THE WHEAT PRICES.

Southland Times, Issue 19125, 18 December 1923, Page 4

THE WHEAT PRICES.

Government interference by the fixing of prices has been a failure in the case of wheat, and most people will applaud the statement of one Canterbury farmer who told the chairman of the Wheat Board on Friday that he favoured a return to the open market. The case of wheat differs from that of meat and dairy produce, because the producer is growing for the local market. New Zealand has no substantial

surplus for export, and so the grower finds his market within the borders of the Dominion. By the fixing of prices under Government authority the farmer has been guaranteed a price and a market, but the area under wheat has steadily diminished and importations are increasingly necessary. The area under wheat in recent years reached its high point in the 1921-22 season after the fixed price had touched eight shillings, but since then there has been a marked fall. The area in 1922-23 was 278,687 acres, a reduction of 74,000 acres and the estimate for the present season puts the area at 185,000 acres, a fall-ing-off of 93,000 acres. These reductions have come with the downward movement in prices, but in the early days of the pricefixing the area fell away when the prices were rising. Undoubtedly the high price of 1919-20 stimulated the wheat industry, but the farmers are steadily moving away to other crops because wheat does not give a return comparable to that available under other crops. Australia has a big surplus and this competition must be severe, especially as we must import to meet the de-

mand of our population. Mr G. W. Leadley, the chairman of the Wheat Board, stated on Friday that the Board in conference with the millers had obtained for the millers a price higher than the world’s parity—about a shilling higher we would judge—and yet this figure was not high enough to make wheat-growing profitable in this country. Inevitably the result must be a further reduction in the area under wheat and a greater dependence on importations. This has been the effect of pricefixing in other countries. Obviously it is absurd to talk about cheapening the cost of production by a reduction in land values, because these values must be influenced by the productivity return in which is involved the uses to which the land is put. Land which cannot produce wheat profitably will be turned to other uses, and its value will be determined by what it will yield through other crops. Price-fixing may serve to minimise the effects of outside competition, but it means that in addition to the tariff protection the consumer is paying a substantial subsidy to an industry which, it is claimed, is not a profitable one. It is difficult to suggest a solution, but in the long run it will be found, we think, in the open market rather than in the artificial stimulus of price fixation.