STATE TRADING.

Auckland Star, Volume LXIX, Issue LXIX, 21 September 1938, Page 12

STATE TRADING.

WHEAT AND ONIONS.

ECONOMIC ANOMALIES.

WHO FOOTS THE Bllit

The activities of the Government in the purchase and distribution of foodetuffe appears to have reeulted in many anomalies which in some caeee have brought protests from merchant*. Those interested in the marketing of crain and produce are not a* vocal as ui>ht have been expected for the simplerenson that they are allowed to pass higher prices on to the consumer, and, in%ny caee, they have no option in regard to the price they must pay. One merchant, however, has drawn the attention of a State representative to the wheat position and his statement is supported 'by other leading traders. Despite a liberal guarantee to Southern wheatgrowera, there has been a very substantial shortage i!L the eupply of wheat for Dominion requirements, both for flour and for stock feeding. Not only have importations of fowl wheat and milling wheat had to be made from Aiustralia to supply the neede of tn.2 Xorth Island, but recently imports from the same source have also been sent to the South Island-

However, the world wheat markets have been low this year, and the Government hae had no difficulty in securing abundant supplies from Australia. These have been bought by the Government, which has sold to the merchant, at the same time fixing the price at which he may resell. Government Purchases. The Government, states the "Star's" informant, is buying wheat for 2/9J per bushel, f.0.b., Australian ports. When approximately 1/ per buehel is added for landing "charges, the total cost is brought up to 3/9*. It is not certain whether or not the Government Department |<ays duty, but in any case the point is "immaterial, as euch payment would simply go to another public department.

Yet for this wneat. which costs the Government 3/9J per bushel, the wholesale merchant is charged per bushel, cash on delivery, representing about 90 per cent profit. Naturally this goes on to the retail price, and every consumer who uses wheat for poultry or for etock food is penalised accordingly, and the extra price is inevitably rellected in the price of the housewife's loaf of bread.

The position of pollard provides another anomaly, but in this case it reacts on fewer of particular consumers, who are favourably situated to receive preferential supplies.

Quite frequently Auckland mille cannot supply nearly enough pollard to meet the requirements of the district, and thie hae been the case in recent months. In such circumstances neither the mill proprietors nor the Wheat Committee benefits from any market reactions.

The price fe fixed by the Government Wheat Committee, which rations out the pollard (and bran also when necessary) to regular flour customers and a selected list of poultry feeders. Other feeders of poultry and pigs have to obtain their supplies from merchants, who import from Australia. The result is that whereae Australian pollard has been selling at £9 5/ and up to £10 per ton, local mill supplies could be obtained in limited quantities by a favoured few at £7 per ton. It should be mentioned that within the last few days local pollard supplies have been more plentiful and the rationing is accordingly less severe.

Consumer Has Chief Grievance. In ite handling of the onion trade the Government has failed to please anybody, but here again it is the consumer who has the chief grievance. Under ordinary trade conditions it hae been the practice in the past for local merchants to import onions from the Northern Hemisphere when the local season has closed. Thus it would usually happen that small quantities would be brought from Japan in May and June, followed by consignments from California in July and August and from Canada in September and October. Australian onione were usually not sought as, being seasonal with New Zealand grown, they could not be depended upon from the keeping point of view. However, the Government having prohibited private importations, these customary provisions could not be made and the matter was entirely in the hands of a Government Department. As far back as April it became evident to Auckland merchants that there would not be sufficient supplies in the Dominion to meet requirements until the new season's Canadian oniona became available late in September or early in October, but they were powerless to act. Not "till the shortage had become acute, by which time local consumers were paying up to 20/ per cwt for the few local supplies available, did the Government make a move and then arranged its own imports from Australia. What Price Did Government P*y? Just what price the Government yiaid for the onions has not been divulged, but it may be mentioned that during July, when negotiations were proceeding, the f.o.b. price in Melbourne ranged from £5 10/ to £6 10/ per ton. Freight charges to New Zealand are £2 1/ per ton and harbour dues 1/10J, so that if the higher price, £6 10/, were paid the cost in Auckland would be £8 12/10* per ton. Here again the Government seeks a profit and the merchants are charged at £9 15/ per 20001b ton, equal to £10 18/ per 22401b. No allowance is made for duty as any payment in this connection would, as in the case of wheat, be made to another Government fund.

In this case the price the merchants may charge is not arbitrarily fixed by the Government and retail prices have fluctuated according to the supply and demand. At present the wholesale price to retail shops is about 16/ per lOOlbs for onions that cost the Government approximately 8/ and there have been occasions when, through a temporary shortage, a particular merchant has had to pay up to 18/. And so the housewife pays up to 3d per lb for onions that are only moderate keepers which have cost the Government la*s than a penny per lb.

In regard to the customary importations from Canada, merchants have not their usual freedom. They are rigidly restricted to the period when their importations may arrive here, namely, between October 5 and November 30, and their permits to import are rationed out by the Government Department. In other words in carrying out their traditional service to the public of keeping the market supplied, their "style is cramped." Moreover, it is impossible for the rationing system of purchase to functym without euggfstions of unfairness.

A comparatively large number of small dealers are each able to secure a permit for a small quantity while lar-'e

firms who have in the past "made" the market, have had their quotas seriously curtailed. It is understood that the total quantity of imports for which permits have been issued is about half of the quantity imported last year so that a local shortage in December is quite a possibility. State Export of Potatoes. The advent of the Government into the p<*ato market as an exporter finds little support locally. Merchant* are of the opinion that in buying potatoes from Southern growers at £3 per ton on trucks to ship on consignment to the Argentine will involve the Dominion taxpayer in a substantial loss. They state definitely that there is no profitable market at present for New Zealand potatoes seeing that Australia refusee to lift the embargo against deliveries to that country. It is, moreover, difficult at this time of year to secure substantial quantities of potatoes that are sound enough to stand the voyage to South America and subsequent handling.

First at the farmers' pits and later at the port grading stores there is a rigid inspection involving considerable rejections, but tubers passed as sound will at this time of year develop disease on the trip.

It will be surprising, eaid one merchant, if the Government secures enough to pay for the sacks and freight charges when the potatoes are marketed at the other end. The irony of the situation is that the object o£ ihie export move, namely, to raise the price in the Dominion, has completely failed. South Island potatoes can be bought in Auckland to-day at a lower price than at Lyttelton and with a new Pukekohe season only a few weeks ahead there i 3 little prospect of an upward trend, developing.