PRODUCTION RISKS

Evening Post, Volume CXVII, Issue 23, 27 January 1934, Page 10

PRODUCTION RISKS

'Numerous demands have been made upon the Government lately for assistance to producers who have suffered losses from storms and frosts. Fruit growers in Central Otago, tobacco growers of Nelson, and wheat growers of Canterbury have appealed for aid. The Prime Minister has met all requests made to him with promises of investigation by departmental officers, and the producers have .interpreted the promises as implying that they will be granted the assistance desired. It is necessary for the Government, however, before making its final decision to consider what precedent it may establish. Hailstorms and frosts are natural risks in-primary production. Granted that those recently experienced have been unusually severe, yet they cannot be put under the same heading as a disastrous earthquake. And even for an earthquake the Government proposes that in future special steps shall be taken to lessen community responsibility. In the Finance Act passed at the close of last session there was provision under which the Government, < after fixing the terms by negotiation with the insurance companies, may arrange that fire following earthquake shall be covered by ordinary fire insurance policies. That is to, sa?, the property owner who insures against fire would, under the same policy, be insured against fire following an earthquake which is at present a special risk accepted 'only on payment of ; a special premium. This action is, proposed in order that the claims upon the State for rehabilitation after a severe earthquake may be. reduced. The principle of the proposal has a direct bearing upon the weather risks borne by producers, and the claims now being made upon the Government. It is the principle that extraordinary risks cannot be accepted as a matter of course by the Government (meaning the people). The same principle Is involved in compulsory third-party motor insurance, and in , workers' compensation for accidents. It is a sound principle inasmuch as it places responsibility upon the persons who are .best able to minimise the risk. Property owners cannot, of. course, prevent earthquakes, but by building soundly they can' lessen the risk of damage. Employers cannot always prevent accidents, but they can adopt safeguards. Producers are not responsible for^the, vagaries of the weather, but they can guard in a measure against loss. In Central Otago the Prime Minister was shown one orchard crop ruined by frost and another much less damaged because the owner had used fircpots. Not only precautions but a regular system of crop insurance should be possible. It must be remembered that, if once it is. admitted that the community should share the risk of losses in primary production (though it does not share} the risks of manufacture or trade) ,it will be very difficult to draw the line against risks which cannot be accepted. A drought in Hawke's Bay, or a bad dairy season in Tpranaki may involve even heavier loss" than hail in Canterbury. Then, too (and this is a point the producers themselves must consider), if losses are shared, what about gains? Wheat growers in the hailstorm area, by asking the Government to share their losses, accept the sharing principle for this season. Will they accept it also when they have good seasons, as they have had in the past? And do the wool growers accept the principle for this season!