The Press SATURDAY, SEPTEMBER 22, 1956. International Wheat Agreement

Press, Volume XCIV, Issue 28080, 22 September 1956, Page 10

The Press SATURDAY, SEPTEMBER 22, 1956. International Wheat Agreement

The Government’s decision to join the new International Wheat Agreement can hardly have the dire effects predicted by Mr F. J. Henshaw, chairman of the Dominion agriculture section of Federated Farmers. It is true, as Mr Henshaw says, that a large amount of overseas currency is spent on importing wheat which could be grown in New Zealand, and that the bill for imports has grown as the production of locally-produced cereals has declined. But is this not attributable to a simple economic fact—that, generally speaking, farmers farm for profit and produce what brings them the biggest profit? The larger bills for imported cereals have been more than offset by greater returns from products—fat lambs in particular—which farmers have regarded as more remunerative products than wheat. This, of course, is not the sole criterion by which the national good should be judged in this matter. But it is an answer to the contention that overseas funds are drained because of the decreasing acreage of wheat sown in recent years. Certainly it is undesirable that New Zealand should be too heavily dependent upon imported cereals, and therefore at the mercy of a breakdown in shipping, perhaps due to strikes But New Zealand’s adherence to the International Wheat Agreement has not been the cause of ihe country’s dependence upon imported wheat, and is unlikely to be in the future. The basis of the agreement (which was first negotiated in 1949) is a guarantee on the part of each exporting country to make a certain quantity of wheat available to participating importers, each of whom in turn guarantees to buy a specified tonnage from participating exporters. These- guarantees are effective only in the case of exporters at the maximum price and in the case of importers at the minimum price. New Zealand’s guaranteed purchases are 5,878,994 bushels. It is estimated that more than 12,000,000 bushels will be required in New Zealand this year. Exporting countries have not had to call on importers to fill their guarantees up to now; but if New Zealand were called upon to take its full quota (at the minimum price) there would still be a margin of more than 6,000,000 bushels that could be supplied by New Zealand growers. Over the five seasons up to 1954-55, the annual production of wheat averaged 4,834,000 bushels. A further heavy decline in acreage planted has caused one authority to estimate New Zealand’s production this year at no morp than 3,000,000 bushels. Thus, there is an ample margin for increasing wheat production in New Zealand before the effects of the International Wheat Agreement could possibly be felt. The question of a price incentive to encourage wheat-growing was mentioned by Mr Henshaw. But this again is something apart from the International Wheat Agreement The maximum and minimum prices under the new agreement are respectively two dollars and one dollar 50 cents, equivalent to 14s 6d and 10s lOd in New Zealand currency. These prices are for a high-grade Canadian wheat which sets the price pattern for all other types and grades of wheat sold under the agreement. Over the last few years world prices have tended towards the minimum. The basic fixed price' in New Zealand over this period has been 11s 6d, which compares favourably with prices at which wheat is imported from Australia. If in advocating “an “ economic price to our growers ” Mr Henshaw urges a policy of paying substantially above world prices to encourage the growing of more wheat in New Zealand, that is a domestic question upon which the International Wheat Agreement does not bear. But farmers’ organisations must be conscious of the ambiguous position in which they put themselves when they ask for price support programmes that they condemn elsewhere. The International Wheat Agreement has its critics; some contend that it does not go far enough towards promoting orderly production and marketing of wheat, particularly towards the elimination of surpluses. The world’s biggest importer—Britain—withdrew from the agreement two years ago and has not joined the new agreement. But in view of the source of the criticism of the agreement in New Zealand, ’t is interesting to note that, while the grain trade and millers supported the British Government’s decision to abstain from the new agreement, the National Farmers’ Union strongly urged the Government to re-enter the agreement. The National Farmers’ Union said: “The basic need is for price “ stability within a range acceptable “to consuming and producing

“ countries alike. Temporary “ measures to alleviate surplus “ problems cannot satisfactorily “ substitute for mutally-agreed com- “ mitments on prices and quantities ”. A revival of wheat-growing and a consequent better balance in New Zealand’s farming economy are desirable objectives; but putting the blame for the deficiencies in the wrong place will not help their jachievement.