THE New Zealand Herald AND DAILY SOUTHERN CROSS. FRIDAY, FEBRUARY 28, 1919. WHEAT, FLOM, AND BREAD.

New Zealand Herald, Volume LVI, Issue 17097, 28 February 1919, Page 4

THE New Zealand Herald AND DAILY SOUTHERN CROSS. FRIDAY, FEBRUARY 28, 1919. WHEAT, FLOM, AND BREAD.

As the result of conferences and deliberations extending over many months, the Government recently confirmed its decision to maintain complete control over the marketing of wheat and flour, and, modifying its earlier proposal, has fixed the price at which the new season's wheat will be purchased from the grower. The prospective supply for the next twelve months is apparently ample for the Dominion's requirements since provision was made against the deficiency in domestic production by the purchase of a large quantity of Australian wheat. But in its efforts to encourage wheat growing in the Dominion, the Government has undertaken to pay a price considerably in advance of the standard rates for flour and bread, and the best terms it could obtain from the Australian authorities are only slightly more favourable. The new wheat will apparently cost 6d a bushel more than last year's, and in the meantime there have been increases in the cost of milling which add to the difficulty of passing the flour into consumption without a material advance in the cost of the loaf. In order to avoid that result, and to protect the public from a further inflation of the cost of living, in a particularly objectionable form, the Government has decided to absorb the extra cost of flour by the payment of a subsidy from the Consolidated Fund to the millers. The objections to such a measure are obvious, but in the conditions resulting from the Government's past control of the wheat market it would seem to be the only alternative to an increase in the price of bread. If it is ultimately sanctioned the subsidy must be regarded as a temporary expedient, to be administered with the most scrupulous attention to public interests and discontinued at the earliest possible moment.

The efforts which the Government has made during the period of the war to control the price of bread have proved a source of continual embarrassment, and have scarcely yielded the measure of success which was anticipated. The first experiment to check the rise in prices was the purchase of wheat in Canada, a transaction which involved a considerable loss, and which at the most is claimed to have steadied the market, though it had no material advantage, since the Government's option was not exercised and no wheat was brought into the country. Two years ago, the Government : fixed the prices of -wheat and flour, and to meet the deficiency in the 1917 harvest imported over 1,000,000 bushels of wheat from Australia, the latter transaction involving a loss of £6690. At the same time it guaranteed the purchase of the 1918 crop, and as the latter became available for consumption fixed the prices of flour and bread, and undertook the distribution of the whole supply of milling wheat. Although the terms have only recently been definitely fixed, it has been understood throughout that the regulation of

the markets would be continued. Thus for two seasons the growing of wheat in the Dominion has been encouraged by a system of guarantees, offered as a security against the fluctuations of a notoriously unsteady market and as a protection against the risk of loss through the growing of wheat instead of other products, the sale of which was also assured by contracts with the Imperial Government. It is impossible to estimate the effect of these methods, but the result has not been the full provision for the Dominion's needs which it was hoped to achieve. The areas sown in wheat and the total yields in recent years have been as follows :~

Season. Acres. Bushels. 1914-15 .. 229.600 6.644.336 1915-16 . . 3-29,207 7,108.360 1916-17 . . 317.743 5,051,227 191718 .. 280,978 6.807.536 1918-19' . . 225,360 6,265,000 'Estimate The steady advance in prices during the first half of 1915 and the uncertainty regarding the marketing of other products under war conditions explain the high level of the figures for the 1915-16 season. Thus in the first two years of war there was a considerable surplus above the Dominion's requirements. This factor may have produced a reaction, while the security of ocean transport fostered the production of foodstuffs for which more profitable prices were available. Tho guarantee of 5s lOd a bushel and the appeal to the patriotism of wheat farmers apparently contributed to the improvement of the position last year, but in spite of the considerable advance on that price promised for the present harvest a much smaller area was sown last year, and the yield even if the present estimate is realised will be proportionately lower.

An unsatisfactory feature of the Government's policy in this matter has been the hesitation and uncertainty of its operations. There seems, in fact, little doubt that the decline in wheatgrowing this season is in a measure diii. to the lack of definite knowledge regarding the Government's intentions, so that the effort to stimulate production has been largelv defeated by the confusion and delay in the announcement of the marketing conditions. There should be no such ambiguity in regard to the subsidy to be paid to millers. Although an official announcement has not yet been made, it is reported that the Government has decided to pay £2 17s 6d on every ton of flour manufactured. If that is indeed the amount adopted, the public will require a complete statement of the items which it comprises. The Board of Trade has accepted as a basis of its calculations that 48 bushels of wheat, aro required to produce a ton of flour, and after allowing for a difference of 6d a bushel in the price of wheat, the proposed reduction of 10s a ton in the price of flour, and legitimate provision for increasing milling costs, the reported amount of the subsidy would appear to be much in excess of the new burden laid upon the millers. The annual consumption of flour is estimated at 100,000 tons, so that such a subsidy would involve an expenditure from the Consolidated Fund of over £280,000, and on the face of it the arrangement would do nothing more than keep the price of bread at its present level. On the other hand it appears that the sale of Australian wheat at the same rate as the New Zealand product will* enable the Government to recover a portion of this amount. The position is, however, so complex that the public should not be asked to accept a proposal, so objectionable in principle, however necessary in fact, without the most detailed information regarding the reasons and the effect of the scheme. Reports by the Board of Trade regarding the cost of manufacture in the mill and the bakery are now out of date, and the official announcement of the subsidy to millers should be accompanied by an authoritative statement of the primary and secondary costs in the production of flour, the details of the transaction in Australian wheat, and an exhaustive analysis of the conditions under which the millers of the Dominion are to distribute State-subsidised flour.