The Evening Star THURSDAY, JULY 1, 1926. WHEAT AND FLOUR.

Evening Star, Issue 19290, 1 July 1926, Page 4

The Evening Star THURSDAY, JULY 1, 1926. WHEAT AND FLOUR.

Last night Mr Hawken made a statement in the House of Representatives which indicates that ho and the Government are in possession of the facts concerning the wheat and flour situation, and are strangely callous to the position clovoloping from those facts. He has as good information as to supplies of wheat in the dominion as those engaged in the industry itself. And that information is not very definite. It is now coming to be realised that, though the last New Zealand harvest fell very considerably short of requirements, the shortage was not so great as was at first believed. The acreage that had been sown was insufficient, but the crops generally threshed out very well. As to the marketing of the wheat, there was a tug-of-war between farmers and millers. The farmers ultimately won. They succeeded in getting the price they were holding out for. But from the nature of those transactions this statement is a general one, subject to exceptions. Some farmers perhaps could not afford to hold, and accepted prices below current rates. Other farmers are still holding. Statements have periodically been made of late to the effect that practically ■ all of last year’s wheat harvest is now in millers’ or merchants’ hands. But there is a good deal of doubt as to whether that is strictly in accordance with fact. What is a fact is that under existing circumstances New Zealand wheat, whether it is in millers’ or farmers’ hands, is likely to stay there instead of reaching the consumer in the form of flour. Seeing that too little wheat was grown in the dominion, this is a paradoxical position. Wo have not produced enough of a commodity, yet wo refrain from using all that we have produced. It is set aside, and we import for current needs. It is bad enough to have to send money out of the country to pay for what in any case it would have been necessary to import, but it is foolish to make it worse by importing more than is necessary. It is doubly foojjsh to import hour instead of wheat from Australia. Even some of our millers are themselves importing flour, although they may—and some of them undoubtedly do—possess heavy stocks of New Zealand wheat. They could not turn that wheat into flour and sell it as cheaply as they can import and'sell Australian flour. If they do not themselves import hour others do, as recent experience has shown. Nor can they import Australian wheat and sell the hour gristed from it, because others would undersell them with imported flour. Therefore flour-mills are closing down, though they either actually have ample supplies of raw material to work on or would have if prices were right. And the reason why prices are not right lies largely with the Government. The Government has been told this again and again, hut declines to move. Mr Hawkcn said last night that “ he did not think the Government was called upon to take any action at present, it was the intention of the Government to allow the ordinary channels in New Zealand to provide the supply of wheat or flour as the case might be. It was not the Government’s intention to interfere by importing wheat duty free or flour. There would be plenty of wheat from other countries if we did not have sufficient in New Zealand.” In view of the facts set forth above, this' decision seems very pig-headed, very wasteful, and very , unpatriotic. The clue to the motive actuating it appears to nestle in the preceding sentence of Mr Hawken’s statement: “It was calculated that there were still a million bushels of wheat in the hands' of farmers.” This estimate xnay be near the mark or wide of it. If the latter, then the Government is only beating the air. But if farmers arc still holding wheat to that extent the Government, by its policy of inaction in the matter of readjusting Customs duties on imported wheat and flour, is only rendering that wheat unsaleable by the farmers. Wheat growers may well exclaim: “Save ns from our friends!” If millers holding New Zealand wheat (probably bought at a lower price than that for which fanners who retain stocks are holding out)' are not using it so long as Australian flour dominates the market, they are extremely unlikely to seek to add to their difficulties by buying more New Zealand wheat. ■

A previous reason given by the Government for calmly looking on at the unfortunate results of its own misdoing was that, compared with other countries, the flour millers’ costs of production, especially their overhead expenses, were unduly high. There used to exist an impression, which we believe was quite justified, that this was a fact. The chief contributing causo was the existence of some out-of-date mills and the adjustment of selling prices to enable these to show a profit on thenoperations. It may be the set policy of the Government to make conditions so hard that these will bo forced out of existence —an application of the law of the survival of the fittest. But according to our information, which comes from tried sources, conditions have been made so hard that the most up-to-date mills cannot grist wheat, home-grown or imported, and sell the flour in competition with Australian flour. If that is so, then it is the Government which h deliberately penalising an industry, aggravating unemployment, and swelling unnecessarily an adverse trade balance. In corroboration of the belief that the duties put not only the relatively inefficient but the efficient mills out of court, there is the protest and threat (Tom Auckland, where the mills are independent, being untrammelled by consideration for weaker concerns linked up with them in the industry.