H.-44.

AGRICULTURAL-LIME INVESTIGATION. The Committee appointed by the Hon. the Minister of Agriculture to inquire into this industry completed its report to the Government during the year. This Committee, under the chairmanship of Mr. G. A. Holmes, Department of Agriculture, was representative of all interests farming, manufacturing, and employees —while the Government was represented hy the Chairman and Mr. N. E. Dalmer, of the Department of Industries and Commerce. Prior to making its report the Committee inspected most of the plants in the Dominion and took evidence from all interested parties. TOBACCO INDUSTRY. The Department has continued to remain closely associated, with all matters relating to the development of the tobacco growing and manufacturing industry, this association being particularly close by reason of the Chairman and the Secretary of the Tobacco Board, Messrs. L. J. Schmitt and H. L. Wise respectively, being also officers of the Department. The Government and the Board have spared no effort to bring to fruition a long-range plan for the industry, and it is very pleasing to be able to report that this was fully implemented during 1939. The plan has included the raising of prices to the present level —namely, minimum average basic prices of Is. lOid. per pound for flue-cured and Is. 7id. per pound for air-dried leaf, the fixing of a minumum price below which leaf cannot be sold or purchased, the establishment of a tobacco-research station, the formulation of a comprehensive programme of research, and the adoption of minimum grades of leaf acceptable to manufacturers. Import control may also be regarded as an integral part of the long-range plan for the industry. By all these meaus both the growing and manufacture of leaf in New Zealand have been directly encouraged by the Government. As mentioned in last year's annual report, the Government decided that arrangements be made with manufacturers for payment to growers of a minimum average price of Is. IOJd. and Is. 7£d. per pound for flue-cured and air-dried leaf respectively of the 1939 crop on the understanding that they be recouped in a form to be finalized later to the extent of the additional cost of leaf involved. As manufacturers were prepared to pay on the basis of Is. Bd. per pound and Is. sd. per pound for flue-cured and air-dried leaf respectively, these arrangements meant that the Government was assisting growers to the extent of 2Jd. per pound. The method that the Government finally evolved was an increase in Customs duties on imported tobacco, cigarettes, and cigars, and a similar increase on tobacco, cigarettes, and cigars manufactured locally. The increase was to the extent of 25 per cent, of the duties previously payable. The new duties came into operation on the 27th September, 1939. The adjustment of duties enabled manufacturers to recoup themselves for the additional outlay of 2 Jd. per pound and at the same time provided a basis for the continuation of the prices of raw leaf at the figures mentioned. This action on the part of the Government, as already indicated, brought to fruition the plan for the stabilization of the industry. By collaboration between the Government and the Board prices have now been raised successively each year since the 1935-36 season. In that season, which was immediately prior to the setting-up of the Board, prices for flue-cured leaf averaged from Is. sd. to Is. 6d. per pound, so that it will be seen that the prices stabilized in terms of the long-range plan for the industry are substantially in advance of the average obtained prior to the setting-up of the Board. At a recent meeting the Board recommended to the Government that the minimum average prices to be paid by all manufacturers for the 1939-10 tobacco crop should be on the same basis as in the preceding year, and that regulations to this effect should be introduced. The question of the issue of such regulations is receiving the consideration of the Government at the present time, but it is understood that manufacturers will in any case pay for the 1940 crop on the basis mentioned. The Government has each year since 1936 fixed a minimum price below which tobacco leaf cannot be sold or purchased. For the 1936 season the minimum was fixed at Is. per pound, but in the 1937 and following seasons the minimum was increased to Is. 2d. per pound. For the 1939-40 buying season which recently commenced the mimimum was again fixed at Is. 2d. per pound, this being done by the Board of Trade (Raw Tobacco Price) Regulations 1940. The purpose of the regulations is to prevent the sale and purchase of leaf at very low and uneconomic prices that are unpayable to the growers. The regulations are designed primarily in the interests of, and for the protection of, the growers, but they have also been of definite advantage to manufacturers inasmuch as they have protected them from unfair competition which would otherwise have been created by the sale of manufactured tobacco and cigatettes made from leaf bought at very low prices that were unpayable to the growers. As in previous regulations, the 1940 regulations include a clause authorizing the Minister of Industries and Commerce, in any case where he considers it proper so to do, to permit the sale and purchase of raw tobacco at a price less than the price fixed by the regulations. The object of this clause is to enable leaf which is unfit for manufacture into tobacco and cigarettes and which would otherwise be rejected and destroyed to be used for manufacture into insecticides. The regulations remain in force until and including the 31st March, 1941. A cause of difficulty in the past has arisen from the fact that all leaf has not been purchased in the district where it is grown. The grower likes to witness the sale of his leaf and to be present when the value of his leaf is appraised and the price determined. Difficulties which have arisen in this connection should be obviated during the purchase of the 1940 crop, because arrangements have been

25