WOOL GROWING COSTS.

Press, Volume LXIX, Issue 20757, 18 January 1933, Page 6

WOOL GROWING COSTS.

GAP BETWEEN PRICES. ENQUIRY IN AUSTRALIA. Far-reaching recommendations for the relief of the wool industry in Australia are contained in the report of the Commonwealth Wool Enquiry Committee. which was recently appointed by the Federal Government. The committee stated that the crisis in wool was a prime cause of the economic depression prevailing throughout Australia. "It is," says the committee, "of as vital consequence to the community that the budget of Australia's greatest industry should be balanced as it is that Governments should balance their own Budgets, because if this key industryfails, Government revenue will diminish, and the Governments themselves will be reduced to a state of bankruptcy. Costs over which the grower has control have been reduced to minimum, and it now becomes necessary to sock alleviation in other directions. "The following table shows on the committee's analysis the conclusions reached in respect of the average costs on a typical property attributable to the production of wool only:— AVERAGE COSTS. EXCLUDING INTEREST. Pit 11) of wool. (1. (a) Expenses of Production —■ Working expenses, excluding all interest . . . . ..(!:,' Annual maintenance and average drought expenses . . .. lJ Total wool expenses tit the sheep properties . . . . K,J (b) Expense of production and marketing expenses, ns above . . 8J Rail freight, handling, and selling charges . . . . . . 1 n (c) Expenses, including interest on borrowed capitalExpenses, excluding interest paid. at the point of sale, ns above. OJ. Interest liability on borrowed capital . . . . 1J Hi TOTAL COSTS. INCLUDING ALL INTEREST. Expenses at sheep properties . . 8J Average interest at 5 per cent, on i.'S per sheep area (for wool only) 4i Tota; costs at the sheep properties . . 13 Additional costs to the point o£ sale . . 1 Total costs at the point of sale . . 14 "The above figures, however, allow nothing for management or for the risk of investment in the industry. The owner's investment is in land, improvements, stock, and equipment. The committee Las carefully considered the question of land values, and it is bound to report that the evidence establishes as a fact that neither over-

capitalisation nor high land values has had any material effect in causing the crisis in the industry. Since the prewar years the tariff has been greatly increased, and with other costs directly and indirectly imposed by legislative authority, tho tariff has contributed to inflate the eosts of export production generally. Wool is completely unassisted. It gains no compensations. It goes out to meet the rigours of the economic hurricane, now raging over tho world, already burdened by clinging costs. Burden of Land Tax. "During the last three years land tax has been collected from capital or from money required for maintenance. It threatens the integrity of the industry, and particularly stud properties using large areas of valuable freehold land. Where both Federal nnd State land taxes combine to require heavy payments the situation is full of menace. "We recommend that a substantial reduction of Federal land tax on woolproducing properties should bo uvadc forthwith, or that tho t:>x on such properties should be immediately suspended or abolished. We commend the fact to the attention of the State Governments also, and suggest further that they

should consider the question of substantial discrimination in favour of u ell-improved rural lands. "In view of the committee's conclusion that the present price of wool does not meet the cost of production, enable the growers to maintain their properties, meet interest charges, or obtain any profit from their operations, it is considered that the present critical position warrants the establishment of special executive machinery for speedy action. It is therefore recommended:— "'(1) That a Commonwealth Wool Exe cutive be constituted as follows: One representative of the wool growers in eacli State with the chairman of the Australian Wool Growers' Council as ox officio member. Two representatives of the National Council of Wool Selling Brokers. '•'The wool growers' representatives to be appointed by the Wool Growers' Council and the brokers' representatives to be appointed by the National Council of Wool Selling Brokers? Minimum Reserve Price. "It is further recommended that the Commonwealth Government should by regulation under the Customs Act, or by such other action as may be necessary, take to itself power to prohibit the export of wool, except on conditions as to minimum reserve price or otherwise ;is may be prescribed, provided that this power shall be exercised only at the request of the Commonwealth Wool Executive. "The committee fully realises that io give effect to tho recommendations of the executive it may be necessary to procure financial provision in order to hold over wool, and it will be a function of the Commonwealth Wool Executive to confer with the Commonwealth Government for the purpose of securing the necessary funds. "Assistance through exchange is practicable, and it has been in operation for about two years in varying degrees. The control of exchange, however, is in the hands of the Commonwealth Bank Board. The committee states emphatically and without reservation that it considers that this undivided and independent control is essential to the welfare of the whole community." At the end of the report further comments arc made about the burden imposed on the industry by the tariff. It is asserted that the tariff adds to the costs of production 2d a lb of wool or 18 per. cent, of the cost of production other than for land. This 2d a lb it is contended, must be reduced. The principle of protection was... .not ehal T longed by that statement, the committee adds, but the extent of tariff protection was entirely dependent upon the costs imposed and the extent to which the export industries could carry such costs.

For the Hawke 's Bay ram fair on January 26 and 27 s 0783 rams are to bo offered, compared with 5321 in 1932. Flock Eomneys account for 3670 and Southdowns "for 2700, leaving 140 Lincolns, 20 Border Leicesters, 31 English Leicesters, and 46 Eyelonds. Stud rams total 69.

THE OATS HARVEST.

The threshing of the heavy oat crops is now under way. Operations last week on a farm at Totara Valley, Pleasant Point, South Canterbury.