In all countries, owing to the reduce purchasing power of the people, especially in the thickly populated industrial centres of "Europe, Asia, and America, there has been a great decline in the consumption of wheat. Organised attempts to control supplies and keep up the price have steadily added to the surplus. Many normal consumers have had to fall back on cheaper substitutes. Throughout Europe, excluding France, Italy, Spain, and Belgium, the consumption of rye to wheat is likely to cause more extensive demand for it, and consequently a more stabilised market. The average mean export value of wheat in Australia in the period 1909-1913 was 3s. 6d. a bushel. During those years the wheat available ahead of world population was 2.41 bushels. In the years 1926-28 it was 2.46 bushels and the Australian export value was 4s. 10d. a bushel. Production has increased since then, particularly in Russia, so that there would appear to be no prospect of a world shortage of wheat." "It may be assumed that prices will settle down around the values prevailing in the pre-war period, with the usual fluctuations due to seasonal conditions in the chief producing countries. As Australia produces about 3 per cent. of the world's wheat, it is futile to consider control of prices." the possibilities of future progress on the Commonwealth as a whole, and more particularly of this State, are most intimately associated with the extension of wheat growing and the growth of export trade. The only system of agriculture suitable to Western Australia involves the production of wheat (perhaps with sheep as a "side line"), so the question that has to be faced is how to make farming pay within the State, having regard to the reduced world priced ruling for the wheat produced. This can primarily be effected by exercising a far greater control over production costs than has yet been attempted. The future of the industry, assuming the world wheat price does not rise materially above the present figures, appears to be dependent upon the following three major points:—

1. Reducing all production costs.

2. Finding funds to maintain full production.

3. Easing the pressure of debt on farmers.

Costs of Production.

We have not been able to arrive at any definite figure for the cost of production per bushel of wheat because costs vary greatly according to circumstances. Many attempts appear to have been made to arrive at such a figure. Investigation shows that the estimates range between 2s. 6d. per bushel and 6d. per bushel. In this State it appears a properly conservative estimate to assume that the bare cost of production is 3s. per bushel f.o.b. The average yield of wheat in this State for the ten years 1919-1929 is 10.87 bushels per acre. It is considered that the wheat farmer is amongst the most industrious of landowners. He works long hours and his living conditions are often most primitive. He cultivates, puts in, and takes off his crop on an economical basis. Yet by reason of the fall in values in world wheat prices, coupled with high production costs in Australia, he is confronted with the position that costs him 3s. to produce a bushel of wheat which is worth on present figures 2s. per bushel f.o.b. or, in other words, a loss of 1s. per bushel.

REDUCTION OF COSTS.

The following proposals for the reduction of farmers' costs are not dependent upon Part 1., which is a plan to deal with the liquidation of farmers' debts, but applies, for the most part, equally to farmers outside as inside the proposed plan. The farmers' costs are so bound up in public policy that it is impossible to deal with them sincerely without in some degree criticising existing legislation. As much of the legislation which has pressed so heavily upon the farmers and is likely to press even more heavily in the future, is Federal in its character, it is practically beyond our control. Therefore, we rather concentrate upon those matters which are under the control of the State Government, whilst not neglecting entirely the disabilities due to Federal policy.

Customs Tariff.—Whilst much of made of the effect of customs taxes imposed upon farm machinery and the farmers' requirements, this is far from the sum total he suffers from our Federal fiscal policy. These taxes, which fall upon his plant, his bags, much that he eats and wears, have been the subject of much agitation from the primary producers through the Commonwealth and we do not in any way belittle it, but would add our voice to theirs in protest. At the same time, we desire to draw the Commission's attention to the fact that these taxes are much more in the nature of a direct tax upon the farmer than are the customs duties imposed upon the community in general. It is these indirect taxed which so inflate the farmer's costs without his realising to what extent. All taxes imposed at the Customs House become to all intents and purposes an element of the cost of the goods. As wholesale profit and retail profit are estimated and added to cost on a percentage basis, it will be realised that the higher customs the higher is the profit, retail and wholesale. The actual cost of production plus the customs duty, plus wholesale profit on cost, plus customs duty, plus retail profit on all these several items becomes the price of the article. The price of the article becomes an element in the cost of living. The wages of the community are assumed and awarded upon the cost of living, therefore any advance in the cost of living due to these causes will be accompanied by an advance in wages. As an advance in wages becomes an increase in the cost of production, the sheltered industries are able to obtain a further advance in customs duties, and so the merry game goes on, at the farmers' expense. It will be seen that neither the wholesaler, the retailer, the consumer-worker, nor the consumer-manufacturer bears the tax.

Investigation after investigation has proved only too conclusively that the cost of this unscientific method of raising revenue is borne nearly wholly by those who have to sell their goods in the open markets of the world (these are mostly primary producers, and wheat farmers form a very large proportion of them) and by those with fixed incomes. This shifting of taxation from person to person till it ultimately falls upon the farmer and is paid by him, amounts to a much heavier load that the more apparent load of the tax upon goods he requires on his farm. So, while advocating a reduction or removal of all customs duties on those articles which are necessary to the farmers, we also advocate a substantial reduction of all customs duties which make for a higher cost of living.

Freights.—According to figures supplied to us from a reliable source, the wheat consumed in the State amounts to two and a half million bushels. Production in 1930-31 amounted to between 51 and 53 million bushels. The cost of transporting the crop from country siding to the port of shipment as at February 16th was 27 per cent. of the value of the wheat at port. The total cost was £1,500,000. The proportion of the cost of transport to the 1929-30 crop was 9.7 per cent. This year shows an increase of 17.7 per cent.

The average return to growers in the 1924-25 season was £3 11s. 1d. per acre. The average return to the grower in the 1930-31 season is 22s. 2d. per acre.

The fact that freights to-day amount to 27 per cent. of the value of the crop at the port, must convince us that here is an item of so great importance to the industry that it is imperative that freights be reduced to the lowest possible figure. It will at once be advanced in reply that our railways do not pay. Though this may be granted, it does not follow that the responsibility for making them pay rests solely with the farmer. Too high freights may have two effects. Too high freights may divert a proportion of the traffic to the roads, in which case there will be an even greater loss on the railways, coupled with an increased cost for the upkeep of the roads without any compensating increase in revenue. Too high freights may check, or event kill the industry, making for an even greater loss on our railways, to which would be added a very large loss of general revenue.

The city possesses the advantage of practically paying no freights; while the farmers pay nearly all the freights. When goods are sent from the city to the farmers, the farmer pays the freight. When the farmer sends his product to the city, the farmer again pays the freight. Yet the city is as much, if not more so, advantaged by the railway system as the farmer. The city's only contribution towards the railway is its contribution to that portion of general revenue appropriated to meet the loss on the railways. While the