H.—35.

When the index number given in the fourth and fifth columns risesjibove 100 the price relationship is beneficial to the farmer as compared with 1914, and he cm purchase more goods for a unit of produce. When the index falls below 100 the price relationship is injurious to the farmer. An examination of column 5 shows that the farming community as a whole benefited from the price relationship in the years 1915-17 ; suffered in the years 1919-22, 1924, and 1926-27. The position of the dairy-farmer (column 4) is very similar. In view of a margin of possible error in the figures, a change of lor 2 per cent, in the ratio is perhaps not significant; but the general position is clear enough. Speaking generally, we may say that, apart from the year 1923, the farmer would have been worse off than in 1914 during the whole of the period 1919-27 even had costs moved proportionately to export prices. 4. Movement of Agricultural Charges. For the purpose of this inquiry we have taken (1) taxes, (2) wages, (3) cost of farm requisites, (4) annual charges in respect to land, as the most important payments to be made by the farmer out of his gross income. Assuming all other factors to move in such a fashion as to leave the farmer's net income unchanged, what would be the influence of each of the above factors, taken separately, on the farmer's economic position ? (1) Taxation. —Since the war the total per capita burden of taxation has increased considerably. As far as farming is concerned, the main relevant taxation is local-body rates and land-taxation. In the former I have included county rates, rates of Road Boards, river districts, land-drainage districts, and half the rates of Harbour Boards. It is impossible to determine what proportion of Harbour Board rates are levied on rural districts, and the proportion is a considered guess. The item is not important, however. The figures for local-body rates are given in Table 2. Table 2. —Local-body Rates as they affect the Parmer. v „„„ Local-body Rates v Local-body Rates year - (000 omitted). I,ar - (000 omitted). £ £ 1913-14 .. .. .. 897 1920-21 .. .. .. 1,672 1914-15 .. .. .. 963 1921-22 .. .. .. 1,334 1915-16 .. .. .. 1,056 1922-23 .. .. .. 1,885 1916-17 .. .. .. 1,125 1923-24 .. .. .. 1,905 1917-18 .. .. ..1,187 1924-25 .. .. .. 2,029 1918-19 .. .. .. 1,375 1925-26 .. .. ..2,144 1919-20 .. .. .. 1,482 Local-body rates show an increase of over 100 per cent, during the period 1913-14 to 1925-26. Export prices, on the other hand, were about 70 per cent, higher in 1925 than in 1914, and about 38 per cent, higher in 1926. Local-body taxation would have to be reduced by roughly £500,000 in 1925 to bring it to the same parity with export prices as in 1914, and by roughly £900,000 in 1926. These are only approximate figures, but show an appreciable increase in the burden of local rates. Some portion of this is, no doubt, balanced by improved services, such as better transport facilities, reacting to the economic advantage of the farmer ; but it is difficult to believe that the increase in such economic advantages is sufficient to counterbalance the increase in local taxation. The problem of the land-tax is more difficult to elucidate. The total land-tax increased from £767,000 in 1913-14 to £1,229,000 in 1927. In 1926-27 the tax assessed on those engaged in farming and allied pursuits was £603,000, or somewhat more than half the total amount. The number of taxpayers in this group is given as 25,470 ; but some seven thousand taxpayers appear to pay approximately £500,000 out of the total of £603,000. It would appear from this that, in so far as the vast majority of farmers is concerned, any changes in land-tax are not likely to be an important item in the present situation. The average assessment per taxpayer was £24 in 1926-27. If we exclude the seven thousand taxpayers referred to above, the average amount of tax paid by the remaining farmers must be very low. (2) Wages. —Wages are again compared with export prices by dividing the index number of nominal wages of agricultural labour into export prices. The results are given in Table 3.

Table 3. —Export Prices of (1) Dairy-produce, (2) All Commodities, together with Nominal Wages and effective in Agricultural and Pastoral Industries, and a Comparison of Export Prices with Nominal Wages, for the Years 1914-26.

28

(Base average, 1914 = 100.) Export Prices. Wages. ! Column 1: Column 2: Year. j .Column 3. Column 3. Dairy-produce. Commodities . , Nominal. Effective. I (1) (2) (3) (4) I (5) (6) 1914 .. .. .. 100 100 100 100 100 100 1915 .. .. .. 108 119 117 109 92 102 1916 .. .. .. 130 1.38 121 104 107 114 1917 .. .. .. 150 157 129 | 100 116 122 1918 .. .. .. 151 162 136 i 95 111 119 1919 .. .. .. 168 167 144 | 92 117 116 1920 .. .. .. 174 164 152 86 115 108 1921 .. .. .. 214 152 153 86 140 <19 1922 . . .. .. 144 114 145 91 99 78 1923 .. .. .. 156 140 148 94 105 95 1924 .. .. .. 159 159 147 92 108 108 1925 .. .. .. 146 170 148 91 99 115 1926 .. .. .. 136 138 148 91 92 03 1927 .. .. .. 125* 134 147| 91 85 91 * Average monthly figures, January-June, 1927. f March quarter. After " New Zealand Official Year-book." Figures of export values recalculated to base year 1914 = 100.