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Wheat (1) - Part 1

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946. In Canada those who own the elevators make advances on the wheat?—Yes, sometimes to the disadvantage of the farmer.
 
946. In Canada those who own the elevators make advances on the wheat?—Yes, sometimes to the disadvantage of the farmer.
  
947. If a co-operative society were formed to erect and control the elevator, would it not be necessary that the society should be so financially strong that if required to finance the farmers, the society could do so?—Not necessarily. If we had some means by which the certificate, which is issued directly the wheat is delivered to an elevator, can be recognised at its face value. I am i nfavour of co-operative elevators.
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947. If a co-operative society were formed to erect and control the elevator, would it not be necessary that the society should be so financially strong that if required to finance the farmers, the society could do so?—Not necessarily. If we had some means by which the certificate, which is issued directly the wheat is delivered to an elevator, can be recognised at its face value. I am in favour of co-operative elevators.
  
 
948. In Canada only one-half the value of the wheat stored is advanced?—I am not aware of that.
 
948. In Canada only one-half the value of the wheat stored is advanced?—I am not aware of that.

Revision as of 04:30:44, May 11, 2018

to bulk handling?—Yes, that is why I said that in view of the experience we have had in connection with the Pool, I am inclined to favour the owning and operating of country elevators by co-operative companies. But as it is so large a question, I reserve the right to alter my opinion if after consideration it can be shown that there are some insuperable difficulties connected with the co-operative scheme.

945. Do you think that if these elevators were held by co-operative bodies there would be any difficulty in our financial institutions advancing on certificates without Government guarantee?—Yes, the only certificate that will be recognised will be a Government certificate. We do not want the documents to have merely a local value.

946. In Canada those who own the elevators make advances on the wheat?—Yes, sometimes to the disadvantage of the farmer.

947. If a co-operative society were formed to erect and control the elevator, would it not be necessary that the society should be so financially strong that if required to finance the farmers, the society could do so?—Not necessarily. If we had some means by which the certificate, which is issued directly the wheat is delivered to an elevator, can be recognised at its face value. I am in favour of co-operative elevators.

948. In Canada only one-half the value of the wheat stored is advanced?—I am not aware of that.

949. There the farmer has the right to a storage charge upon which he can draw an advance from the company on the certificate given by the Government officer, or he can sell outright?—Frequently the owners of the elevator buy outright from the farmer.

950. Do you think a co-operative company here could take on this work without being backed by the Government?—I do not think a co-operative company could undertake the control, because they could not issue certificates.

951. But in Canada the certificate is issued by the Government inspector. Could not the same thing be done here?—Yes, that is exactly what we want. But in Canada the Government certificate is not issued when the farmer delivers his wheat; that is a private certificate by the local elevator company, which has only a local value, or such value extended in accordance with the name and standing of the local elevator. What I think should be done here is that directly the farmer delivers his wheat to the country elevator. the certificate shall have the endorsement of the Government so that the farmer shall not be at the mercy of local financiers, but can get the value of his certificate in any market of the Commonwealth, or indeed of the world.

952. You mean that the certificate should be backed up by a Government guarantee?—Yes, a guarantee as to quality. The Government does not guarantee any particular price. Take an instance; a farmer may deliver a thousand bushels of No. 1 Strong White. He will get a certificate from the elevator accordingly. The quotation for that grade to-day is, say, 4s. 6d. The farmer can sell his certificate for 4s. 6d. a bushel or he can lodge it as a collateral security with the bank. It means that the Government guarantee to deliver a thousand bushels of that quality wheat out of that elevator when called upon to do so, but it does not mean that the Government guarantee that the farmer will get 4s. 6d., because next week that wheat may be down to 4s. 5d.

953. In Victoria the farmer is allowed to negotiate his certificate; here he is not so permitted?—I do not think it is advisable.

954. Yet you think it would be advisable to let him sell his certificate under the elevator system?—Because we are then back to normal conditions. In my opinion it is altogether inadvisable that there should be any speculation in certificates at such a time as the present, but when conditions are again normal it will be quite a different thing.

955. Do you think that other parts of the world would purchase certificates issued by a Government inspector in Western Australia when the financial institutions of this State would not do it?—Yes, I am quite sure that Louis Dreyfus & Co. or any of the British or Continental firms would purchase them.

956. Do you not think they would reduce the price considerably seeing that they had been turned down by local institutions?—No, the local institutions do not want our wheat. If we could consume all our wheat locally, there would be no need for the Pool.

957. Do you think a Government certificate would be necessary in the case of Bell & Co., Darling & Son, and other similar firms?—It is not necessary, because they are on the spot, but it would be an advantage because they would then know what they are buying. At present, under the bag system, they deal largely with a commodity of unknown value and in consequence they make allowance for it. Under the proposed system it would not be necessary to make such an allowance. You take a sample and assess its value, and perhaps then find that it is not as good as it looks.

958. You advocate the carrying out of the bulk handling system co-operatively with a Government certificate on which any person could trade, without any financial guarantee from the Government?—There would be no need to have any financial guarantee in normal times.

959. Have you ever been to Canada?—No.

960. Have you seen any silos constructed out of timber?—Yes.

961. Do you think they would be suitable for Western Australia?—They will hold wheat and store wheat and can be used for bulk handling purposes. I do not think they are suitable because the cost of upkeep is too great. A report has already been written detailing the reasons why Mr. Hammond and I have changed our opinions in regard to timber silos. That report is available.

962. By Mr. BROWN: Was that for the permanent storage of wheat in bulk?—It was for this storage that we not require also for permanent storage. The point which influenced my mind was the cost of insurance. At first it did not appear to be great, but when we found that the increased rate of insurance chargeable on the timber silos also applied to the contents our calculations were upset.

963.By the CHAIRMAN: From whom did you get your insurance quote?—First of all from Mr. Carter, who gave us the rates out of some technical periodical. The rates applied to Canada. The Canadian silos are built of soft wood, which is more inflammable than hard wood, but this was off-set by the fact that in Canada these soft wood silos were built there was an ample supply of water, whereas in our dry areas there would be none. The construction of soft wood silos was comparatively easy as against the construction of hard wood silos, into which we could not drive nails without boring. In view of these circumstances we agreed that timber silos had to give way to concrete silos.

964. You got no quotes from the insurance companies?—We did. We got a quote through Mr. Basil Murray, who was then general manager of the Victorian Insurance Co. The Fire Underwriters' Association gave us a quote.

965. A very large number of timber silos are built in Canada?—Yes. I have seen this week that the proportion is rapidly decreasing, and that the tendency now is in favour of concrete.

966. By Mr. BROWN: Have you seen the silos at the Perth mills?—Yes. It was because of these that I was at first a firm advocate of timber silos.

967. By the CHAIRMAN: You were on the committee which was previously appointed in connection with the construction of silos and elevators?—The bulk handling advisory committee, yes.

968. Did you then make inquiries in regard to shipping?—Yes. We wrote to practically every shipping company trading in Australia to get information on the point. We obtained replies from all. Their report was that if bulk wheat was available the ships would be available. I met the captains of the first four ships carrying Scheme wheat. They were all men who had handled bulk wheat from the Argentines, and they asked me why we still kept to the bag system. The captain of one boat told me that on one occasion he had loaded his boat and discharged it in a few number of lay days than was provided for. He told me in the charter party for loading only he had received a considerable sum as a result of saving his lay days.

969. Do you think the difference in the time between the Argentines and Australia would affect the position?—It would be more in favour of bulk handling.