The Wanganui Chronicle THURSDAY, MAY 18, 1933. NEW ZEALAND AND THE QUOTA

Wanganui Chronicle, Volume 76, Issue 115, 18 May 1933, Page 6

The Wanganui Chronicle THURSDAY, MAY 18, 1933. NEW ZEALAND AND THE QUOTA

IT IS only reasonable that the New Zealand Fanners’ Union should do its best to avoid, in so far as it is possible to do so, the imposition of a quota upon the Dominion butter which is placed upon the English market. By agreement with the British Government last year the principle of the quota was established by the action of the Meat Board agreeirig not to increase the exports of meat to Britain. This was easy to concede because it could be foreseen that, owing to a decrease in the flocks of the Dominion, there would not be the quantity of meat available for export this year as compared with last year. But the very facility which brought about a reduction of sheep flocks was the cause of the increase in milk products. It may be said that the restriction in the ease of meat exports tended to force the pace in the increase of milk products. By the easing of the meat exports the pressure has been thrown on the milk products export. Now the weight of the restriction is to be felt in full force if a quota on milk products is established. It is desirable, therefore, to view the prospects of the establishment of a quota on milk products and its likelihood of affecting the dairying industry. The dairying industry in New Zealand is capable of considerable expansion; natural conditions favour that expansion, and the production of butter and cheese is not heavily handicapped by the distance from the European markets. It is convenient, therefore, to continue producing butter and cheese while the market can absorb the exportable total. But seeing that the market is at saturation point and beyond it, the British Government, in its desire to protect the Home farmers, proposes to impose a quota restriction on Australian and New Zealand butter, and probably also on cheese. The result, if this proposal is adopted, will be that some scheme will have to be worked out whereby a portion only of each factory’s production will be received for export. It can be assumed that, in these circumstances, there will be a reduction in the quantity of milk accepted by suppliers. The highly efficient farm will, therefore, be reduced by a wider margin than the less efficient farm. The quota system, consequently, is likely to fall heavily where it should not, and lightly where it otherwise would fall heavily. A fall in prices has the effect of driving out of use the least efficient farms. Lands which produce small profits are, by reduced prices, turned into loss-producyig unit§, A low price is thus a very desirable instrument in bringing about a curtailment of output. This cannot be said of the quota plan. In the absence of the marginal farms going out of production, and instead the establishment of a quota system, it will be necessary to pay attention to the new conditions which will face the farming industry. The alternative to reducing production is to search round for additional products which can be placed on the market. It will be a short-sighted policy which uses up all the available energy in protesting against the quota system. While there can be no doubt that the farming industry in New Zealand is going to be placed under difficulties if the quota plan is adopted, the adoption of the quota plan, from the British viewpoint, is not an unreasonable course to follow. New Zealand cannot hope to dictate to the British market, and the next best thing to do, while maintaining an adequate protest, is to seek for means and ways to accommodate the Dominion’s pastoral industries to the changed conditions which are likely to prevail in the near future.