GOVERNMENT STEPS IN.

Star (Christchurch), Volume LXVI, Issue 20285, 20 April 1934, Page 4

GOVERNMENT STEPS IN.

Will Assume Control of Dairy Industry in New Zealand. COMMISSION TO BE SET UP. (Special to the “Star.”) WELLINGTON, April *2,0. HTHE GOVERNMENT lias decided to assume control of the X dairy industry. In a statement last night, the Prime Minister (Mr Forbes) said that the whole problem, which had arisen mainly as a result of developments outside New Zealand, was such as to amount to a crisis, and the Government held the view that it must accept the responsibilitv of tackling the question.

Among the steps which the Government proposes to take is the setting-up of a Royal Commission to examine the internal state ot the industry, while it is also prepared to subsidise shipments to new markets and to investigate the discrepancy between the prices realised by New Zealand dairy produce and tiiat trem other countries in Britain and endeavour to remove that discrepancy.

After giving very full and anxious consideration to the condition of the dairying industry, the Government is impressed by the seriousness of the position, by the uncertain and changing outlook for the future and particularly by the bearing of recent developments on our relation with his Majesty's Government in the United Kingdom.” said Mr Forbes. “The New Zealand Government has decided to assume full responsibility of the problem and all necessary steps will be taken in accordance with this decision. In the face of the crisis, it is not possible to act effectively with divided and uncertain control. The Government now accepts responsibilitv definltely and clearly. This is the decision of Cabinet and it is one that has not been lightlv made. “The difficulties which confront the Dairy Produce Board are appreciated, but the Government realises that the problem is not confined to the dairy industry and is now extending in other directions and raising issues beyond the board s jurisdiction. The indication of the policy of the Imperial Government, together with the near approach of the termination of the Ottawa Agreements, justify the Government’s decision to take such steps as may be deemed advisable in the circumstances. Quotas. “ The public is aware generally that for well over a year an important quesbefore the Dominion has been whether the New Zealand Government and the dairy industry should agree to the quantitative regulation of exports of dairy produce from New Zealand to Great Britain. *' The New Zealand Government referred the matter to the Dairy Produce Board, which expressed its opinion very definitely against the suggestions of a policy of regulation and the Government accepted and transmitted the decision to the British Government. The British Government thereupon accented the situation, and in order to safeguard the operation of the milk marketing scheme arranged recently for temporary financial advances to British dairy producers by a subsidy scheme guaranteeing a fixed price level for all surplus milk processed. “It has become apparent however, that the refusal of the dairy industry to negotiate along the lines of regulation. of supplies has given rise to a straining of the hitherto friendly relations towards New Zealand of a large section of the British public and to a definite loss of goodwill towards New Zealand and its export produce. The Government will approach the British Government with a view to restoring conditions to a mutually satisfactory basis for the future disposal of our dairying products in the United Kingdom. In thus acting on behalf of the dairying industry and of the Dominion, the Government will endeavour to find *ome acceptable arrangement. The New Policy. “It will be recalled that it was recognised by all parties at Ottawa as a guiding principle that the interests of British producers should have first consideration on their own markets and that it was admitted that the interests of Dominion producers should come next in order of preference, i.e., before foreign. “ The improvement of quality and suitability of our products for markets and the necessary co-ordination of authority will be the keynote of the policy to be followed. The quality factor must stand first in our considerations and necessary expenditure in this connection will be a wise investment. In addition to reopening negotiations as indicated above, the Government is of the opinion that urgent action is necessary in the direction of improvement in the conditions under whicli the dairy industry is operating within the Dominion and in the development of additional markets for its produce. Accordingly, it has decided to accede to the request of the recent Dairy Conference and to set up a Royal Commission to report on whatever action may be deemed necessary whether legislative, regulatory or developmental and to investigate, inter alia: (1) The economic administration of the dairy industry.

(2) The methods and conditions of farm and factory production of dairy produce in their relation to quality as required by the consumer and any practical improvements in these methods. (3) The necessity or otherwise of affording further Governmental assistance in the immediate future for the maintenance and reasonable development of the industry and the best means by which any Governmental assistance should be afforded. (4) The economic practicability of the utilisation of raw dairy products for purposes other than the manufacture of the present standard lines of butter and cheese. (5) Diversification of production of dairy lands. (6) The organisation and stabilisation of local marketing. (7) The adequacy of the provisions of the Dairy Produce Export Control Act having regard to the special conditions now affecting the industry. New Markets. In regard to the extension of markets, the Government has already taken considerable steps to negotiate treaties. This policy will be actively pursued, and the Government is further prepared to co-operate financially with the industry in establishing trade channels, subsidising new avenues of trade abroad, including shipping to countries in any part of the world that offer opportunities for the sale of New Zealand produce “ Conditions abroad are changing, and a passive marketing policy in the face of such changes will not meet requirements. The Government will be prepared to co-operate with the industry in the development of existing and new markets where possibilities exist, and will be prepared to share in the establishment of such trade organisations as are shown to be necessary. “The Government will have an investigation made in Great Britain into the causes that have led to the great discrepancy between the prices of New Zealand dairy produce and those of competing countries, and, if found necessary, will assist the industry in removing them.” THE BOARD’S VIEW. Submissions Made to Government. Per Press Association. WELLINGTON, April 19. The proposals for the rehabilitation of the dairy industry submitted to the Government by the New Zealand Dairy Produce Export Control Board were released to-night for publication The board states that its considered views are that the best plan for the dairy industry is to work on the following lines:—lnternal: Pay a subsidy on exports, reduce costs wherever possible, diversify production and cull inferior stock, maintain and improve the quality, organise local market and stimulate consumption of milk, cream and cheese on the local market. To this end legislation is necessary. External : Improve and extend marketing wherever possible and do the utmost to negotiate favourable reciprocal trade treaties, regulate shipments, stimulate United Kingdom consumption of New Zealand butter and cheese by advertising, and co-operate -with the British Milk Marketing Board to stimulate milk consumption in the United Kingdom. In its report, the board states that there is apparently no plan than can be put forward which will definitely and immediately increase export prices. It submits that only by taking action along the lines suggested by the conference can immediate relief be given to dairy farmers. The board submits that imposition of quantitative restriction and tariffs on foodstuffs, in view cf the unsatisfied demand in many countries, is wrong in principle and their adoption by the British Empire is but perpetuating the difficulty. It, however regretfully agrees that if. eventually, no other alternative is offering which will improve next season’s levels, it must accept the principle of restriction.