OUR PRODUCTS.

Taranaki Daily News, 18 June 1921, Page 7

OUR PRODUCTS.

VALUE OF DAIRY PRODUCE. SAVES THE SITUATION. OUTLOOK FOR NEXT SEASON. •f HARD WORK AND THRIFT . REQUIRED. Wellington, Yesterday. In the oouree of his address to the annual meeting of the Bank of New Zealand to-day, Mr. Harold Beauchamp said: Had the Imperial Government continued purchasing our produce at the same prices as when the various commandeers ended, we should have been still revelling in prosperity. Just what the Imper* ial purchases have meant to New Zealand may be realised from the fact that the total payments made by ihe Imperial Government up to April 30 amounted to £158,602,725. The outstanding feature during the past season, in connection with. produce, was the excellent return obtained from both butter and cheese. Butter was taken by the Imperial Government, during the season now ended, at the extraordinarily high price of 280 s per cwt. f.o.b. New Zealand ports. Butter and cheese shipments and values for the year ended March 31 last, compared with the figures for the previous year, show:—

There has been a decrease in the quantity of cheese exported, but this was due to the attractive price ruling for butter, causing factories which had the necessary plant to turn over from cheese to butter manufacture.

During the 1920-1921 season, up to the present time, pheese has been realising prices much in excess of those which were obtained under the commandeer. The present tendency is towards lower prices, as the new Canadian output is now coming on the market and being sold at a much lower price than has, up to now, been obtained for the New Zealand product. Still, the outlook for cheese is distinctly good. The prompt realisation of butter at a high price proved of great value in dealing with the exchange problem. Had dairy produce slumped in the same way as wool, meat, tallow, hides and skins, the conditions in New Zealand to-day would have been very much worse than they are.

Future prospects. The past dairy produce season has been an excellent one, and our concern is now with next season. It is most difficult for anyone to express a definite opinion on the prospects, because the conditions are subject to violent changes, but there are some basic facts that need to be kept well in mind. The first is that Britain is our best, and practically the only, customer we have for our dairy produce. This customer has been impoverished by the war, by internal strikes and political unrest, and by' the inability of Europe to purchase goods exeiept at small prices, in reduced quantities, and on long terms of credit. It would be folly to expect that butter will again sell at £2BO a ton, but just what it is likely to rule at will depend upon the developments of the next eight or ten weeks. The 'British Food Ministry will have a large carry-over of butter, and the quantity in private hands is also likely to be substantial. The Imperial authorities have made repeated cuts in their butter prices; still the Danes have been able, or have been forced, to sell at a lower rate to obtain quittance. The Danish producer cannot afford to hold his butter for any fancy price, and is ready to meet the market. However, it does not seem possible that butter will fall to the 1914 average of 116 s per cwt. While not venturing upon a forecast of the price, I am satisfied that it will be much lower than the prices paid by the Imperial Government during the war.

■ THE WOOL PROBLEM. Wool has apparently fallen to its lowest point—at all events for the time being—and there is now a much better demand for the staple and more activity in the market. There is, however, a great mass of wool in store, and how to get this into consumption and at the same time to obtain a fair price for the clips now coming forward is a problem that has been fully and freely discussed for some months past. At the present moment, wool is almost a drug on the market. This applies especially to coarse wool, and by far the greater part of our New Zealand product is of this class. Apart from the large quantity in store, the European and z North American clips, whatever they may amount to, are now coming in, and in the course of a few weeks Australia will be baling another clip, while there will also be Argentine, New Zealand, and South African clips to be taken into account. On the other hand, only a limited market can be found in the United States, because in that country also there is an accumulation of wool, and the new Administration is expected to adopt such a high tariff as will effectually exclude most of our wool from the United States.

The proposal to uphold values by arbitrarily fixing prices does not commend itself to me, for I bold the opinion that values can be created only by the inexorable law of supply and demand, and not by any artificial means. All commodities satisfying human wants can be sold at a price, and it is for the seller, in the ordinary course of trade, to ascertain what the price is and to meet the market as best he may, and so endeavor to stimulate the consumptive demand. Wool is one of the necessaries of life—at least, to the peoples of Europe and North America and some other countries —and therefore there will always be a demand for it. Large though the accumulations are now, they would be speedily reduced if the people of Europe were able to make purchases, but they are unable to buy through sheer inability to pay for the goods. They are literally poverty-stricken, and must ba accommodated in the best way possible. Until Central and Eastern Europe arc MiblA > abaorb wool? the market will M

in an unstable condition, zig-zagging up and down and. causing a great deal of trtraibla, Onlefifi a. demand can be created which will annually absorb the whole of the year’s output and a portion of the previous accumulation, it is to be feared that little relief will be obtained from the operationfl of the B.A.W.R.A. and the New Zealand Committee. WAR AND PRICES. In experiencing a severe fall in the prices obtainable for out staple products, we are on common ground with primary producers in other countries. All markets have fallen, but some more than others, and how long this downward tendency will continue is not within the power of prediction. History shows that after the Napoleonic Wars prices sagged for a long time. Even after the American Civil War—which, compared with the Great World War, was a trifling affair—it took fourteen years for prices to stabilise, so that, if history repeats itself, as seems • likely, it will be some years before the point of stabilisation will have been reached.

So far as we are concerned, we may look for many changes and the collapse of many economic faiths that have been built up on fallacies. Socialism, Sovietism, Communism, Bolshevism, and all the other “isms” that have been invented by dangerous cranks and much more dangerous agitators, must perish. We must take a broad view of the outlook, for, if we are to have any improvement in New Zealand, that improvement must emanate from outside, and for us that “outside” means Britain. The people of Great Britain are our principal and best customers, and until there is some recovery in Britain there can be no improvement. The speed with which recovery takes place in Britain must largely depend upon the position on the Continent of Europe. Indeed, the trade and commerce of the world cannot be reinstated without the inclusion of Central (Europe and Russia. This will involve time, because the situation in many. European States is being mishandled by the politicians who have been afraid to tall the people the nnpleasant truth, and instead of preparing them to meet hard times, slack employment, and high taxation, have steadily persisted in painting the position in bright colors and in devising any artificial measures which would put off the evil day of realisation. In every country it is desirable that bureaucratic control and interference with trade, commerce and industry should cease. Politicians should attend to their proper occupation of managing the national affairs with efficiency and economy, and leave the industrialists, the manufacturers, and the traders, to attend to their business-—that of making their respective businesses successful. Hard work and thrift are still the only way to salvation. Capital and Labor must be drawn closer together. It is a truism to say that there is a general desire to give to Labor a fair share in the results of industry, preferably in the form of high wages for efficient production, but Labor must realise that the laws of Nature cannot be defied . without serious consequences.

LOSS FROM STRIKES. Several occurrences of the past few montlis go to show that this is not realised by some of those who sway the councils of organised Labor in our Dominion. The strikes of slaughtermen last December delayed the export of lamb when sales could have been effected az top prices. The result on was that there was such congestion in the freezing works that large quantities of stock, which could not be dealt with, had to be retained in areas which were suffering from conditions of exceptional dryness, where they soon reverted to store condition. The pin-pricking tactics of the waterside workers led, in February last, to a •.hree-weeks’ hold up of shipping, thus further delaying exports, which were urgently needed to finance the Dominion’s requirements abroad.

The delays thus caused in the arrival of our exports at the places where they were to be realised, at a rime when prices were falling, resulted in several shipments missing a favorable market and realising miich lower prices than would have been obtained if it had not been for these unfortunate and unnecessary delays. The Shearers’ Union, with full knowledge of the critical position of the wool industry, has put forward a claim for increased rates of pay which, if granted, will still further cripple that already stricken industry. ■ The attitude of the coal-miners in, at times, pursuing a “go-slow” policy, instead of facilitating the increase of the output so urgently required, is bringing about a state of affairs which must be faced sooner or later.

Within the Dominion there is an abundance of coal developed, and only labor to bring it to the surface; yet it has been found necessary during the .year to import coal to the value of no .es-s than £746,467, and it has recently ■been announced that the Goverfffeent has made large contracts for the importation of Welsh coal.

All this money which, in these times of stress, would serve so useful a purpose in providing employment within the Dominion, has been sent out of the country, and is incidentally helping to increase the exchange difficulty. PRICES AND WAGES. Low production and high wages cannot exist together, and ultimately mean loss to the. worker in having no work to “go-slow” on. Diminished production increases the burden of the worker and reduces the purchasing power of his wages. In New Zealand there must be a. greatly-increased efficiency of production or great reduction in wages, or the alternative—increased unemployment. The Arbitration Court, in endeavoring to stabilise wages for the next twelve months at the present level, is unconsciously contributing to the growth of unemployment, because the country’s industries cannot sustain the present standard of wages unless there is a very marked increase in production through efficiency.

It would be idle for us to look for any big recovery in the prices of produce—the very circumstances of Europe make that impossible just now—Consequently we must endeavor to make production pay on the basis of present prices, and to that end there must be a contraction of profits and a contraction of wages, with greatly increased efficiency of production, thereby lessening its cost. The cost of living must be reduced, and can be reduced if all sections in the community will do their part. In the past, we have frequently seen prices for our primary products as low as, and in some cases distinctly lower than, those ruling to-day in the world’s markets, but cost of production, transport and other charges have, in the meantime, advanced enormously. In support of this statement, I feel I cannot do better than quote to you from a letter reesntly received from a reliable &u*

thority, relating to frozen meat and its principal by-products. The writer says:— “Market Values.—A comparison of present values with those of 1913, which could be regarded as a fair pre-war year, is as follows:”

. He goes on to point out that, although expenses have increased so greatly, there is still a margin for the grower jn meat of the better qualities, but that the continuance of such prices cannot be depended upon, and that some people with knowledge of the trade expect that, within a very few months, the value of mutton and lamb will not greatly exceed pre-xvar prices. He also points out that the increases in freight and manufacturing charges threaten to make the cost of the preparation of some of the important byproducts of the freezing industry more than the price obtainable for them in the market. This refers especially to coarse and low-grade slipe wools. The figures which he gives show that the cost of preparing and shipping such wool have increased since pre-war times by 173 per cent., - while the corresponding costs with reference to tallow and pelts have increased by 195 per cent, and 172 per cent, respectively.

SHIPPING FREIGHTS. The rise that has taken place in freights is, of course, a serious handicap to New Zealand producers. Lately, owing to Government pressure, the companies have made some concessions which will mean a saving of approximately £250,000 per annum to the producers, but, even taking this into account, the freights remain abnormally high, having in view the greatly reduced prices that are likely to be realised for what is shipped. A great increase has taken place in the world’s shipping tonnage since the signing of the Armistice, and, except as regards insulated ships, the supply is now greatly in excess of the , demand. Hundreds of vessels are, at the moment, laid up in Great Britain, America, Sweden, and elsewhere. . It is expected that the shortage in insulated tonnage will be remedied in the near future, as there are several large vessels now in course of construction.

FUTURE OF PRODUCE MARKETS. It may possibly be that, with so many causes combining to make sheep and cat-tle-raising less profitable than in the past, some of our farmers who own suitable land will turn their attention to the growing of wheat and other crops, for which there is a satisfactory local market. This may afford a certain measure of relief to the situation. How long the monetary stringency and industrial depression will last depends upon a variety of circumstances, but mainly upon the rapidity with which the economic unity of the world is restored. All the Great Wars of the past immensely stimulated the economic development of the world, and invariably gave a powerful impulse to the greater use of labor-saving machinery. Probably we are on the eve of some such economic developments. After all we must rely upon ■hard work and thrift and the moderation of party politicians in arranging the national affaire. There will be a continued demand for New Zealand’s products—our woo], meat, butter, cheese, hemp and tallow are all wanted—and the purchasers are willing to pay. up to the limit Of their purchasing power; that limit just now is a low one, but it will expand, and so will the demand for the products. Our trouble just now is in adjusting the cost of production to meet the changed conditions. As soon as prices of commodities show some signs of stabilisation, there will be manifest confidence in the situation, and on that confidence a new and enduring structure of .trade and commerce will be built. The present is a time for the avoidance of axtramM—extreme optisiam and ex«

treme pessimism. It is a time when conditions should be looked at squarely and dealt with courageously. New Zealand is not feeling the pinch as seriously as some other countries, and if all flections co-operate for the common welfare, the recovery will be speedier. Sustained effort in production, efficiency and economy should be the keynote of all classes of the community in these critical times.

Butter Cheese • 1919/1920. cwt. 310,283 ........ 1,540,949 r £ 2,832,991 7,720,366 . 1,851,232 10,553,357 .•* 1920/1921. cwt. '£ Butter ...... 476,730 6,114,464 Cheese 1,208,263 6,514,619 1,684,993 12,628,983

Present Ruling Pre-war Prices. Mutton.—Wethers 4%d s%d E-wes ...... 3%d 7d Lamb— 5%d Is. Beef.—Oz 3%d 4%d Cow 3Hd 3%d The costs of manufacture and transit compare as follows:— Pre-war. Present Rates. Increase per lb. per lb. per cent. Works charges to f.o.b 5d 1.3d 160 Freight to U.K. ,053d 1.939d 197 Insurance, Exchange & Commission 274d .498d 82 London Loading Charges .ifld .27d 69 Total expenses 1.58'd.p.lb l.OMd p.lb 152%