The Dairy Deficit

Southland Times, Issue 23839, 9 June 1939, Page 6

The Dairy Deficit

MR LEE MARTIN’S revelation of the size of the current season’s deficit in the Dairy Industry Account makes it easy to understand why the Minister of Marketing has appealed to dairy farmers to accept the present guaranteed prices, without change, for another year. The deficit on butter and cheese already sold has been estimated at £1,827,000; and Mr Lee Martin told members of the South Island Dairy Association yesterday that unless market conditions change “materially”, the ultimate loss for the season will be still heavier. The deterioration in the market has been rapid, for only seven weeks ago, when Mr Nash addressed the Dominion Dairy Conference at Wellington, he quoted the deficit at that time as no more than £1,000,000. The first season’s deficit of £272,000 has now been met from the Consolidated Fund, and there is a surplus of £555,000 from the second season’s operations which will reduce the current deficit to some extent. It seems probable, however, that by the end of this season the Government will be between £1,500,000 and £2,000,000 out of pocket in its dealings with the dairy farmers. Delegates to the conference at Dunedin were naturally curious to know where this money would be found; but Mr Lee Martin did not satisfy them. “You will have to wait until Mr Nash’s return before that is answered,” he said. “However, there has been no indication that any future deficit will be charged against the Consolidated Fund.” But surely it is not without significance that at the Dominion Conference Mr Nash himself, in. suggesting the acceptance of the current guaranteed prices for another year, said “he did not want the dairy farmers to ask for greater sums out of the Consolidated Fund this year.” The inference is that the current season’s deficit will have to be met out of taxation, and the Government’s recent hasty return to financial orthodoxy supports the belief that this course will be followed. Temporarily at least, “credit creation” is out of favour: it has produced too many nasty problems already. Faced with a deficit of this size in a season of by no means poor export prices, the Government has not hesitated to offer a similar deficit-produc-ing subsidy to sheep farmers. The taxpayer may soon understand what he has been let in for.