WELLINGTON NEWS

Hokitika Guardian, 26 October 1929, Page 7

WELLINGTON NEWS

PRODUCE PROSPECTS. (Special Cur respondent.) •WELLINGTON, Oct. 24. A good deal has already been said and written about the prospects of wool, and the prospects are not encouraging. There is every indication that wool prices this season will show

a drop of 20 to 25 per cent, compared with the past season. It is sincerely to be hoped that it may be less. A fall in wool'naturally affects the price of fat sheep and lambs for sliped wool is one of the products of the freezing, industry. But apart from) this mutton and lamb are depressed oh the Smithfield market, and that; must be reflected in the fat prices. The quotations cabled for last week showed that light weight lamb under 361 b. was averaging about 8 and fd per lb., while a year ago the price, averaged 10 and Jd, vthere is a drop of ljd, per lb. Wether mutton, 56 to., 641 - is now quoted at about 6fd against 6 and Jd twelve months ago, and ewes are 4 and gd against 5 and jd. From these prices must be deducted the freezing, freight and other charges, which in the c-ase of lamb approximates 2jd per lb. and l|d in the case of mutton.

It is necessary also to take into account the fact that pelts are lower by about 30 per cent, compared with a year ago, and this is another byproduct of the freezing industry. Thus we have to lbckon with the fact that frozen meat itself is down, and in addition two of the more important products are also down.; In view of this it is useless expecting any fancy prices for fats. The season for the freezing companies to begin is retarded by about three weeks to a month owing to the unfavourable climate conditions, at least this is the case over the most of the North Island. The weather so far has been cold and the grass has not come away as it should have done. Some fine warm rains and fine warm weather are wanted now, and if these are experienced very soon the position will be relieved to some extent. But we have to take into account that the flocks have increased during the past year by approximately two million head; this will mean a bigger wool, clip, more lambs* and grown sheep and pelts for export, This should make good some of the loss from declining values, but it will not cover the lot. Sheepmen must reconcile themselves to the fact that wool and fat stock will bring substantially lower prices, some estimate the decline at 25 to 30 per cent., even so it is apparent that the loss will be severe and substantial.

It would be a big mistake to suppose that only the sheepmen will be affected. They will suffer the loss direct, that means that their spending or purchasing power will be reduced, and in an agricultural and pastoral country like New Zealand when the income of the rural population contracts and spending power is reduced the whole country feels the effect in contracted trade and less employment.

The one bright spot in our production and export trade is provided by the dairying industry. Prices for butter and cheese are at the moment satisfactory, and it is to be hoped, that they will remain so. But there are so many factors to be taken, into account, not the least of which is th~ strained condition of the world’s money markets, rendered more serious by sensational collapse on the New York Stock Exchange that one dare not embark on a forecast and run the risk of being made to look ridiculous by the sudden changes in the money market.

The trend of commodity prices ie downwards as credit rates rke. Money seems likely to he dear well into the new year. am\ it should occasion nc surprise if bntter and cheese prices break. If this should happen there would he the danger of it going be'ow the cost of production. Our production are fairly heavy, and that iV Inreelv due to the fancy and in Anted assessment of dairy land. Ever if dairv produce yields a hotter net re turn than last year the incomes of tin farming community in the aggregate will h" less than in the nest season and they must regulate their expenditure to fit the incoipe. But New Zealand is not the only farming country that will suffer. The Australian position is worse, for the Commonwealth’s main product, wool, which last season ,'ealised £57,000,000,

i.s fully 3Q per cent, of less value than a year Jlgo, and Australia cannot lose £16,000,000 without being emmrassed. Other Australian products uch as wheat and sugar are also delressed, whilst costs of production all round are excessively high. In South Africa the position appears to he had also and a recent cable message stated that General Ilertzog, the Prime Minister of the Union of South Africa, warned the people that 1930 would he a strenuous year, and urged them to save hard to ‘ meet hard times. The same warning needs to h° given In New Zealand and Australia,