The Guaranteed Price Should Determine Farmers Land Sales Values

Chronicle (Levin), 9 June 1948, Page 6

The Guaranteed Price Should Determine Farmers Land Sales Values

"The component parts of the farmers' guaranteed price and the standards on which the price is based should he u'sed as a guide to the value of their land," said Mr. W. E. Scott (Kapuni) a past member of the Land Saies Court, to the conference of dairy farmers at Massey Agricultural College last night. He.was speaking on land viilues in relation to the guaranteed price. .

"For many years p'rior to tlie opera-. tion of the Land Saies Act land was sold 011 the supply and deniand basis, and generally speaking prices were arrived at by a niethod we now ' cal! ' coniparable saies'," said Mr. Scott. " it is coinmonly used today in the assessment of values of vacant seetions in urban arca. Tliere was a complete lack of stabiliry of farm values and most of us remeinber tlie flood ot speeulation which followed World War l, and the disasters that foJlowed untii millions of pouiuls worth of mortgages liad to be written off, resulting in hardsliips to many honest and deserving people. That sjieculative period earneu .•i reputation for some of our best dairy farms of being a piece of good land fenced in wltli niortgages — a description which was true often enough. But ncver was tliis because the farmer diu aot know his job as a produce)', Ijui ratlier because he lacked a propor ap prec.iatioa, or liad no knowledge at all. of the basic etoiiomics of his own business. ' 1 Throughout those years tliere was n coimiion plirase: 'Land is worth what it will produce.' The real truth is that land is not worth what it will produce but a percentage of what it will produce. The purchaser ot a farm can pa;to the former owner a percentage of tlie gross income as interest on the pu1' chase price. That percentage is not the s.ame on everv farm. Xor is it alway.-i siatic on anv farm i'rom year to year, but tlie application oi' the principle oi applying a given percentage of gross income to payment of interest and rates or rent and rates is the soundest c.lieck on budgeting values that has so fur enlerged. Tliere are other methods oi' checking budgets as the (igure oi" £73 per cow capitahsed as tlie hypot het ical dairy farm used in the assessment ot the 1938 guaranteed price showed. G-uaranteed Price Component The three compoiients of the guaranteed price liad always bceu working and iuaintenance expenses, labour ro ward and capital charges, sani Alr. BcotL. In the 1942-43 season tliesc wero approxiniately : Working and inainteiuince 32 per eeul., labour dO per ceut., capital l.S per cent. At the inception of the Land Saies Act it liad become apparent to a few people that it was of tlie uuttosl iniportuiii e tn.„ structure of ihe guaranteed price should not be broken down by iarmers who sold their land. What would have been the present position if some farmers ! liad succeeded (and some liad actualiy tried to) in haviug their ojiiuions aceepted by Land Saies Committees that each unit of labour could produce not (it)OUlb of butterfat aniiually, but 80U0lb to 12,0()(>lb l The price was based on a unit production of (iOUOlb i'aV. fliis was tlie average for New Zeatami. llti'd SOOflb been establishod for Lano Saies how could (iottolb be takou in ussessim; ilie guaranteed price: fln., . was wliere tlie lnipurtanl reiutnm.siiLi between land values and gr-aiaiii ee-» prices was empimsised. Labour Not Land Values ''It is not denied that on certain farms more thau tiOuUlb rat has been produced, particularlv in war vears, but it is conteiuled verv strongly that i: oue uian does Ino men's work he should get two mtii's pay and not have his laboui capitalised into land values,' Mr. Scott coiitiiiiied. " lt is more im portant still that if certain expenditur-' is necessiiry to achieve certain levels or increase [iroductiun, tlie money paid under the heading of working and main tenance expi ndituiv should be spent in that direction and not allowed to in fiate land values and deplete soi! '"eilility. 1 greatly appreciate tlie work of those ineiubers oi Land Sale,J v'ojimittees who have so eapably preserved tlie structure of the guaranteed price th rough their adininistration ot Land Saies Act. Other primary in duslries could, witli advautage to thos" /cngaged in production aird tlie eeonomio life oi our Doiniriion, foilow our lerid and collcct niuch-needed data 011 costs and prices in their respectivo iields. Kven in tlie dairy induslry ligures re garding pig production are receiving ( loser attention now. The difliculty always has been met and will alwavs cont'ront our mvestigators vvhcn at tenipling to prove pig production costs, that the work iuvolved in raising pori; and bacon is not separable froui olhci farm duties and tiierefore the costs can not be segrated and an exact cost basi-an-ived at. The lll.'tS guaranteed pric made an allowance of 1.5ld a poun !

butterfat on . b.utter-producing f.arm&. and . hrjff that ampunt . .on . , elieeseproducing farms. .- Although, variatipns have- been made ;in other coinponeut parts of the guaranteed -price no aiteration has been made in the allowance for uigs or for the capital charges since L938." Throughout the years since 1938, until tiie setting up. . of , the Dairy Products Marketing Cpmmission in .1917^ there hgd been considerable controversy between the dairy indiistry aud the Government over . the standards of the guaranteed price, and even at the present time certain people were desirous of reviving the argument and wishing to revieu the whole structure of costs and jirice. As land saies values were at 1 present based on 1942 standards, departure from thein would bring violent repercussions and perhaps grave injustices to either buvers or sellers of land since the inception of the Act. lt was not generally known, liut there were other people besides farm veudors who wished to adopt a basis other than the guaranteed price for land saies purposes, but if oue basis were used to iix prices for production from the land, Ihe suine basis should be used for the sale of the land.- Ile considered that those who farnied *the land had standards lixed for tliem in 1938 and those standards must at least be preserved if tliey could not be inipro ved. Popular With Some "We assuine that purchasers of lan-J like the Lanu Saies Act while sellers probably resent it, but these people are only a minority of those engaged in primary production and 1 tliink we are entitled to view the position mainiy from the angJc of the man who farms tlie land," Mr. Scott coutinued. "lt will be agreed that in the Jinal analysis ihe prosperity of the whole of tlie people in a deniocratically governed countrv like New Zealand depends niainly on two factors — tlio raw materiais aud tlie iudustry of the people. The raw mateiial is our land and climate. The preservation of the fertilitv of our soil, aud if possible, its increase, should be priority number oue for all of us. The Land Saies Act stopped speeulation in land — it preserved tlie iand for genuiiie farmers and it stopped aggregation — a benelit iii itself -that is worth an ascertaiuable amouut to Ouf nation as a wliole. AVith such a lifnited aiiiouut of good land in th'is Couutry we caiuiot al'l'ord to al'lbw too much of it ■to get into ihe hinds of oue person. Xor should we mahe the mistake oi the Europeau counti'ies and allow it to' get into too small u'nits and ultimatel\ have peasant farming. Despite the fact that people don't agree vvith me 1 still believe that the A^fMlas had^a greatei■iiilluence o'n preserr'iiig soil' fertility ' hau u e cuu " etftimjlrte -iii pouiids. ' shil lings and penV'e. The ' land has been furnu'd insteall of t^ieculated with and fenced iii with nloTtgages. Just apficf'S- arnl costs' are related we Can niake- ' a coiupartson 'between • soil fertilitv 'afid moi'tgcigesi y ' •- "Today mortgagds"'are loW— perhap* idi er "■ than vevf;t* *" beford — and sou fe'aility is so hi'gh' tlrat,'' in Ynv'opiiiion, we are in good shape t'o fat-e the future, exi-ept, of cotii'se; f'8r the other factor, Ihe indiistry of the'*p6ople, ' ' coneluded the speaker. "Xo oue can be verv iiappy over that aspeet at the momeui, with such shortages of goods and services and not oue ,hour being occ.upied with work. While the world looks for more food for its people we in New Zealand adiiere more ardently to tlie 40-hnur week religiou, with extreme jienal rates for overtime and liolidays aiul for work done on Saturdays aiui Sundavs, except on farms. For how long will it continue? Time aloue will answer. I have often been asked what will be the enu of the Land Saies Act, and when l 1 would prefer to see tlie beiielits of the Land Saies Act. retained pennanently in some way or other. j'referablv it should be done by educa' tion ratlier than regulation. "