HARVEST EMBARRASSMENTS

New Zealand Herald, Volume LXXI, Issue 21717, 5 February 1934, Page 8

HARVEST EMBARRASSMENTS

The Farm Administrator of the United States proposes to make arrangements in ten days to bring the output of wheat within the terms of the international wheat agreement by removing from production five and a-half million acres. It would be a colossal achievement, but past experience does not encourage any feeling of certainty that the result will be as desired, and in view of the surpluses that are accumulating in the countries which are parties to that agreement, it would not be surprising if the whole

scheme of restriction breaks down. The United States planned to reduce sowings by 15 per cent below the average of the last three years, but the actual result has been a cut of only. 3£ per cent. The acreage prepared for the current season is 41,000,000 acres, compared with 39,000,000 acres last year. Yet the Government has paid one hundred and thirty million dollars to farmers for taking land out of grain produc-

tion. One of the reasons for the unexpected position appears to be that while the Government scheme effec-

tively covered the States which produce the principal harvests, it neglected others where land previously used for other purposes was put into wheat in the hope of making a profit from the expected increase in prices. Even in the main grain-growing States acreage,,.reduction failed to diminish the yield to the extent anticipated, for the common practice was to withdraw the worst land

from cultivation. Thus the average yield per acre did not fall in proportion to area. The world wheat situation is beset with tremendous difficulties apart from those of the kind indicated. Canada has long been burdened with surplus stocks, and Argentina is now in the throes of a predicament proportionately serious. The last harvest in that country was good, and a surplus of

18,000,000 quarters was available. Under the agreement the export is limited to 14,000,000 quarters. A month ago 9,000,000 quarters were still held, but for such a quantity there is not sufficient suitable storage. The question is now being raised whether some of the grain will be allowed to sprout or whether under the encouragement of what has been described as "exchange gymnastics," there will be an effort to get round the agreement. Whatever may happen in the future there is one stern fact that cannot be avoided, and that is that wheat prices have not responded to the restriction plans, and doubt exists in many minds as to whether it is within the power of any Government to limit the production of such a commodity. As with cotton so with wheat, the only sure corrective appears to be that which is slowly brought about by the influence of supply and demand.