Wairarapa Times-Age SATURDAY, OCTOBER 28. 1939. DAIRY PRICES AND COSTS.

Wairarapa Times-Age, 28 October 1939, Page 6

Wairarapa Times-Age SATURDAY, OCTOBER 28. 1939. DAIRY PRICES AND COSTS.

WHILE the Minister of Marketing (Mr Nash) maintains that the 1939-40 guaranteed price for dairy produce the same price as was paid last season—is a fair one, widespread dissatisfaction with the price was reported by the directors ol the National Dairy Federation at their quarterly meeting in Wellington on Thursday and it was decided to ask the chairman of the. Dairy Industry to call as soon-as possible, a conlereuce of representatives of all dairy companies in the Dominion to discuss what steps should be taken to deal with the position.

A stage has been reached at which it may be possible lor the Government and the representatives of the dairy industiy respectively to state in explicit terms the lines on which they think the guaranteed price policy ought to be. developed as time goes on. All-important to the farmer as is the amount of the price, a mere contention by one party that the price is fair and by the other that it is not leaves a number of essential issues untouched.

In a dispassionate examination of the facts, the Dairy Board credits the Government with an effort to implement its promise embodied in the Primary Products Marketing Act, 1936, and observes that over the period for which the guaranteed price has been in operation, dairy producers have received a considerable sum over and above the market realisations on their produce. According to the latest figures cited by the Minister of Marketing—figures not available when the Dairy Board‘report was drawn up —the deficit in the Dairy Industry Account for the 1938-39 season was upwards of £2,500,000. Taking account also of the surplus of over £500,000 in the preceding season and of the excess payment of £272,842 in the first, year of the operation of the scheme, it would appear that in the aggregate, for the three seasons including 1938-39, dairy producers received roughly £2,225,000 more than was obtained from the sale of their produce.

Against this excess payment, the Dairy Board points out, there are on the debit side largely increased costs which arc claimed greatly to exceed the amount which has been received in excess of market realisations. It is quite evident, the board adds,

that the Government is seeking to, as far as possible, guarantee a price that will average over the years approximately that realised on the market. With the accumulative effect of higher wages, shorter hours, and generally rising costs, it is, of course, abundantly evident that .the net return to the farmer on such a basis must be less than the actual market return under previously existing conditions.

Accepting this statement of the position, it would appear that the chief benefit offered to the dairy farmer under the’ guaranteed price scheme is the averaging of his returns over a period of years. With that benefit are commonly associated the economies resulting from a progressively improving organisation of the industry. To a considerable extent, however, these economies presumably might, be effected even if no guaranteed price scheme were in operation. i

The vital question underlying the present contention between the dairy industry and the Government’ is whether dairy producers have been promised and are entitled to receive for their labour and production a return that is equitable in relation to that obtained by other sections of the community. The position meantime indicated is that, on account of the extent to which costs have 1 risen and are rising, the dairy farmer cannot be given, from market realisations alone, returns that will place him on an equal footing with other members of the community. A deficit of upwards of £2,500,000 in the Dairy Industry Account for last season, and the fact, disclosed by the Minister of Marketing, that the United Kingdom has not. yet offered a price for New Zealand dairy produce equal to the price the Government is now giving to the dairy farmer, speak for themselves from this standpoint.

Are the representatives of the dairy industry demanding that it should, be subsidised —that the returns obtained from the sale of dairy produce should, be supplemented by funds derived from some form of direct or indirect taxation? As the existing protection of the wheat industry and of various secondary industries bear witness, such a demand would not be without precedent, but many dairy farmers probably will agree that thesub.sidising of an industry developed on the scale that dairying has attained in New Zealand would be a dangerous and an enervating policy. It appears to be time, in any case, to substitute for more or less inconclusive bickering over the guaranteed price a serious examination of the fundamental issues involved.

It is, of course, to be recognised that in the extent to which disproportionate costs are imposed on the dairy industry, its scope must sooner or later be contracted. While little enough is to be hoped from any attempt to subsidise an extensive and highly developed branch of primary industry, the question of arriving at an equitable adjustment of internal costs evidently is or should be of vital concern not only to dairy farmers and to other farmers, but to all sections of the community.