DAIRY INDUSTRY

Southland Times, Issue 22486, 23 November 1934, Page 8

DAIRY INDUSTRY

RECENT LEGISLATION VIEWPOINT OF THE GOVERNMENT ADDRESS BY MR HARGEST An explanation of the Government’s attitude to the Dairy Commission’s report and of the legislation recently enacted to assist in the rehabilitation of the industry was given by Mr James Hargest, M.P., in an address at the quarterly meeting of the Invercargill Chamber of Commerce yesterday. The luncheon was attended by more than 50 local body representatives and business men. The guests included his Worship the Mayor (Mr John Miller), the president of the Gore Chamber of Commerce (Mr E. C. Smith), the president of the Southland League (Mr W. Hinchey) and the chairman of the Bluff Harbour Board (Mr W. A. Ott). Mr C. B. Tapley, president of the Chamber of Commerce, who presided, in introducing Mr Hargest, read the following resolution carried at the recent conference of the Associated Chambers: —

This conference considers that the Agriculture (Emergency . Powers) Bill now before Parliament is in many of its provisions unwise and inequitable. It gives to an executive commission of three persons (yet to be appointed) extraordinary and apparently unlimited powers over the production and marketing of the Dominion’s natural products, which power may prove dangerous to the trade of the Dominion and to its producers and traders. This Bill gives to the Govemor-in-Council power to make such regulations as he may consider necessary for the economic ■ welfare of New Zealand, which regulations will over-ride existing Statute law and abrogate the right to the enforcement of contracts as between one national and another. While recognizing the serious position, of the dairy industry, this conference does not consider it such as to justify the introduction of such drastic Government control or such gross interference with all primary industries and many commercial businesses. Mr Tapley also quoted brief excerpts from the address given by Mr A. M. Seaman, president of the Associated Chambers, on the subject of Government interference in business. Mr Seaman had said: “The report of the Dairy Commission is a document to be considered seriously and not to be hastily condemned merely because it runs counter to our ideas on the wisdom or practicability of control.”

Government Action Justified.

“I think that an address is rather an ambitious name to call this talk of mine,” said Mr Hargest, “but I am certainly glad of the opportunity to place something of the Government’s viewpoint before you. I am also glaa that the chairman read the views of the Associated Chambers on the matter. I think their attitude is typical of that of most buisness men regarding Government interference in industry. It is only when consideration is given to the changing conditions that justification will be found for Government action. I admit that the legislation is drastic, but I wish to remind you of the commission’s report.” Mr Hargest then referred to the emphasis laid by the commission on the extremely critical position facing the industry, on the need for early and effective measures being taken to cope with the situation, and on the desirability of setting up as soon as possible the Council of Production and Trade. The report stated that the work confronting such a council demanded powers wider than those possessed by any board. It was rather remarkable, continued Mr Hargest, that whereas the Dairy Commission’s report had been generally acclaimed, the legislation proposed by the Government based on the commission’s recommendations had been al-, most wholly criticized. The commission and its report were an object lesson in the difficulties confronting a Government in effecting any radical changes in business, irrespective of whether these changes were for the good of the industry or not. Private concerns could reorganize without any adverse comment, but the Government in instituting reforms invariably gave benefits to one section and hurt others, with a resultant outcry. “Well, to-day,” he continued, “I wish to place before you a few points of view of the Government. These are not to be taken as coming officially from the Government, though I have reason to know that what I am saying coincides largely with the Government’s attitude.” Causes of Crisis. Mr Hargest reminded his hearers that to the Ottawa Conference the Government of New Zealand had sent not only Mr Coates and Mr Downie Stewart, but representatives of the provincial primary industries. These men had made representations to the Imperial Government that preferences should be given to the products entering Britain from Empire dominions, but the Imperial authorities had made it clear that they could not do this and at the same time place restrictions on imports from foreign countries. If restrictions were placed on the primary products of foreign countries the British Government would be compelled in the interests of its own producers to place certain restrictions on the products of its dominions. However, as the result of the representations of the dominions’ delegates the British delegation had consented to grant a respite of three years, until August, 1935. This left New Zealand with less than a year to put its house in order and it was on this account as well as for other reasons that the commission had stressed the urgency of the need for action. In recent years there had been a big increase in dairy production in almost every country competing in this line of business. This increase, coupled with the closing of markets through the erection of tariff walls, had resulted in a debacle, as the report of the commission had stated. In New Zealand’s case, for instance, Canada had in 1929 absorbed 16,756 tons of butter (or 20.3 per cent, of the total exported) from New Zealand. In 1932 the amount fell to the negligible quantity of 32 tons and last year it was 349 tons or 0.3 per cent. The closing of the Canadian market to New Zealand butter meant that the amount involved was diverted to Britain—a happening typical of others occurring through the closing of former markets. It was said by economists that there could be no overproduction, but if three-quarters of the world refused to trade the remaining quarter could not absorb all that was produced. For three or four years the United Kingdom had absorbed increasing quantities of dairy produce, but at prices which were not payable to the producers or satisfactory to the British farmers. In 1929 Britain imported 320,000 tons of butter, in 1931 403,000 tons and in 1934 a quantity estimated to be 485,000 ions. It was remarkable how the price had gone down with the increased importation. The 320,000 tons imported in 1929 cost Britain £54,750,000 and the 485,000 tons imported this year cost only £32,000,000. Though the amount taken had increased by 50 per cent, the total price paid in 1934 was only 59 per cent, of that paid in 1929.

New Zealand’s Increased Exports. New Zealand had helped to swell Britain’s importation of butter. In 1/31 96,000 tons had been sent from New Zealand to the United Kingdom, in 1932 106,950 tons, in 1933 125,600 tons and in 1934 140,000 tons (estimated). There had been a corresponding increase from Australia. Probably production had not yet reached a maximum, and it was realized that unless something was done by the Govemmen or some competent authority deputed by it to remedy the situation, the iuture facing the dairy industry of the Dominion was hopeless. This year’ the dairy farmers of New Zealand were milking 75,000 more cows than last year a fact which bore out the argument that production had not reached its maximum. But Britain was fast reaching saturation point. _ ... h The situation was such that Bntisn farmers had demanded that their industry be P rotected -.^? OU n l . 8 +( S el of the population of the United Kn?g dom were primary producers, and the Government, moved to assistth ese, had inquired into the possibilities limiting the imports of P?mary Produce. Since Ottawa it had asked the co-operation of the dominions m effecting this, but New Zealand and Australia g had not followed the lead. Mr Baxter had come out as an emissary the British farmers to put their position before their New Zealand colleagues, but the door had been albeit courteously, slammed m his f a c ?- had made it clear, however that definite steps were going to be taken to as sist British farmers, and since his return agreements had been made with Denmark, the Argentine, s J. eden ’ T land and the Soviet Republic. _ These countries had agreed to restrict their nroduce but New Zealand and Aus Fralia had not. Yet the position was reaching the acute stage. What Of Quality?

Touching on the quality of New Zealand dairy produce, Mr Hargest said that while he did not wish to’ s?™ d * derogatory note he could not help ask fn whether New Zealand butter was really the best in the world as it was so often claimed to be. On that.day S figures, as quoted in the Southland Times, Danish butter, was realizing from 118/- to 120/-, and New Zealand 72/- to 73/-. If the New Zealand product could be made to command the price of Danish in the British market the national income would be increased by £6,300,000. Even allowing half this amount as being due to some loss of quality because of long shipment, New Zealand could still benefit to the extent of over £3,000,000. The consumer s table was the best test of quality, and the disparity between Danish and New Zealand butter showed that something was lacking in the latter. It was to be inferred that it could be improved in quality and palatability. The Commission and the Government had felt that it was impossible for the Dairy Produce Board to deal with the many vital matters affecting the industry, and it was on this account that the Council of Production and Trade, or as the Act called it, the Executive Commission of Agriculture, had been set up. It was probable that in the near future the British Government would have to be approached with a view to assisting the industry as far as it reasonably could, and in this respect it was well to realize that New Zealand was not quite so insignificant as was sometimes thought. The public debt of New Zealand held in the United Kingdom was 166 millions, the local body debt 18 millions, and with private debts this would probably be swelled to 200 millions, representing an annual interest payment of at least eight millions. Then freights and insurance receivable by the United Kingdom from New Zealand exports amounted to another 10 millions, and from 11 million to 20 million pounds worth of goods was sold to New Zealand, the figure varying with the prosperity of the Dominion. If Australia was coupled with New Zealand it could be said that the debt held in the United Kingdom amounted to 1000 millions, and the interest, freight and insurance bill to 100 millions annually. These facts should be placed before the British Government by representatives who went Home in connection with trade agreements and a strong case could be made out for preferential treatment. Who Should Put The Case?

The question arose, who should put New Zealand’s case and make the negotiations? The Government felt that the Ministers were too engrossed in their own affairs of State to undertake the task, and experience had shown that the British Government was not prepared to treat with representatives of any section or of only semi-official status. Mr Hargest cited the case of Mr D. Jones who had gone Home in the interest of the meat producers and who had been unable to deal directly with the British Government owing to the fact that he represented only sectional interests. The Government was fully aware of the attitude of the Imperial authorities, hence the setting up of the Commission of Agriculture. Mr Hargest said that he preferred the name of Co-ordinating Board to that of Council of Production and Trade or Executive Council of Agriculture, since he considered that the idea underlying its formation was to obtain the best results from the boards at present functioning, the wider powers of the major body enabling it to do much more than the boards. After reviewing the powers of the Commission of Agriculture both in its advisory and executive capacity, Mr Hargest said he was quite certain the Government had no intention of overriding the work of the boards provided they were carrying out this Work satisfactorily, but where it was not possible for boards to achieve results the Commission of Agriculture would take over.

Why Farmers’ Opposition?

Mr Hargest said he found it hard to understand why there had been so much opposition from the dairy farmers to the legislation, the whole object of which was to assist them. The industry was in a critical position today partly because the dairy farmer had been producing an article which was not wanted in such quantities and because its quality was not of the best. The industry had asked that a commission be set up in its interests, and yet when legislation based on the commission’s recommendation was enacted there was opposition from the very people whom it sought to assist. Some of the leaders of the dairy farmers and of the Farmers’ Union were trying to stampede the country into a subsidy which they desired to be 2d a pound on butter, thus adding about £4,000,000 to the load already borne by the community generally. The result of such a subsidy would be increased production and a probable further lowering of price. It' was quite impracticable to consider the repayment of any such subsidy. It was alleged that the Government was doing nothing to assist the farmer, but by means of the 12J per cent, rebate on rates and the mortgagors’ relief legislation direct benefits had accrued. Some of the other recommendations of the commission would no doubt be put into effect, probably at a cost to the community of £2,000,000. “I can quite see the business men’s objection to Government interference in industry,” continued Mr Hargest, “but I cannot see the justice of the dairy farmers’ objections. So far as the business men are concerned it is only the critical state of the industry which excuses the action taken, and in this respect I would like to remind everyone how serious is the position. If the dairy

industry fails the whole country will fall with it. It is impossible to contemplate the collapse of the dairy industry. On the other hand, if it benefits from the legislation the whole country will benefit. I ask you to bear with the Government in its endeavour to put the industry on its feet. The situation has compelled the Government to take action and it is to be hoped that it will receive assistance from all in the measures it has taken to avert a national crisis.” A motion of thanks to Mr Hargest was moved by his Worship the Mayor, who said he had no wish to criticize the Government for setting up a commission to do what it should have done itself. He would ask all to show by acclamation their thanks to Mr Hargest for having explained the legislation resulting from the commission’s report. The sustained acclamation showed that the talk had been thoroughly appreciated. ______