MILK AND MOTOR-CARS

Sun (Auckland), Volume IV, Issue 992, 7 June 1930, Page 12

MILK AND MOTOR-CARS

TRIBULATIONS OF THE DAIRY FARMER DOUR WARNING FROM DUNEDIN (Written for THE SUN) A Scotsman is invariably a great depressionist and enjoys no satisfaction like the fulfilment of his worst fears. When tribulation descends he is the first to say: “An’ didn’t a’ tell ye! ” Mr. James Begg, of Otago, some-time member of the Taxation Commission, a braw chiel in Farmers’ Union circles and associations where shepherd kings foregather to talk about the price of wool, the land-tax and the shortcomings of rural labour, is more than pleased with the lugubrious financial forebodings of the Hon. George Forbes. Does it not bear out what he and others of that ilk have been saying for years—that we must swear off borrowing, cut down public expenditure and abolish compulsory arbitration. Let the canny Dunedinite ! tell his own story: “The production of farms has increased phenomenally in recent years. It can be still further greatly increased, but if farming becomes unprofitable owing to falling prices, or to expenses being kept at an artificial level, production will inevitably decline. “Milk pays for the motor-cars, silks and furs seen in our city streets. It pays interest on our debts, and is the basis of our credit. The men, women and children who produce it are, on the average, the hardest-worked and worst-paid people in th.e Dominion. This position is wrong, and should he righted.” Air. Begg said he believed the lower level of prices had come to stay. To meet this lower level, he suggested that borrowing outside New Zealand should cease absolutely, that drastic reductions in public expenditure be immediately effected, and that compulsory arbitration be abolished. THE BEGG TRADITION It would be a sad day for Mr. Begg if Mr. Forbes and the Government took him at his word. In plain English it would mean leaving unfinished vast railway, hyrdo-electric power works and roading schemes; it would mean the wholesale discharge of workers * who could not readily adjust themselves to changed conditions, and widespread labour disturbances. No doubt Air. Begg would regard the situation with the same philosophic detachment that his father displayed on a notable occasion when similar views on popular extravagance provoked very crude expressions of dissent from uncultured electors who went short of food as the result of the depression of the early ’nineties.

No one is likely to dispute Air. Begg’s suggestion that the friendly cow, which, according to Robert Louis Stevenson,

“Gives us cream with all her might To eat with apple tart” is one of the pillars of the Dominion’s economic structure, nor is there any necessity to question his statement that those engaged in extracting the contents of the udders of a million milkers are “the hardest worked, worst paid people in the Dominion.” The pity of it is that so large a proportion of the population cannot find a more congenial or remunerative occupation. It comes rather as a shock to find that a generation has passed without shaking the Begg tradition. Science, discovery, mechanical invention and war have effected world-wide revolution in the production of wealth; the standard of living has been raised enormously, and yet when a glut of agricultural products in the world’s markets causes economic hardship to the New Zealand dairyman, the only contribution Afr. Begg can make to the problem is to tell the unfortunate farmer to tug a little harder at the teats of the cows, and make a frenzied effort to redress our adverse trade balance by increased production. I)A TRYING ECONOMICS

Let us get down to the economics of the dairy business. A year ago at the annual meeting of the Otago Provincial Farmers’ Union, Air. Begg flashed a broad beam of light on the subject of land values and the cost of agricultural production. Curiously enough it seems to have been more blinding than illuminating. With unusual insight he demonstrated beyond question how the benefits of State loans on easy ter.ms, low railway freights, departmental services, and ail the State provided aids to the farmer had been capitalised. When a man buvs a farm the price he pays for it includes all these things. Without them the value of th© land would be considerably less. But Air. Begg’s statement, which is perfectly true, must be carried a bit further, to reach its logical conclusion. In purchasing a dairy farm the buyer bases the price he pays for it on the current payment for but-ter-fat; and not only takes into consideration all the things Mr. Begg enumerated, but he also allows for the cost of living and of working the farm under existing conditions. In other words, if the benefits of State loans, free carriage of lime, departmental assistance and co-operative marketing tend to inflate the price of land, the cost of labour and of living tends to depress it. The price of boots, clothes, fencing wire, fertiliser and the farmer’s necessities generally are equally factors in determining the value of land.

The man who buys on the assumption that butter-fat will average Is 6d during the currency of his mortgage is obviously in the soup if it falls to Is and stays there. In many cases it simply means that he has made a mistake; that his. equity in his farm is extinguished, and that he has lost his money. But it is not a valid reason for suggesting that because he has paid too much for a farm and because his returns are inadequate to meet his interest and leave him a surplus that wages should be reduced, that the State should rush to his assistance and that protective duties should be abolished in the hope that he might save half a crown on a pair of boots and, incidentally, disorganise another important industry.

The chief factor in the cost of farm production is interest, because no other occupation involves the investment of so much capital to provide a man with a living as farming. The farm mortgages in New Zealand are officially estimated to amount to about £100,000,000 and the average cow has to earn about £ 6 per annum to keep the mortgagee quiet. It is no wonder that by the time some of the smaller dairy farmers have paid the rest of their outgoings, even a Ford car becomes a luxury. AN OLD FALLACY

But let us look at Air. Begg’s assertion that “milk pays for the motorcars, silks and furs to be seen in our city streets.” Air. Begg does not add: “When the farmer and the squatter come to town for the races.” The suggestion he desires to convey is the stupid old fallacy that the farmers who comprise about 12 per cent, of the breadwinners are the only wealth producers, and that the rest of the community are parasites. How any farmer, who is unable to make his business pay, can produce a surplus to provide motor-cars for himself or anyone else, is one of those problems that might be solved by algebra, but the motor trade wastes no time trying to figure it out.

The savings that admit of the enjoyment of those luxuries which we are so anxious that our neighbour should forgo, are the products of much more profitable operations than dairying on dear land, an occupation fol-

lowed from necessity and seldom from choice by those who have small aptitude for anything else. Does not this suggest to Mr. Begg that there may be more money in the motor-car, silk stocking and fur-coat business than in slaving to increase the production of butter-fat in the sure and certain knowledge that the market is already over-supplied? Why should we go on struggling to produce cheap food and raw material for other countries, which are content to leave the relatively unprofitable business of farming to backward nations, and devote their own energies to reaping the rich rewards of industrial production? Any man whose living depends on selling food products in overseas markets finds himself the competitor of the agricultural serfs of all nations. Indian and Chinese coolies who toil from daylight to dark for a pittance, Argentine half-breeds, the South African blacks who are paid less for a month’s work than a New Zealand shearer makes in a day; European peasant women who work all day in fields, barns and dairies for a living that would be regarded with abhorrence in this country, are all combining against the antipodean producer, and for the moment they are too much for him. In past years the advantages we possessed in our climate, the application of machinery to dairy production, the use of motor transport between farm . and factory, and cooperative systems of manufacture, have enabled us to hold our own. WHERE SALVATION LIES It is different today, and Mr. Begg is probably right in his opinion that “a lower level of prices has come to stay.” Admittedly, it is a serious thing, when the fall in the prices of agricultural products reduces the gross income of the country by so many millions. The position would have been still worse, but for industrial development, and the creation of wealth through the conversion of raw material into manufactured goods. The most hopeful method of restoring prosperity is to expand industrial production instead of trying ‘‘a hair of the dog,” and going in for still more dairying. Our economic salvation lies in becoming more independent of importations, so that the surplus from the sale of our exports abroad will be available to pay the interest bill to the British lender, and eventually redeem the principal sums borrowed. Instead of setting our people to work In ever-increasing numbers to milk cows to provide Britain with more butter than she can eat, and buying back motor-cars, silk stockings and fur coats, why not give our own people a turn at making these things for themselves? It is much more interesting and profitable. Besides an industrial population here in New Zealand provides a sure and non-competi-tive market here on the spot, for much of this butter which is realising such low prices after being carted at great expense half-way round the world. It cannot be done in a day, but the sooner we make a more serious start the better. Nothing Mr. George Forbes or anyone else can do will provide a quick solution to the business depression. We have had periods 'of low prices in the past. They have involved retrenchment and reduced expenditure on luxuries. The country has emerged from slumps mainly because low prices stimulate consumption, and the slump produces its own cure, regardless of the vagaries of politicians. But it would be folly to do anything to discourage the investment of British capital in New Zealand. It is when one’s income falls short that one is most in need of a loan, and the time to restrict borrowing is not in a period of depression, but when the country is prosperous and can dispense with external loans without serious inconvenience. It may be that if the British money market takes Mr. Forbes’s exceedingly impolitic utterance seriously, it will be disinclined to furnish the assistance we need, in which case we shall have to resort to the heroic expedients adopted by Australia. The experience will be painful, and a community which is not used to hardships may be uncomfortably restive under even a modification of the treatment Mr. Begg prescribes. PETER SIMPLE.