State Duties on Wheat Must Fail

Sun (Auckland), Volume II, Issue 356, 17 May 1928, Page 16

State Duties on Wheat Must Fail

CRITICISM BY ECONOMIST RIGID CROP IMPOSSIBLE Because the success of the Government’s sliding scale of wheat duties depends largely upon the restriction of crop to New Zealand requirements, it is considered by Mr. H. R. Rodwell, lecturer in economics at the Auckland University College, that the scheme will effect no permanent good either to producer or to the consumer. His view is that any attempt by wheat growers to manipulate the market with or without the tariff—is doomed to failure. Mr. Rodwell substantiated his contention before members of the Economic Society of Australia and New Zealand last evening, when he mentioned a criticism of the State’s endeavour to stabilise the country’s wheat market. The object of the sliding scale of duties, he said, was to cut the New Zealand wheat market off from the world market, and thus prevent changes in value outside having any effect on values inside. For success to attend that effort, there must not be more wheat produced in New Zealand than was required for local consumption. If there was a surplus for export, there would be no wheat or flour imported, and, therefore, the scale would be inoperative and prices of wheat in New Zealand would fluctuate in accordance with conditions of supply and demand. ELASTIC PRODUCTION Th© area under wheat fluctuated considerably from year to year, and an increase was inevitable if some special circumstance arose to make wheat production more attractive than other types of farming. Such an attraction was most certainly offered in the stabilising of the price of wheat at 6s a bushel. The Government Statistician calculated that 8,250,000 bushels of wheat was the yearly consumption in New Zealand, which an average yield of 29 bushels to the acre, required 284,000 acres. That area had been on several occasions exceeded, and the production this year might leave a surplus. The formation of a wheat pool might go far toward a maintenance of the internal price, and a disposal of the surplus overseas; but the lecturer foresaw difficulties in such a proposal. The first task of a pool would be to gain control of all the wheat produced in New Zealand, but that would be extraordinarily difficult. It would be very difficult to organise all the farmers, as many were obliged to merchants who provided them with credit on condition that they bought and sold through those firms. The financing of the scheme would present further difficulties, especially if any considerable portion of the crop was held for any length of time. If an attempt were made to finance through the intermediate credit scheme, a nice point in ethics would arise whether it was right to use .public money, to keep up the price of

any commodity against the public. However, a reduction in land values was necessary before the wheat industry could get back to a sound footing, and the rapidity with which that readjustment took place would be an important factor in stabilisation.