduction of costs was the soundest way to meet the position, and would support the Government on that policy, but it must be a genuine policy. * “Work More for Less” “When the Minister mentions the items of cost that he has in mind, 1 suspect,” Mr. Mulholland said, “that all he means is that while other people arc to work a little less and to be paid a lot more, the farmers are to work a lot more and be paid a little less. “His statement is that he intends to reduce farming eosls by a reduction of interest rates, rationalisation of the method of production, lowering the price of manures, and by efficient working of the zoning system, and it shows a lack of appreciation of the structure of farming costs. No action that the Government- can take can reduce interest rates below the present. level. But they can reduce the farmer’s return on 'his investment considerably by costing interest below the actual rates and paying a price on that basis.

"Lowering the price of manures will be useful and, if the reduction amounted to 10 per cent, it might save the dairyfarmer as much as .Id per lb. on his production costs. The efficient working of the zoning system could contribute something, if the savings are not cancelled out by further increases in transport costs. Those are very desirable savings, but they are a trilling off-set to the rapidly rising costs with which the farmer is faced. "The Government must realise the very great inflation of oqsts brought about as a result of its actions. If the resulting level of farm costs is to be borne without severe economic distress. then farmers’ prices must he maintained at as high, if not a somewhat higher level, than those ruling in 1928-29.”