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the profits to be derived from it will 
increase also; and land in the margin 
between intensive and extensive 
secupation will tend to fall into the 
‘ormer catecorv. either because the 
F. MARKETING 
1. In paragraph 70 (12) we say 
that— 
“ Most vexed and most impor- 
tant of all Australian questions 
is that of the cost of production 
with its effect upon export indus- 
ries and of the combined effects of 
the Tariff and the Arbitration 
Acts.” 
Australia must look for her future 
development in great measure to re- 
munerative exports. To-day wool and 
wheat are the principal exports which 
show a profitable return. 
9. Costs have seriously increased in 
wool and wheat production, but the 
strong demand for wool and the highly 
organized and mechanized production 
of wheat still permit of clear profits 
being obtained from their sale. As to 
minerals, only the richest mines can 
be worked under Australian condi- 
tions; we have been told that there 
are many properties which would be 
considered of high grade in countries 
such as Canada and the United States 
of America, which are left unworked 
in Australia owing to the high costs 
of operation. 
3. A great variety of agricultural 
products has been produced to meet 
the demand of the home market. In 
most cases this demand has been arti- 
ficially retained for the home produc 
tion by a system of tariffs on im- 
ports, with a consequent increases in 
the cost of living. 
4. A great problem facing Australia 
when production overtakes the home 
demand and a surplus is available, and 
this surplus has been produced at a 
higher cost than in other exporting 
countries, is that of marketing such 
surplus. So long as it is but a small 
percentage of the total production, 
the difficulty can be and has been met 
by schemes for assistance from within 
the industry itself or from the Govern- 
ment. When the surplus assumes large 
proportions, then the problem of 
marketing becomes greatly intensified 
and even critical because the home 
sceupier will turn from sheep or cattle 
aising to agriculiure, or because the 
ising value and price of land will in- 
luce him to sell his ground for that 
yurpose. 
«ND DISTRIBUTION. 
sonsumer may be unwilling to bear the 
sost imposed on him to assist the over- 
seas market. The surplus of produc- 
-ion has been intensified by far reach- 
ng developmental schemes which have 
yeen embarked upon without due con- 
sideration of the question of how the 
esulting increase in production can 
ne marketed. Improved and scientific 
nethods of production, although they 
will reduce costs, will at the same time 
sermit of a bigger output being pro- 
luced on the same areas. 
5. Nevertheless, the first step is to 
educe the cost of production. This 
reed is common to all industries in 
\ustralia and is dealt with in our 
nain report. It is often said that 
she price of agricultural land is too 
1igh and that this high price is an 
mportant element in high costs of 
yroduction. But though there is an 
wonomic ‘lag’ in land prices, so 
shat they move slowly, in the long run 
shey must reflect what a willing seller 
vill accept from a willing buyer. No 
doubt the grant of subsidies, direct 
>r indirect, to the products of the 
land tends to raise land prices, but 
shen the farmer gets the benefit of 
he subsidies in relief of his costs of 
yroduction. No doubt high prices, 
serhaps too high prices, have been 
sharged for land on which heavy ex- 
senditure for irrigation and the like 
1as been incurred. But they cannot 
emain permanently too high. If they 
sre not justified by the profits which 
san be made from the land they must 
ome down. Generally, high land 
yrices are an effect of high profits, no 
ess than a cause of high costs of nro- 
{uction from land. 
6. As the producer is usually in a 
imall way of business, it is necessary 
hat he should join with his neigh- 
sours for the co-operative handling of 
iis product, or for its disposal through 
some central organization. We have 
investigated a number of ec-operative 
activities; we realize that all profits 
accruing return to the co-operators,