PRICE GUARANTEE

Gisborne Herald, Volume LXVI, Issue 20081, 30 October 1939, Page 6

PRICE GUARANTEE

ABOVE MARKET LEVEL THREE YEARS REVIEWED RETURN TO DAIRYMEN INCREASE IN COSTS (Special to the Herald.) WELLINGTON, this day. In the three years in which the guaranteed price for butter and cheese has been operating, dairy farmers have received £1,717,482 above actual market realisations, according to an estimate made by the New Zealand Dairy Board in its annual report, which discusses the question of the guaranteed price.

“The controversy which is at present taking place in connection with this problem makes it difficult to see it in clear perspective,” says the report, “Let it be said frankly that the Government has sought to implement its promise recorded in the Primary Products Marketing Act, 1936. Among the considerations to be taken into account when the price was being fixed were the following:—

“(a) The necessity in the public interest of maintaining the stability and efficiency of the dairy industry; (b) the general standard of living of persons engaged in the dairy industry in comparison with the general standard of living throughout New Zealand; (c) the prices to be such that any efficient producer engaged in the dairy industry under usual conditions and in normal circumstances should be assured of a sufficient net return from his business to enable him to maintain himself and his family in a reasonable state of comfort.

Net Return to Farmer “It is on the question of th net return to the farmer that differences of opinion are expressed. On the credit side of the guaranteed prices we have the fact that in the first year of its operation the producers were paid £272,842 in excess of the amount realised by the produce on the market. For the second year of operation the producers received approximately £555,000 less than the produce realised and while it is impossible yet to give the results of the guaranteed price for the 1938-39 season, it is estimated that the Government’s loss on the deal may be at least £2,000,000. “If this estimate is anything like correct, it will mean that producers have received the sum of £1,717,482 over and above the actual market realisations. On the debit side are the largely increased costs. It is claimed that these increases very greatly exceed the amount which has been received in excess of market realisations. It is difficult to see how such a result can be avoided under the policy which has been adopted. To give effect to the ideals of the Government policy for guaranteed prices to dairy farmers means cutting adrift altogether from the question of market realisations. Average of Market Price “It is quite evident, however, that the Government is seeking to, as far as possible, guarantee a price that will average over the years approximately that realised on the market. With the accumulative effect of higher wages, shorter hours and generally rising costs, it is, of course, abundantly evident that the net return to the farmer on such a basis must be less than the actual market return under previously existing conditions.”

The board admits that the Government is alive to the danger of rising costs. In the negotiations which have been carried on regarding the price for the 1939-40 season,.the Minister of Marketing, the Hon. W. Nash, expressed his concern in this connection, and went to the length of seeking a standstill agreement not only on the guaranteed price itself, but on the question of wages. The board’s report gives a full account of the negotiations with the Government on the vexed question of the guaranteed prices being adjusted to meet the risen and rising costs of production, and the inability of the Government to meet the difficulties as presented by the representatives of the producers.