"STRAIT-JACKET” PERIL

Evening Star, Issue 21747, 15 June 1934, Page 5

"STRAIT-JACKET” PERIL

THE REAL MENACE TO DAIRY INDUSTRY BANKER'S ANALYSIS Reviewing the dairy industry crisis in his statement to the shareholders of the Bank of New Zealand at Wellington to-day, Sir Harold Beauchamp (chairman) quoted figures to show the great expansion of imports of butter and cheese into Britain. The total imports into Britain in 1927 (he said) amounted to 6,Blß,Gllcwt, and in 1931 to 8,060,068 cwt, an increase of 2,241,457 cwt, or about 40 per cent., in four years—years of financial stringency, peak unemployment, and heavily reduced spending power of the people. in respect of both butter and cheese it is apparent (he continued) that New Zealand’s increasing production has been a considerable factor in bringing about the collapse of the market. In the past, thanks to a steady' demand for all our products at good average prices, prosperity has been achieved perhaps too easily, as is evidenced by the inflated values which have been, and in many cases still are, placed on farming properties. Adjustment of values, ■which has been delayed by the legislation protecting mortgagors, must now be faced if, as appears almost certain, quantitative restriction is to be imposed.

Our established policy of encouraging the settlement of on the land will obviously require revision in so far as it would involve the further production of “ quota ” products. Can we find new markets for our butter and cheese? I am not confident of success in this direction. Britain must still be regarded as practically our only overseas market, and any increased demand for our dairy produce _ under quotas will probably be due mainly to the failure of our competitors through climatic or other causes to maintain their outnut.

If the quantity of mir dairy produce which New Zealand may export to Britain is to be limited, it is most essential that the quality should be of the highest standard. The aim of those controlling the industry must be to win the favour of an increasing circle of consumers, so that there will be an insistent demand for “ New Zealand.” If this can be achieved, we may hope to receive compensation for a reduction in quantity. Disturbing though the outlook is, it may be helpful to our development as a self-reliant people that we should be forced to call a halt and take stock of our position. I have said that the development of New Zealand has proceeded on the lines of always having a free market in Britain for her produce, and it is equally true that (with the exception of the war loans) New Zealand’s debts, oversea and internal, have been contracted in the same belief. Of the total national debt of £280,000,000, of which approximately £80,000,000. was incurred during the war years, over £161,000,000 is domiciled in London. Local body debt also domiciled in London amounts to a further £17,000,000. As the shipment of produce is New Zealand’s only means of providing for the service of her overseas deists and of paying for her purchases of British goods, it follows that restriction on. the entry of New Zealand’s produce into Britain will ultimately have the ( effect of limiting the funds available for these purposes to the amount realised for such produce. What of the future! J lb would be against all the teachings of history to assume that the industry will hot recover. It must recover, for the dairy industry holds too strong and prominent a place in the world’s economics to remain continuously depressed. Ah adjustment between supply and demand is, of course, imperative. It is believed that the production in New Zealand next season will be less by 20,000 tons to 30,000 tons than has been recorded for the season now closing.

The recovery of the dairy industry must be through natural processes if it is to be real and of some permanency. The very highest standard of quality must be insisted on. But 1 have no belief in “ planned economies.” In my opinion, the industry needs advice, help, and sympathetic treatment, and the rest should be left to individual farmers, who, 'after all. are actuated by the natural desire to make a competent living. Undue interference with the industry, and efforts to place it in a strait-jacket with a fancy name, are the chief dangers menacing the dairy industry.