PROBLEMS OF THE FARMER

Wairarapa Age, 15 February 1927, Page 5

PROBLEMS OF THE FARMER

HIGH WORKING COSTS. EFFECT ON LAND VALUES AND PRODUCTION. STRIKING ADDRESS BY MR. W. J. POLSON. Addressing the Arbitration Court yesterday with reference to the interest of primary producers in the freezing workers’ dispute, the Dominion President of the Farmers’ Union (Mr. W. J. Polson) elaborated at length the contention that largely as a result of high costs, including labour costs due to the increased cost of living, the restrictions imposed on employers by the Arbitration Court, and a slackening of effort during the recognised hours of labour by workmen generally, land in New Zealand was deteriorating to an extent that if put into figures would stagger the Dominion. Extracts from Mr. Poison’s address are given below. After stating that there were in the Farmers’ Union between 20,000 and 36,000 farmers, about half <»f them sheep-farmers, Mr. Polson said: “Wo regard the present cost of freezing as too high, and we are of opinion that unless some relief is obtained from these and other high costs which are throttling our industry, disaster is ahead of us, and that the position in New Zealand this winter will be wdrse than anything since the days of the Atkinson Government. I wish to point out to the Court that we are, the only people who cannot pass these charges on, and that with the gradual fall in prices of primary products—a fall which economists agree is the natural corollary to the return to the gold standard—it is impossible for us to develop the primary industries in this country unless we get costs of production down.” “I believe,” Mr. Polson said in another part of his address, 4 4 that the depreciation since the war in North

Island land alone amounts to as much as 20 per cent, in some counties and to probably 5 per cent, of the whole rateable value of North Island county land (£208,912,325) or, in oilier words, to over ten millions sterling. I regard this depreciation, due to the growth of weeds and second growth, as a significant indication el the cost of labour, which is the chief factor in controlling it.” WANING PRODUCTION. “The point which chiefly concerns this Court,” Mr. Polson observed, “is that, in spite of the expenditure of the Government on land and soldier settlement since the war, ‘there is practically no increase in the output of mutton and lamb. The steady rise in quantity and value which took place up to 1920 has stopped, and the 1926 figures show a fall in value.” Mr. Polson then quoted the following table showing the rise or fall in quantity and value of meat and by-products for 1926, as compared with 1925:— Quantity.

“But,” Mr. Polsoa continued, “a Dominion balance sheet showing not only the diminished income of the producer from the fall in the value of his stock, but .the depreciation of his land, which has never been taken into account, and the depreciation in the value of his stock, which I estimate at 7s 6d a head, in round figures ten million sterling, is the only way to show the true position of producers as a body. I have endeavoured to compile a more or less approximate balance sheet from the material at my disposal. It is, of course, not accurate, but generally the figures are conservative.

ESTIMATE OF COSTS. “For the purposes of such a -balance sheet we must estimate the wages of pastoral employees set down in the Year .Book at slightly over 50.000. This amount must be reduced by half the number of women employees, who for the purposes of this calculation are estimated at two females for one male., This gives 45,500 employees, whose average wage according to the Year Book fluctuates from 50s ll}d to 105 s, which, worked out from the Census returns, gives an average wage of over 60s per week. To this must be added the cost of board and lodgings in a majority of cases, estimated at 30s per week, but-which I have set down at £l. We must also estimate the interest, for which the Year Book again supplies the data. In ten\ years £lO6/865,660 worth of town and suburban mortgages have been issued and £193,480,962 worth of copnty mortgages, to which must be added a proportion of bank overdraft?, so that at the average rate of interest, 6.22 per cent., the rural interest hill amounts to a little over .12. millions. /A study of .the area- under dairying and the proportion of mortgages in the dairying'provinces seems to show that the proportion of pastoral mortgages is about 60 per cent, of the whole, but no accurate figure is possible. It is clear that -the pastoral mortgage interest, however, is at least half the whole charges other than interest and rent, and labour costs from the balance shepts in my possession, work out at a high figure, but I have reduced them largely in order to err on the side of safety. Thus we get on the debit side:-—

£ Wages 9,100,00 Interest 6,000,000 Charges 10,000,000 Stock depreciation 10,000,000 Land deterioration (10 per cent, on 10 millions) .... 1,000,000 £36,100,00 “If we now study the pastoral production of the country, apart frqm dairying, wd arrive at a total sum of £24,548,138. From this must be subtracted the added value based on last year's Year Book figures of approximately three millions, leaving the net value of farm products exported at 214 millions. To this must be added the value of the products consumed in New Zealand, a total for 1925-26, of six millions, made up of:—

Muttonw.. .. 1,875,000 Lamb 587,500 Beef* 3,820,000 Hides, etc. (a high estimate) 180,000 Total .. £27,962,500

“Thus you have a total apparent income of £27,962,500 and total outgoings amounting to at least £36,000,000, or a capita’ reduction for the past year of £8,037,500. If we consider the cost of farming in detail it will easily be seen where looses occur. I have omitted deterioration and depreciation in values from the figures I now propose to give, which aim to set out the position in such a way that no hole can be picked in it, and which probably greatly errs on -the side of caution.

FARMERS’ BALANCE SHEETS. “I have endeavoured to* obtain the balance sheets of a number of farmers for the confidential use of this Court.’ Unfortunately it is only those farmers with a considerable balance of assets over liabilities who can -be induced to offer their balance sheets for scrutiny. The balance sheets I wish to present, therefore, show a position which is better than the average. I have referred to the individuals by numbers, and will be glad to hand the key to the Court if it requires. It is unfortunate that the great bulk of the producers object to having their embarrassments dragged into the light. “I would further point »ut to the Court that the small farmers who largely belong to the organisation I. represent have been in many cases working long hours, depriving themselves of the amenities of civilised life, whieh every worker nowadays regards as part of his birthright, ami that nothing appears in their balance sheets to represent this item. The worker receives his wage at regular intervals, the farmer’s itfage depends upon next season’s markets, which places him at a double disadvantage in a period of declining prices. The lag in co-st re-

ductions is invariably twelve months and generally two years behind. The small farmer whose land is assessed for land tax at less than £2OOO and who constitutes two-thirds of the farming class is the worst hit, because his labour creates a considerable proportion of -the value of his product when compared with his capital. Farmers of this class who do not live with the greatest frugality and practice the greatest economy cannot hope to survive these conditions. Why should these handicaps not be shaded by others? If such is .the position- it is evident that the only chance not only for the farmer, but the country, is to increase production and get the apsts of production down. THE COURT’S RESPONSIBILITY. “We say as producers that the responsibility is upon this Court of seeing that the cost of production is reduced. The cost of living is based on index values over which the farmer is the only section of the community without any control. The continual interference of the Coutl, and I speak with respect, in order to maintain a standard, which I contend is a false standard, has had the effect of retarding a return to sounder conditions; as an Australian authority recently put it, we are engaged in ‘a futile and endless travelling of the vicious circle.' I do not wish to reduce the worker's standard of comfort, but I am satisfied that reduced costs of production would mean reduced cost of living. I have been able to make some investigation in such countries as Denmark and Holland, where the basis of living is vastly lower than in New Zealand, but where the standard of comfort is undoubtedly as high, if not higher. The reason is that production costs are low.

AN EARNEST APPEAL. “In conclusion, I would urge upon the Court its enormous responsibility in this matter. Freezing casts must be reduced. The price of the service is dictated by the largest works in New Zealand at the present time. All the small works are running a.t a loss, with the result that they arc being closed down by process of exhaustion. These works perform a distinct service to the producer in some cases, and their withdrawal is in those districts a retrograde step from the point of view of efficient service, local observation and supervision, and prevention of loss through long railway journeys for such as lambs, a monopoly for some large works is rapidly being created in which labour conditions play a considerable part. The farmer's protection against unfair labour demands is the smaller works. The freezing companies are in a different position from the farmers. They are in a position to pass their charges on. Similarly they would be in a position to pass on any reduction. ”

1925. cwt. .1926. cwt. Beef 705,751 388,701 Lam b 1,502,702 1,521,663 Mutton . 1,082,268 973,345 bales. hales. Hides and skins 9,895,881 1,045,439 Wool ...... 596,895 631,84.3 Value. 1925. 1926. £ £ Beef 1,093.871 511,996 Lamb 6,761,890 5,593,463 Mutton 3,069,763 2,122,099 Hides and skins 2,744,817 2,484,411 Wool 17,7.38,738 11,820,188 Loss, £8, 818,932.