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Wednesday, 21 October 1931

Mr GIBBONS (Calare) .-This bill is the remnant of a sustained and sincere effort by the Government to assist the wheat-growers. The Deputy Leader of the Opposition (Mr. Latham) stated that he had recently visited the wheat belts, and familiarized himself with the conditions obtaining there. I believe that if he had taken that trip prior to the introduction of the legislation providing for the establishment of an. Australian-wide pool, the measure would have been accepted by the Senate. The honorable gentleman at last appreciates the revolutionary transformation in the general conditions surrounding the growing and marketing of wheat that is needed to confer any permanent benefit on the growers. That has been insisted on by members supporting the Government throughout this Parliament, and because the Government realized the conditions of the farmers it proposed the introduction of a pooling system. No other method is practicable in the existing circumstances of the industry. This bill must be read in conjunction with another measure to be introduced later: in addition, regulations will have to be drafted to safeguard the interests of the general community. It will be very difficult to administer the bill in such a way as to give a sense of security to the people who will have to repay the money that if to be advanced to the farmers. First the f.o.b. price must be defined. In the light of my practical experience, both as a farmer and as a purchaser and distributor of wheat, I do not think that the human mind can conceive a method by which a uniform f.o.b. price for wheat throughout Australia can be fixed or can devise machinery to police the collection and. distribution of wheat in such a way as adequately to secure the interests of all concerned. I am not suggesting that there will be actual dishonesty, but proper business practices will have to be adopted to meet the changing conditions that may develop as a result of this legislation. The Combined intellects of honorable members may at the committee stage devise satisfactory amendments, but it would be advisable to point out now the inconsistencies inevitable in a measure to control the collection and sale of wheat other than through the agency of a pool. Suppose we had to fix the f.o.b. price of wheat in Australia to-day. In Adelaide at 4.30 p.m. it was 2s. 6$d.; at Manila, New South Wales, purchases were made at 2s. 11½d. ; in the country small parcels of bagged wheat were sold at 2s. 8d., and in Melbourne sales were effected at 2s. lOd. How then is it possible to fix for a day or a week a uniform price throughout the Commonwealth? An international buying agency, such as Louis Dreyfus and Company, fixes it3 prices from day to day in accordance with its sales and charters. The firm may lose £50 on a parcel of wheat for a customer in- one country, and make £300 on another charter to a different part of the world; so it fixes its f.o.b. price on the average results1 of its sales over a period.

Mr PARKER MOLONEY (HUME, NEW SOUTH WALES) - The licensee has to show on the certificate the actual price paid. It matters not if the price varies in the different States.

Mr GIBBONS - I am pointing out the inconsistencies that may arise and cause trouble, through the absence of a pooling system. Suppose that the f.o.b. price is definitely indicated on the docket given to- the farmer on delivery of his wheat at the railway siding. The price paid by one buyer may be 2s. 8d., and by another buyer 2s. lOd. The bounty will provide a margin of 6d. for buyers to play with, and business firms will naturally safeguard their own interests. A minimum price will be fixed, and that minimum will become the f.o.b. price. Therefore, the amount of money to be found by the Government within the limit of £3,000,000, to sustain that price, will be the minimum price fixed by the associated buyers. So far as the price paid to the farmer is concerned, competition will be dead. Let us consider the case of a wheat buyer operating on the basis of Liverpool or Chicago quotations from time to time. A transaction completed this morning between the United States of America and France has relieved tho former of 50,000,000 bushels of its surplus wheat. That has caused an advance in options in America up to June next. In the Liverpool wheat exchange there has been a definite advance. in options up to next March. An Australian firm with international ramifications would operate in accordance with those developments. Therefore, some sense of security must be given. Those firms which deal in options in America and England have been in operation for a long time, and their judgment of the trend of the market may be accepted as fairly reliable. In the light of their operations it is reasonable to believe that wheat values have a tendency to rise, apart from possible fluctuations in the exchange. That is confirmed not only by the advance in options in the United States of America, the United Kingdom, and Canada, but also by the fact that considerable inquiries have been received from different parts of the world, particularly Belfast, by Australian millers for quantities of flour, pollard and bran.

Mr Hill - If that is so, this bounty will never operate.

Mr GIBBONS - I am leading up to that point. It is reasonable for one who studies the movements of wheat to take an optimistic view of future price levels. The Government has announced that the farmers are to be assisted to the amount of £3,000,000, but under the terms of this bill the people of Australia may not be called upon to find any portion of that sum. The farmers have continued their industry, despite great difficulties, and it would be reasonable to provide that the £3,000,000 shall be definitely paid to them to relieve them of some of the obligations they entered into in previous years to maintain their own existence and the solvency of the nation. Can any rational objection be raised to this proposal to relieve the wheat-growers? The project is a reasonable one, aand will assist farmers who have struggled against overwhelming odds to maintain their holdings. Time after time they have been subjected to disappointments and setbacks, because this Government has been unable to carry through the legislation that it brought town t to assist them. The position should be clearly defined, [f it were reasonable that £3,000,000 should be made available to assist the wheatfarmers when wheat was about 2s. 2d. a bushel, surely the fact that price levels have advanced somewhat must give a greater sense of security to the financial institutions concerned. Ninety per cent, of the wheat-farmers are at present working on restricted overdrafts. The money that they will receive under this scheme will merely relieve their position and increase their credit; it will not go into their pockets, but will find its way back to the financial institutions, which are, to-day, practically managing the majority of the farms. Actually, it would be a transfer from bank to bank. At the same time, the money would relieve farmers from the awful tension under which they are labouring, and give them a greater sense of security for the future. As price levels are rising, it appears clear that the amount that will be necessary to build up the f.o.b. price to 3s. will not be great.

Mr Maxwell - Who fixes the f.o.b. price?

Mr GIBBONS - I endeavoured to make that clear when I began my speech. It is not. definitely stated in the bill. When the measure reaches the committee stage, I shall seek specific information as to how the f.o.b. price will be established. Is it to be upon London or American parity, or upon the value of sales made to China or Japan? How can any person who is receiving wheat establish an f.o.b. price other than that which he places on the docket? In nine cases out of ten, when delivery of wheat is taken at a country railway siding or at a mill, those concerned do not know what the f.o.b. price will be, because, at the time, they are unaware what price the mill will receive for it.

Mr Maxwell - Does not the buyer put upon the docket the exact price that he pays for the wheat?

Mr GIBBONS - Yes, but it is impossible for him to write on a ticket the amount that he is going to receive for the wheat. Assume that a farmer is growing wheat at Bendigo, which he delivers to a mill 20 miles away. What would be its f.o.b. price? Again, a man who grows wheat in the Wimmera dis trict may have to transport it 300 miles to a mill. What will be his f.o.b. price?

Mr Gabb - Do not agents receive wires from their principals every day giving the price?

Mr GIBBONS - In practice, there is regular communication between agents and principals, but I contend that it is not possible for the buyer to fix at the time of purchase the f.o.b. price for the wheat that he buys.

Mr Gabb - It is merely the purchasing price, plus freight.

Mr GIBBONS - Assume that the agent buys 1,000 bushels of wheat delivered at a siding. It is then sold to a miller in Sydney, to be shipped to the East. An f.o.b. price is placed on that purchase. Another buyer may have a subagent at the same receiving depot who purchases in order to fill a contract that has been entered into with a London principal. The f.o.b. price for that purchase could be 3d. a bushel leas than that paid for the other wheat, bought on the same day at the same siding. I mention these inconsistencies to assist honorable members to deal with the bill in committee.

Mr Gabb - An f.o.b. price could be established for each port in Australia. The price could be ascertained daily.

Mr GIBBONS - Each buyer might know the f.o.b. price for his own requirements, but the price of wheat varies in different localities. I have called attention to a variation of prices in three different places in Australia, which is as much as 31/2d. a bushel. In such circumstances, how could a f.o.b. price be fixed ?

Mr Gabb - There would have to be an f.o.b. price for each port.

Mr GIBBONS - That would eventually mean that the minimum price would be the f.o.b. price.

Mr Paterson - And the bounty would be used to make up the difference.

Mr GIBBONS - Precisely. This Parliament must use its intellectual capacity to prevent such a thing from happening. If the minimum price became the f.o.b. price, buyers, by making favorable sales to different organizations, could obtain a rate of 7d. or Sd. a bushel, 6d. of which would have to be paid by the people of Australia. We must try to prevent that.

Mr PARKER MOLONEY (HUME, NEW SOUTH WALES) - Does not the (honorable member realize that the price will be stated on the sale docket?

Mr GIBBONS - I do. .

Mr PARKER MOLONEY (HUME, NEW SOUTH WALES) - Then, how can difficulty arise?

Mr GIBBONS - My practical experience in this business teaches me that you can put the purchase price on a ticket, but that will not be the average f.o.b. price obtained for the wheat. If three or more agents are operating at one receiving depot, each one can Legitimately have an f.o.b. price in accordance with his sales, and it may differ in each case. One person may buy for three different principals. He may be buying for a miller and on a particular day can offer 3d. a bushel more for that principal's requirements than he can for the needs of a shipper, as the latter may have entered into an arrangement to supply an order at a set price to some port on the other side of the world.

Again, take the f.a.q. wheat. It is possible under the existing system for a man who is selling flour to Egypt to pay as much for 59 as for f.a.q. wheat, although it may be 2 lb. under f.a.q., and yet make as much out of the transaction as if it were 61 wheat f.a.q., as he may be supplying requirements in a certain part of the world where flour milled from the lighter wheat would do. Under the proposed system of docketing it will be the responsibility of the Commonwealth to police tho act. Supposing that the f.a.q. is 61, and that there is a considerable quantity of wheat offering at 59, the milling quality of which is equal to that of the 61. Unless a uniform system of docketing is adopted, the 59 may bring a price equal to that given for slightly bleached 61, which any self-respecting farmer should put into his silo.

Mr McNeill - Assume that wheat that cost 2s. 2d. a bushel at Coonamble cost 2s. 7d. in Sydney, due to the freight. What figure would go on the ticket to indicate the f.o.b. price?

Mr GIBBONS - The Minister has shown another possible inconsistency. He has asked whether in the case of wheat grown 200 miles from the port of shipment the f.o.b. price will be fixed with due regard to the cost of railway haulage, and, if so, whether another man who grows wheat within 10 miles of the place of delivery is to be treated in the same way. In order to establish a safe f.o.b. price for f.a.q. wheat, merchants usually average their purchases over a given time. We must tie prepared to meet these possibilities if we are to safeguard the interests of the people generally.

Mr Maxwell - Will, there be any difficulty if the people concerned are honest?

Mr GIBBONS - Just as it has been found impossible to identify wheat, so it has been found impossible to prove charges of conspiracy, although it has been known that thousands of bushels of wheat have been manipulated at the places of delivery because of unhealthy business practices.

The farmers of this country have a right to expect the nation to come to their assistance to the extent of £3.000,000. Unfortunately, price levels are such that it will not be possible to find money to establish an f.o.b. price which will give farmers a sense of security. The £3,000,000 to be expended will be paid to the farmers only if the price of wheat is below 3s. a bushel f.o.b. This should not be, as the farmer should receive the £3,000,000 providing the f.o.b. price doe* not exceed the cost of production. It is only reasonable that we should do something for that section of the community which the present Government has endeavoured in various ways to assist.

Mr Archdale Parkhill - It has failed.

Mr GIBBONS - The Government has failed only because of the political power of those institutions which the honorable member represents in this House. I have spoken in this strain to-night, not because I fear any action on the part of the farmers, but because of the influence of those persons who, in the past, have controlled the collection and distribution of wheat to the detriment of the wheatgrowers and the community generally. Certain organizations are endeavouring to create a feeling of pessimism in relation to wheat values so that they may continue to make huge profits out of the wheat-growers of this country. That is what I wish to prevent.

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