FARMING AFFAIRS

Chronicle (Levin), 13 September 1946, Page 6

FARMING AFFAIRS

(This column is supplied weekly by Pedera'fed Farmers of N.Z. The information given is ofheial, but any . views expressed are those of the Federation and . are not necessarily those of this newspaper.) -The Dairy Arbitration •Tlie report of the Commission of Inquiry to determine whether the costs of holding the price of butter and cheese should be debited to the Dairy Industry Btabilisation Account is" undoubtedly the chief topic of interest to the New Zealand farmers to-day. At first the majority opinion. came as something of a shock to producers, but, having agreed to accept the cohmiission's fuiding, the Dairy Board and ' Dairy Industry Council could adopt no course but that of acquiescence. Then caiue the Government's decision to meet from the Oonsolidated Fund the costs, incurred for 1946-47, leaving the industry accounts to bear tlie costs to the end of July, 1946. . A certain "legal mystery" surrounds the decision of the commission. Although the two judges who signed the majority report found. against the industry, tliey yet found in favour of the Industry to the question which was put to thein: "Whether, having regard to All circumstances relevant to the agreement between the Govermnent and the Farmers' Federation — the costs, above the price realised, incurred iu holding the price of butter and cheese in XewZealand can, under provision of the said agreement, be debited to the Dairy Industry Btabilisation Account." The judges then said: "The draftsman has framed the question rather unhappily. Counsel for the industry insistently reiter'ated that the question admits and postulates that the Goverument had made a loss on tlie sale of local butter and that such loss was incurred not ih subsidising producers, but in holding down the local pricc of butter. Obviously that cannot be wliat the question meants. If that is wliat was meant, there would have been no need to refer the niatter to a comjnission because the question would have answered itself — against the Governinent." The judges then submit that such an argumeut was fallacious and,in effect, they posed and answered another question. "The effect of what was done, " said the leurned judges, "was to enable tlie retail price of butter to be held, and the reai question is whetlier these costs to these inoneys couie within the ambit of ciause 6 of the agreement as being subsidies required to keep the cost oi pifoduction of butter down to the level existing on December 18, 1942. "If t-hey came within the ambit of ciause 6, the Governnient is entitied to debit them to the Dairy Industry Btabilisation Account — otherwise not." Ciause 6 of tlie Stabilisation Agreement states: "Where a subsidy is required to keep the cost of production of any product down to the level existing on the determined date (December 15, 1942), the ainount of that subsidy — will be debited to the appropriate stabilisation account." In the question put to the judges, the reference is to 1 ' t-he costs-above the price realised- incurred in" hbltfing the refail " price of butter and cheese in New Z.ealand." The hnding, therefore, is to the eilect that costs incurred in holding the retail price are costs of production. Ten farmers will subscribe to that view, as discussion at last week's dairy conference showed. A leader in the current issue of Straight Furrow, the otlicial organ of the federation, also makes the point very clear. To agree with the view expressed by the judges is to agree that a loss incurred by a second party in selling an article for less than it costs to produce is a- cost of production. "In this case, ' L.'says Btraight Furrow, "the cost of pi'oduction has been agreed upon. The selling price charged by the second party, the Govermnent, is admittedly below the cost price. Surelv the dilTercncc is not a cost of prodxiction and, therefore, should not be charged to the producer. It is a loss in sale price." Wliile the industry has accepted, tho finding of the Govermnent has waived oue vear of its application, the Dairy Board is adamaiit that it will not accept Ihe application of the same principle in t'uture. In fact, it will not complete present price regtilalious uiitil the t'uture position is made clear. The Govermnent meanwhile pays the £1,500,000 subsidy for the 1946-47 season and the Dairy Industry Btabilisation Account will need approxiinately £2,500,000 up to July 31, 1946. One rav of sunshine does appear in the commission 's linding, liowever the judges agree that producers are not liable under the Stabilisation Agreement to subsidise uieat consumers. There will obviously be no rcnew'al of the present agreomeut whereby the meat stabilisation. is liinited to the extent of £400,000 to hold the locai' meat prlces. Wire Prices Advice has been received from .'tlie United Kiirgdom that prices of. all wires have been advanced 10s per ton sterling. That will not niake any dift'erence to prices in Xew Zealand; which are stabilised on December, 1942, values. The increase, liowever, indicates that supplies are no bettei; fioiu Lngland. Wire Distributors, Ltd.-; have advised the federation that strotig representatious were being made through the authorities to arrange for supplies of wire from the United States and no deJinite arrangements have yet been made.