18th June 1943

The Secretary,

The Farmers' Federation,

P.O. Box 715,

Wellington C.1.

Dear Sir,—

Farm Products Stabilisation Accounts

Referring to your letter of the 31st May and to discussions that have taken place between representatives of your Federation and of the Stabilisation organisation, I understand that agreement has been reached on the points involved subject to my approval. The form in which the arrangement now stands is as follows:

• 1. A separate account will be kept in respect of each product or group of products as may be determined by the Government after consultation with the industry.

• 2. Stabilisation accounts will be kept in the Marketing Accounts with the Reserve Bank, but will be recorded separately from existing pool and other accounts.

• 3. Into the stabilisation account for any product will be paid any increase in price received from sales overseas for that product after the determined date unless the increase, although related to a specific product or products has been paid for a general national purpose, in which case it will be applied as provided in clause 5 below.

• 4. If any increase in price is paid to meet increased costs in respect of more than one product the increase will, after consultation with the particular organisations dealing with the products involved, be allocated among the respective stabilisation accounts in proportions related to the cost increases.

• 5. If any increase paid from overseas on any product is paid for any general national purpose such as to maintain sterling balances to offset general import price increases or Government expenditure in holding costs that increase will be applied as follows:

  • (i) if it includes compensation for any cost increase held by subsidy which is charged against a stabilisation account, a credit equivalent to the amount of the subsidy will be made to the appropriate stabilisation account.

  • (ii) the balance of the payment will be credited as the Government determine.

• 6. Where a subsidy is required to keep costs of production of any product down to the level existing on the determined date, the amount of that subsidy, excluding the continuation at the level on the determined date of any subsidy paid or payable prior to that date, will be debited to the appropriate stabilisation account subject to the provisions in 7.

• 7. If any increase credited to a stabilisation account is paid specifically to cover increases in costs including increase in costs held by subsidy paid or payable before the determined date, the account will also be debited with any part of that earlier subsidy which relates to increases specifically covered.

• 8. Any debit still remaining in a stabilisation account on the closing of the account will be transferred to War Expenses Account.

• 9. Any credit still remaining in a stabilisation account on the closing of the account will be used for the benefit of the appropriate industry after consultation with representatives of that industry and no payment will be paid out of the account pursuant to this clause except with the consent of the producers' organisation dealing with any products concerned; it being understood (i) that this shall not be construed as an undertaking that credits will be used at the time the scheme of stabilisation ends; and (ii) that such credits will not be paid out in respect of produce sold during the period when the scheme of economic stabilisation was in operation; (iii) that agreement will be reached within twelve months of the closing of the account.

• 10. Reasonable information concerning stabilisation accounts will be made available to the producers' organisation dealing with the particular product. Reasonable information concerning the basis on which any increases under clause 5 have been arranged will be furnished from time to time to the Farmers' Federation.

• 11. The “determined date” will be 15th December 1942, unless by agreement between the producers' organisations and the Government a different date is fixed to meet particular circumstances.

• 12. While this stabilisation policy continues, prices for farm products be not allowed to fall below the level of prices ruling at the date that stabilisation became effective (15th December 1942) irrespective of the effect of internal or external markets.

I am pleased that agreement has been reached in these terms which I formally approve, and I would be grateful to have your confirmation as early as possible.

Yours faithfully,

(Sgd) D. G. Sullivan,

Minister of Industries and Commerce.

Farmers' Federation,

P.O. Box 715,

Wellington, 18th June 1943.

The Hon. Minister in Charge of Stabilisation,

Wellington.

Sir,—

I acknowledge receipt of your memorandum of the 18th June re Farm Products Stabilisation Accounts and I have to say that I have discussed the proposals contained therein with members of my Federation and am now in a position to agree to all of them as now set out.

Would you please accept this letter as confirmation of the acceptance by the Farmers' Federation of the terms, which I observe you have formally approved.

I am pleased, with you, that this agreement has been satisfactorily arrived at.

I have the honour to be, Sir, Your obedient servant,

(Sgd) W. W. Mulholland,

Chairman.