3: 1 SE i q AP 11 Qe + e d “2 Q 1S 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,