Dispute Between Government And Federated Farmers

Bay of Plenty Beacon, Volume 13, Issue 39, 10 January 1949, Page 8

Dispute Between Government And Federated Farmers

The policy of fixing the local market prices for tallow, hides and skins at a lower level than export parity has been in dispute between the Government and Federated Farmers almost ever since the institution of the practice. Originally agreed to for a limited amount of bobby calf skins required for New Zealand Manufacturers, the local demand has so increased that the Federation has argued that the policy was now costing the farmers approximately £1,250,000 a year for tallow, and over £1,000,000 for hides and skins. Personal representation on the subject were made to the Minister of Finance (Mr Nash) early in O'ctober by the Dominion President of the Federation, Mr W. N. Perry. He showed that local soap and margarine manufacturers were receiving 16,500 tons of tallow (from a total production of 46,500 tons) at a price averaging £75 per ton less than the export price. Local tanners v/ere receiving some 410,000 hides at an average reduction of 46/- per hide on the export basis while a similar position obtained with bobby calf skins and lamb and sheep pelts benefitting the tanners to the extent of approximately £320,000 a year in the case of bobby calf skins, and £186,000 a year for pelts. In a lengthy reply to Mr Perry’s representations the' Minister has now stated that the Government considered that the first call on New Zealand production was the domestic market and until its requirements had been satisfied, no exportable | surplus existed and -that surplus had no bearing on the basis adopted for fixing the price at which the local market was supplied. Under present stabilisation policy, said Mr Nash, the price structures approved for the sale of goods in New Zealand were based on actual costs of production or importation plus a reasonable margin of profit. The bulk of primary produce was sold overseas at prices in excess of the assessed cost of production prices within New Zealand. Mr Nash would not agree with the Federation’s argument that by the sale of these products for local use at prices lower . than export parity, the producer was subsidising the consumer. If the primary producer were granted a return on his local market supplies based 1 on export parity, said the Minister, it would be equivalent to giving him an advantage over all other suppliers to the local market. The farmer would be receiving, for the produce sold locally, a price in excess . of the cost of production whereas others were held to that basis. Mr Nash argued that if farmers were allowed export parity prices for goods sold on the local market, it would be equally right for other sections of the community (wage and salary earners, manufacturers and retailers) to claim world parity prices for their goods and services. Such a concept was incompatible with a stabilisation policy and would build a higher cost structure fo.r the primary producers themselves. Where, in pursuance of the Government’s stabilisation policy, the local selling price of an item was held at below cost of production, as in the case of butter, the difference was made up by subsidy from the consolidated fund. That, said Mr Nash, was in accord with the policy that the producer was entitled to his cost of production but it was entirely different from subsidising up to export parity. In reply to Mr Nash’s statement regarding the price of other sections of the community to claim world parity prices for their goods and services, the Federation has asked whether stabilisation levies were imposed on goods exported from New Zealand, particularly on exports to the United States of America, and in what fund such levies were held.