MARKETING OF WHEAT.

Timaru Herald, Volume CXXV, Issue 18636, 4 August 1930, Page 5

MARKETING OF WHEAT.

To the Editor of the “ Timaru Herald.” Sir.—l have read with great interest the article by “T.C.L.,” under the above heading in yesterday’s issue of I your paper, particularly as on my reI cent trip through Canada I made the I personal acquaintance of the gentle- | man he mentions representing both I sides of the grain trade. The figures I given are substantially correct, but the | impressions given to him by the ! members of the Grain Exchange, together with his own, need a whole lot of correction. First of all, there is no | organisation in the world that recognises more thoroughly the law of supply and demand than the Canadian Wheat Pool; that is, if you mean by “supply” the world’s wheat crop, and by “demand” the requirements of the world’s consuming public. This demand is very even and con- | stant, because no one will buy two I days’ bread if he can get it daily, nor will a miller buy two months’ supply of wheat if he can get it monthly or weekly. The Wheat Pool aims at keeping its supply as even as the demand, like a wise shopkeeper who puts his goods on the shelf, and will sell them when they are asked for or required. There is always a market in the whole world for the world’s wheat crop; this is the Pool’s market. When the world’s crop is short of requirements, prices are high, and when crops are large all over the world, as at present, then prices fall. The Pool takes into consideration that there are successions of good seasons and successions of bad seasons,’ apd they are not less wise than that well-known Israelite who stored the abundance of the prosperous years of Egypt for the ; lean years that followed, so they are j storing their 200 million for the lean years that are almost sure to be at | hand. There is another definition of ) “supply." however, and it is the I grain-traders’ definition which the ! Canadian Wheat Pool does not recog- | nise as a basic law. That is, when , Canada puts a harvest of from 300 to I 500 million bushels on the market in ! about six weeks, with the result that I the market is glutted for the time ! being, because the world's demand is j capable of absorbing this large amount ! only over the whole year, particularly | as Canadian “Hard Red,” is rarely , milled alone but mixed with softer wheat from other parts of the world. | This temporarily glutted market (means unnecessarily low prices, which is the speculator’s opportunity, and this brings me to my second point. The Canadian Wheat Pool does not try to beat the market, it only tries to beat the speculator. There is a phrase coined here in New Zealand which seems to me to fit the case; it is this: “Whenever a man gets a shilling i which he did not earn, it necessarily follows that someone earned a shilling which he did not get.” Now, I submit that when your correspondent “tried his hand” on the Winnipeg Grain Exchange, he got £2O which he did not earn, and some Canadian wheatgrower earned £2O which he did not get. The consumers’ market paid it, but the supplying producer did not get it. Here is the pivot of the whole question, and it is this speculating which the Pool is designed to prevent. The extent of their success can best be gauged by a comparison of the turnover on the Winnipeg Grain Exchange, which in pre-Pool years was as high as 800 million bushels, when Canada’s crop was less than 300 millions. In five years’ operations of the Pool this turnover was reduced to the neighbourhood of 200 millions, while their crop increased to 500 millions. Ihe Pool sells direct to the con-

suming countries of Europe and Asia, cutting out the Speculator and getting his profits back to the man who earned it—the farmer. While I was in Canada, I studied the wheat marketing question very thoroughly, because, being a farmer, I was vitally interested, and I found every section of Canada very firm in their support of the Pool, with the one exception of the graintraders, and they tried to impress me in the same manner as they did your correspondent. I was not satisfied with their viewpoint; I preferred that of the Associated Banks, who assured me that the first reason why they were keen supporters of the Pool, was because it got the world’s value of wheat back to the man on the land, and a strong, prosperous rural community is the best asset of Canada; whereas, before the Pool was formed, the speculator got the profit and took most of it down to U.S.A. I have heard of the “frozen capital” bogey before, but, like every other bogey, he vanishes when the searchlight is played on him. If the Canadian Wheat Pool had unloaded its 200 million bushels of wheat on the 5/- market, it would not have been eaten any faster than it has been. It would merely have changed hands, and someone else’s capital would have frozen instead. But such a sale was not possible. Before 1 200th. had been sold, the price would have fallen, and if the sale was forced, wheat would very soon have been almost valueless, and the farmers’ frozen capital would thaw out and vanish, and where would the Banks’ advances -be? But that is not the end of it. At those very low prices, the grain traders would buy the lot and do with it what they are now blaming the Pool for doing—hold it in store until the market recovered, then supply the world’s market with it. The same old story—the consumers pay for it, the speculator gets it, and the farmer gets only the fresh air and the scenery. I also came home from Canada with the impression that the Canadian farmer is learning, and like the farmers of this country, they are fairly slow at learning, but they have at least learned this one thing, that their own method of marketing wheat is a long, long way better for them than the system it lias displaced.—l am, etc., C. V. WOODFIELD. Christchurch, August 1.