PRODUCTION COSTS

Dominion, Volume 34, Issue 44, 15 November 1940, Page 6

PRODUCTION COSTS

A Recent Increase THE POSITION OF THE PRIMARY PRODUCER (By .Lux.) The Court of Arbitration lias refused the application made by dairy companies for exemption of employees receiving over £6 a week from the general order increasing award wages by 5 per eent. This illustrates clearly the contention of the dairy-farmers that the policy, as now imposed by the Government, works inequitably. They were told, when the guaranteed price system was first introduced, that Its chief merit ■lay in the fact that it would enable the producer to cover his costs and give him a reasonable margin upon which to live. The Minister of Marketing stated emphatically that if costs “lifted” when farmers received the fixed prices then the intentions of the Government would lie defeated. The issue was raised two or three years ago. The award for dairy factory employees was made after prices for the season had been fixed, and there was also an increase, under arrangement, in the wages of farm workers. These two movements in costs were not taken into account when prices were determined, and they formed the basis of the farmers’ claims for an adjustment. The Minister promised the producers, at Morrinsville, that he would work out a system whereby prices could be adjusted to meet costs that had increased after the announcement of the prices for any season. That promise has not been kept and the Minister should be asked how the industry can carry the extra factory wage bill in any way other than by reducing the pay-out to suppliers. Increases in factory costs must come out of the aggregate sum available for distribution. Any reduction of the aggregate must involve a lowering of the individual returns to farmer suppliers and so reduce the standard of living.

The position is that the farmer, who has invested his capital in land, buildings, plant and stock, is expected to carry these added costs, despite the fact that'his average income is below that of many factory employees, of the men who transport the produce from factory to cool store and of the men who load it into vessels for export. These employees are protected by awards and agreements from adverse movements in the cost of living, but the basic man, the producer, must see his standards of living steadily reduced because prices for iiis output have been summarily fixed. They are the same today as they were in August, .1.938, despite the fact that costs have increased materially since then.

The only means available to the farmer to counter these movements is 1 to work harder and for longer hours, but other sections of the community have been given higher wages and shorter hours of work. Everyone, farmers included, must meet increased costs of living, but the dairy-farmer, with a price fixed for his output, cannot get any adjustment to off-,set heavy increases in the costs ot production.' That is his difficulty. He has a strong claim both in equity and good faith.