The Waikato Times THURSDAY, FEBRUARY 17, 1938 DAIRY CONFERENCE

Waikato Times, Volume 122, Issue 20426, 17 February 1938, Page 8

The Waikato Times THURSDAY, FEBRUARY 17, 1938 DAIRY CONFERENCE

The expressed willingness of the Minister of Marketing to consider the delegation of the power to fix prices to a special tribunal, pre-

sided over by a member of the Supreme Court Bench, is evidence of a desire to meet the wishes of the producers, but when all the factors ore considered it is not the most important of the demands made. The prices fixed for the first year would have been satisfactory, although they were decided by methods which excluded the question of costs altogether— except for the merest fraction of a penny allowance —had not costs risen rapidly. The producers had reduced their costs to the very minimum during the depression, and the original prices would probably have afforded them some margin had POM?i also remained stable. It will be remembered that the Minister Agriculture, speaking ii the district, said that in all probability

something would be done to cover, or cover in part, the increased costs. The Minister of Labour, after a visit, seemed to be of the opinion that higher prices were tlie solution of the difficulty. The prices for the second year were governed by the conditions laid down in the Act. and took into account the costs then ruling. Ihe various items have been challenged as not being sufficient, and stress has been laid on the absence of any provision for the losses of stock. But the chief weakness of what the Government said would be the permanent system, was the total lack of any provision to meet increased costs. Since the prices were fixed last August wages on farms and in factories have been increased. That may mean a reduction in the payments to producers, and there is no machinery available to compensate the farmers for that debit item. The position is realised by the Minister, and when he undertook at Morrinsville to investigate the possibility of introducing some method for meeting costs, that had jumped after the declaration of tlie prices for the year, he held out to the men on the land something likely to be of greater value than the constitution of the body that actually fixes prices. Any body must work on ascertained facts. It will work on the costs as known, whereas what is wanted, in simple justice to tlie producers, is a system that will give them an added return if, at a later stage, higher costs, over which they have no control, threaten to reduce their net income.

Some such adjustment- i- necessary if tlie guaranteed price system is to continue. Tlie claim that the primary producer has been assured a measure of stability not hitherto enjoyed loses its value if mounting costs cut down the return that he, according to the advocates of the scheme, is fully entitled to receive. The stability, under present conditions, does not apply to the net return and that is the margin on which the farmer relies. The gross return may be fixed. That depends upon the producer's standards of efficiency, and to some extent on climatic conditions. But if costs continue to rise then his net return must continue to shrink, so that the stability claimed would not exist. A position in which later developments, in the matter of increased costs, must be at the expense of the producer cannot be stable. It does not follow that the adjustment must take the form of higher payments. The same result could be achieved by lowering costs in some way, and the Hon. IV. Lee Martin said not long ago that he intended to investigate that aspect. The task confronting the Minister of Marketing is to introduce into the system he has adopted a greater degree of elasticity. One side has been fixed but the other is free to move, the result being lack of balance. If the plan is to ensure for the average producer a reasonable return then obviously the factors that tend to reduce that return defeat the very purpose of the legislation.