MEAT AND DAIRY INDUSTRIES

Timaru Herald, Volume CLVIII, Issue 23259, 21 July 1945, Page 4

MEAT AND DAIRY INDUSTRIES

Subsidiary Payments Borne Ey Producers 'Special, WELLINGTON. July 20. As the methods of the payment to the primary producers which have been in force under the stabilisation policy, and because some of these payments are referred to as "subsidies,” there is an idea in the minds of many of the public that primary producers are receiving substantial subsidies from the Consolidated Fund or War Expenses Account. This is simply not ..ue. The Meat and Dairy Boards have therefore decided to issue this statement ef fact which sets out the position a .1 shows how and why the socalled "subsidies" have come into being. As is now well known, the New Zealand Government, receives from the British Government "lump sum payments in addition to the actual prices paid for our produce. These comprise a lump sum payment of £12,000,000 and annual lump sum payments of £4.000.060 for four years, a total of £28.000.099. A committee fully representative of the primary producers which has had access to all the documents connected with these lump sum payments, has agreed that the primary p oducers have no direct claim on these lump sums. The latter are being paid by the United Kingdom "in recognition of the benefits received from the price stabilisation policy.” Therefore the lump sum payments are direct payments for stabilisation subsidies of a general nature. What the public fails to realise is that under our stabilisation procedure, the producers do net receive any of the lump sum payments nor the whole of the money that is paid for their produce—apart from tirese lump sums—and that the whole of the so-called "subsidies" paid to the producer come from the money received for our pro. . :ce. or in other words, from the producers' own pockets.

Decision of Producers During the war, we in New Zealand could have done either of two things. We could have secured higher prices for cur produce each year, in which event wages and ether costs in New Zealand would have likewise risen higher ; ar by year, or as we did do stabilise New Zealand costs and prices, not allowing the producers to have access to the full amount of the money that was paid for their produce. The primary producers themselves decided that the latter course was the best both for tlie country and themselves. It is obvious to anyone that whichever course was adopted, our produce must itself stand all the costs. Nor should it be forgotten that without production there would have been no lump sum payments. The representatives of the producers themselves almost unanimously agreed that stabilisation vigorously and completely applied was the best possible cour? for the Dominion to take in wartime. They regret first that the policy of stabilisation was not implemented earlier, and second that it was not fully applied to all sections, thus, in practice weakening its effect. Two points are crystal clear. The producers do not actually receive annually as payment for their produce the whole of the purchase price paid by the United Kingdom for the exported portion of their produce; part is paid into stabilisation and other accounts cn their behalf. The total amount of the so-called "subsidies" being paid to the dairy farmer gives a clear illustration of hew the producer "subsidises" himself with his own money. During tne present season the total cost allowances and "subsidies" paid Ito the dairy farmer will amount to between £6,000.000 and £7,000,000 and these will be charged to the Dairy Industry Stabilisation Account—that is, charged against the price Britain pays for our butter and cheese, not against lump sum moneys. A considerable part of this is represented by the amount the dairyfarmer has to pay for the increased cost cf articles and services used on the farm. Fertiliser "Subsidy'’ One large item is the "subsidy" on fertiliser amounting to over £1.000.000 per annum. Again this amount is charged direct?.' against the price paid for our produce neither the Consolidated Fund nor War Expenses Account bearing any part of the cost. In other words tlie fertiliser "subsidy" is paid out of the price received from Britain for butter, cheese, meat, etc. but instead of the farmer receiving it and paying more for his fertiliser, he does riot handle the cash, but receives his fertiliser at the stabilised price. The cost of all these so-called "subsidies” is charged against every pound of butter, cheese, beef, mutton and iamb, and in no sense of the word, do they ' represent a subsidy as usually underI stood. I What is true of fertiliser is true also ! of lesser "subsidies" paid out to the i primary producers—true for instance of the "subsidy” paid to stabilise

cutter-boxes and cow covers for dairyfarmers; true also of the “subsidy” paid in connection with stock feeds. The “subsidy” to farmers for growing crops for their pigs and thus saving the importation of grain is likewise paid out of their own pockets, from money in the Meat Stabilisation Account which has come directly from the sale of their meat for export. The dairvfarmers are to-day receiving farm and’ factory cost allowances so that the guaranteed price may remain unaltered—because the many requisites, commodities and services used on farms and in factories have risen during the war years. This money, sometimes erroneously referred to as a "subsidv.” comes directly from their own pockets, from money paid for our butter and cheese by Britain, and withheld from the dairyfarmer, in the Dairy Industry Stabilisation Account. Other Controls

Apart however from these so-called “subsidies” which are actually paid to producers as a means of holding down their costs of production, there are tlie "general” subsidies for all sorts of purposes, such for instance as keeping down the price of sugar, coal, eggs, fruit, clothes and services, all part of our general stabilisation policy. The general stabilisation subsidies come out of the lump sura pay’.'ients, end to the extent that they do not exceed £4.000.000 per annum may ' e fairly said to have come from the piiuiarv production of the country as a whole. The primary producers’ representatives believe that this method of working by means of a stabilising policy, is sound for the country as a whole, in spite of tlie sacrifices it entails on their own part. It has already been shown that the farmer, from his own produce pays tlie “subsidies” he receives under stabilisation. No other busines., in New Z< aland carries its own subsidies in this way. As far as all tne other many "general'' subsidies ar? concerned, it is only when they exceed £4 000.000 per annum that they come from tlie War Expenses Account or tne Consolidated Fund. Up to that stage, they really come out of the country s primary production. Summing up. the public should cleai - Iv understand that the primary producers in receiving these payments a*e not being “subsidised" by the munity. but that whatever so-called "subsidies" they receive, actually come out of their own pockets, from mone.. received for produce. Their representatives have taken a broad national liewpoint on tlie whole question, have agreed that they have no direct claim to the lump sum payments, and tna. it is better to face up to a temporary wartime situation by a policy of stabilisation. than to have an uncontrolled .piral of rising costs. They are disappointed that stabilisation was not implemented earlier and that Jt was not applied rigorously and enective.y to all sections, and are particulaily disappointed at the recent m the ‘policy Which they think will affect them detrimentally This statement should dispel the idea that under stabilisation the farmer is being 'Ubsidised from the Consolidated Fund, or War Expenses Account.