9

H.—44

In order to protect the position of consumers in the Dominion, Government took steps to secure as far as possible an adequate local production, and, to the extent that such supplies fell short of our requirements, importations from Australia were arranged on the best possible basis. Good milling-wheat of the harvest of 1922 was purchased by Government in terms of the following guarantee given to growers in 1921 : — (a.) For Tuscan and similar varieties, ss. 6d. per bushel f.o.b. ; for Hunters and similar varieties, ss. 9d. per bushel f.0.b.; for Pearl and similar varieties, 6s. 3d. per bushel f.o.b. (6.) An increment of fd, per bushel per month to be added to above prices for wheat dealt with between the Ist May, 1922, and the 31st October, 1922. (c.) Market rates to be paid if in excess of the above guaranteed minimum prices. ('/.) If necessary to determine market rates the Government to be guided by the world's market value of wheat in February, 1922, of similar quality to New Zealand wheat, having regard to the necessary adjustment between North Island and South Island ; but, in any case, the purchase price to be not less than the minimum stated above for the respective varieties with the monthly increment. Market prices in January and February, 1922, were such that in accordance with the terms of the guarantee, the above-mentioned minimum prices became the maximum prices, and it was at those prices that the wheat was taken over by Government. The harvest was a particularly large one, growers apparently being of the opinion that with depressed markets for other products an assured price made wheat-growing a relatively advantageous undertaking. The total yield amounted to 10,565,275 bushels, but a considerable quantity could not be classed as of good milling-quality, and Government purchases amounted to 7,853,993 bushels. On account of the anticipated loss on the surplus, which necessarily had to be exported on Government account, the price charged to local millers on resale by Government was " loaded " to an amount of 9d. per bushel, this loading covering also the estimated costs of administration and brokerage charges. The loss on export proved to bo less than was at first anticipated, and the consequent balance of profit remaining in the hands of Government was used to reduce, in November last, the price of flour and broad. Flour-prices were reduced (by means of a subsidy to millers) by £2 10s. per ton, and bread-prices were reduced throughout the Dominion by Jd. per 2 lb. loaf. After investigations of costs of production during the season ended February, 1922, and the prospects of reduction in costs during the ensuing season, prices of wheat products were fixed by 11 Order in. Council dated 28th February, 1922, at £18 for flour, £8 for pollard, and £5 for bran, all less 2i per cent, discount for cash within seven days, on the basis of delivery f.o.b. Timaru, Oamaru, or Lyttelton. Relative prices for sales at other points were fixed, allowance being made for charges and costs of transport from southern ports. At these prices no subsidy on flour was necessary, as they returned to the miller his expenses of production and what was estimated to be a reasonable margin of profit. The reduction in flour-prices in March, 1922, was such that bread-prices throughout the Dominion were in general reduced by |d. per 2 lb. loaf. It was found, however, that minor adjustments in price-scales were necessary in respect of a number of the snlall centres, and a considerable volume of work has been done in this connection. The position of the bread trade in approximately three hundred towns and districts has been under review. As previously mentioned, the accumulated profit on wheat transactions, towards the end of 1922, was used by a subsidy or rebate to millers to reduce flour and bread prices as from November to the end of the wheat year —28th February, 1923. Orders in Council were gazetted reducing maximum flour-prices from a basis of £18 f.o.b. southern ports to £15 10s., and bread-prices by Jd. per 2 lb. loaf. The maximum price of bread for cash over counter was reduced to 5Jd. per 2 lb. loaf in main South Island centres, and 6d. per 2 lb. loaf in the North Island. Relative additions to these prices were allowed for booking and (or) delivery, and were also allowed in smaller centres where cost of production and distribution warranted special consideration. At the end of February of this year Government control of wheat and of the prices of wheat products ceased. There remained in the possession of the Government, however, some 200,000 bushels of last season's wheat, which have now been disposed of at ruling market prices. The policy-of the Government in this matter has been carried out at a very small administrative cost, arid without any call being made during the past year upon the Consolidated Fund. In fact, after making financial provisions for the rebate on wheat (which absorbed a very substantial proportion of the profit of last year's trading) it is expected that the final accounts of the Wheat Control Office will show a small credit balance. In earlier years, during a period of high world prices, it was necessary that growers in the Dominion should receive similar returns for their products. In order to minimize the effect of such prices upon the cost of bread to the public it was decided that a subsidy should be paid to millers, and by this means flour and bread prices were prevented from reaching an excessively high level. The cost of such subsidies to the State was to some extent reduced by the profit made on favourable purchases of high-grade Australian wheat. When the current wheat season opened it was realized that, while the Government had no desire to take any further part in the control of this trade, wheat-prices on the world's markets had fallen to such a level as to place growers in this Dominion in a most unsatisfactory position. It was estimated that this year's harvest was likely to be ample for our domestic requirements, and it was

2—H. 44.