A SURPLUS OF WHEAT.

New Zealand Herald, Volume LIX, Issue 18020, 20 February 1922, Page 6

A SURPLUS OF WHEAT.

Although estimates vary as to the amount, there will be a considerable surplus of wheat available for export this season, the first for many years. Any addition to the Dominion's exports is welcome as a contribution of quantity toward balancing the fall in prices, though the arrangements made by the Government with the wheat-farmers will result in the paradox that the Bale of the surplus will both augment the national wealth and diminish the national Treasury. It is, however, too late to regret the Government's undertaking to purchase the whole yield of milling wheat at prices that have proved, as was anticipated at the time, higher than the world's parity. The contract has been made, and consumers in New Zealand must pay unnecessarily high prices for flour and bread, while the prospective loss on the surplus may be kept down by reserving an ample carry-over for next year. It has not needed the experience of the present season to .demonstrate the failure of the subsidy as a means of ensuring independence of foreign wheat. During the period of greatest need the domestic production showed the greatest shortane. and so far as definite conclusions are possible in such a matter it may be said that the guarantee of prices was th,e least important factor in determining the area sown in wheat each year. More might have been achieved by a conditional guarantee requiring the wheatgrowers to produce a definite proportion of the country's requirements, but that was not required. The cost of the subsidy system will, however, not be wholly lost if the lessons of the past five years are heeded, for it is obvious that the national policy in Tegard to wheat production must be reviewed. At present it is generally agreed that an effort should be made to establish ! independence in the matter of wheat supplies. That view is reflected in the new customs tariff, which imposes an increased duty on wheat and flour that may prove a sufficient safeguard against deficiencies. But if the returns from wool, meat and dairy produce again become more profitable than those from wheatraising, the protective duty will probably be ignored and the country again be faced with the problem that became acute during the war years. It will then become necessary to choose between reliance upon supplementary supplies from overseas, which in practice moans Australia, or some method of stimulating domestic production. Our experience has already demonstrated that a guarantee of prices, within the limits that the consumers can afford, is an ineffective inducement, and the rule may be safely propounded that in future no proposal involving a subsidy on the basis of prices will be entertained. If the need arises, no form of guarantee will be of any value unless it involves a reciprocal undertaking by the wheat-farmers, so that in future the national policy will fail unless it is in terms of acres, probably finding itß application in the form of a bounty on every acre of land turned by the plough for wheat-growing,