TEMPORARY AND REAL REMEDIES.

Wairarapa Times-Age, 26 May 1939, Page 4

TEMPORARY AND REAL REMEDIES.

surprisingly, perhaps, delegates to the Inter-Provincial Conference of the Farmers’ Union found themselves by no means all of one opinion yesterday in regard to the measures that should be taken to lift the primary industries of the Dominion out of their present difficulties. After. extended discussion, it was decided to defer further consideration, of. the proposed guaranteed prices for meat and wool until the findings of the Royal Commission, which is to investigate the existing condition of the sheep farming industry have been made known. Some conflicting opinions were expressed, too, on the question of raising the oversea exchange rate.

Although they are regarded by a good many farmers and other people as opposed alternatives, it is fairly plain that neither guaranteed prices for the leading pastoral products nor a higher exchange rate, are entitled to be regarded as anything better at most than temporary palliatives for the state of affairs that exists today.

Apart from the highly important, questions of State control, or socialisation, as against, individual freedom ■which were discussed yesterday, the utility and the equity of a guaranteed price of course ■would depend entirely on the extent to which it balanced the costs incurred in earning it. Even if the issue of socialisation were set aside, and a good many sheep farmers evidently are not at all inclined to set it aside, a . guaranteed price would be just to farmers, and would give stabilisation to their industry, only if it, were based upon a thoroughly equitable adjustment of costs and returns. As to the policy of raising the oversea exchange rate, it is going too far to contend, as one delegate is reported to have, done, that it would give farmers no relief. The immediate net effect of raising the exchange rate would be to give farmers who export produce, or whose returns are based on export parities, an increased share of the available national income. In the absence, however, of a satisfactory internal adjustment of costs and returns, the relief and benefit obtained in this way inevitably would be whittled down until they disappeared and farmers would then be handicapped. by an even greater economic maladjustment than exists at present, and faced by problems correspondingly more, difficult of solution. From these broad conclusions there appears to be no escape. If action were confined simply to raising.the ratq of oversea, exchange and internal costs were allowed to take their course, it, could be only a matter of time before the benefit, derived by farmers from the raising of the exchange was nullified by higher costs. Each and every depreciation of the New Zealand pound increases the prices of imports and. in this way and others sets in motion a chain of wage and price increases. While costs continue to rise against the farmer —and the raising of Hie exchange does nothing to prevent that rise and something to expedite it—it is self-evident that any benefit derived by the farmer from the raising of the exchange can only be temporary. The chairman of the Inter-Provincial Conference, Mr Lloyd Hammond, said yesterday that “it was futile to ask the Government to reduce costs because they would not’ consider it.” In that Mr Hammond may be right, but it is certainly futile to expect to achieve a satisfactory stabilisation of primary industry, or any other industry, in any other way than by bringing costs and returns into a just relationship.

■Air Hammond says that while the prices the farmer is getting are 21 per cent above the 1914 level, the costs the farmer has to meet are from 50 to 100 per cent greater than they were in 1914. Apparently the depreciation of the New Zealand pound by 25 per cent on sterling now does little to modify the effect of Ibis'disparity. How much would it be modified, and for how lorhL if the New Zealand pound were, depreciated by another 15, or more per cent.' Where cos'ts and returns in any industry are out of balance, the. only realjjjmedy is to bring them into balance. It is 1 lie more necessary to face that simple but commanding fact since the malign influence of uncontrolled costs in hampering production and restricting distribution is not by any means confined to primary industry, though it is no doubt more obviously and more sharply felt in that industry than in any other, there is more than suggestive evidence that the uncontrolled rise ol money costs in this country is operating with serious detriment to many industries besides farming and with ultimate detriment to Iho whole body ol workers ami consumers.

The problem thus raised—the problem of controlling costs in such a way as to permit ami encourage unhampered production —i s of national scope and must be handled comprehensively, that is to say. by bringing all costs and returns into a just and stable relationship, if a fully effective ami lasting remedy is to be found for existing disabilities. In themselves, a system of guaranteed prices, in the conditions in which it is offered, ami the raising of the exchange rate obviously both fall considerably short" of satisfying these essential requirements.