THE MARKETING OF WHEAT

Otago Daily Times, Issue 22099, 1 November 1933, Page 6

THE MARKETING OF WHEAT

The Wheat Agreement, has been described as a useful piece of salvage from the wreck of the World Economic Conference. The value of it has yet to. be tested. The Australian Wheatgrowers’ Federation is, clearly, not satisfied as to its usefulness. It threatens “ direct action ” in the form of “an Australian-wide hold-up of wheat.” What this precisely means has yet to be explained. Upon the face of it the Australian growers would seem to contemplate a policy that would inflict greater penalties upon themselves than they will suffer under the internatr'onal agreement. Any plan for the restriction of the output of a commodity is open to objections that are fairly obvious. That which is embodied in the Wheat Agreement involved concessions on the part of countries that import, as well as on the part of countries that export, the cereal. The importing countries undertook that they would “ not take advantage of the voluntary limitation of exports by the 'exporting countries to develop their own policies in such a way as to frustrate the objects of that voluntary limitation.”- Chief among -these objects is, of course, the raising of the world price of wheat, which had fallen to a level that did not afford to the grower an adequate return for his labour. The world’s crops during the past few years—from 1928—have been so bountiful that, in the absence of a plan of distribution that would make supplies of wheat available to famished populations, they have been embaiv rassing to the producing countries. Two years, of exceptional crops in the principal exporting countries were accompanied by an exceptional crop in the importing countries, and this led to efforts blithe part of the latter countries, when the slump began in 1930, to maintain the internal price both by increasing tariffs and by the imposition of quotas. While this policy had the effect of protecting their own growers it also contracted the demand and thus added to the accumulation of exportable supplies. - At this juncture, moreover, Russia became once more an exporter of wheat, and large quantities were poured by her upon a glutted market, with the result that the accumulated surplus became so large that it was about equal to the whole of the exports during the past year. It was in these circumstances that the international agreement was arrived at two months ago, in terms of which the exporting countries engaged to limit their exports to a figure corresponding with their exports during the past season and also, with the exception of Russia, to curtail their production next year by 15 per cent. In its application to Australia, the agreement apparently means that the area of production must be reduced by a million acres if the country is not to be left with an unexportable surplus on its hands. If this places the industry “ in a mess,” as one of the growers is reported to have said it does, and as can readily be believed, it is not easy- to see how the Government, having committed itself to the agreement, can get-the growers “out of the mess.”