COMPENSATED PRICES

Te Awamutu Courier, Volume 53, Issue 3831, 9 November 1936, Page 5

COMPENSATED PRICES

SOLVING FARMERS’ GRIEVANCES LOWER COSTS OR HIGHER PRICES? ADDRESS BY COLONEL S. J. CLOSEY. There was an attendance of about fifty farmers at the Parish Hall last Friday evening to hear an address on “Compensating Prices for Dairy Products,” by Colonel S. J. E. Closey, of Levin. The meeting was convened by the Te Awamutu branch of the N.Z. Farmer:.' Union. The chairman was Mr A. T. Bryant, president ot the local branch, and he briefly introduced Colonel Closey and bespoke for him a courteous and attentive hearing. Colonel Closey said that in asking for a compensated price they were asking for nothing more than what the Farmers' Union had been asking for for many years. He wanted all to feel that there was a great need at this juncture for an overhaul of the position. There had never been a time when it was so necessary for all occupations to have a survey of their conditions. When they exam ined the farmer’s economic position the first thing they found was that he had a grievance, that he had had it for a great many years. With the changing conditions he had got to sit up and take stock ot what that grievance was. Colonel Closey said he would appeal to them on. three lines: (1) The farmer’s grievance as he saw it; (2) the cure fqr it; and (3), the most important, to suggest to them that they had got to make up their minds what they were going to do about it. What was the farmer’s grievance? Why had he year upon year been granted a small measure of help? He had been suffering great disabilities. He sold his produce overseas on a low free trade market, and he bought on a high protected market. He sold low and he bought high. Year by year for the last fifty years this young country had had an ambition to start second ary industries which had made appeals to succeeding Governments for tariff protection. That protection had been granted. All tariffs started this way, and invariably they were in creased every few years, but no one ever recorded a drop in tariffs. LIVING COSTS. The cost of living had increased, and as a result the Arbitration Court came into being, the trade unions applied for higher wages because ot the increased cost of living, and these were granted. As wages rose, the manufacturer wanted a high tariff, and so the thing went on in an ascending spiral until to-day they had the spectacle of articles costing hah as much again in New Zealand as they did in England. To the average citizen the fact that costs were so much higher than in England did not make very much difference. It was a question ot higher costs, higher wages, but to the farmer the position was a vital one because he was always selling cheap and buying dear. He was manufacturing like any other manufacturer. He took his material, stock, plant and farm, and turned out his manufactured goods, but what manufacturer could keep solvent who was always buying dear and selling cheap. The problem had now come to a head, and it had got to be solved once and for all. From time to time the farmer had been able to overtake the handicap by increased production, but sooner or later it would get home. He had no control over either the selling or the buying price. On the one hand he went along with his produce and said: ‘-‘What will you give me for it?” When he wanted to buy he asked what he had got to pay. When they found out his price levels were so badly out ot joint then they would realise the troubles of the farmer. He reminded them, too, that if the farmer was not sound then nobody was sound. CANCELLATION OF TARIFFS. The New Zealand price level might be lowered by the cancellation ot tariffs and a reduction of import taxation, or, on , the other hand, the returns which the exporter received might be built up to compensate him for the injurious high costs. In regard to the lowering of tariffs, all efforts to achieve anything in this direction had met with complete failure. In fact, it could be said that no section was desirous of a lower price level in New Zealand except the ex porter. Many powerful organisations were definitely working to maintain and increase this level, and so they were forced to consider the second alternative, and were asking for a compensated price; in other words, a method of raising the farmer’s returns. Here they were meeting with little opposition and much support. They were asking that the farmer be restored to the. position that obtained in 1914, though he was really entitled to even more consideration than that. By means of graphs Colonel Closey allowed by figures taken from official publications how Tn the United Kingdom the prices ot commodities such as copper, lead, spelter, copra, palm oil and rubber had fallen considerably in June, 1935, as compared with prices obtaining in 1914, whereas the prices for foodstuffs had increased in the same period. But, taking the index figure at 1000, the cost level in New Zealand had risen since 1914 to 1300, while the farm product price level had fallen to 800. In other words, the farmer, while being forced to accept a much lower level for his goods, had to pay a much higher level for the goods he required on the farm. Their effort must be directed to closing this gap, so that the farmei could successfully carry on his operations. PRICES QUESTION. He knew the question was asked: Why not try to bring the price of goods in New Zealand down’but as he had said, the Farmers’ Union for years had been urging this without result, owing, no doubt, to the very powerful interests which were opposed to any reduction of tariffs, and so to-day the farmers were asking for the immediate removal of the disabilities under which they themselves were labouring by requesting compensation for having to send goods overseas and then to pay a high price level in New Zealand. Colonel Closey urged that the farmer was justly entitled to something more than he was receiving at present: The annual exports of butter from New Zealand had increased year by year. They had increased two and a half times in the last seven years. It was a miracle the way production

had been increased. New Zealand’s record in this connection was not equalled or approached by any other industry in the Empire. In addition, the Dominion was catering for an increase of some thousands in her own population, and there were 17 per cent less people on the land and 1,000,000 less acres of land being farmed than was the case four or five years ago. Yet there were people who said the farmer was being spoon-fed. Surely the farmer had done his part, and surely he deserved something more than the present tolerance and patronage. YIELD FROM HERDS. li, however, this was not considered a sufficient reason for paying the farmer a compensated price, he would suggest another grievance on behah of a silent, hard working partner. He meant the dairy cow herself. The average yield of butter fat per cow had increased during the last few years from 152 lbs to 230 lbs. This was still further evidence of effi ciency on the part of the farmer and the industry, but where had it landed them? The farmer had not had a fair deal. Costs had been held up against him while prices for the goods ho produced had fallen. Colonel Closey, proceeding, said the primary products of New Zealand were sent abroad not to bring money back, but to get back other goods in exchange, but the position to-day was that imports were so loaded with additional costs by way of taxation that far more produce was required to purchase a smaller quantity of goods. Since the present Government had assumed office the gap was continually widening, and consequently the farmer was suffering a greater handicap. The Minister of Finance, the Hon. W. Nash, had said the payment to the farmer must be measured by the same tape measure as was used to measure the payment to others who rendered | equal service, and the Prime Minister, the Rt. Hon. M. J. Savage, had said: “By what rule ot logic do people arrive at the conclusion that most of the other sections ot the community should have guaranteed' incomes, but that the farmer must have his income fixed by rapidly changing external conditions? Should not all sections of the people who are giving useful service have some guarantee . . the .farmer is entitled to the difference between the amount he receives in the market overseas and the amount that it takes to maintain a standard of living in equitable relationship to the Dominion’s production from all sources. Farmers should not be forced to carry the economic loss which results from producing for export which is the only means available to the whole of the people to meet their overseas obligations." The speaker contended that when at the end of the present dairying season the generalised price of butter and cheese was changed, a true price ■ must be given to the farmer. He must • he in the same position as applied to ' other industries. :

EFFECT ON FARM LANDS. By means of another chart Colonel Closey showed how the decreased farmer’s prices plus the farmer's increased costs had affected the position of farm lands in New Zealand. As he had already said, the number of men on the land had fallen considerably, and in four years over 1,000,000 acres had gone out of occupation. Unless farmers could make a better living more and more must go out, until ultimately only the very fertile land would be occupied. New Zealand had a. tremendous debt of £300,000,000, and on the asset side they had among other items Great War, Native settlement, road construction and maintenance, railways, etc., items which had no tangible existence. The money had all gone, but they were told they had to be included, otherwise it could not be shown where the money had gone. The land was the only asset, and if that went out of occupation there would be nothing for the Dominion’s creditors. He stressed the fact that men of property and wealth, although they considered they had no mortgage on their homes or shares, had to face up to the position that the Dominion’s debt was £300,000,000, that this was over all property, and that the only thing that stood between them having to foot the bill was to keep the farmer on the land and to bring more and more land into cultivation. To do this they had to bring the farmer’s prices up or his costs down. LAND VALUES. Discussing land values, Colonel Closey said land was not worth what it could produce, as people had often said. Land was worth what it pro duced above the cost of that production. Colonel Closey showed how costs ot overseas goods were increased on entry into New Zealand. A motor car, for instance, which cost £213 overseas cost another £197 to land in New Zealand. He illustrated this position by saying a farmer sent away two tons ol butter and it realised £213. A car camo to New Zealand in exchange, but by the time the farmer became the possessor of the car he had had to find another two tons ot butter to pay for it. The position was the same with benzine, and if the farmer did not buy a car himself then heavy increased transport costs affected him in the end. Whichever way it went the farmer had to meet increased overhead, but he was not able, like other business people, to pass it on. Other people told him what they were prepared to give for his goods, and he had no alternative but to accept that price. It must not be imagined the taxation paid on cars was luxury taxation, because while one had to pay in New Zealand twice the price a car could be purchased for in overseas countries, the tax on diamonds was only l-47th of the cost.

EXCHANGE QUESTION. Proceeding, Colonel Closey said it had been suggested that guaranteed prices should be substituted for exchange. In the first place, it was recommended that the exchange be increased to 40 per cent, but only 25 per cent was given. People talked about taking the exchange oft, but how impossible this was until the farmer’s costs were brought down or the alternative, the prices he received, were -built up. The farmer was not responsible for the position in which he found himself. Due to the heavy costs as a rqsult of high tariffs in favour of secondary induslries, the farmer was barely able to keep his head above water. In fact, many had gone under, and unless something was done to give relief many more would find themselves in the same

: position of the poor brother who had : gone under for the third time. What, he asked, were they going to , do about it? By means ol a graph Colonel Closey showed how many boxes of butter the American car manufacturer wanted for his car, and the pile of boxes required to pay for it in New Zealand. There was a time when seven oregon doors could be exchanged for one box of butter, whereas to-day, thanks to tariffs, three boxes had to be given. CANADA’S COMPLAINT. Could they wonder that Canada complained bitterly about this and had closed her doors to New Zealand produce as a protest? A few years ago they could buy a range for £l5 10s; to-day the same range cost £34. In fact, from the pram to the tombstone the farmer was having to pay double or more. Their aim must be to make everyone realise how foolish it was to try 7 and manufacture in New Zealand goods which could not be produced economically. Let New Zea land manufacture those things which she could produce economically—the products of the land—and concentrate on that; at the same time aiming for the highest standard of quality, and, having exported those products, take back in exchange other goods which could not be produced economically in the Dominion. It was useless to think that New Zealand could be a primary producing country and an industrial country also. Their efforts should be to concentrate on the land and to get every possible acre in occupation. By so doing they would be playing their part in bringing about world peace. Seeing the fierce competition among manufacturing nations, the big development of mass production, the big unit, and district specialisation as paramount factors in this machine age, New Zealand should be thankful it. had chosen pastoral occupation and should take every possible advantage of its unique position in this connection. There could never be mass production with dairying; it would al ways require the individual, and the aim must be to exchange their production for the products of the machine.

GREAT CHANGE. A great change had come over democracy during the past twenty years, though many people did not appear to be aware of it. Year by year Parliament was taking more and more control into its own hands, until to-day 60 per cent of its legislation was restrictive and 34 per cent alternative. How was the farmer to deal with this trend of legislation? He had to organise. There were twelve groups of trade unionism in New Zealand, and while some groups comprised over 87 per cent of the people so engaged, the agricultural and pastoral group could only show 6 per cent. This position must be alter ed, and the farmer must place him self in the same position as other groups and definitely ask for that which ho felt and knew he was justly entitled to. QUESTION TIME. To Mr D. H. Cavers, who said that tariffs had not increased appreciably since 1928, the speaker said Canadians claimed that New Zealand started discriminating by means of tariffs first. He had examined the position, and thought Canada had right on its side. To another question, he said he objected to a price being fixed on the cost of production, because such a cost would be fixed on an untrue basis. He had had an example of this brought to his notice only on Thursday, when he was told that road freights to Te Rau-a-moa had been increased. by 87 per cent. Those increased costs would not be taken into account in fixing production costs. To Mr F. Calder, who asked what was meant by united action to secure compensated prices, the lecturer said he visualised unity of farm organisations. The leaders of eleven have already agreed to one platform, and he wanted the rank and file of those organisations to be informed fully so that they will heartily support their leaders. The Women’s Division was fully in accord and was endeavour ing to make the facts known in all farming areas. He had only to visit Westland to have completed organis Ing the whole Dominion. It was very desirable to have a narrow objective, and that was why he was not at present advocating compulsory unionism which, if given legislative effect, would harm farmers, for dairy factories would even be compelled to refuse supplies of milk or cream from farmers who are not unionists. The time was not ripe for adopting compulsory unionism. His campaign was intentionally designed along narrow lines, to get complete accord among all who take part. To Mr W. J. Hodgson, Colonel Closey said opposition could be expected from advocates of the socialisation of the land, and he proceeded to combat the criticism of compensated prices by Dr Sutch, the economic adviser to the Minister of Finance, in a series of articles published in the N.Z. Exporter. To Mr Cavers, who said the compensatory price assessed by Dr Sutch was Is lid per lb butter fat, and that compensated prices really meant farmers selling themselves fully to the Government, the lecturer said there was no possible authority for Is lid being accurately or even reasonably assessed.

To Mr Cavers, the lecturer said it was not true to say that only 4 percent of the people of New Zealand would be affected by the lowering of the present tariffs. If tariffs were not to be lowered, then returns from farm products must be raised. The organisation he represented wanted one or the other. The present disparity should be closed. There being no further questions, a hearty vote of thanks was accorded Colonel Closey, by acclamation, and the meeting endorsed the compensated price plan as explained by him. The mover was Mr W. J. Hodgson, and the seconder Mr Perrott. Mr Cavers moved an amendment in favour of the guaranteed price now operating, based on the farmers’ costs. The amendment was lost on the voices, and the motion carried by an almost unanimous vote.