SUBSIDY-SYSTEM

Wairarapa Times-Age, 14 April 1939, Page 9

SUBSIDY-SYSTEM

UPWARD TREND IN GREAT BRITAIN .< DEFENCE OF INDUSTRIES. PAYMENTS TO AGRICULTURE. The extent to which the adoption of the subsidy system is taking place in Great Britain is discussed by a correspondent in a recent issue of the “Financial Times,” London. It is pointed out that subsidies have become an integral part of the post-war system of economics, which finds expression in the growth of extreme nationalism, the heightening of tariff walls, restrictions and controls on currencies and the regimentation of industry. In several foreign countries the subsidy system has been highly developed as a weapon in the Competition for export trade. It has been adopted only in relatively small degree and, it might almost be said reluctantly, in Great Britain as a defence of home industries. Since 1931 the beet sugar industry has received £21,000.000. Payments to producers in the cattle industry have totalled £18,000,000, and to farmers under the Milk Act £5,700,000. Nearly £2,000,000 has been devoted to land fertility improvement and some lesser amounts to oats and barley and light horse breeding. Outside of agriculture tramp shipping has received over £4,000,000 and civil aviation some £3,500,000. The tendency in recent years has been for subsidy payments to increase. During the last few years the aggregate assistance to agriculture has average about £14,000,000 per annum, and was estimated at £13,500,000 for 1938. Agricultural subsidies are regarded as a substitute for tariff protection enjoyed by other industries, and are a concession to the popular prejudice against direct taxes on food. Where such duties are found they are mainly intended to give scope for preference to Empire and Dominion produce in the home market, rather than to help the home producer. Among the forms of assistance for agriculture last year are the following:- £ Wheat Act 1,933,000 Livestock Industry Act .... 4,575,000 Milk ActManufacturing milk 100,000 Improvement in quality .... 10,000 Milk in schools, etc ~ 265,000 Agriculture Act — Oats and barley 165,000 Land fertility 1,250,000 Eradication of diseases .... 623,000 Land drainage 110.000 The object of payments to the cattle industry is th improve the quality of cattle, and the assistance takes the form of a payment of 5s per cwt live weight (lately raised to 7s 6d per cwt for extra fine quality cattle), made to growers by the Exchequer over and above the market price, with a reduction for imported store cattle.

The payments under the Wheat Act are more properly described as a levy subsidy, as the funds to make up the guaranteed price of 10s per cwt are raised by a levy on all millable wheat and flour, whether home-produced or imported. Payments ' for growers of oats and barley are based on the principle : of making up a fixed price for the producer, who can only benefit by the scheme if an application has not been made in respect of wheat. Land fertility improvement enables the farmer to obtain lime and basic slag below the market price, the difference being made up by payments through the Land Fertility Committee. It is an essential part of the Milk Marketing Scheme to “pool” receipts so that every producer shares in the returns for milk sold “liquid.” and that part of the output which is sold to manufacturers of cheese, butter, etc, at much lower prices. Wholesale prices are fixed each year by the Board, and the Milk Acts have ensured that returns for manufacturing milk should not be below certain levels.