PRICE OF WHEAT.

Otago Witness, Issue 3713, 12 May 1925, Page 13

PRICE OF WHEAT.

VIEW OF CANTERBURY FARMERS. CHRISTCHURCH, May 6. At the meeting of the executive of tho North Canterbury branch of the New Zealand Farmers’ Union to-day the Agricultural Committee reported as follows: ’’That in vieur of the information obtained from tho Minister of Agriculture and the departmental officers as a result of the recent negotiations with the millers, tho committee recommends that members would be wise to dispose of their wheat -''t tho prices Bd, lOd, and 75.” Mr W. Mulholland’ (chairman of the committee), in moving th 9 adoption of tho report, said he recognised that the wheat market was a very uncertain one. A per son risking a gamble might possibly come out on the light side, but the prospers were against the farmer making anything. In holding his wheat he would require in hang on to it for a lonp time with the chances in the world’s market against him. The motion was carried without diswM. W AIM ATE FARMERS’ UNION. W AIM ATE, May 6. At a meeting of the Waimate branch of the New Zealand Farmers’ Union a discussion took place on the wheat question. In introducing the subject, the Chairman (Mr Robert Sinclair) stated that farmer i must not expect too high prices, and 6s 6d per bushel as a minimum price was, in his opinion, a very satisfactory one. Mr E. C. Studholme said it was a vory difficult question. “How do we know what will be tho cost of production five vears hence?” he asked. The Chairman pointed out that the price was a minimum one.

Mr J. Andrew said they could not expect the man on limestone oountry to grow wheat at a profit similar to that of the man who had good wheat-growing land, lie himself could not grow wheat under 7a per bushel. He contended it would cost Qs per bushel to bring wheat from Australia, and he could not see why farmers should be asked to sell wheat under what it cost to produce. Several farmers in his district nad said they could not grow wheat under 7s.

Mr Cuthbertson said he thought they should not bo too hard, and if a minimum price could be arranged farmers should be prepared to meet it. Mr Studholme said farmers may bo glad to grow wheat at 6s 6d in time. Under a guarantee of a minimum price of 6s 6d farmers might get more, but at tho worst they would be getting 6s 6d per bushel. Mr H. Ruddenklau said if 6s 6d could be obtained as a minimum price the average farmer would be doing quite well. Eventually a motion to the effect that 6s 6d per bushel be Considered a fair minipmm price for wheat, was carried

DOMINION DEFICIENCY. WELLINGTON. May 6. tor wheat imported to make up the local deficiency £1,306,619 was sent out of the dominion for tho 15 \inonths to March 31 last as compared with £5084 for the previous similar period. GROWERS AND MILLERS CONFER. TERMS NOT DISCLOSED. ASHBURTON, May 7. A conference was held to-day between of the wheat-growers of Canterbury and North Otago and the millers to discuss the proposal made by tho millers to the dominion executive of the New Zealand Farmers’ Union that under rhe protection of an embargo on flour the millers would guarantee fixed prices to the growers. Mr John Brown (president of the Mid-Canterbury executive of the union) was voted to the chair. The meeting confirmed the action of the deputar tion at the recent meeting with the Minister of Agriculture in Wellington. Mr Corson (president-of the Millers’Association) /aid the Government should be requested to set up a board with legal status so that its actions would be binding. There were black sheep in every fold, and there would bo some who would not want to break away. The board should comprise lepresentatives of the wheatgrowers, the flourrnfilers, the grain merchants, the poultry farmers, and the Government. Asked if the embargo would bo reimposed Mr Corson replied that it would not be reimposed this year, but lie did not know "hat would happen in future years. In reply to Mr Carr (Methven), Mr Corson said they were aiming at the stabilising of wheat and bread. He thought the defining of the price should be the function of the board. . A motion by Mr Mulholland on the lines of Mr Corson’s suggestion was carried unanimously. It was proposed that, should any agreement with the millers be reached, the period should be three years, but an amendment was moved that it be five years. Only five voted for the amendment., and the motion was carried practically unanimously. Speaking on the question of pfcice, Mr Collins, of the Department of Commerce, detailed tho attitude of the Minister. As \\ heat Controller he came into close contact with the wheatgrowers, and many had expressed satisfaction with the position as it stood, and were prepared to accept whatever prices for wheat the market could pay. ihat was to say, they were fully satisfied with the present protection afforded through the tariff, and wanted to bo allowed to take the risk of prices without a guarantee either from the millers or from the Government. The farmers realised, no doubt, that the protection so far as wheat was concerned was both adequate and encouraging. On to-day’s Australian prices wheat of good milling quality could not be sold at a profit within New Zealand under about 8s 6d a bushel, sacks in. In regard to flour, however, the position was not so safe, in that low f.o.b. quotations were frequently received, enabling flour to be sold ex store at from £l9 to £l9 10s per ton in the North Island, or equal to approximately £lB and £lB 10s in the south. However, as long as flour could be obtained from local millers at or above the parity at which flour could be imported, it was safe to assume from past experience that preference would be given to the domestic flour because of the facility with which it could be supplied and in the precise quantities required by bakers and other .large consumers. The delegates should exercise the greatest moderation in approaching the Government for further assistance. “I hope they will be prepared to rely upon the tariff in the immediate future,” said Mr Collins, “and approach the Government for assistance if and when assistance is proved to be necessary, and only then.” As the Minister has emphasised, the growers had shown their good faith and goodwill by producing sufficient wheat for national needs.

Mr Meek moved that the millers consider that the present wheat prices be the minimum for the period already agreed to. Mr Forrester (Oamaru) seconded th« motion.

At a later stage Mr Corson said the millers had discussed the prices, and they had come to the conclusion that the highest they could give was 6s. Even at this figure they were running a grave financial risk.

Mr Ireland andorsed these statements. It was a business proposition in which they were asked to guarantee a price for three years. For the first year it was all right, but after that the miller would be faced with a big loss. If there came a surplus of, say, 4,000,000 bushels, which could not be carried over, it would have to be exported, perhaps. They were trying to give safety in wheat-growing. The Chairman asked if the meeting could prove that this was not a fair price over costs what about it? Mr Ireland replied that the millers haJ fixed on the price on the assumption that farmers could grow the wheat. Mr Sheat; Well, you are asking an impossibility. Mr Ireland said that if the Government would take any surplus he would recommend the millers to guarantee the present prices over three years. The millers were making every endeavour to help the farmer. In reply to Mr Mulholland, Mr Ireland rsaid that if tho growers took charge of the surplus it would be a different proposition altogether, and ho was not prepared to give a price offhand in that event. The Chairman said the Minister had said the growers would have to try to grow 8,500,000 bushels. The whole thing hinged on production costs. Mr Collins said that 8,500,000 bushels all told would cover the dominion’s full requirements.

Mr Lill: What would happen if the millers were asked to give 8 S od for Australian wheat?

Mr Corson: That is simply answered. The mills would close down. At this stage the millers retired to consider the position. Mr P. R. Talbot (Timaru) said that South Canterbury thought 6» 6d, f.o.b. was a fair proposition. If 7s were asked the Government would not consider the matter. He moved that the minimum be 6s 6d, f.o.b.

Mr SincUjr (Waimato) agreed wltfi this. Mr Lendley moved as an amendment that prices asked for be Tuscan 6s 6d Hunters 6s Bd, and Velvet or Pearl 6s lOd on trucks at country stations. The Chairman: Are you going to aooept the 6s offered you to-day? Voices/* We have no intention of doing

The amendment was carried by 15 votes to 13.

In view of the narrow margin it was decided to delete the amendment, and the motion ftas carried. The millers then returned, and were informed of the motion being carried. On the question of. surplus being raised, Mr Corson said the millers would not worry about dealing with a surplus. Regarding the prices asked, he said bran and pollard were very nigh, and they could not undertake to supply flour if those prices ruled. Tliey could be placed before the millers* annual meeting next month. If the farmers could convince the Government of higher cost of production and enter into a scheme at the prices asked the millers would stand by it. If the Government was willing to give even 10s the millers would give it. A committee of four was appointed to discuss the matter with the millers, anc} the conference adjourned. On resuming the discussion was taken in committee. Later the Chairman informed the press that an agreement satisfactory to all parties had been reached, but no details would be available until they had been ratified by the Minister. POLICY OF SELF-RELIANCE. There does not # appear to be much divergence of opinion between producers and publio on the question of a self-reliant policy for Now Zealand in respect to wheat-growing (says the Evening Post). The only question—and it is tho most im portent—yis at what price. Tho policy is unexceptionable, its cost is the difficulty. This year tho dominion is seriously short of wheat grown in tho country, necessitating heavy importing, and £i,300,000 bus been paid to Australia already to make up tho snortage. More money yet will go out of the dominion for the same purpose. Tho exchange on so large a transaction will amount to a substantial sum in itself, and this, too, could havo been saved had New Zealand been wholly self-reliant for its wheat supplies. Last year 170,000 were sown in wheat, yielding 5,000,000 bushels, or

3,000,000 short of requirements. Importing thus became imperative. It is hoped that as the outcome of the conference above referred to and encouragement given to wheat growers by the Government at least 270,000 acres will be put down in wheat in New Zealand this year which at an average of 30 bushels to tne acre should give the country a sufficiency for usual requirements, providing there is no serious climatic handicap to the harvest. While at Christchurch this week the Wheat Controller will discuss with flourmillers the financial arrangements made or to be made as relating to importations of wheat. The Minister of Agriculture W. Nosworthy) having*signified his willingness to import wheat into Now Zealand duty free subject to millers finding the necessary finance for the undertaking, it is confidently expected that current prices for wheat, flout, and bread will not be increased. OUR YORKSHIRE LETTER. GRADUAL ESTABLISHMENT OF A NEW BASIS. (From Our Special Correspondim-t.) BRADFORD, March 11. Tho period which has elapsed since the first series of London sales for this year has been on© of the worst known for years—in fact, the worst since 1921. Of course, values havo not declined anything like what took place during the 1920-21 slump, but there is no telling where prices P-. ■ <rnW nd if London does not pull the trade togethor the price of tops is going to bo lower still. We have said all along H >t "-nod 64’s tops at 5s would bring wool into line with most other commodities, and. everything indicates that price being reached before any real business developments take place. That confidence is seriously shaken is apparent to everyone in close touch with the market. Naturally wool-growers aro getting the wind up, and are saying things which circnmstanoea do not warrant. Wool has always been liable to sharp variations in price, and the mistake was made at

the beginning of the season in values being on a 6s 8d basis for 64’s warp tops, with trade all the time gradually declining. Had there been corresponding briskness among spmners and manufacturers in the various centres of the world, tho decline would never have been what it is, but advancing wool markets synchronised with declining consumption, and it took till Christmas before that fact was actually realised. It was when buyers in Australia found it impossible to pass forward to spinners and manufacturers that dear wooi in the shape of tops that the slackening began. We are satisfied that even on a 5s basis wool will be profitable for the growers, and is high enough for the consuming public to-day. THE POSSIBILITIES OF COLEMAN STREET. It will depend entirely upon how the auctions go during the next few days, and whetlier there is a firm finish, as to how trade develops afterwards. The Entire industry in this country, Franco, and America needs a tonic, and it remains for London to administer same. Cun it be done? It will all depend, as already stated, upon the buying attitude of the Continent. Bradford has been one of the biggest buyers in Australia, so has France, white Germany and America have not purchased a great deal. Nobody is expecting any important competition from tho United States, and although stocks of tops are moderate in Roubaix-'J ourcoing, stocks of wool are reported to be comparatively light for this time of the year. The decline has caught home trade buyers with plenty of wool on their l>acks. Importers can stand the loss, but all the same it robs them of considerable financial resources, particularly when they find themselves unable to move freely the stocks which are arriving. Really it is the latter feature which is directly responsible for values gradually declining. If spinners and manufacturers found themselves able to buy at all freely, and there was a corresponding healthy demand for fabrics, the position would be entirely different; but that is what is really wanted to stabilise values. The shortage bogey, of which we have heard so much from London, is entirely discounted. There is enough wool in sight to serve the trade for the ensuing year, and users know that the next Australian and South African clips will be larger than the current clips.

HEAVY LOSSES FOR SPECULATORS. The decline at the opening of the series in London on Tuesday surprised no one. To a very large extent it had been discounted, and it the fall does not develop further there should be a reasonable prospect of prices becoming stabilised in consuming markets. It ail depends whether the trade can got through the series with a well-sustained demand. That really is what is wanted. W e do not expect coarse preparing crossbreds to show any further decline than at the opening, for these wools are apparently being consumed fairly extensively. What we want to see above all is the stabilisation of merino values, but at the moment buyers are greatly handicapped by the heavy losses they are having to face on stocks at home, all of which may prove to be a rather serious hindrance to free buying during the current series. Speculators are up against very serious losses; in fact, many know that they are faced with a decline of anything from 6d to 9d per grease lb, and in some cases even more. To-day it is useless offering second-hand parcels in Coleman street, and selling brokers will do well to concentrate their interest on growers’ clips, and sell same at the best prices obtainable. Even those who bought crossbred wool in New Zealand with a view of rcoffering in Coleman street are faced with heavy losses, and we expect this series to see some fair weights of second-hand parcels catalogued. Last series there were some nice offerings from the first Wellington sale, which realised anything but their own. They were all withdrawn in January, and m all probability the same wools will be re-offered this series, only to command still lower bids. Just the same losses face the wools that have to-day been sent forward direct to manufacturing centres, and where topmakers have not sold forward, their imports are going to stand them to very serious losses indeed. However, it is all in the game. It certainly is pleasant when profits are being made, and distasteful when losses are being encountered, but woolbuyers know that they must take the bitter as well as the sweet. LONDON OPENING.

The trade is now at grips with the offering of wool in Coleman street, the initial sale showing a somewhat serious reduction in values. We might remark in passing that during the interval merino tops have declined about 17 per cent., 56’s 21 per cent., 50’s 15 per cent., and 43’s about 12 per cent. With these facts in the minds of buyers many expected a corresponding fall in Coleman street, but the decline registered in merinoe and crossbreds was hardly as much as what had already taken place in the price of tops. There was considerable reserve in the bidding, as could only be expected, simply because everybody was feeling their way to a new basis of values. Just at this critical time, when America ought to be giving considerable support, none is likely to be forthcoming; in fact, with the near advent of the American new clip, every effort will be made to get that wool as low as possible. However, London sales opened very much as was expected, and if the decline gets no worse there will bo reason for thankfulness. What we are very -concerned about is to see a good firm finish. Better bv half a weak beginning and a strong finish than the reverse, for we have always said that the best thing that can happen is for buyers to go home feeling that the series has been good and that prices are well established. The current series is going to be a critical time for the wool trade in Coleman street, and although the biggest firms are not in want of any raw material, wo think that considerable support will be forthcoming in order to create a better impression in consuming centres like Bradford and Roubaix, where it is hoped trade will pull itself together and move forward towards a radical improvement. AMERICAN WOOLLEN COMPANY’S HEAVY LOSSES. News is to hand that the American Woollen Company, the biggest textile combine in the world (controlling nobody knows exactly how many mills, but over 60 is spoken of), made a trading loss last year of 1L969.836 dollars. TTiis has greatly surprised West Riding firms, and although many were prepared to see a poor balance sheet, a loss amounting to £2,500,000 is

phenomenal. This is the largest yearly loss since the incorporation of the company, and it is regrettable for many reasons. Bradford manufacturers feel that eyeii in protected America manufacturing conditions have not been of the best. A mistake was made by the American Woollen Company when it decided to reduce prices on winter cloths during the month of January-February, 1924, for the winter of 1924-25. This is known across the Atlantic as the heavy-weight season; and while Yorkshire manufacturers were faced with strongly advancing wool values, and were naming higher prices for the fully-manu-factured fabric, American mills reduced prices, greatly to the surprise of firms in the West Riding. The result of that unwise policy is seen in the loss reported. It was thought to be a political move; but, whatever the motive, it has produced disastrous results. The American Woollen Company would have done no less trade if it had advanced its prices 10 to 15 per cent, to compensate for the sensible rise in wool values.