WHEAT AND FLOUR DUTIES.

New Zealand Herald, Volume LXV, Issue 19879, 24 February 1928, Page 10

WHEAT AND FLOUR DUTIES.

The active interest of the Auckland Chamber of Commerce in the question of duties on cereals, displayed in its correspondence with the Minister of Customs, is a welcome reinforcement of the defence of the unorganised and inarticulate interests of consumers. There are so many objections to the new scheme of fluctuating duties on wheat arid flour that any discussion of them tends to focus upon one or two aspects. Thus the Minister's latest letter is mainly devoted to an examination of the theoretical effects of the new duties. They are admittedly fixed upon an basis, and whether the taxation is higher than the previous flat rates, the rate of duty on wheat proposed in the fy'st draft of the tariff was certainly raised when it was before Parliament. Then the Minister was confident that the scheme would ensure a stable price, year in and year out, and that importations could be controlled —in effect, it was designed as a combination of pricefixing and embargo, both devices

that have been discredited by previous experiments. But now the Minister admits that the scheme, instead of producing precise results, will merely tend to have certain influences on prices. If that is a correct analysis of its effects, how long will it satisfy the wheatgx-owersl If wheat prices in New Zealand are artificially inflated by the operation of the variable duty, the inevitable effect will be to divert land from other uses-to wheat production, leading to a surplus above domestic requirements. What is to become of the surplus 1 Will the Government yield to demands that it should bear the loss on the sale of several million bushels abroad in order to maintain the artificial prices within the Dominion, or will it once more refuse to interfere with "the ordinary course of business" 1 In that event, there cannot be any doubt but that an excessive production of wheat would defeat the fluctuating duty scheme, and force the prices of the whole production down to the export parity. The process may not reach its full development for several years, though even this season there is a prospect of over-production, but the ultimate effects of the scheme ai*e clearly evident. So far as it realises the tendency to keep domestic above external prices, it will lead to the inflation of land suitable for wheatgrowing and divert to that purpose land naturally employed in more profitable production. Thenqp will follow the growing of more wheat than the country can consume. With artificial inflation of prices for wheat and f<?r land and artificial excess of production, there will inevitably be a harvest of disillusionment and recrimination.