Economic problems of New Zealand agriculture
Before devaluation in November 1967, New Zealand faced the most marked deflationary pressure on the economy since the 1930’s. Since 1964, economic policies had emphasised the need for growth, based on an expanding flow of exports to finance essential imports. During 1966 and 1967, export prices steadied and then declined sharply, especially in the case of wool. The deficit in the balance of payments widened sharply, and stern deflationary measures were initiated from January 1967. The agricultural industry, which provides 82 per cent of overseas receipts, was caught in the middle of the new investment programme initiated in 1964. Retrenchment was quickly forced on to the agricultural expansionists. Official policy remained expansionist, however, although there were many pessimists on the manufacturing side who believed N.Z. was not diversifying fast enough. No doubt, everyone hoped that the terms of trade would improve as rapidly as they had declined. But the situation worsened, if anything, in the course of 1967, and a permanent readjustment in our overseas trading position was acknowledged on November 20th when the $N.Z. was devalued by 19.45 per cent. For many years, the expansion of agricultural output depended on the self interest of the farming community. Semi popular folk lore on output behaviour was based on the depression expression experience when farmers responded to low prices with a marked expansion of production. Policy itself has been contradictory. On the one hand, internal revenue depreciation allowances and the like have favoured farming and particularly new forms of mechanisation, agricultural research is encouraged and so on; while on the other, national policy toward full employment and stability has effectively drained the countryside of its labour force and has been very wary of measures that would result in larger incomes for farmers. Advanced technology has been forced on agriculture by the social conditions prevailing rather than through direct cost savings. In general, a steady expansion of output had always been forthcoming, and this in turn provided the exports to finance the import demands of the rapidly urbanised society which resulted. Some details of these agricultural changes now follow.... [Show full abstract]
Keywordsagricultural sector; agricultural policy; agricultural research; agricultural trade; New Zealand; farming sectors; economic aspects; economic conditions; economic depression
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