FARMER CHASES COSTS: GOVERNMENT CHASES VOTES.

Hawke's Bay Herald-Tribune, Issue 61, 30 March 1937, Page 4

FARMER CHASES COSTS: GOVERNMENT CHASES VOTES.

When a government sets out to fix the price of any commodity many things other than "social justice" have to be considered. When the producers of the commodity concerned nappen to be a powerful electoral influence then votes are apt to loom larger than either *commereial judgment or, social justice. Eor this reason our government is going to iind it extremely dif fieult to decide upon the guaranteed price of dairy produce next year. First of all the price at present being paid wiil in aH probability leave a deficit in the Dairy Industry Account at the Reserve jBank. Then the dairy larmers are quite definitely convinced that increased costs are more than absorbing the margin given by the present guarantee. Last, but by no- means least, next season's price will be in force at the time of the General Election. 'The Minister of Lands, speaking in the Bay of Plenty recently, said that "next year the guaranteed price would take in the increased costs and it was likely to be over 13£d per lb." The statement apparently has caused more than one to reoall a very definite statement made by Mr Langstone prior to the last election. Speaking at Te Kuiti he said: "It would be necessary to give the dairy farmer 1/3 a pound for his butterfat," and he went on to promise that the Labour 'Party would- pay that sum when it bought the produce. The basis the Minister used in his pamphlet, it has been said, was taken simply to illustrate how the thing would be arranged, but the promise given to the farmers at Te Kuiti was not qUalified in any way. Prior to the election many farmers certainly believed that the price to he paid would be between 18d and 15d. The statements made after Mr Nash had announced the Government 's decision showed that plainly. Now the Minister of Lands has admitted that if costs are to be covered the price must go up. It was clear from the general tone of the Dominion dairy conference, held recently in Wellington, that there will he a wide-spread agitation for higher guarantees next season; and it will be an agitation that the Government cannot very well ignore withoUt endangering its electoral majority. As long as the Government continues with its present policy and costs continue to rise, the tendency will be for the guaranteed prices to be f-orced higher and higher. Yet even with the guarantees at their present level and without making any provision for "direct retrospective payments," the Dairy Industry Acconnt is certain to show a deficit for the current season — a deficit which has been estimated as between £2,500,000 and £3,500,000, though' of course, it may be considerahly less. Failing a permanent improvement in the Home markets — the forcing up of guaranteed prices can mean only greater and greater deficits in the account, deficits which will fall> in the last resort, on the taxpayer. How long does the Government think this can go on ? Even the present limited experience of the guaranteed prices scheme has revealed the fallacy of the Government 's notion that it can set up in a primary producing country an internal economy that takes no account of the influence of world markets and world prices.