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War Economy

New Zealand as a Food Producer

page 181

New Zealand as a Food Producer

NEW ZEALAND'S most vital economic contribution to the allied war effort was the produce of her farms. For a time, when British food supplies were at their lowest ebb, extra food production became more urgent than the strengthening of New Zealand's fighting forces.

Before the war, a sixth of the United Kingdom's meat imports, a quarter of her butter imports and well over half of her cheese imports came from New Zealand. These proportions were to be increased considerably in time of war.

The long-term trend was for the volume of New Zealand's farm production to increase by about 2 1/4 per cent a year. However, production as well as price was subject to unexpected variations. There had been two very good farming seasons in 1936–37 and 1937–38, but, in the immediate pre-war year, 1938–39, the volume of farm production fell back to the level of three years before. The main decline was in the production of butter, which more than offset the effects of a very good season for wool. As a result, export volumes were comparatively low. This, combined with a tendency for export prices to fall, added up to a poor season for export earnings in 1938–39, a result which was particularly embarrassing when New Zealand was already having overseas exchange difficulties.

The season 1938–39 saw the first really effective use of the Labour Government's guaranteed price scheme for dairy produce. The price of butter averaged £130 a ton on the United Kingdom market, compared to £133 in 1937–38. The price of cheese fell more steeply to £65 a ton compared to £73 in 1937–38. The operation of the guaranteed price scheme resulted in payments to farmers being £2 ½ million higher than the amounts received for the sale of dairy produce. This extra payment tended to stabilise farmers' incomes, page 182 but, by helping to keep up domestic expenditure, it no doubt contributed to the tendency for imports to remain high and for import payments to exceed the sum becoming available out of current overseas earnings.

At this time, though there was some sign of an upsurge in manufacturing industries, farming's position as New Zealand's main producer was virtually unchallenged. It was the chief contributor to the volume of goods and services in New Zealand, and almost the sole earner of foreign exchange. Unfortunately, this most important New Zealand industry was subject to violent fluctuations in the overseas prices for its products, an influence which, in spite of guaranteed prices for dairy products, tended to keep the whole economy in a state of undulation and uncertainty.

Fertile soil, equable climate and good farming methods, kept up to the mark by adequate research and technical advice, all contributed to enable New Zealand to enter the war with one of the most efficient farming industries in the world.

The average annual output of New Zealand farm produce for the three seasons 1936–37 to 1938–39 was:

164,000 tons of butter valued at £20 million
88,000 tons of cheese valued at £6 million
470,000 tons of meat valued at £25 million1
309 million pounds of wool valued at £15 million
Other farm products valued at £14 million
total £80 million

Of these, 85 per cent of the butter, 94 per cent of the cheese, well over half of the meat, and 92 per cent of the wool were exported. The foreign exchange earnings of these farm exports averaged:

Butter £17 million
Cheese £6 million
Meat £15 million
Wool £14 million
Other farm products £4 million
total £56 million

Other exports averaged less than £4 million a year, bringing the total to £60 million, of which farm products supplied 94 per cent.

The United Kingdom took four-fifths of all New Zealand's exports, including nearly all the food2 and over half the wool.

page 183

The pattern of New Zealand farming is fairly inflexible, sheep being based predominantly on the hilly and mountainous country, cattle on the pastures where winter feed can be more readily provided.

1 At a rough estimate, actual values not known.

2 Over 97 per cent in each of the four pre-war years.