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The Rural Voice, 1978-03, Page 9A Matter of Principal Briefly continuing from my February column re the new grading for hogs. I shipped seven hogs on February 6. They dressed from 144 lbs. to 168 lbs. Due to the new grading regulations I lost a total of $10.38. As I suggested the new grading system will force hog producers to increase the dressed weight to at least 170 lbs which will be sure to equal at least 10 lbs for dressed carcass or an increase in meat of over six percent or about 3500 pigs per week. Can you think of any method that would as successfully drop the selling price of hogs at the "farm gate". I wonder if the government has as effective method to see to it that the price of pork in the rethil outlets will drop accordingly? If so I wonder if the retailers and processors will accept such new regulations with the same docility that the hog producers seem to have acquired? With rumours of an early Federal Election our economic problems are getting a great deal of attention from the politicians. Inflated prices higher and higher wages, reduced production, and resulting higher unemployment, loss of world markets etc. etc. However there is one employee that is fully employed, never goes on strike, works 24 hours a day, seven days a week, 52 weeks a year and the income is quite satisfactory - Money! There are many solutions to solve our economic problems but 1 have never heard interest rates mentioned even though there has been a great increase in recent years. Governments seem to be able to control farm production and keep farm prices. comparatively, very reasonable. The new grading regulation I predict will successfully have started hog prices on the down -grade by the time this gets in print. It will also have successfully increased the supply of pork. The government has other methods of increasing farm productivity. Farmers get grants for putting in tile drains plus low interest loans for the balance. Grants are available for milking parlours, silos, feed lots. hog barns, and most any other project that will force the farmer to increase his production. Lower interest, longer term farm mortgages are offered to younger farmers to encourage greater efficiency and of course increased production. This method is very effective in keeping a generous supply of food available for Canadian consumers and the price is right. Since the early sixties, the percentage of take-home pay required to purchase food has dropped from close to 25 percent to less than 15 percent. Why can't the clever government civil servants devise ways to use reduced interest rates to increase production and reduce prices in other areas as effectively as they in Agriculture? We hear over and over again that we have priced ourselves out of world markets. High wages and high profits are blamed and price and wage controls were introduced but as far as I have been able to discover that they were not in anyway successful. On Nov. 28th my wife purchased a 4.96 Ib (225kg) bag of oatmeal at regular price of $1.59. On Jan. 21st she purchased the • same quantity of the same brand at regular price of $1.69 in the same store. Interest rates dropped a little during the past year but are on the way up again. How can we expect lower wages, lower profits if interest is too high? How can employees purchase homes if the price is so high that the interest on the necessary mortgage is so close to all they can pay that a 30 -year or longer term is needed. They must have high wages. If an investor can get 10 percent on a guaranteed investment bond will he buy industrial corporation stock unless he has reasonable prospects of 13 or 14 percent to cover the risk? How can a manufacturer put out a product at a competitive low price if he has to pay 14 percent dividends to the share holders. In the February 13, 1978 issue of the Stratford Beacon Herald there was a column "Farmers make use of Credit". It stated by J. Carl Hemingway that the average new farm loan in 1977 from the Farm Credit Corporation to farmers in Perth County was $92,Sb0. At the "reduced" interest rate of 91/4 % this loan will require yearly payments of $9,275. for 29 years.(Total S268,975.) I wonder if the average farm borrower will survive so long? We do a lot of complaining about high wages received by labour and high Corporation profits but I think "Money" is also subject to question for its wage demands. Sometime ago I showed what happened to the retail price when labour gained a 10 percent increase in wages to manufacture a certain article -when the labourer got the increase he discovered that he actually had to pay more than his 10 percent increase to cover the increased retail price of article. Suppose the labour cost of an article is $10.00 The cost of the material to make the article is $5.00. Moving the article from factory door to retail is 30 percent =$4.50. Retail price=519.50 The labour gets 10 percent increase in wages Labour cost of article is $11.00 Labour cost in material now increases cost 5.25 Cost of moving article to consumer retail is 4.86 New retail price =21.11 Labour increased his income by $1.00 but has to pay $1.61 extra for the article at the store so he lost .61 cents on the deal. The manufacturer now says he can't export the article at a profit so he has to cut production. Labour now says we want our jobs. We will forget about the increase and instead take a cut of 10 percent in wages. The labour cost of the article drops to $9.00 The material and labour costs drops to $4.75 Moving from factory to retail consumer drops to $4.13 Total retail is now =$17.88 Labour now goes to the store and pays $1.62 less for the article. He lost 1.00 in wages and paid $1.62 less when he purchased the article and saved .62 cents. The manufacturer increased his export trade and hired more labourers. I wonder what would happen if interest rates were dropped back to where they were in the middle sixties -71/2 percent. if Farm Credit dropped back to the five percent it was in the middle sixties? It would make a tremendous difference to the total that the average farm borrower in Perth County would have to pay over the 29 years. Is there any chance of this'fiappening? I doubt it. Reduced interest would cut seriously into the income of those people who will invest only in guaranteed interest bearing bonds and money has tremendous influence on the "Powers that be" in our economy. I dare any candidate to include cuts in interest rates in his platform. It would stimulate investment in industry, put Canada in a healthy position in the World market but would pinch the non-productive wealthy class. People are funny? 1 read an article in one of our farm papers recently. The writer lamented the disappearance of the family farm. I agree with him but not his reasoning. This writer said the "family" farm must be retained in order that farmers would have voting "clout" in our elections and would therefore have influence on government. Nonsense! What voting "clout" does the Medical Profession have? Yet doctors have the highest average income in our country. What voting clout do our school teachers have? Yet the Provincial Minister of Education announced that enrolment at the Ont. College of Education will be cut in half this coming fall to eliminate "surplus" teachers for our High Schools Supply and demand are going to be carefully matched. Could we farmers dare go to quota production on all our products? 1 wonder if we have a "caste" society in Canada? THE RURAL VOICE/MARCH 1978, PG. 9.