Lower Wheat Price Advocated To Reduce World Surpluses

Press, Volume XCIV, Issue 28154, 18 December 1956, Page 19

Lower Wheat Price Advocated To Reduce World Surpluses

The “astronomical” wheat surpluses accumulating in exporting countries have been criticised by tne Canadian Bank of Commerce which strongly advocates government action bv exporting countries to force the world price down to the International Wheat Agreement minimum of 1.3 dollars a bushel. Only this, the bank contends, can increase the international movement of wheat, decrease world production and begin to shrink the world surplus. “If world carry-overs continue to grow as they must as long as national policies remain unaltered, the pressure will eventually force a sharp drop in the world price,’ the bank says. Should this happen Canadian farmers would be the most seriously affected, since Canada lacks the United States resources for disposing of its surplus. , , Immediately, the bank agrees such a move would not add greatly to the volume of wheat traded, but m the longer term it would do much to relieve the situation of its dangers. It could also “induce the United Kingdom to re-enter the 1.W.A., bringing assurances of greater stability and reducing the quantity of wheat to be traded at ‘free’ prices should a break be unavoidable.” . The bank, referring especially to Canada, questions whether the size of the farm income is still a major determinant of national prosperity, and suggests that in the event of any action to improve world wheat trade the subsequent contraction of wheat production is not only inevitable but

necessary to the health of the economy. A reduction from the present world price level of about 1.75 dollars would mean that wheat farmers must accept a lower gross return than for some years past. Marginal producers would therefore be forced out of the industry. The bank warns that such adjustments must be gradual.

Australian Carry-Over The carry-over of Australian wheat dropped by 7.5 million bushels in the year ended November 30, the chairman of the Australian Wheat Board, Sir John Teasdale, announced last week. Sir John Teasdale, according to the “Australian Financial -Review,” said the year’s operations had been more satisfactory than expected, and prospects were reasonably good. The carry-over at December 1, 1955. was 91.649 million bushels in the form of wheat and flour. Receivals by the board into the 1955-56 pool (No. 19) totalled 179.68 million bushels, giving a total of 271,332 million bushels. Sales for the year totalled 187.2 million bushels. The new cereal year had begun on December 1, Sir John Teasdale said, with a carry-over of 84.1 million bushels, to which must be added the incoming crop estimated at 115 million bushels—a total of 199 million bushels. Allowing a safe working carry-over for 1957-58 of 20 million bushels, the board had allocated 57 million bushels for local flour and feed wheat consumption, and 122.1 million bushels available for sale overseas as wheat and flour.