FINANCIAL

Manawatu Standard, Volume LX, Issue 162, 8 June 1940, Page 4

FINANCIAL

COMMODITY MARKETS AND PRICES. \ ■' WAR AND PRODUCE. (By “Penloo.”) In these critical days, when everyone in New Zealand is anxious to give the utmost assistance towards winning the war. it is found that the best and only way that we can render effective assistance is by sending more and more men to fight overseas, and to send more and more foodstuffs and raw materials to assist the Allies. Finding, funds for the sick and wounded is purely a domestic affair, and yet money is pouring in for this purpose —clear evidence that people are keen to help. One - need not consider the problem of more men, for that is being advanced by the authorities and young men are responding splendidly. It is the xiroblem of production that is oi considerable importance at the present time. The foodstuffs and raw materials required of us are well-known; they are of animal origin and therefore increased production from this source must take time. To increase the production of wheat and other cereals is comparatively easy, and is achieved by extending the area of cultivation; but the same method cannot be adopted with respect to livestock. AVe could have a bigger output of dairy produce if we had more milch cows, hut the “more” is not obtainable immediately. The only real help that could be given is to produce more pig-meats, which could be done in a comparatively short time. Beef, mutton and lamb, and wool cannot "be increased so readily'. This problem of expansion of production is entirely an economic one. and importing patriotism into it does not\ lielp in the least. For farmers to expand production as' suggested they must see some profit in it. If there is no profit, and production is expanded, it would be at the cost of the farmer, who has perhaps contributed in other ways towards winning the war. It is because production costs are very high that farmers find themselves unable to extend their farming operations. This question of costs must be solved lrefore there can be any great expansion in production. The effects of high costs of production on the dairying industry can be seen from the official figures of the outputs for each of six seasons. The figures are as under :

SEASONS REA r IEAYED.

It will be noted that in the 1935-3(5 season there was an increase in tiie production of butter 'of over 10,000 vons compared with the preceding season, and a further increase ot 8000 tons in the 1036-87 season. But in the two following seasons /there were successive shrinkages. In 1038 there was a drop of 12,500 tons compared with 1036-37, and there was a more rapid decline of 20,000 tons in the past season. It is .necessary to examine the cause of this marked, decline. The fact appears to be that many farmers have abandoned dairy-farming tor other kinds of farming, mainly sheep-farm-ing. According to the report of the National Dairy Association, in the season ? of 1937-38 there were 4327 fewer suppliers and in 1938-39 this number was increased by 1470. That is, in two seasons there were 5797 fewer suppliers to the factories. That is to say, that number of dairy-farm-ers abandoned dairying. The current dairying season docs not end until July 31, but the National Dairy Association furnishes the figures for nine months of the season ; that is, to the end of April last. - The production figures for the nine months compared with the corresponding nine months of the preceding season show as under : 1939-40,1938-39

In tile period under review the current season shows a substantial increase, accounted for by special .circumstances. To quote the report or the association, “Weather conditions for the 1939-40 season were not favourable till about December, and up till that month a reduction of the output when compared with the previous year was shown. The good rainfall experienced in most of the dairying districts during that month resulted in an exceptional heavy growth of gras6, and it is many years since such favourable conditions for production have been experienced during the remaining months of the season.” The increase in production this season is due to weather conditions which are beyond the control of farmers; but such special favourable conditions cannot be expected to recur, and so the fact remains that, unless more cows find their way to the milking sheds in the next season, instead of an increase there will be a decrease in production. To increase production some of the 5000 suppliers who retired from the business must re-enter it, and it is a question whether they will. Farming is not new an attractive calling: that is to say, there is not sufficient profit in dairying to warrant the drudgery and risks inherent in the business, and therefore it is

purely an economic problem. Tile main trouble of the dairyfarmer .has been rising costs, and be is in the unfortunate position that he cannot control these < osts; he has no control over the markets overseas, and lie is thus between the devil and the deep blue sea. It is true that he has been receiving guaranteed prices, which except for one season were above the market prices, and now he is receiving the British Government’s commandeer prices, which are still higher. Yet his profits are no greater because of ascending costs. The war has necessarily added to all costs, and the farmer has to pay. Jt is suggested that the Government should help farmers to increase production.' The only real help that the authorities can render is to endeavour to reduce costs. A supply of farm labour at reasonable wages would be most helpful, but as yet nothing tangible has lieen done, except that farmers are urged to increase production on patriotic grounds. But an economic problem is involved and it is the economic problem that must be solved.

Year ended Butter Cheese < J nlv 31 Tons Tons 1934 139 337 105.139 1935 136 217 92,673 193G 146 687 85 555 1937 154 564 88 222 1938 142.835 85,470 1939 122.570 81,577

Tons Tons Butter 125,084® 118,127 Cheese 84,705 70,606