DAIRY PRODUCE PRICES

Southland Times, Issue 23610, 10 September 1938, Page 19

DAIRY PRODUCE PRICES

Guarantee For New Season PRODUCERS MAY BE DISAPPOINTED I INCREASE OF HALFPENNY PREDICTED The guaranteed price for the current dairy season is the subject of an editorial in the last number of The New Zealand Dailyman. The journal discussed the subject with a large number of producers of all shades of political opinion, and was greatly surprised at the “variety of opinions and exaggerated hopes” entertained by practically every one of them about the new price for butterfat. The article proceeds: — Judging by the views expressed—views that appear to be fairly general throughout the industry—we are inclined to think that the ultimate announcement of the guaranteed price will cause a considerable amount of disappointment among dairy producers. It is commonly held that this year’s price will be materially in advance of last year’s price, and while the 'most modest expectation is for at least Id per lb butterfat above last year’s, butter suppliers generally expect 1/4 to 1/5 per lb butterfat with cheese suppliers an extra 2d per lb above this figure. It is somewhat surprising that these expectations are not based on anticipated increase in export values nor so much on an increased cost in production; in practically every instance the firm belief in a higher guaranteed price appears to be based on the fact that this is an election year. It will be niteresting to see to what extent this expectation will be realized. FINAL DECISION WITH MINISTER It is rather a sad commentary on the integrity of our politicians and the political system generally that such an impression should take hold throughout the industry. To what extent such an impression is justified will become apparent when the announcement of the guaranteed price is made public. It is only fair to say that, knowing the Minister of Marketing as we do, we cannot help thinking that any expectation of a greatly enhanced price because of this being election year is doomed to disappointment. Whatever may be said for or against the present system of marketing dairy produce, the final decision lies with the Minister of Marketing, and Mr Nash is the last man in the present Government to be swayed by influences that may jeopardize the financial success of his marketing policy. As Minister of Finance, Mr Nash has still a serious deficit m his first year’s Dairy Industry Account, and he is far too orthodox a financier to encumber himself with a second deficit if he can possibly avoid it. For this reason, if no other, undue price concessions on this account should be heavily discounted. At the same time, political influence, whether for or against the Producer, is the fundamental weakness or tne present marketing policy, and we venture to predict that the day is not far distant when the Government will gladly .divest itself of the vexatious responsibility of an annual price fixation. A far better, sounder and more equitable policy would be to guarantee dairy farmers a minimum net return of, say 1/- per lb butterfat, subsidizing prices when export values drop this figure and allow the industry, to do its own marketing. There was a time when we believed that an effective equalization scheme might prove beneficial to the industry, but if such a scheme entails revolutionary marketing methods such as we have witnessed during the past two years, any benefits derived therefrom are overshadowed by the dissatisfaction ana dissension created throughout the industry. Even admitting that there is no intention on the part of the Government to make a profit out of the industry, it is certain that m a long range policy the Government will not suffer or even take a risk of a loss. NO ILLUSIONS Whatever price, however, the Government may decide to pay producers, it will never be a price that will compensate them for the loss of industrial freedom and loss of ownership which the present marketing policy entails. Both Government and producers have no illusions today on that score. It is the very essence of this policy that m fixing prices the scales should be weighted against the producer. Let us take, for instance, the personnel of this year’s Advisory Committee, which, we believe, by a majority vote, will recommend a guaranteed price that will prove acceptable to the Government. It would be difficult to select a body of men more capable or with a greater measure of honesty of purpose than the one entrusted with this difficult task. But with the interests of buyer and seller so diametrically opposed it seems inevitable that a three-agamst-three vote will place the final verdict in the hands of a chairman who himself was appointed by the Government. These are some of the reasons why we believe that the big section of the industry which looks for a considerable increase in this year’s guaranteed price will be definitely disappointed. Regarded from the Government’s standpoint and more particularly from the point of view of the Minister of Marketing, who is also Minister of Finance, there exists neither internal nor external justification to pay a higher price for butter and cheese than last year. Subject to the estimated surplus in the Dairy Industry Account after realizing last season’s dairy produce, we believe the Government will decide upon a price that will return approximately Id per lb butterfat more than last year, and we are basing this forecast on the fact that the guaranteed price is nothing more or less than a reflection of the estimated export value of our produce, a fact regarding which producers should have no more illusions. In plain English, under the present marketing policy, dairy farmers need not expect to receive more out of the Dairy Industry Account than export prices will put into it.