BASIC PROBLEM

Te Awamutu Courier, Volume 72, Issue 6241, 12 June 1946, Page 4

BASIC PROBLEM

FARMING PRICE DISPARITIES STATEMENT BY ECONOMIC RESEARCH OFFICER “The fundamental problem of New Zealand’s farming industry is one of price disparities,” said Mr D. L. M. Martin, economic research officer to the Federated Farmers of New Zealand, in an address at the interprovincial conference at Wanganui. “It is not much good getting a high price for our products overseas if our prices within New Zealand have risen 50 per cent higher than our export prices during the same period. “For instance, the export price of lamb rose from 85d per lb in the 193940 season to 9d in the 1944-45 season, an increase of 9 per cent; wethers rose from sid to 51d over the same period, an increase of 12 per cent; ewes from 3b to 3 5-Bd, an increase of 16 per cent; beef 32s 6d per 1001 b to 40s, an increase of 23 per cent; wool, 12.25 d per lb to 14.0875 d, an increase of 15 per cent; butterfat 15.880 d to 19.377 d, an increase of 12 per cent. From 1939 to 1945 wholesale prices rose 49 per cent. The price disparity between export and wholesale prices at the end of 1944 was 25 per cent, by which I mean that the farming industry was at a 25 per cent disadvantage between selling and buying, compared with 1914. From 1939 onwards the terms of trade have grown steadily worse, the disparity being 25 per cent at the end of 1944, compared with 1914. “You may think that I am painting rather a pessimistic picture, but I maintain that when you come to do all the work that you have been postponing during the war, such as scrubcutting, fencing, topdressing, replacing machinery and plant, and improving land that has deteriorated, you will see the picture more clearly. I am willing to go so far as to saxj that farmers on marginal lands are hardly working on an economic proposition to-day.

“There are three methods by which the present price disparities may be improved: Deflation and repayment of Government securities held by the banks, £36,009,000; increased internal production and importation; increased prices for exports.

“The last time this method of removing price disparities was tried everyone suffered, but not equally, the farming industry suffering most. “It is in increased production and importation of goods that we must, therefore, look for relief from our present price disparities, as an increase in prices for our exports is something over which we have no control, while the marketing of our products is in the hands of the Government. While the demand for food is great in Europe our present export prices should be maintained. “Importation of consumer goods can be increased by reducing import restrictions as far as it is economic. Production can be increased by introducing a longer working week, by reducing subsidies and encouraging more efficient management, and last, but most important, by reducing income tax to a reasonable level. In addition, that most inequitable of all taxes, land tax, should be reduced or abolished.