The Press MONDAY, JANUARY 16, 1939. The World’s Wheat

Press, Volume LXXV, Issue 22610, 16 January 1939, Page 8

The Press MONDAY, JANUARY 16, 1939. The World’s Wheat

It seems almost certain that the result of the International Wheat Advisory Committee’s present sitting in London will be the summoning of a world conference to consider an international agreement on production, price control, and marketing quotas. The committee itself was set up, in the first place, to administer the agreement of 1933. When that broke down, on the withdrawal of Argentina in 1935, the committee lost its chief functional value but has been kept in being; and Argentina’s decision to co-operate with the committee again, three or four months ago, restored its potentialities for full activity. A further hopeful development followed when Holland, Denmark, and Finland agreed to cooperate. Argentina’s decision, to rejoin the committee appears to have been directly due to the influence of the United States, which earnestly desires to see an international agreement reached. Pressure, perhaps, is the word, rather than influence; for behind the persuasions of Washington there has appeared the threat of a tremendous unloading of American wheat on Argentina’s nearest large market, Brazil, should the southern exporter stand out of any agreement. This is prompting which would in almost any conditions be hard to resist; but the conditions now ruling make it well-nigh irresistible. The International Institute of Agriculture has estimated the 1938 season’s exportable surpluses at 1,135,000,000 bushels, 60 per cent, above the figure for the previous season; but import requirements, at 540,000,000 bushels, are only 3 per cent, higher. (The cabled report from London raises this last figure to 560,000,000 bushels.) The situation is obviously one in which, without agreement and regulation and on terms of cut-throat competition, prices would tumble to catastrophe; and no domestic systems of subsidy or basic price could stand the strain. Canada’s crop, almost double that of 1937, is typical of the enormous harvests recorded by the major wheat countries. The Canadian guaranteed price, which was 20 cents above world parity in October, threatened to load the budget with a tremendous debit, which was causing consternation in the Eastern provinces. A widening gap and an increasing burden would create for Canada not merely a fearful economic problem but a dangerous political one, as the old contention between East arid West must be deepened and embittered. Argentina’s return in November to 'the principle of a basic price, to be financed from exchange profits, was effected on a more conservative price basis, the guarantee being only a shade above existing market rates; but a flood of uncontrolled wheat on the world’s markets would undoubtedly wreck the protective exchange mechanism. The Government could not afford to buy wheat at seven pesos for 100 kilos, sell it to exporters at market rates, and rely on any workable exchange margin to cover its losses. Such are the facts which are sternly impelling the wheat exporting nations to a regulative agreement. The obstacles, of course, are not slight. The measures suggested by the Advisory Committee are the obvious ones: abolition of subsidies, adoption of export quotas, restriction of sowings. They are all measures that must at once create difficulties in the country that adopts them. Argentina was first reported to be willing to co-operate, if she were not obliged to restrict her wheat acreage. The proviso points to the difficulty of contracting the scale of a huge national industry. A later report is that Argentina is willing to co-operate, if export control can be deferred till next season. The proviso points to the difficulty of dealing with a large carry-over of unsold wheat. But however troublesome and even dangerous such problems may be, they cannot threaten trouble or danger so great as a tidal wave of grain.