WORLD WHEAT AGREEMENT

Press, Volume LXXXIV, Issue 25555, 24 July 1948, Page 5

WORLD WHEAT AGREEMENT

Another Attempt Fails HISTORY OF INCREASING DIFFICULTIES The international wheat agreement has failed to materialise, though its prospects looked better than for any of the previous schemes for some control of the world’s supply of wheat. The immediate effect on New Zealand is not likely to be great, but the recent history of the wheat trade suggests that unless some agreement is eventually reached, the New Zealand producer may have to try to justify a pay- : able price in the face of extremely low world prices. Up to the time of the first World War, production of wheat in the world kept pace reasonably well with the expansion in population and the increasing standard of living, and from 1885 to 1914 the change in the price of wheat on the Liverpool market in any one year seldom exceeded 10 per cent. Over , the whole period, except for the world- . wide slump in the 1880’s, the range was ; less than 20 per cent. After the first i World War, it became apparent that | the resumption of full production in European countries, together with the increased production of the main exporting countries, would create difficulties in the international wheat trade, and during the late 1920’s stocks began to accumulate, culminating in the 192829 season, in which production all over the world was at a very high level. The United States and Canada attempted to hold prices at a reasonable level by keeping wheat off the market, but it was in the end necessary for these surpluses to be released, and a heavy fall in prices occurred. Contraction of Imports During the 1930’5, the depression resulted in a contraction of the import demand, which was further restricted by the actions of governments in various importing countries to protect their own producers from the worst effects of the fall in world prices, to conserve scarce foreign exchange, and for political and other ends. Australian wheat was worth about 5s a bushel in 1929, 4s in 1930, and only about 2s in 1931. The protective measures adopted in different countries all had the effect of restricting the trade in wheat, and increasing the pressure on the growing surpluses held in exporting countries. During the five years 1932-37, world net imports of wheat averaged about 550,000,000 bushels, compared with 650,000,000 bushels in the five years 1909-14, and 750,000,000 bushels in the 10 years 1922-32. Carry-over stocks in the principal exporting countries were by mis time in excess of 1,000,000,000 bushels, twice the normal carry-over, but a succession of very bad years from 1933 to 1936 so reduced the surplus that the price again began to rise satisfactorily. In 1937, however, prices again began to fall as North American production increased with better seasons.

A disturbing feature for exporting countries was that by 1930 it had become apparent that the consumption of wheat in the importing countries had become fairly stable, and that fluctuations in purchasing power meant an expansion or contraction in the demand for industrial products, and had little effect on the demand for wheat. Wheat prices were almost entirely influenced by the quantity of production, which was influenced first by the seasons, and second by the tendency of producers to step up their production following a season of high prices and restrict it after low prices. In most of the years between 1931 and 1937, Australian wheat was worth between 3s and 3s 7d a bushel, but in 1937 it rose to 6s. By September, 1939, the price had fallen to such an extent that sales were made as low as Is 10d f.o.b. The surplus at the outbreak of the war lasted for several years, and even in 1943, Australian wheat was being exported at about 4s 6d f.o.b.

After the waf, of course, there was an acute shortage of foodstuffs in the world, and with European producers going back into production only slowly, wheat prices reached record, levels. There was no world market in the sense that a world market existed before the war, and prices as high as 30s in New Zealand currency were obtained by the Argentine for export wheat, and Australian wheat at the beginning of this year was being sold at about 22s for export. Market Disturbances

The market disturbances in the 1920’s led the chief producing countries to seek ways of stabilising the market, and in 1931 the first of a series of conferences was held under the auspices of the International Institute of Agriculture in Rome. From then onward, conferences were held in different countries, generally with the object of reaching some agreement on the restriction of supplies and a, sharing of i the market among the chief exporters. I Usually agreement was not reached, or where it was reached, broke down rapidly because of lukewarm support by some exporters, and by the lack of any agreement with consuming countries to accommodate their demands to the quotas decided upon. Difficulties with price ranges, size of quotas, and maintenance of reserve stocks were additional stumbling blocks, but by the outbreak of the war, a fair measure of agreement had been reached. At a meeting of representatives of Australia, Argentina, Canada, the United States and the United Kingdom in 1941, these countries agreed to a preliminary arrangement confirming I the principles of acreage control, price ranges, and export quotas, and the ar- | rangement was finally put into form the following year. Between 1943 and 1946 discussions were held frequently in an attempt to reach some agreement on price ranges for incorporation into a scheme to cover the war and immediate post-war years, but the United Kingdom was invariably unable to meet the ranges suggested by the exporting countries. In 1947, agreement was at last reached, though the Argentine by that time had withdrawn from the proceedings, and a new principle was Incorporated in the agreements. The new principle was the acceptance by importers of a guarantee that they would take specified quantities of wheat. In March this year, 36 countries agreed to the final draft of the International Wheat Agreement, which established price ranges for five seasons, export quotas, and quantities of imports to be accepted by purchasing countries, and arrange for carry-over stocks, but the agreement has lapsed, as only 12 of the 36 countries had ratified the agreement by the final date, July 1. SHOW DATES The following show dates have been fixed:— October 16.—Ellesmere Agricultural and Pastoral, at Leeston. October 22-23.—Timaru Agricultural and Pastoral, at Timaru. October 22-23.—Marlborough Agricultural and Pastoral, at Blenheim. October 23—Northern A. and P., at Rangiora. November 4.—Ashburton Agricultural and Pastoral, at Ashburton. November s.—Amberley Agricultural and Pastoral, at Amberley. November 11 and 12. —Canterbury Agricultural and Pastoral, at Christchurch. November 19, 20. —Nelson Agricultural and Pastoral, at Nelson. November 20.—Courtenay A. and P„ at Kirwee. December 4.—Motueka Agricultural and Pastoral, at Motueka. December 14. 15, and 16.—Royal Show at Invercargill. March 19.—Mayfield Agricultural and Pastoral, at Mayfield. March 26.—Hawarden Agricultural and Pastoral, at Hawarden. March 26.—Methven Agricultural and Pastoral Association, at Methven. April 18.—Mackenzie Highland Jubilee. at Fairlie.