NEW METHODS OF MARKETING

Southland Times, Issue 23839, 9 June 1939, Page 8

NEW METHODS OF MARKETING

Problems Looming Before Farmers ADDRESS GIVEN BY MR MULHOLLAND STABILITY NEEDED FOR WOOL PRICES Steps which the farmers might take to overcome their present difficulties were outlined by the Dominion president of the New Zealand Farmers’ Union (Mr W. W. Mulholland) in an address at Oreti last night. He said farmers must organize to protect their industry. First they must get rid of exchange control and then they must consider the development of new marketing methods. The quota restrictions on meat exports necessitated the farmers taking action to maintain control of their produce instead of allowing the Government to take charge. He also urged the farmers to consider a change in the marketing of wool to stabilize prices.

There was an attendance of about 200 district farmers, Mr James Findlay being chairman. Mr A. R. Johnston, past president of the Southland provincial executive, was present and many branches were represented.

“We find that all over the country farmers are complaining,” said Mr Mulholland. “The complaints have found voice at many different meetings and when you find that farmers are rolling up in big numbers to state their troubles you must realize there is something wrong. The farmer is telling the rest of the community that if things are going to be allowed to carry , on in a certain course production is going to go down and the other sections are going to find themselves short of many of the things they want.” Farmers were merely stating a fact, but the evidence in support should be stated because it was freely stated on the other side that things were not so bad as painted, he said. Wool prices had fallen, but were not low enough to warrant the alleged position of the farmers when previous years were considered. Lamb prices also, although lower than last year, were not below the average for a period of years. These basic prices had not by any means been at a catastrophic level and the same position existed for butter and cheese. In spite of these facts, 1300 farmers had assembled in Timaru to draw attention to their plight. It required something serious to cause two-thirds of the farmers of a district to assemble and declare that their position was not right even in a time of fair prices. FARMERS NEAR BANKRUPTCY It was a fact that if creditors were to demand their rights from farming clients at present the farmers would have to go bankrupt. These were among the best farmers because most of the inefficient farmers or misfits had been dropped during the depression. “There is other evidence in support of the case,” he said. “This is to be found in the statistics of advances made by the banks to farmers. Figures published recently show that banks’ advances are on the increase. However, the figures relating to fanners who are able to deal direct with the banks are not a direct indication. The figures of advances made by banks to stock and station agents who are in the habit of financing farmers show an increase from December 1937 to December 1938 of a little more than £1,000,000. These do not state the advances made by stock and station agents to farmers which would be greater. These figures also do not cover the later and more serious phase. Increases in advances made to dairy companies are also nearly £1,000,000. The evidence is that quite a number of dairy farmers did not have enough income to meet expenditure, but had to live on capital. These facts might individually be explained away, but, taking them together, there is no gainsaying the fact that the farmers position is not good.” SOARING COSTS What was the reason for this position in a time of reasonable prices? It was because costs had risen to such an extent that they completely swallowed up the income from farming produce. An analysis of costs and prices showed that the index for weekly wages had risen from 100 in 1914 to 176 in December 1938. Retail prices had risen to 151. Dairy export prices had risen to 111; export meat prices to 148; wool prices to 101. Dairy produce, meat and wool prices showed no advance comparative to wages and retail prices. The average index figure for primary products was about 125. When wages were considered it had to be remembered that hours had been reduced and the correct index figure on an hourly basis was 211. Another important factor in rising costs was Government expenditure. Last year Government expenditure crept up to £56,000,000. The value of production was probably not greater than £130,000,000. Two years ago it was £136,000,000 and if this figure was accepted it would be realized that State expenditure was more than one- third. A great deal of that expenditure filtered down until it reached the farmer. He had examined some sheep farmers’ accounts to learn the direct Government charges on farmers. In many cases the charges were in excess of wages actually paid on those farms. Direct local body and Government taxation had averaged £l7l over the whole group of farms while wages had averaged £274, Figures for another 10 representative farms showed an average of 1850 sheep; £278 in wages, and £207 in direct local body and Government taxation. This removed from the farmers money which could otherwise have been spent in increasing production. “STAGGERING BURDEN” “This is a staggering burden. It is a load which farming cannot afford,” Mr Mulholland said. “I say it is imperative that farmers should be relieved of these taxes. It is imperative that he be relieved of those charges levied on him sirpply because he is a farmer. I do not say he should be relieved of his fair share, but he should not have to pay taxes’ just because he is a fanner.” The Government had come into power on a policy of inflation which would undoubtedly result in raising farmers’ costs. Mr Nash, in particular, had emphasized that farm prices also must be raised. The Government had energetically put into operation one side of the policy only. It had raised farming costs, but it had failed to raise farming prices. This had resulted in a marked devaluation of internal currency, but the value of the currency abroad had been kept constant. This meant that farmers had subsidized imports. Some indication of this could be gained from the cost of living figures. These showed that what

£5 bought in March of this £4/3/4 would have bought in 1934. “The farmer is therefore buying his goods and services at a much higher rate than he is allowed to obtain lor the produce he sells overseas. / hls , IS bad for the farmer and bad for the whole community," he said. Sterling funds held by New Zealand had fallen from March 1936 to March 1939 by about £35,000,000. This was a good j share of a season’s exports. The Hon. P. C. Webb had said this disclosed a high standard of living. Actually it showed that the people were spending j more than they were earning. The loss ( of London funds could have been pre- j vented if the value of internal and ' overseas currency had been kept m relation. ] To correct this position the Govern- . ment had made its major economic . mistake. It had imposed exchange and j import control. The reason given for , this action was the conservation or . London funds, but during the , export season the funds ; were ’ built up by only about £2,000,- . 000. Exchange control had proved ( a failure and a more drastic system < of import control had been introduced. The banks were now rationing exchange and deciding who was most entitled to it. THREAT TO FARMERS ■ “Exchange control threatens the very life of the farmers. It is the greatest blow ever struck at the life of the primary producers of New Zealand, Mr Mulholland said. A. report by the League of Nations on the effects of exchange control showed that internal currency became over-valued. This meant that producers received a great deal less than the value of goods exported. A tremendous burden was consequently placed on the producers. In addition internal costs of production rose still further. This could be seen in evidence in New Zealand. Regulations were being piled on m such a fashion that shortly regulating would become the major industry. The Internal Marketing Department now controlled all the goods published in a recent list and all persons dealing in those goods could not raise their costs without the permission of the department. The system had been in operation only a few months, but it had already advanced a tremendous distsncc. “Farming cannot exist under _ the paralysis of control, but if it continues farmers will find themselves bound down by a control which is certain to grow. We must get rid of it without delay. It not only means a blow to farmers, but a blow to the whole community. Inevitably we will be in a chaotic condition,” he said. It had been said New Zealand could not afford to do away with exchange control because the Dominion would not be able to pay its way. If people had the courage to do away with it and free the exchange the position would quickly correct itself. The exchange rate would rise at first, but farmers costs would not rise in the same ratio. When the value of the internal currency rose the overseas exchange rate would fall. When exchange was artificially pegged internal devaluation caused costs to rise and unless a firm hand was taken costs got out of hand. This had happened in New Zealand. To continue the position would only make the final reckoning more difficult. If costs were to rise further New Zealand would meet catastrophe and, perhaps the sooner the better. The farming community and organized farmers had a serious responsibility. It was to these farmers that the community had to look for the solution of the problems and he felt sure they would not look in vain. “I think the cutting away of the incubus of exchange control is of first importance, but there are also other aspects to . consider. Things are changing and individualism appears to be waning. Farmers have got to change their marketing methods to meet the competition of the outside world,” he said. MEAT EXPORTS QUOTA For the first time in New Zealand’s history restrictions had been placed on exports of meat to Great Britain. Unless something was done to meet that position some of New Zealand s mutton would become valueless. This would mean that fat ewes would be worth only the value of the skins and offal. The position had to be met in an organized way. By next January there would be such a demand from farmers for action that something would have to be done. At that late date it could only be done : through the Marketing Department, but if farmers prepared their plans to meet the situation they could handle the ■ question themselves. The choice was cooperative or Government control. The farmers would be very wise to hold the business in their own hands. The Meat Board was qualified and had the necessary experience for the task, but could not undertake it without the approval of producers which he believed ; they already had. Interference in the marketing of wool was a difficult problem because of the complexities of the trade, but farmers were nearing a position when interference was becoming necessary. A scheme ’ had been suggested to him by a Sydney business man as a means of stabilizing prices. Artificial fibres were offering serious competition to wool and one of ; their advantages was stability of prices . which wool did not at present possess. . Wool growers, therefore, had to face the question of stable prices. This did not s mean fixed prices, but Mr Mulholland said he believed some scheme for stab- • ility could be evolved. The real diffi—--1 culty was to bring the wool producers together. A great advance in that direc- ■ tion had been made at the Sydney • primary producers’ conference. A pre- ; liminary organization had been arranged and if all the growers of the Empire could be brought together out- ' side growers could be brought in. ’ The scheme was the creation of a ' wool pool to buy when prices fell be- . low a certain level and sell when ■ prices rose above a fixed level. There were difficulties, but he believed they could be overcome.

A motion moved by Mr J. A. Miller and seconded by Mr D. Brown expressing appreciation of Mr Mulholland’s efforts to steer the farmers through a period of difficulties caused by high costs, import control and reckless extravagance and commending his efforts to secure a Royal Commission to inquire into the position of the sheep farmers was carried unanimously. A vote of thanks for the address was also passed.