PRODUCTION AND COST

Otago Daily Times, Issue 21982, 17 June 1933, Page 12

PRODUCTION AND COST

WHEAT, FLOUR, AND BREAD

SYSTEM OF CONTROL A BENEFIT OR A HANDICAP? A Dunedin miller stated to a Daily Times reporter yesterday that there seemed to he such a diversity of opinion regarding the control of the wheat and flour markets in New Zealand, and so many erroneous allegations, that it might be timely to give a short history of the position. He said that as a result of the millers and wheat growers acting together a request was made to the Government to set up a Wheat Purchase Board, so that the wheat growing industry might be protected and full benefit obtained from the sliding scale of duties. The Government agreed, and the Wheat Purchase Board was set up. On the board were four millers, four representatives of the wheat grower's, and a chairman appointed by the Government, The board had authority to deal with the whole of the fair average quality milling wheat from the past year’s harvest, and to sell it to millers. The board decided to make a progress payment of 3e 4d, f.0.b., for Tuscan to the growers for the months of January, February, March, and April, and to arrange with the millers to buy the bulk of their estimated year’s requirements at a minimum of 4s Bsd, f.0.b., before the end of May. For the month of May 3s 5d was to be paid to the grower for his Tuscan with an increment of Id per bushel each mouth till September, when 3s 8-Jd per bushel was to be paid, and 3 s 9d for October. Hunters and Velvet were to be sold at relatively higher figures. « ■ The Wheat Purchase Board had no money tc». pay for the wheat, and that was the reason it entered into an agreement with the millers that, instead of their buying their wheat' from month to month, they should buy as much of their quota as possible before the end of May and pay for it. The millers agreed, and the system wag thus enabled to function. For instance, one Dunedin miller has several thousand bushels in his store, and has already paid the board some £30,000 or £40,000.

It might be asked how the board arrived at the quota of wheat to bo allotted each miller. That quota was based on the amount of wheat each mill had purchased during the previous year.

It should be explained that the difference in the price paid to the grower and that charged to the miller, goes to a fund with which to buy surplus wheat from growers which the millers are unable to take and to balance the loss on wheat to be exported, or, in other words, stabilise the price all round.

It has been alleged that certain mills, termed “ free ” mills, are unable to obtain all the wheat they want from the Wheat Board. So they are. A “ free ” mill, it may be stated, is one operating outside of Distributors, Ltd.—a body which allots a certain output of flour, and no more, from each of the mills controlled by it. Now the position is very clear, and under all the circumstances it appears quite fair, said the Dunedin miller. Each of these “free” mills is entitled to receive, and does receive, its full quota of wheat, the allocation being based on exactly the same, proportionate basis as that of the other mills. A “ free” mill not working last year, and therefore having no output by which to gauge its trade, was allotted a quantity of wheat by the board on a sack capacity and on a comparative basis with all other mills. A “ free” mill was not entitled, however, to work a greater number of shifts than the other, mills, use up its recognised quota of wheat, and then ask for more. If that were allowed then all mills would ask for the same privilege, and then chaos would quickly descend on both the flour miller and the wheat grower; Some people thought that the milling industry should work 24 hours a day and sell its product at a price to show a reasonable return on capital invested. One did not, however, expect the iron or woollen industry, or any other industry, to have to work 24 hours a day to show a reasonable profit on the capital invested. That being so, the milling industry should also show a return on capital on a 48-hour week. The miller said that if New. Zealand wanted it, they could have the free importation of wheat. They could have the New. Zealand mills working three shifts a day—none of the leading mills in Dunedin to-day worked one shift all,the yearround —with the market flooded with flour, with the small mills squeezed out, and with wheatgrowers working for nothing. They would not, however, get a cheaper loaf, as bfread was as cheap in New Zealand to-day as any part of the world. The agitation for the cheaper loaf was, in fact, something of a “ bogey.” Competition amongst flour millers was not excluded by the present system. They had to produce a good, sound article, and the better the article the more chance they had of getting orders from the bakers.

“ Taking these facts into consideration,” said the miller, “ would any clearthinking person in the Dominion today argue that they should destroy the wheat-growing industry and disrupt the flour-milling industry, throw hundreds of people out of work, and send thousands of pounds out of the country every year? The flour millers’ hands, moreover, are tied as regards their prices. Those are controlled by the Board of Trade. The millers’ books have to be open for examination by the members of the board, and they exercise this privilege to discover a fair basis of price for New Zea-land-manufactured flour.”

It may bo added that some years ago the Crown took action against Distributors, Ltd., charging it with operating against the _ public interest. After a lengthy hearing his Honor Sir William Sira found Judgment for the defendants. The case was then taken to the Court of Appeal, which reversed Sir William Sim’s judgment. A further appeal was taken to the Privy Council, which in turn reversed the Court of Appeal’s decision and upheld Sir William Sim’s judgment.