PRICE OF THE LOAF.

Taranaki Daily News, 4 December 1920, Page 6

PRICE OF THE LOAF.

PROSPECTS FOR NEXT YEAR. TARANAKI MERCHANT'S VIEWS. "How will the reported fall in wheat prices in America affect us in New Zealand'/," was a question put by a Daily News reporter to a New Plymouth mer- • chant closely in touch with the flour position. In reply it was stated that flour prices here next year cannot be less than present rates whatever happens to the markets of the world, because the Government has guaranteed wheat growers a minimum of 7s 6d a bushel, which means that the present subsidy of £4 7s fld a ton on flour must be maintained to keep flour at to-day's prices ( £l6 103 f.0.b.), and the opinion is held that the subsidy may be withdrawn and the consumer called upon to pay the advance.

"It is in forecasting how much more than to-day'sqmce we may have to pay that the world's values become of importance," added the merchant, "because the growers have been promised that if the value of Australian wheat for export in February is higher than the 7s 6d minimum, such export value will be the New Zealand price for the season, and if it is necessary to import wheat the growers will be entitled to be paid a rate equal to the landed cost of the imported wheat."

"Will New Zealand have to import?" "That cannot be stated yet, but apparently the area under wheat is about 214,000 acres, which may be expected to produce 25 bushels an acre on the average, or under 5J million bushels. Our consumption, including fowl and seed wheat, may be about 7 millions, and if so importation will be necessary." The merchant added that the price mentioned in the Canadian cable (5s 4d) is presumably in bulk, so cost of packing, transportation to the seaboard, freight, insurance, exchange, duty, loss in conversion, etc., would bring the landed cost up much higher than appears at first glance, and it is fairly safe to conclude that if wheat has to be imported it will be from Australia. The position there is that the New South Wales Government has guaranteed growers 5s a bushel for their crop, and the Victorian Government 7s Od a bushel to their wheat producers. AU the wheat will be sold through the Federal Government pool, which has announced that, tie selling price for home consumption is to be 9s a bushel, and the cables yesterday indicate either that the whole "or a very large portion of the exportable surplus lias been sold at 9s f.o.b. Assuming that pollard and bran will pay for the cost of the manufacture, the 'cost of a ton of flour is equal roughly to the cost of .48 bushels of wheat, and to this must be added the millers' selling charges and profit.

Next year's price mav then be:—(])' '■ The present basis is £lO 10s f.o.b. T</ enable this to be the Government must continue the present subsidy and the Australian market recede Is 6d per bushel on to-day's prices. This price appears unlikely. (2) A price 'based on the Australian rate of Os, with the present subsidy continuing. This would mean a rise of £3 12s plus commissions, profits, and extra expenses, bring- 1 ing the selling price of flour to about £2l f.o.b. (3) Assuming that we June to import part of our wheat require ments from Australia at a landed cost of JOs per bushel, with the present Government subsidy continuing, the price of flour would be übout £23 f.o.b. ! (4) On the same assumption as above, without any Government subsidy, the price of flour landed at New Plymouth will be nearly £3O per ton. (5) Tliere is the possibility of the Government increasing the subsidy to an amount sufficient to counteract any rises, but this seems hardly likely. As regards supplies to-day, there appears to be ample for immediate requirements, and the Board of Trade appatently 'considers there' k sufficient wheat in the country to last until the new harvest, but as to whether their forecast is correct is a matter of opinion. "But don't let that Canadian cable give you visions of a cheaper loaf, or you will be disappointed," added the merchant.