WHEAT AND FLOUR

Southland Times, Issue 21823, 28 September 1932, Page 9

WHEAT AND FLOUR

SLIDING SCALE OF DUTIES. CASE FOR RETENTION. The following circular has been forwarded to members of Parliament by the Wheat Marketing Agency Co. Ltd., Christchurch:— There would seem to be according to newspaper reports, some more or less organized opposition to the present sliding scale of duties on wheat and flour. In order that those interested should be made fully acquainted with the position, it is thought that a few remarks showing the effect of these duties on the various phases of our economic life will not be out of place. It is proposed to deal with the matter under the following heads:—(a) Effect on the cost of living; (b) effect on the pork and bacon industry; (c) effect on the poultry industry; (d) efforts made by other countries to protect their wheat-growing industry. 1. Effect of the Wheat Duties on the Cost of Living.

(a) Consumption of Bread.—There is apparently a mistaken idea in some quarters that bread is the chief item of food and that any duty on wheat and flour has an enormous influence on the cost of living. In the 1931 Year Book (page 795) as a result of the collection of family budgets, the expenditure on bread is shown as 3.23 per cent, of the total family expenditure. We have just received details of the bread delivered by one of New Zealand’s largest bakers to 2308 households in Christchurch. The average for six months works out at 2.83 for pound loaves per household per week—surely not sufficient to justify the charge that a duty on wheat and flour is a burden on the masses. At to-day’s prices the total weekly bread bill of the average household should not exceed 2/4 per week. It would take a reduction of £2 15/0 per ton in the flour duty to alter the 21b loaf by one halfpenny and even then the average family would not save more than twopence three farthings weekly. (b) Price of Bread. —In order to compare Australian with New Zealand bread prices, an inquiry was instituted through the Department of Industries and Commerce, and on August 26, 1932, the Australian prices were advised by cable as follows:—Melbourne, 4d. per 21b loaf cash over counter; 3d. per 21b loaf dole bread. sd. per 21b loaf cash over counter; 5Jd. let 21b loaf cash delivered; s?d. per 21b loaf delivered and booked. Some shops in Sydney are cutting to 4d. and 4Jd. cash over counter. Bread prices in the principal towns of the South Island are as follows:—

Per 21b Loaf.—Christchurch: 4Jd. Cutters, about 40 to 50 shops in town and suburbs, are selling at 3d. Timaru: sd. cash over counter; s|d. booked and delivered; cutters selling at 4Jd. Oamaru: sd. cash over counter; 5Jd. cash delivered; 6d. delivered and booked; cutters selling at 4gd. Dunedin: sd. cash over counter; 5Jd. delivered; jd. extra for booking. Invercargill: 5d to 6d. delivered and booked; cutters 4d. The cost of transporting flour to the North Island amounts to a farthing per 21b loaf, but even if we allow a halfpenny the bread consumer everywhere in New Zealand is in the fortunate position of getting supplies cheaply. These startling facts speak for themselves and provide ample proof that the consumer in New Zealand can gain no advantage by trusting to importation of wheat and flour without duty. 2. Wheat Duties and the Pork and Bacon Industry.

Statements are continually being made charging the wheat duties with causing stagnation in the pork and bacon industry. As a matter of plain fact, the duties, through ensuring the production of bran and pollard in New Zealand, actually assist this industry. New Zealand calls for some 60,000 or 70,000 tons of bran and pollard annually, of which 60,000 tons are produced in New Zealand, and the balance imported. Australia (which is the only country from which supplies are ever available to New Zealand) exports on an average 10,000 tons per annum and in a drought season, has none to spare whatever. What would New Zealand dairymen and pig producers do for the balance of their requirements if the New Zealand wheatgrower was forced out of business?

Further, even if wheat were available duty free, it would not be used by the pig producer, for the simple reason that much cheaper and better feeds which are already on the free list are available as follows:—Barley, bran, cracked maize, pollard. There has been no duty on the above for at least two and a-half years, but in spite of these cheaper feeds which have been available for years, the number of pigs in New Zealand has fallen considerably as shown in the following table:—

Total Pigs in N. Z. 1928 586,898 1929 556,332 1930 487,793 1931 476,194

The wheat duties do not handicap the dairyman and pig producer, but assist them to secure sufficient supplies of their most essential foodstuffs, bran and pollard. The price of bran and pollard for sonsumption in Australia is £5/5/0 to £5/10/0 per ton. The New Zealand price for shipment to the North Island is, Bran, £4/0/0 f.ob. South Island ports; Pollard, £5/0/0 f.o.b. South Island ports.

3. Wheat And The Poultry Industry. The Government Statistician states, on page 405 of the 1932 Year Book; “Though poultry farming as a definite branch of farming exists to .some small extent, poultry keeping is generally carried on merely as a sideline,” and in the evidence given by Mr E. J. Fawcett before the 1929 Parliamentary Committee on wheat, Mr Fawcett stated that only 150 to 175 poultry farmers were in the business for a living, the great bulk of the eggs being produced from flocks of 42 to 36 birds. A majority of the professional egg men are in the South Island where they secure their wheat as cheaply as they could import duty free. Those who are in the business for a living (only 150 to 175) feed much less than one bushel of wheat per fowl per annum, and all their other feed (barley, cracked maize, bran and pollard) is DUTY FREE. Yet certain interests would sacrifice the 6,000 growers and all the labour and capital employed in the wheat industry for a doubtful advantage to a few poultry keepers who fondly believe that they can import wheat from Australia to produce eggs for export which will compete in the same market as Australian eggs produced where the wheat is grown. As regards bran and pollard the same argument applies here as with pigs, viz., the protection for wheat ensures the production of sufficient bran and pollard which could not possibly be imported in the required quantities.

4. Practically All Countries In The World Protect Their Wheat-growing Industry.

All European countries to-day, with the sole exception of Denmark and the Irish Free State, are protecting their wheat-growing industry and in some cases to quite a marked degree. Even Great Britain for so long a period wedded to free trade, has considered it advisable and necessary to protect its wheatgrowers, and a scheme has been adopted and is now in operation, whereby the wheatgrower is guaranteed 5/74d. per bushel. Under the sliding scale of duties here, the grower in New Zealand obtained for his wheat this year 4/3 to 4/5 per bushel. He is therefore in not nearly such a fortun-

ate position as the English farmer. South African legislation provides that the importation of flour below a landed cost of £lB/10/0 per ton is prevented, and further, the Government undertakes to review the position whenever the importation of flour comes into competition with local flour milled from wheat at the agreed prices of 6/7 and G/8 per bushel. For authoritative information on the tariffs, and other forms of protection adopted by various countries, we refer you to the Twentieth Report of the Imperial Economic Committee “The Wheat Situation, 1931” (London). From 1924 to 1931, the report states (page 73) that the changes in duties in Germany, France, Italy, Austria, Belgium, Czechoslovakia, Greece, Sweden and Switzerland show:—(a) Almost constant increases in the rates; (b) increases at short periods during 1929 and 1930, or provisions whereby duties can be modified by decree in accordance with some sliding scale or price movement. On pages 77 to 81, the action taken by the United States to protect its growers is fully set out, and Congress voted hundreds of millions of dollars to assist the Federal Farm Board to help the United States’ wheatgrowers. In Australia this year a bounty of 4Jd a bushel is paid to the wheatgrower and this has already meant the distribution of £3,300,000 to the end of June last and it is impossible to estimate what this amount will grow to before the end of this year. As showing the heavy duties by which some countries are prepared to protect their wheat industry, it is interesting to note the following increases in duty on wheat and flour from 1924 to 1931 (given at per cwt.): —

Czechoslovakia—free in 1924, now under sliding scale. Sweden 2/1 2/1 3/8 3/8 Austria —free in 1924, now under sliding scale. Capital employed in wheat growing.— In the report of “Wheat Industry Committee, 1929,” page 277, the detail of capital invested in the wheat industry in New Zealand is given showing a total of £12,981,853. Employment.—The 1932 Year Book gives the number of wheat growers as 6290, and it is admitted that the wheat and flour industry gives employment to a vast number of our people. The industries dependent on wheatgrowing also would suffer considerably if wheatgrowing were refused the moderate protection now granted. As far as the railways in our wheat areas are concerned, it might be said that they could simply shut down if it were not for the grain carrying traffic. Our binder twine works would be ruined. The agricultural implement business would receive a great set-back. The threshing mill business would go out. Great numbers of flour mill workers, farm labourers, waterside workers, storemen, carriers etc. would be thrown on the unemployment list. Any interference in the duties on wheat and flour could only have the effect of making New Zealand dependent on Australia for its supplies, and this would mean that we should have to send out of the country some two or three million pounds annually to buy goods that we can quite well produce here. Not only would we do this, but we would without doubt increase our army of unemployed to a considerable extent at the very time when we should make every effort to encourage industries to provide as much employment for our own people as possible. What could Australia take from us in exchange for the £2,000,000 we would be required to send her for flour? There is nothing we produce which she requires or would accept in payment. New Zealand wheat duties in the past:—Prior to the coming into force of the sliding scale of duty in October, 1927, the rates of duty were as follows :— Flour.—£3 per ton of 20001 b plus primage. Bran.—£2 .10/- per ton of 20001 b plus primage. Pollard.—£2 10/- per ton of 20001 b plus primage. Wheat.—l/3 per bushel. Although the tariff rate was £2 10/--on bran and pollard, these goods were admitted by the Government for some time at £1 per ton duty. In 1927 the sliding scale of duties on wheat and flour became operative and the duties on bran and pollard were set down at 20/- per ton. In 1930, owing to an agitation by merchants and poultry keepers, the duties on bran and pollard were abolished. It is necessary to bear in mind what these duties were prior to the sliding scale rate, because so many .of those now opposing the duties seem to suggest that before the present duties operated, the wheat, flour, bran and pollard industries were without protection. In conclusion, it is to be regretted that any suggestion of North versus South Island should enter into this question which is of necessity a national one, and should be viewed from that angle only. This is made perfectly clear by the references in the earlier part of this statement. In the report of the ■ Imperial Economic Committee already referred to, it is pointed out that in all European countries the governments realize the vital necessity of encouraging agriculture in order to maintain as large a rural population as possible and to sustain a balance between urban and rural occupations, and the duties imposed to protect wheatgrowing indicate how these governments advance this policy. The Parliamentary Wheat Committee of 1929 went into the whole question most exhaustively and there is no need to refer to its findings in detail as it is recent history. The result of their months of work was a recommendation that there should be no alteration in the duties. It is to be noted that this committee was composed of representatives of all parties in the House.

Wheat Flour 1924 1931 1924 1931 France 1/7J 6/7i 2/7 15/3 Germany 1/9 12/6 4/25/9 Italy Free 6/9 7’. 9/8