A Time for Reinvestment in the Land

New Zealand Journal of Agriculture, Volume 81, Issue 6, 15 December 1950, Page 499

A Time for Reinvestment in the Land

AT the time of the completion x*. of the bulk purchase contracts for butter, cheese, and meat in 1948 the arrangements made seemed to offer reasonable security

jmlhE., in a world of fluctuating economic conditions. It was expected that i a seller’s market would give way Mm, L* to a buyer’s market and it appeared that the limitation in price fluctuations of P er cent, would help to ease the period of transition.

To a very limited extent this has been the case, but there have been two factors tending to militate against the equitable operation of supply and demand. First, the price of imports has increased considerably, especially since the devaluation of sterling, and secondly, and what is a partial cause of this increase, the fairly rapid deterioration in the international situation culminating in the Korean war and the present state of extreme uncertainty has caused what is almost panic buying of certain raw materials essential to the prosecution of war.

Notable among these is wool, and gratifying as the record wool prices are in many respects, there is nevertheless an underlying danger in such high prices. I am not referring at the moment only to the inflationary consequences, but to the possible repercussions on our farming economy. It would be regrettable if there were too marked a swing away from dairy production, the export price for which is generally no higher than last year. This is especially true now that considerable progress is being made in finding fresh and lucrative markets for that proportion of our produce sold outside the contracts.

There are, of course, a number of reasons why such a swing is not likely to be rapid or marked, and I feel sure that in general the balance of our farm economy will be preserved.

In spite of the failure to obtain higher prices this year for dairy produce and meat, the future for our farming industries is, I consider, a bright one. New Zealand farmers can produce livestock products much more cheaply than their competitors in other countries. There is an almost unlimited demand for foodstuffs in a world in which two-thirds of the population is underfed, and though it is true that at present only a small proportion of this demand can be described as effective, an increasingly large proportion is becoming so as underfed countries improve their standards of living.

For these reasons I do not think that farmers need hesitate to embark on any farm development programmes they have in mind and the Government has been sufficiently optimistic about the future to give encouragement in a number of ways.

Soon after taking office, I took steps to establish the Primary Production Advisory Committee to advise me and, of course, through me the Government, on ways and means of assisting the primary producer. The guidance of a committee comprised of leaders of all sections of farming interests and representatives of interested State Departments has proved most valuable to the Government both on measures which it was intended to implement in any case and on the various proposals made by the committee itself. The following are steps taken during recent months, all designed to assist and encourage investment in the land.

Incentive Taxation Relief. — The disincentive of heavy direct taxation to increasing production is well known and is particularly marked in farming, because beyond a certain point considerable effort and expense are needed to attain production increases. The amendments made to the Land and Income Tax Act have been well publicised and there is no need for me to enumerate them here. Briefly they permit of much more liberal depreciation allowances and a wider range of items on which tax exemptions can be claimed.

Modification of the Servicemen’s Settlement and Land Sales Act.— has not been practicable or desirable to abolish this Act immediately, but the more obnoxious provisions have been amended so that farmers can now develop their properties in full knowledge that they will receive the full market value if they sell.

The Marginal Lands Board. Activities under this board, recently set up under the Marginal Lands Act, will result in improvement in hill-country sheep farms, so valuable to New Zealand’s economy because of their function as a source of supplies of store stock. z

Supplies of Farm Requisites.— lt would be nonsensical to talk of investment in land without adequate supplies of the tools of production and it would be idle to pretend that all farm requisites are yet in ample supply, but it is true that supplies of farm tractors and other machinery, fencing wire, and fertilisers have greatly improved and it is hoped that steps now in hand regarding immigration will eventually at least ameliorate the labour shortage.

In the present uncertain state no one can safely prophesy economic conditions more than a very short time ahead, but as far as can be seen at present there is every reason to be optimistic about the future of our primary industries and this, with the steps taken to increase production, should leave little room for doubt as to the wisdom of investing money in land development.

K. J. HOLYOAKE,

Minister of Agriculture.