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industry, either in the Dominion or in our main source of supply, Australia. Such matters as the payment for wheat purchased, insurance, loading-expenses, &c., gave no difficulty, and were carried out on lines previously adopted. The return to the gold standard in May, 1925, eliminated difficulties and heavy expense previously existing in regard to remittances to Australia. The Treasury Department and High Commissioner's Office gave the Department valuable assistance in effecting certain economies in these matters. The whole of the Department's operations in the matter of the purchase of wheat during the past year were carried on without Government being called on to advance any funds, the business being handled on deposits made by millers before shipment of the wheat. It has been mentioned above that the Government after 1924-25 was desirous of taking no further active part in the matter of wheat-supplies, and that the embargo on importation was removed at the end of February, 1925. From that time the duty of 2s. per cental was imposed on importations of wheat. This had the effect of maintaining at a relatively high level the price of wheat required for poultry-food—a section of the demand which is not directly affected by the price of Australian flour. The anomalous position consequently arose of New Zealand wheat being worth more for poultry-food than local millers could afford to pay for it in competition with Australian flour. With some fluctuations between March and the spring months, the price of fowl-wheat remained relatively high. Supplies from local production were substantially exhausted by October, and accordingly, at the request of the poultry industry, the Government decided to allow from the Ist November importation under permit duty-free. The conditions of these permits were such as to ensure that supplies were brought in arid distributed for no other purpose than for consumption as poidtry-food. Under this arrangement a quantity of approximately 250,000 bushels was brought in duty-free during the months of November, December, and January. It may be stated briefly, therefore, that for the season 1925-26 the Dominion's supplies were provided (a) by a local harvest of 5,447,758 bushels ; (b) by Government importation for milling purposes totalling 1,791,696 bushels, and by merchants' importations of fowl-wheat of 355,601 bushels, of which approximately 250,000 bushels were admitted duty-free. In addition, of course, a considerable quantity of flour was imported throughout the year, this averaging about 1,000 tons per month, or approximately one-eleventh part of the national requirements of flour. As this importation of flour during 1925-26 would represent nearly 600,000 bushels of wheat, the total annual wheat requirements of the Dominion were again shown to be approximately 8,250,000 bushels. The foregoing deals generally with the subject in relation to the year 1925-26. During that year, however, a very great deal of attention has been given to the matter of the future policy in regard to wheat-supplies, and more particularly with reference to the year 1926-27. In May, 1925, a conference of millers and growers agreed that millers would pay for wheat to be harvested in 1926 prices based on 6s. 5d., 6s. 7d., and 6s. 9d., for Tuscan, Hunter's, and Velvet varieties respectively, free on board Lyttelton, Timaru, or Oamaru, sacks extra. The Government ratified this agreement, and gave an indication that, if necessary, an embargo upon importation of wheat and flour in 1926 would be arranged, it being quite understood that the offer of millers wai dependent upon there being no serious fall in world market prices. The prices arranged were apparently acceptable to growers, who in general made every endeavour to grow wheat. An exceptionally wet winter and spring, however, made the preparation and sowing of large areas quite impossible, and when the planting season was over it was known that an area of approximately only 160,000 acres had been sown. This even at a satisfactory average yield would produce little more than half the annual requirements. A conference of growers, at which millers were represented, decided in early December last to request that the Government take control of the market during the season 1926-27, purchasing wheat from growers at the prices arranged in May, reselling to millers, and importing the necessary additional quantities from overseas. This would, of course, have involved the reimposition of an embargo against importations of wheat and flour. In order that growers might be assured of the prices which they had expected to receive, the Government agreed to adopt control on the lines pursued some years ago. The Department acted in this matter under the direction of the Minister of Agriculture, and steps preliminary to the carrying-out of control were taken in December and January. In those months, however, apparently as a result of continued high prices in overseas markets, growers and merchants expressed a desire to reconsider the matter, and after considerable discussion a request was made to Government to refrain from adopting control and to allow the market to take its own coir, se behind the protection of the tariff. Government accordingly did not proceed with control, and preliminary action in that direction was cancelled. At the same time, while agreeing to a free market with duties," it was decided that wheat for consumption as fowlfood should be admitted, under permit, free of duty. The Department has therefore, in conjuction with the Customs Department, issued permits to recognized produce-merchants, and under the policy laid down will continue to do so until the harvest of 1927 is available. Since this decision was announced there has been, as in 1925, a conflict of opinion as to the true value of wheat which growers have available. Millers have offered for the several varieties 6s. Bd., 6s. 10d., and 75., f.0.b., sacks extra. Growers consider these prices are at least 4d. below fair market value, and in many instances have refused to sell below a basis of 7s. per bushel for Tuscan wheat. Allegedly, under necessity of continuing operations, some millers are reported to have paid growers' prices, while other mills are said to be prepared to close down if supplies cannot be bought on a basis of 6s. Bd. for Tuscan. During the discussion of the matter a considerable amount of attention has been paid to the general tariff question of protecting the wheat-growing and flour-milling industries, and considerable misunderstanding of the facts has been evident. It is not proposed that the matter should be dealt with extensively in this report, but a few outstanding facts may be mentioned. The Government has expressed on several occasions the opinion that it is in the best national interests that New Zealand should be self-supporting in its supply of wheat and wheat-products. The recognized method to ensure that supply is by imposition of Customs duties, and this course has been adopted,

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