The Southland Times SATURDAY, OCTOBER 8, 1938. Falling Prices And Rising Costs

Southland Times, Issue 23634, 8 October 1938, Page 6

The Southland Times SATURDAY, OCTOBER 8, 1938. Falling Prices And Rising Costs

The farmers and manufacturers of New Zealand have been in opposite camps many times in the past; in a country which relies mainly on primary production but is striving to build up secondary industries it is safe to assume that there will be further clashes of interest in the future. When these two important groups find themselves in agreement on a subject of vital importance it is therefore necessary to examine their contentions carefully. This morning we print a joint statement issued by the New Zealand Farmers’ Union and the New Zealand Manufacturers’ Federation. It claims briefly that the real position of the primary and secondary industries at the present time is very different from wh«it it is supposed to be by those who accept the signs of a surface prosperity. National production is not rising: on the contrary, there has already been a noticeable drop in. manufacturing production, and a 6| per cent, reduction in the output of the dairy industry may be a sign that farm production will follow the same downward trend. Costs are higher than they have ever been before, and at the same time seas prices, which determine the amounts received here for our exports, are steadily receding. “ITiis drop in overseas prides,” says the statement, “is transmitted to New Zealand in two ways. We must expect lower prices in the sale of our primary produce overseas, with the result that land on the margin of cultivation in New Zealand is forced out of production; secondly, the lower priced imports drive the New Zealand manufactured goods off our local Dominion market. This has already occurred. The net result is, therefore, a decrease in production, both farming and manufacturing.” These facts are of importance to every person in New Zealand, for they suggest disturbing possibilities if the political methods of the Labour Party are to determine our national economy during the next few years. The Government claims to have increased production in three years by £39,000,000. But the farmers and the manufacturers deny this claim. What has happened, of course, is that the Government confuses—by accident or design—volume of production, with value of production. It is perfectly true that the value of the country’s output has increased enormously since the depression. In 1934-35, for instance, a bale of New Zealand wool was worth about £9 7/-; a year later the average price had risen to £l3 7/-; and in 193738 it was up to £22 .7/- a bale. The same process can be followed in the marketing of butter, which has risen in price from 89/- a cwt in December 1935 to 116/- at the present time. There are increases in the cash price, but not in production; and the increases have taken place quite apart from any action by this or . any other Government. Yet in spite of these plain truths the Government has burdened the' nation with a social security scheme that can be made to function only on the basis of a continuously profitable production. It has raised taxation higher than ever before, arid the tendency of its policy everywhere has been to impose mounting costs on the country’s real .producers. The inevitable effect of these conditions, already foreshadowed by falling prices and production, has been described by the farmers and manufacturers as “a fall in the real national income at a time when the State is making heavier calls on it by way of taxation than ever before in the history of the Dominion.” The warning is clear: there is still time to heed it.