INDUSTRIES AND MARKETS

Taranaki Daily News, 11 April 1928, Page 9

INDUSTRIES AND MARKETS

CONDITIONS OF ECONOMICS DOMINION POSITION REVIEWED. CALL FOR GREATER PRODUCTION. (From Our Own Correspondent.) Wellington, April 9. In Bulletin No. 39 prepared by the department of economics of Canterbury College the conditions of economics are analysed. It is pointed out that the population of the Dominion amounted to 1,450,000 and the last census report indicated that 45 per cent, of these are breadwinners and 55 per cent, dependents. The total value of goods produced in New Zealand in the year 1925-26, excluding distribution and other services, is estimated at £116,000,000. The pastoral and dairying groups alone account for about 55 per cent, of the total production and 94 per cent, of the exports, and these are the basic industries. In classifying the production two markets may be distinguished—the home market, where the demand is limited to the demand of our own small population, and the export market, where the demand though varying with price, is for all practical purposes . unlimited.

A large proportion of local productive industry is devoted to goods which from their nature can be neither exported nor imported, and which must necessarily be produced near the market. In the same class might be placed all those occupations employing about half the working population, classed as not directly productive, which provide distributive, professional and administrative service. These are the sheltered industries. There is a third group of industries producing for the local market, protected to some extent both by transport costs and the tariff, but subject to overseas competition' in the shape of imported goods. An analysis made previously showed that roughly 55 per cent, of our total production came from the unsheltered group of industries, 37 per cent, from the sheltered group.

Analysing this data the Bulletin says: “The significance of this grouping lies in the dependence of industries on their market conditions, and in the importance of market changes to the industries concerned. During the war period of rising prices ■ —1914 to 1920—■ the effects of general inflation overseas were passed on to New Zealand through increasing prices for both exports and imports. The first effects of these rising prices were felt in the unsheltered industries, but they were passed on after some lag of time and in greater or less degree, to the sheltered industries and so to the community in general in the Dominion. Since 1920 world prices have fallen heavily. Again the effect has been felt first in the unsheltered industries and the tendency is for these effects to be passed on, again after some lag in time, to the sheltered industries.”

To some extent they have been passed on and some internal prices have fallen. Others, however, remain high, and difficulties stand in the way of their reduction. During the period of rising prices the country as a whole, and the export industries in particular, were very prosperous. New standards of values were adopted and were embodied in capital outlay, in contracts, agreements and custom. Since then world prices have fallen, and the unsheltered industries have suffered the full impact of the fall. Many industries selling in the sheltered local market, and not directly sub;-. 't io changes in world prices, have been able to avoid the full effects of falling world prices. Consequently, inter- .1 prices, compared with pre-war prices, remain substantially higher than world prices. Since internal prices must be paid by the primary producers, as part of their costs of production, and since they must accept the lower world prices ruling in their export markets, the margin between costs and prices in our basic industries has been narrowed, and the industries have been on the average of good and bad years depressed since 1920. It is held that the key to improvement lies in increased production all round at lower prices. Under economic pressure it is being achieved in the unsheltered farm industries, where research, better farm management, herd-testing, top-dress-ing, labour-saving machinery, etc., are reducing costs and expanding output. But there is less evidence of progress in the sheltered industries, where economio pressure is less direct, and where the burden of restrictive regulation is greater, and high sheltered prices make expansion difficult, both for sheltered and unsheltered industries.