INCOMES OF FARMERS NOT AIDED

Hawke's Bay Herald-Tribune, Issue 151, 14 July 1937, Page 9

INCOMES OF FARMERS NOT AIDED

— Own Correspondent)

LABOUR P0L1CY CRIT1CISED MR MULHOLLAND'S SUMMING-UP No Gain Evident in Guaranteed Prices FARMERS' UNION AS POLITICAL FORCE

(By Telegrapk-

WELLINGTON, This Day. Had the State found the money to hold the price of dairy produce at the present level during the six seasons from 1931 to 1936 the sum of £22,000,009 would have been required. At least £50,000,000 would have been required to have maintained the prices of the Dominion's main exports at an equivalent level during the period of the depression. These are the estimates of Mr. W. W. Hulholland, who in his presidential address at the annual Dominion conference of the New Zealand Farmers' Union, delivered to-day, strongly attacks the Labour Government for its failure to fulfil its election promises to raise farm incomes and for its policy of raising costs, thus adding further burdens to the farmer. Mr. Mulholland emphasises that the Government's marketing policy is no more than a ©ompulsory pool and that in order to maintain stabilised prices reserves must be built up to meet the time when prices fall. But he believes that political pressure will prevent this ever being done. Meanwhile, he says, the farmers' prices must he raised "again and again" if they are to meet the rising costs. He considers that the Farmers' Union must take a definite part in politics to defend a vital plank in the union's platform — opposition to socialism. He discusses the advantages and otherwise of a Farmers' Party, and says that the Government should be pressed to define clearly its intentions regarding socialism.

Mr. Mulholland said that he found throughout the country the keenest interest waa shown, that farmers of their own volition were joining in large numbers and that whole districts were organising themselves without the asaistanee of regular organisers. The Labour Party, he said, was emphatic prior to the election that wages should not, and indee-i could not, be raised apart from the raising of farm prices. Mr. Nash in his pamphiet "Guaranteed Prices. Why and How," published prdor to the election, and containing an exposition of the guaranteed price proposal, said on page 17: — "The guaranteeing of farmers' incomes through prices together with the guarantee of workers' and other consumers' incomes through wages, pensions, etc., both rising with dncreased_ productive efficiency, must be inextricably linked together in any policy, if it is to succeed and have permanency." "Undoubtedly," said Mr. Mulholland, "it was in the Labour Parfy's mdnd that the Taising of farm prices should precede the raising of wages and other farm costs. In the Budget last year Mr Nash says: 'We first promised to (1) Guarantee prices to the farmers and abolish the present speculative na ture of their income. ' and Mr. Nash in his pamphiet definitely laid it down that the price shouid be ' baaed on a decent return to the farmer for his services after all other costs had been met.' "In implementing their policy, however, the Government proceeded energetically to execute the raising of wages in industry and the imposition of conditions on commerce and industry which materially raised farm costs, while very leisurely pursuing what had heen announced as the first part of their policy— tho raising of farmers' prices."

When the Primary Products Marketing Act was introduced, said the s.peaker, it was naturally looked upon as the instrument by which the Government intended to give effect to its promnsea, but an examination of that measure showed that it was not designed to raise prices or a« an inflationary meafaure at all, but wa® a purely marketing measure, and it , was definite that the marketing scheme would only pay out in the long run what it received for the produce it handled. In Mr. Nash's pamphiet, on page 12, demonstrating that the operation of the scheme would not result in inflation, the Minister definitely indieated that eventually the expenditure must balance with the receipts. For a marketing measure that was sound policy, and tho measure as drawn was admirably adapted for its purpose, which was the stabilising ot' the price of farm produfcts over a period of years, but it did not carry out, and was not intended to carry out, the raising of farm prices in aecord with the raising of farm costs— the nece§sity for which was so emphatically insisted on by Mr. Nash himself, and a further action to bring that about was necessaiv and was obvdously iotended.

Fluctuating Markets The prevention'of the violent fluctuations to which farmers' markets are subjo'ct was an objective which would be viewed eympathetically by every farmer. Fluctuating markets were liable to creafce situations which no amount of business • sagaci'ty could enable farmers to meet without serious loss, If those fluetuations could be suecessfully "ironed out" it would be rogardcd by most farmers a« a splendid achievement. The Primary Products Marketing Act was very ably devised to malce the attempt. With the object of stabilising prices over a period of years that Act created a compulsory pool controlled by the Minister for Marltetinc which had no definite balanc.iug date, and authorised the Eeserve Bank to exlend an unlimited overdraft to the pool. In order te stabilise the price it was essential to tho scheme tliat when prices are ahove tlie level at which stabilisat/.on is i sought the payments should be little

above that level and the balance of the proceeds from the sale of the produce retained in the pool to form a stabilisation or cqualisation fund. "In order to get some idea of the amount of money that would be involved in such an attempt and of tho problems ineident to the financial aspect of such a seheme," said Mr. Mulholland, 1 ' I have calculated from the export quantities and values given in the Year Books the sum that it would have been necessary to have paid out to have yiade the price up to the guaranteed prico of 117/3 per cwt. for butter and 63/7 per cwt. for cheesp in the six seasons ending June 30, 1931, to June 30, 1936. It would have required £22,000,000. For the other primary exports there as no basis for calculation,

but as their proportion to butter and cheese is about three to two it would be conservative to say that it would havo required at least £50,000,000 to have maintained the prices of our main exports during those six years at the level envisaged by the Act. Deflationary Effect. "Is at possible to create such a large fund from the surplus receipts ln years of high prices? Where could it be held'l And what would be the effect of withholding such a large sum from circulation? Undoubtedly ( the withholding of this money would have a considerable deflationary effect which as high prices are usually associated with a tendency towards inflation might be advantageous; provided that the money „was held entirely outside New Zealand. If it were not held entirely outside New Zealand, it would be deflationary wcth respect to the producers for export, and inflationary for other people, causing economie stress. This position would arise even if it were lield entirely outside New Zealand, if at were available as a reserve against which credit could be issued here. Can politicians be trusted not to uso it for this purpose under stress?

* 'While the control of the scheme remains in the hands of a Minister, however, political pressure will make it impossible to build up an adequate reserve fund, if, indeed, it is possible to build up any at all. The guaranteed price will never achieve its object, unless the control is restored to the industry where it rightly belongs." Apart from that, asked the speaker, was it in practicc, possible to maintain a difference between the prices received by the pool for the sale of its pro duee, and the prices paid to producers — that is^ between the selling and buying prices — sufliciently large to enable the necessary fund to be built up? He doubted whether the Minister for Marketing had ever considered that phase oi' the p'roblem, yet it should have been tho major couslderatlon in fixing tne level at which to stabilise prices. 1 f

the level were too high, there would be little surplus available, especially as any sound scheme must allow of some ,rise in the price paid to farmers in times of rising prices. Otherwise the export producer would be placed in a ddsadvantageous position cojyipared with the rest of the community, for it was Impossible to insulate the country entirely from the effect of world prices, and as the purchasing power of money fell in New Zealand, the farmers' costs would rise. It was therefore essential that export prices move to the extent necessitated by the internal price movement. Allowing for the necessary movement of prdces within the bounds of stabilisation could sufflcient funds be obtained to establish the necessary reserve? The one-sided inflation carricd out by the Government had gone >o far — the value of the New Zealand uound to buy services, labour, and con--umer goods, had been, and is being so reduced — that it was impossible to keep export commodities at a price which would enable farmers to obtain reasonable rejuuneration for their services, and, at the same time, to build up the necessary marketing reserve at the present value of our New Zealand pound in terms of overseas currencies. The Minister for "Agriculture had stated that the compensated price and the Government's policy were the same. He suggested at the South i.slaiid Dairy Conference that the conference had no need to carry the compensated pnice remit. He told the Auckland provincial conference of the Farmers' Union that the Government's policy "Reveals little difference from that advocated by the union." Mr. Mulholland agreed that the compensated price was entirely in accord with Government policy as stated to the electors, and the Farmers' Union insisted that the Government carry out its policy. Minister's Speeck, In view of those statements, it was somewhat of a surprise to read the newspaper report of the Hon. the Minister's spcech at Te Kowhai where he said: "We cannot go on raising the guaranteed price again and again, but having once arrived at a fadr price to pay for dairy produce, we must turn our attention to cutting costs. There aie ways in which we can do this and we are going to devote a good deal of our time to it." "The Minister must go on raising the guaranteed price agaiin and again if he is going to carry out the Government's policy," said Mr. Mulholland, "or otherwise he must stabilise all other New Zealand price levels including wages, on the basis of the guaranteed price. But I would remind Mr. Lee Martin that the Government has, by their own actdons, already raised these prices even beyond boom time levels — especially taxation and labour costs. If the Government intends to maintain this level of farmers' costs they must maintain at least the 1928-29 level of prices for export commodities. It costs are to rise still further. then the Government must, dn view • of Mr. Nash's statement on 'Prices, Incomes, and the Price Level,' on page 17 of his pamphiet on guaranteed prices, be prepared to increase farmers' prices 'again and again.' "The Minister said at Te Kowhai that the Government 'must turn its httention to reducing costs.' I can assure the Government that the Farmers' Union stdll holds to the opinion it has alway® held — that reducing costs is the soundest way to meet the position, and will support them to the utmost, if they adopt that policy. But it must be a genuine policy of reducing costs. When the Hon. Minister mentions the items of cost that he has dn mind I suspect that all he means is that while other people are to work a little less and to be paid a lot more, the farmers are to work a lot more and b8 paid a little less. His statement is that he intends to reduce farming costs by a reduction of interest rates, rationalisation of the methbd of production, lowering the price of manures, and by eflicient working of the zoning system, and it shows a lack of appreciation of the> structure of farming casts. No action that the Government can take can reduce interest rates below the present levol. But they can feduce the farmer 's return on his investment considerably by costing dnterest below the actual rates and paying a price on that basie. Lower ed Prices "Rationalisation of the method ot production is a sounding phrase but in practice what does it niean? Some juagic formula that wTll enable a farmer lo work twace as long without feeling tired? Or perhaps an efficiency expert will teaeh him to strip fqur teats at once in rhythm with a jazz band on the wireleas." Lowering the price of manures would be useful, he said, and, if the reduction amounted to 10 per cent. it might save the dairy farmer as much as .ld per lb. on hds production costs. The effieient working of the zoning system could contribute something, if the savLngs were not cancelled out by further iticreases in transport costs. Those were very desirable savings, but they were a trifling off-set to the rapidly rising costs with wliich the farmer was t'aucil.

The Govcrmnent must reallse the very great inflation of costs brought about as a result of ita actions, The restoration of 1931 rates of wages placed wages on tho level of farmers' prices in 1928-29. In addition, there had been the 40hour week, and the restrictions imposed by the Shops and Offices Act and the Factories Act. A multitude of other regul'atory measures had all added to farmers' costs. In particular, the- Government 'a poliev in regard to transport had materially inereascd transport costs and threatened to increase them very uiuch more in the future. Then taxation exceeded the 1928-29 flgure by 70 per cent. in 1936-37, and mueh of that found its way into farmers' costs. If tlie resulting level of farm costs was to be borne without eevere economie. distress, then farmers' praces must be

(Continued ou Page 10.)

W ■ J' ■' 1 iw. . ^ J *" H" - ' ' Income of Farmers Not Aided (Continued from Page S.)

maintained at as high, if not a somewhat higher lover, than those ruling in 1928-29. On the other hand, the Government must not allow the costs of industry, and particularly the farming industries, to be inflated further. The movement had, in faet, gone much too far already oven for the Government 'b policy. Whatever method at might have in mind for raising export prices, it must in fact be a devaluation of the New Zealand pound, either openly or covertly, and while it wae true that New Zealand had complete control of its internal eurrency, there were very delinite limits to the lengths to which that could be carried wdthout causiug eerious trouble. J It could not be carried very far without jeopardiging New Zealand 's position on the British market. We owed the practically unrestricted entry of our produce to Britain to the goodwill of British dndustrialists, both employers and empioyees. If we devalue our New Zealand pound a great deal more, howover> we might cause the industrialiets to join forces with the British agrieulturists who had all along been desirous of some restrictions on our competitdon, and tben we would be in danger of losing our favourable terms of access to the British market. Union Agrebmehts. "The Labour Party's official organ anhounced with considerable jubilation a few weeks ago that an employees union had been successful in obtaining an award giving them an dncrease of 2^d per hour over 1931 rates of wages and published an article calling up all unions not to make an agreement for anything less when their awards came up for roview," continued the spealcer. "There are demands for holidays on full pay. All sorts of conditions are asked for which increase costs. The health ■ insuranee scheme can . be so enacted as to. be a heavy additional burden, and there will be pressure on the Government in that direotion. "I believe the Govermnent realises that it must call a halt — that it camiot allow costs to be increased aay further without causiug considerable harm to the body politic. Oan they resiat .the pressure of . those whom, by their own legislation, they have placed in such a Btrongly orgauised poSition? .Not unless the more stable elementa in the community make their pressure equally felt. "A record value of experts for the past season, amounting to more than £00,000,000 Worth, prevented our inflated costs from being as seriously felt as they would be under more normai conditions. Nevertholess, under what almost amounts to boom conditions we find uuemployment stubbornly persisting. The Minister for Employment proudly points to factories working full time, and then unable to cope with their orders, but why are these factories not putting in new plant or extending. • their premises, anstead of turning orders awa y? Why is so much New Zealand capital seeking investment in Australian ratber than New Zealaiid industrial concerns? The Canterbury Chamber of Commerce Bulletin for My4 1937, says: 'Business is stiil very uncertain about what the Government is going to d.o noxt, and consequently heeitates to venture its capital, ability, and organisation, where thc future appears insecure. ' Capital expendituro is necessary to absorb our people in normal employment, but if the Governmont capital exp^ndituxo were stopped to-day, as stopped it must eventually bo, what is to replace it, if private enterprise has not the confldence to establish factories, plants, ete.1

Fall in Wool Prices. "The Government eeoms to De ©ntirely unconcerned about the other impoitant branches of farming other than dairymg, although they supply a considerably largcr value of exports than the dairying industry does. To wool is mainly dae the credit for the value of our exports attainiug record figures last year. Tho wool market is one of the most lickle of our primary products markets, and may i'all almost overnight to half or less than half of last season 's prices. Sooner or later such a fall in prices ia bound to come. Tho Government states emphatically that dt .believes that, in the face of falling prices, it is wrong to reduce costs. It would assist the return of confldence greatly if they would demonstrate elearly how they will nieet the position which surely will arise. Have they any practical method of dealing with this situation?" The intricacies and difliculties of the situation to-day demand that the union should, within the nest twelve months, seriously consider its relation to politics. While the Farmers' Union had always maintained a non-party political attitude, it had always been intensojy political, and had beou closely connoctcd with the various proposals that had come before Parliament from time to time. A vital plank dn its platform wus tho opposition fco socialism, and by socialism he did. not mean social betterjnent, for w'hich • that term.was fixaquently used,.' but State ownership of tho means of production, distribution, and exchange. So far, the present Government had not taken any action which could be stated to be deflnitelv socialistic in the true sense, neverthelesa, it was of extreme significance that probably its most powerful supporting oiganisation — the National Labour Federation — had as the central plank in ita platform, the socialisation of the com-n-.on ownership and control of the means and instruments of production, distribution, aud exchange of wealth. Wben Mr. Savage was hsked a direct quesfciou as to whether that was the objeet of the Government^ he did not give a clear-cut 'reply. No member of the Ministry had, to Mr. Mulholland's knowledge since going into office, given

a definite statement as to his position, neither do the various Acts which the Government has placed on the Statute Book reveal their intention. They were all quite compatible with progi'essive policy based on individual ownership. Nevertheless, many of them were of such a nature that they could be used with little, if any, alteration for the introduction of socialism. For instance, the complete operabion of the Primary Products Marketing Act would place the whole of the overseas funds within the control of the Government. The Reserve Bank Act could cnable the Government to carry out almost any flnancial policy that it desired without further reference to Parliament. The Industrial Efficiency Act would enable the Government to control industries to almost any extent that it desired. The Primary Products Marketing Act again could bo used practically to expropriate farm owners by taking their produce at whatever price the Government docreed. The Transport Act enabled ihe Government to iake possession of all transport services, and to put owners transporting their own goods ofE tho roads. Union and Politics. The Government must be pressed to make dts position' clear, and the union must faco tho responsibility of the Government itself declaring its adherence to socialism. What . then? There were (several courses open. One was to form a definite farmers' political party, another would be definitely to link up as a political party with the present Oppo« s-ition, or the union might maintain its present non-party attitude, opposing the socialistic policy of the Government. "I believe," he said, "that both the Labour Party and the National Party would be relieved at the moment to find a Farmers' Party in the field. It would relieve them of the necossity of having to find a policy attractive to farmers and at the same time placate their more extreme followers^ and would imjnediately result in the respective policies moving further to fue left and to the I'ight. After the election both parties would bargain lor the support of the Farmers' Party. The necessity for this bargaining would alford ample excuse for the jetftsoning of their more extreme planks by either party. So that they would be free to put as attractive a programme before the electors as they could think of without the risk of having to carry its more extreme elements out. Under these cir'cumstances the Farmers' Party would have the choice of becoming the Eight Wing of the Labour Party, or the Left Wing of the National Party with a prospective anfluence on politics out of all proportion to its strength. "This position obtains in several Bi'iLsh countries — notably, in Oustralia —and at first sight is attractive. But we must remomber that as a political party we would have to put forward a complete platform, not only dealing with those matiere that farmers were vitally interested in. While we, as a non-party organisation, can count on the support of perhaps 90 pef eent. of farmers on those matters which particularly concern them there would be such a considerable division of opinion on other points of policy tbat I doubt if a Farmers' Party could, even with the most careful selection of a platform, command the support of 50 por cent. of the farmers and the others would be actively hostilc. '•Notwithstanding the advantago that holding tha balance of power gives, I am of the opinion that the non-party attitude ehables tne farmers to exert more influonce on political policies. "Whdle I do not expect that the present Government will adopt a socialistic policy, and while I also believe that a very large majority even of their siipporters are opposed to such a policy, we must remomber that the loaders of tho tx*ado uuions movement are practically all socialasts, and that they have at their hand a very ■eflicidnt organ'isation, so that it will be necessary for us to bo equally well organiscd, and to be equally aggressive, if wo aro to resist their eilorts,

CompulBory Unionism. ' ' The use of compulpory unionism which the trade nnZon officistls aro niaking to forward their political axms is a matter to which attentiou should be directed. Whilo we have in the past opposed compulsory unionism aa an interference with personal Iiberty we always recognised that there was] in-so-far as the unions were strictly incustnal organisations, a good deal to be said on the other sido. When they become partisaxx political bodies tho position is entirely altered and no matter whether tho majority of the membere decree it or not there is no justification for forcing the xninority to support political ideals with which they are not in sympathy. "In conclusion I wxsn to express my appreciation of the help and assistance so loyally given me during my year of olfice bv the officers of our organisation every where. First to bead office stalf, both of those in the office and of those in the field I can say that xnoney could not purchase the loyal and efficient eervice given to the union and to me personally. The Dominion secrotary and his staff have dndeed been a tower of strength to me. Tlxe members of the Dominion executive have responded well to the calls I have made on them, though I fear at timcs I have been rather exacting. ■ Where all have given such valuable and ungrudging service I feel that I must restrain myself and not mention names, but I cannot refrain from mentioning the help which the dmmediate past president, Mr. Polson, gave to me especially during the time Parliament* was in session, 1 have been greatly impressed by the \york of the provincial officers, our provincial secretaries are mostly quite outstanding men whose services are efficient and enthusiastic, and not in any way to be measured by their salariea. The provincial presidents are of a fine type and their enthusiasm and energy in carrying out their duties are reflecL ed in the great increase in the prestige of the union. They are assisted : x their work by many keen and loyal workers. One thing which imprersses me is the number of young men who are now taking their share iri the work. It gives great hope for the future of our organisation. To all officers of the union who'se loyalty and help have mado this organisation the- povor ihat it ';s today, I' extend my sincere appreciation knd thanks. "