PRICE GUARANTEE

Timaru Herald, Volume CXLV, Issue 21087, 13 July 1938, Page 9

PRICE GUARANTEE

VITAL PRINCIPLES ' ABANDONED

Opinion of Farmers’ Union;

By Telegraph—Kress Association WELLINGTON, July 12. "One of the most important matters concerning the farmers of this country to-day is the Government’s guaran-

teed price plan. What is the guaranteed price? I have to confess that after its various metamorphoses I find it difficult to say,” said the president, Mr W. W. Mulholland, in his address at the annual meeting of the Dominion Farmers’ Union.

“In my address last year I describee the Government’s scheme of marketins under the Primary Products Market ing Act as a long range stabilisatioi plan. The means used for attaining the objective, I pointed out, was i compulsory pool operated by the Min ister for Marketing and which had n< definite balancing date. For the sue cessful operation of the scheem it wa. of vital importance that the Equalis ation Fund, which resulted from thi balance from sales overseas in season, when prices were good, should remaii intact in tht Dairy Industry Accoun until required to make up a deficiency in low price periods. I pointed on that for the six seasons prior to Juni 30, 1936, it would have require!

£22,000,000 to have paid out a price on exported butter and cheese equal to the guaranteed price for 1936-37. I also stated that while control of the scheme remained in the hands of the Minister, political pressure would make it impossible to build up an adequate reserve fund, if indeed it were possible to build up any at all. A guaranteed price would never achieve its object unless the control were restored to the industry where it rightly belonged. A Correct Forecast “I could hardly have anticipated that the correctness of this statement would have been so fully demonstrated in so short a time as has been the case. The Minister for Marketing at the conference of the National Dairy Association at New Plymouth on June 22 last announced the disbursement of the equalisation fund before it had existed for one season. He stated that there was an anticipated surplus of a little less than £1,000,000 in the equalisation fund as the result of this year’s transactions, and that he was going to pay nearly the whole of that away in an additional payment of id per lb butterfat. The Minister also said it has been said that the guaranteed price principle has been abandoned. It is not true. The principle remains that the Dairy Industry Account stands on its own. The Government does not propose to touch the account in any way. The adjustment of the price for the current season does not break the principle.

“It is not an abandonment of the principle of the guaranteed price only if it is expected that the price over a series of years will be sufficiently much above the 1/2-1 or 16 2-3 d per lb butter fat for making butter or cheese respectively which is now being paid to enable the equalisation to be established while paying that price. There is no evidence in the Minister’s statement that this has ever been given a moment’s thought. The disbursement of the credit balance in the Dairy Industry Account is a complete abandonment of the most vital principle in the guaranteed price plan—the establishment of an equalisation fund.

The Surplus “Mr Nash has said on many occasions that the retention in the account of the surplus from good years was a vital part of the scheme. It is only necessary for me to quote Dr Sutch’s statement in his book ‘Recent Economic Changes in New Zealand.’ He says: ‘From explanations given by the Minister of Marketing (Mr Walter Nash) it has been made clear that the Dairy Industry Account is to act as an equalisation fund whereby surpluses from realisation in good years balance deficits incurred in low-priced periods.' The authoritativeness of this statement is vouched for not only by Dr Sutch’s position as Mr Nash’s economic adviser, but also by an introduction written by Mr Nash himself. This vital principle has now been abandoned to political necessities.

“Fixation of the price for 1937-38 indicated the abandonment of the principle—so definitely promised in Mr Nash’s pre-election pamphlet—of paying a price divorced from the market value of the produce. The 1937-38 price was fixed on the market prospects. That it was so the payment of the bonus confirms. The first year the guaranteed price was anchored to the market by means of the 8-10 year average of market prices. "I had thought that the promise of the Prime Minister and of the Minister for Marketing to have a price fixed by means of a tribunal—very grudging-

ly given it is true— might have been a re-instatement of the principle of an artificial price unrelated to the market but related to farmers’ costs, but the opportunity to abandon that proposal was very readily seized, and it has disappeared from the picture With these vital principles abandoned, what Is left? Of the guaranteed price plan of the Labour Party there now remains nothing but the State ownership and control of the marketing of dairy produce, and that seems to be the only principle which the Government will not abandon. Have the other promises and principles with which the scheme was decorated been only sugarcoating to induce us to swallow something which, if openly avowed, would have been exceedingly noxious to the farmers of New Zealand?”