THE BOOM IN LAND.

Taranaki Daily News, 12 June 1919, Page 9

THE BOOM IN LAND.

i EFFECT IN TARANAItt i BROWN AND JONES MEET AND DISCUSS THE QUESTION./ They had not teen each other for quite a while and their meeting in town gave each other pleasure. Brown belonged to the town and'Joues to the country. "And so you've not sold out yet!" said Brown. ''Yon must be one ot the Jew in Taranaki who have not." "Could have sold out several times during the past few weeks if I had wanted to," replied Jones, "bill X never did see much use in selling out and retiring to town and taking to bowls and perhaps to booze. If 1 was 'played out' it might be different, but 1 feci quite equal to hard work yet awhile." "You are evidently not like some ol your neighbors then," remarked Brown. "Saw two or three of them the other day. They were all very happy at selling out. One of them got £65 an acre lor a property that he secured for £23 just before the war. He tnougnt the chap who bought was a mug, but the latter sold out again at an advance of £5, after putting down only a small deposit to clinch the bargain. Two tales in a few weeks. What is going to be the outcome of all this changing and selling? It cannot be good for anyone but tin State, the land agents and the lawyers. I figured it out that in these two transactions these voracious gentlemen twallowed £lO, a fiver a time. That means the land will have to carry this additional burden in future. The sales arc a big tax on the land and the community. Can you tell me what has caused the great boom in land? Upon my word, I can't sec .any real reason for it. But that may be my density." "Well," replied Jones, "it's this way: many people have been putting; off and putting-off until after the war, and now they want to get a piece of land. Then there are many returned toldiers who are obtaining assistance from the Government or their people, or both, and this in itself would cause a. stir in the land market. Then prices for produce are so good." 'But not so good as to warrant a jump in prices of from 20 to 25 per cent," interposed Brown. "There must be some other cause or causes."

"May be. There is a feeling abroad amongst dairymen that high as prices are now for butter-fat they will he much higher in the near future when the factories go in for the side lines, like sugar-of-milk, dry milk, catein, etc. They believe prices will reach 2s 6d a lb for butter'-fat. They know what Nathan's have guaranteed in the Waikato and believe that these shrewd gentlemen know more about the trend of things tlian tne average man. Hence, if it is good enough for them to guarantee such good prices for a stated number of years it is good enough to trust the market for that time."

"In other words," said Brown, "farmers are banking upon the future possibilities, and not upon actualities. They are giving a big premium on land in anticipation of the markets improving considerably in the near future. A man in business,' could not afford to take such a risk. Looks to me as if Oie farmers are tempting providence." "There are other factors," continued Jones. "The yield of the average dairy herd is improving, and there is still tremendous,' scope in this direction. For instance, the average cow in Taranaki gives 100 lbs of butter-fat. Some of the herds, in the testing associations, are averaging double that, whilst, rs yon know, we have pedigree cows in Taranaki which have topped the 700 lb mark. At. say, 2s.' a !b for butter-fat the cows will return £3O apiece, as against, say, £lB to £2l at present. There you have an increased production of 33 "per cent."

'That sounds alright, but I itm still unconvinced. To get good herds together a man must have capital and to obtain a high test and good production he must have the means of keeping them in good condition. Now, I can't see how the average man who buys a farm at a high price on a small deposit can compass the purchase of good animuls and cultivate his land and grow the feed required. He is up against it all the time, and he will be forced to work like a slave, at' will his family, in order to meet his various engagements. That can't be good for him, his,' family, or the community." "But that has been said from the beginning of the dairying industry in Taranaki. I remember years ago some people thought others were mad to buy the good land on the Waimate Plains for £2O. The land has been rising ever since in value, and, tell me, bow many of those who paid the then ruling rates have come to grief?" Brown: "But they bought it—or contracted in—on a rising market. Prices were becoming stabilised in 1914 before the war broke out. The best land in Taranaki had then reached £6o'. It is different now, when the same land in selling for £9O. to £IOO. There has; been no warrant for it. Suppose next year, when the Imperial Government's contract with the New Zealand producers terminates butter and cheese made no advance; suppose indeed prices went down a little—as is quite likely—where will be the highly financed dairymen?" Jones: "He's taking the risk like he has: always done and will eome out on top again." Brown: "But it is unreasonable to expect this increase to continue. Now. look at the matter from a business point of view. Take the case of the man who buys a first-class piece of land at £9O an aore. You will admit that, despite all that is said to the contrary, it will take 1% acres of Taranaki's best country to carry a cow even when the place is well farmed and provision made for winter feeding. You thus want 100 acres for 73 cows, or the equivalent jn young stock. The place costs £9OOO, the stock, say. at £ls a piece, £1125, milking machine plant, hors,es, etc., £300; a total capital cost of £10,425! At 6 per cent, the current rate, the annual interest charge is £625, plus rates and taxes £45 (a low estimate), plus again living expenses £2OO and labor

£loo—a grand total'of £1)70. Now take the other side. Say tin cows arc in milk and they average" £2O each for the season (the average for Taranaki 13 at least £3 less), the total return is £I3OO. So you arrive at a gross profit of £330, looking at it from its brightest aspect." Jones: "But you have omitted revenue from pigs and profit, on young -stuff growing up. Thes/e items would make the proposition quite a good one on your own showing." Brown: "That is true, but ] had in my • mind that the £2O per cow coveredjauw return from pigs. Pigs are become attractive in Taranaki and they JKft-Bot being grown, asw like they Wd

ito be. In regard to the other' point, any _ profit coming from young stock will be " counter-balanced by the necessity for reinstating the milking cows, many of which go off, are barren, have disease, jor go out altogether. The fact remains.- ; that on a capital cost of £10,425 there is only a profit, under the best conditions, of about three per cent. It is.' not a business proposition, chiefly because of the high price of land. *Tliat land cannot be worth any more, on an economic basis, than £OS per acre, and that price can only be justified by price's for our produce keeping up after June, lfl'2o. The farmer w taking a mighty big risk."

Jones: "On the other hand, if the byproducts come to anything, if as a result of the visit of our representatives to America, Canada, England and the Continent, we are able to go in for the dry milk and sugar-of-milk industries, the man you cite will have a big win, for it is possible 2s: 'ud will be paid out, which will bring up the return per cow another £5, or a total of £32s—a clear annual profit therefore of £CGO. I consider that is a good proposition when you boar in mind that the farmer is living well and rearing his family. In ten years he would be worth £6OOO, plus what he had before he bought. I would like to know how many of your business men can show an equal return in normal years."

Brown: "That's alright as far as it goes, but 1 repeat that you are basing your estimates on the possibility of the present good prices —even better prices continuing. What would be the position of the farmer if ins,tead of receiving £2O a cow he only got £l4 or £ls? He would be making no headway at all, but would be only living, hardly existing. lam satisfied that the present boom is bad for the individual and the community and may have a boomerang effect." Jones: "You are entitled to your opinions, but I have said enough to show that there is another and a brighter side to the penny." Then our chronicler left.