THE GUARANTEED PRICE.

Wairarapa Times-Age, 5 August 1939, Page 6

THE GUARANTEED PRICE.

REASONABLE request lias been put forward by the dairy industry executive committee —a body consisting ol the Dairy Board, with representatives of the National Dairy Federation, South Island Dairy Association, New Zealand Farmers’ Union and the nominees of the industry on the 1938-39 Guaranteed Brice Advisory Committee —that the Government should define clearly its policy relating to the guaranteed price. In particular the executive asks whether the Government intends to charge deficits 'which may occur in the Dairy Industry Account against realisations in future years. In view of the estimated heavy deficit in the account lor tin l season just ended, the question thus raised is by no means of merely academic importance. When the guaranteed price scheme was propounded, it was apparently intended that tin' returns of the industry should be averaged over a period ol: years. (It seems to have been assumed that in these conditions the industry would always have an adequate margin ol returns over costs. If that belief was entertained it is being upset rather seriously in the present period of rising costs. That apart, however, dairy farmers certainly are entitled to know precisely what they are offered under the guaranteed price scheme. As a question of monetary policy, too, Ihe matter of the deficit in the Dairy Industry Account needs clearing up. Pointed attention was called to this aspect of the position by the directors of the Reserve Bank in their annual report. To the extent that such deficits exist (the report observed), they represent the creation of credit beyond the equivalent of commodities produced, and the board considers it important that the inflationary tendency of such accommodation should not be overlooked. Dairy farmers and the public are entitled to a plain statement by file Government of what Ihe guaranteed price policy really amounts to. At the moment some very vital aspects of. the policy remain to be defined.