How The Dairy Industry Lost Millions

Chronicle (Levin), 2 May 1949, Page 3

How The Dairy Industry Lost Millions

■ GISBORNE, April 30. "The dairy industry lost £10,000,000 last year through the exchange coming back to parit.y, but the dairy farmer ia Btill obtaining the guaranteed price," Mr A. J. Sinclair told the Dairy Board conferenee in Gisborne. The difference between the price received from dairy products and the price paid to the farmer was being withdrawn from the Dairy Account Fund, even though prices were at the peak overseas. The fund had been actually set up to be used when prices reeeded, and it was never visualised then that there would be an alteration in the exchange rate. "The Dairy Marketing Commission can go on drawing on the fund till it ia exhausted, ' ' said Mr Sinclair. "When that happens, the Government will have to be consulted and the money will have to come out of the Consolidated Fund." The opinion that the alteration had had a hidden but detrimental effect on the dairy f armers ' position was also expressed by Mr W. Hale, chairman of the New Zealand Dairy Board. From all that had happened since he was eertain that he had nnder-esti-mated the harmful effects. Unfortunateiy, beeause of the price guarantee under which the dairy industry worked, the real effect of the removal of the exchange was not immediately apparent. Any reduction in f armers' costs occurred mainly in farm working and maintenanee expenses and to a slight extent in the costs of plant and equipment. Any gains were not direct to the farmer beeause the reductions1 'in costs • would be taken into account by the commission in fixing the guaranteed price. Unfortunately, little attempt had been made to hold wages. Over 20 aWards had been increased since the exchange rate adjustment and on' top of ' all was the recent pronouncement by the Arbitration Court. 1 1 Those who have been continually pressing for the upward movement of wages will bear a heavy responsibility for the troubles that will eventually come when prices overseas recede." concluded Mr Hale.