FUTURE OF FARMING

Wairarapa Times-Age, 30 August 1938, Page 4

FUTURE OF FARMING

ADDRESS BY MR A. P. O’SHEA i NEED OF REAL ECONOMIC POLICY. HOLDING PLACE IN WORLD MARKETS. (By Telegraph—Press Association.) PALMERSTON N., August 29. Today was a special day for - the Rotary Club of Palmerston North when about 30 farmers in the district were guests at the weekly luncheon. The gathering was addressed by Mr A. P. O’Shea. Dominion secretary of the New Zealand Farmers’ Union, who spoke on the future of New Zealand farming. Mr W. H. Carter presided.

“It is constantly claimed on behalf of farmers that costs have a tendency to mount and eat into the farmer’s share of the produce he raises,” said Mr O’Shea. “Many people think the farmer is inclined to cry ‘wolf,’ but I would like to ■ clarify the position. When the slump came export prices of the farming community dropped by 40 per cent, while wholesale prices dropped by 16 per cent, and nominal wages dropped by approximately 17 per cent Retail prices in 1933 had dropped, by 21 per cent, but this drop occurred considerably after the main drop in farmers’ incomes. The former has been asked to face a much greater fall in income than any other section of the community. When you read of amounts being written off farmers’ mortgages this is not because the farmer has received the money, but largely because incomes of other sections of the community were out of all proportion to the farmers’ income for some years. In consequence the farmer has been producing at a loss. It should be clear that when the farmer is producing at a loss someone else in the community is receiving too great a share. The farmer is expected to sell on a world market and buy on a sheltered New Zealand market, and the result is that the farmer’s reward tends to grow less when' the reward of other sections of the community tends to increase.

INTERLOCKING AGENCIES. “This tendency has been manifest for many years, and it is large because New Zealand has never had any real economic policy. There have been three interlocking agencies which have produced the state of affairs which has resulted in the position to which I have referred. ' These are the Arbitration Court, the tariff, and Public Works borrowing policies of the present and past Governments. The Public Works borrowing policy in the past has had the effect of creating large numbers of assets, many of which have been of little, if any, use in assisting production in this country. For a great part the assets produced have not increased the consumable commodities of this country one iota. However, the mopey borrowed and paid out. in wages for these works has artificially inflated nrice levels, and this depreciation in the value of our currency has meant that high prices have 'required higher wages in the secondary industries which, in turn, have demanded higher tariffs and so the spiral has gone on. The Arbitration Court has. of course, increased wages as prices have risen. “You have heard recently of a horse called ‘Security,’ and its pedigree. Using this illustration, I might say that for many years ‘Wages’ and ‘Prices’ used to run neck and neck, and the result used generally to be a deadheat. .In recent times ‘Wages’ has won in a canter, and the people who necessarily had their monev on ‘Prices’ (Lethe. farming, community) have been losing steadily. High internal costs have reacted not only against the farming -industries, but they have retarded the development of secondary industries, both by decreasing their power to compete with overseas countries and bv decreasing the purchasing power of our people in New Zealand The country which has the lowest costs is the best off in the world. The net result of all this has been that, in the aggregate New Zealand is considerably worse off than she might have been had a prudent economic policy been followed. The farming community is. tn terms of today’s currency, at least £3.000.000 a year worse off in gross income than it was in 1929. It is freely admitted that costs are at least the same as in 1929 and the farming community. yis producing approximately half as much again as it was in 1929.”

SHEEP-FARMER’S POSITION. “This means that its aggregate costs must be very considerably increased on the aggregate of that date. So the farmer is worse off by £3,000,000 plus the extra costs necessitated by his increased production. The former is working harder—producing two-thirds as much again as he did in 1929 —for an actually smaller return. “While the position of the farmer as to costs and prices is not satisfactory, the position of the sheep-farmer is infinitely worse,” Mr O’Shea continued. “The sheep-farmer on second and third class country is today in a most unenviable position. His costs are higher than ever before, but his income is well below peak levels, and Indications are that it will not improve. This second and third class country is the backbone of New Zealand sheep-farm-ing, for it provides the ewes from which we breed our fat lambs. Yet this is the country which all our legislation is making it almost impossible to farm. “A lower level of costs will keep a good deal of this land in production, which means that we can export so much more produce, which purchase imports such as motor-cars, radios and so on, which New Zealanders have come to regard as necessaries of life.

A SUGGESTED REMEDY. “What, then, is the remedy?” asked the speaker. “The primary industries are the basic industries, and they should be the base on which the other industries in New Zealand are founded. As we are so dependent upon our primary industries and therefore on overseas markets, and as it is probable that this state of affairs must long continue, the only satisfactory solution is to make our economy fit in with the needs of the basic industries. In other words, instead of trying to insulate New Zealand, which on the face of it is absurd, we should endeavour to make our economy as elastic and as responsive as possible to overseas influences. This would have a disturbing effect, but its effect would be very much less disturbing than would periodic recurren-

ces of readjustment which appear to be inevitable, if the present system continues. To hold a place in the world’s markets, New Zealand must aim at quality, and she must also aim at cheapness. She must be prepared to feed the people of the world better and,' cheaper than anyone else can do its Surely it is a laudable desire to give'; the public cheap and wholesome food. In their turn the'public of New Zea-' land must be prepared to share with the farmer his period of adversity, and the farmer must- be prepared to share with the rest of New Zealand his periods of prosperity. New Zealand must be prepared to afford the farmer and the rest of the community cheaper and cheaper costs; only in this way can the products of science and invention and improvement in industry be handed on to the people. If people can obtain more with their wages then they are better off and no one can take that improvement away from them.

NEED OF CHEAPER GOODS. “The New Zealand farmer has produced better goods all along the line, but he has not produced more cheaply. He has not done this mainly because New Zealand has been pursuing a policy which has not been in the interests of the farming community, nor,in fact in the interests of the community as a whole. The task before us is to devise an economic system which will retain money wages as near as possible at their present level, but which will give people cheaper and cheaper goods. It is no use thinking of shorter hours until there are sufficient commodities for everyone in the country. If we desire a higher standard of living, it is essential that we produce more goods. We can do this by producing more and cheaper goods, that is, by increasing our competitive power in the markets of the world, and to do this it is essential that we have low costs. It cannot be done by increasing the farmers’ costs without increasing his return, and it should be apparent to everyone that at present there is no incentive to the fanner to increase his production. When the farmer's production increa.V es his income should increase, and the income of the rest of the community should increase, for the aggregate income is increased.

“What I suggest is that the wages of the rest of the community, and the basic rate of interest should be regulated so that they increase or decrease in accordance with the fluctuations in the value of our exports,’ said Mr O’Shea. “This is the only way in which we can keep our currency stable. New Zealand by now should have learned the futility of high wages and short hours which have meant only more unemployment. New Zealand can progress only if her basic industries progress, but she will not progress if the economic policy of the country is designed to strangle them.”