The Waikato Times FRIDAY, JUNE 30, 1939 DAIRY INDUSTRY’S POSITION

Waikato Times, Volume 124, Issue 20844, 30 June 1939, Page 6

The Waikato Times FRIDAY, JUNE 30, 1939 DAIRY INDUSTRY’S POSITION

“The worst season in his 45 years of experience of the dairy industry ’ was reviewed by Mr Arthur Morton at the conference of the National Dairy Association at Wellington in an address containing more than ordinarily interesting material. The whole industry, like Mr Morton, will await the coming season with the hope that it will show a marked improvement on the past year, when production showed a decrease of about 11 per cent., following a decrease of 6 per cent, in the previous year. This loss of 17 per cent, over the two years has had a very serious effect on the whole financial position. A bountiful season would indicate the real causes of the decline and perhaps do something to repair the damage caused by unfavourable conditions.

The question has been asked whether the Government would be particularly alarmed if primary production did decline moderately as a permanent condition as long as the secondary industries were expanding, since that development would give better “balance*’ to the Dominion’s economy. The past two years have supplied the answer. New Zealand’s financial position is such that a large favourable trade balance must be maintained to avoid default, and that balance can be supplied only by the primary industries. The manufacturing industries, although of obvious importance, are almost powerless to provide the balance of something like £12,000,000 a year to meet inescapable annual commitments abroad. It is probable, indeed, that the extent of that commitment will be increased as a result of Mr Nash’s visit to London.

Even with the decreased output the Government will this season be involved in a heavy loss through the guaranteed price scheme —• a loss that might be well over £2,000,000, against which the State holds a surplus from last year of about £500,000. This will be the first occasion that the dairy farmers will gain any substantial “benefit” from guaranteed prices, and this will provide the first real test of the scheme. What provision will be made to meet the deficit in the Dairy Industry Account f Possibly the Reserve Bank will carry the deficit into the next year in the hope of recouping the loss in a more favourable season; or will the general taxpayers be called upon to bear the loss ? In any case the dairy farmers themselves will eventually have to carry their share of the deficit. In such circumstances it is not surprising that Mr Nash objects to making any advance in the guaranteed price for the coming season. But the farmers can see no justification in the price remaining static while extra costs are steadily swallowing their Working profit. Mr Nash asked the industry to accept last year’s price again on the understanding that he would arrange with the labour unions to cease forcing up the cost of labour. Recent developments among the labour unions have sent that hope overboard, and Mr Nash will have to face a very difficult problem when he returns to New Zealand. If he cannot stop the upward surge of costs he cannot reasonably peg the guaranteed price for dairy produce. If he does not peg that price the general taxpayers will be called upon to meet increasingly heavy deficits.