merchants, or at the local mill. Oats intended for human food are not treated by the farmer, but are subjected off the farm to the essential processes of rolling or milling.

51. Diagram A shows the channels of distribution of cereals, flour and bread in this country.

IV.

MARKETING AND DISTRIBUTIVE COSTS.

52. The costs incurred by the farmer in marketing his grain are the hiring or provision of sacks, market tolls or fees, if any, the

cost of transport from the farm to the buyer's premises or to the railway station, and the merchant's commission if the grain is sold on a commission basis. In cases where the grain is sold to the merchant outright, the latter's profit is a distributive as opposed to a marketing charge. The cost of the transport of cereals by rail mainly concerns that section of this report which deals with millers' costs and charges, and consideration is reserved until a later stage accordingly.

(A) HIRING OR PROVISION OF SACKS.

53. We have stated that the practice with regard to the provision of sacks varies in different parts of the country. In the Eastern and Midland counties, we are informed, the cost is usually borne by the buyer who provides the sacks. In Lancashire, the same arrangement obtains, though the supply of returnable sacks by the farmer is not uncommon. The latter practice is also found, to some extent, in Shropshire. Elsewhere, the general practice appears to be for farmers to hire from sackhiring companies, including the railway companies, the sacks required for marketing purposes. A charge of 1d. per sack is made for each journey. Parties hiring sacks for the conveyance of grain by railway are allowed to have them six days (inclusive of the days of hire and return) for the purpose of filling and returning to the station whence obtained. If detained beyond six days, demurrage is charged at the rate of d. per sack per week, such demurrage commencing upon the expiry of the six days. From 1st March, 1917, until June 30th, 1923, the time allowed to consignees to empty and return the sacks was 14 days (including Sundays) from the date the consignment was actually forwarded from the station; but on and from the 2nd July, 1923, the period was extended to 21 days (including Sundays). If the sacks are detained beyond 21 days, an additional charge of Id. per sack per week is made until they are returned. The pre-war detention charge appears to have been d. per sack per week. In Scotland, when sacks belonging to the railway companies are used by farmers for carriage by motor, the charge made by the companies is ld. per sack per week.

54. The sacks mainly in use at the present time hold half a quarter of grain. We are informed by the Railway Companies that over 23 million sacks were hired out by them during the year 1922 for the conveyance of home-produced and imported grain. In addition, a large number were hired out by private sack-hiring firms, many of whom act in this matter as contractors to Railway Companies. We are also informed by the Railway Companies that the average life of a sack is 15 years, subject to approximately 70 per cent. of the stock being repaired annually. The cost of a new sack is stated to be 2s. 6d. Producers have made no complaint with regard to the hiring charges.

(B) CORN-EXCHANGE FEES.

55. These appear to be a negligible item in the marketing of cereals in so far as any charge is payable by the farmer. At most places where a corn market is held, buyers are able to rent stands, and at the majority of such markets farmers attending to sell grain are required to pay a small fee for the privilege. A few examples of the rentals and fees in operation may be noted. At Leicester, no fee is paid by farmers buying grain for their own use or selling their own grain, but if acting as agents for others a charge of 1s. a day for "walking tickets" is made. Bristol, Exeter and Colchester, are further examples of markets where no charge is ordinarily made to farmers. At Hull Corn Exchange, farmers pay a fee of 1d. on each occasion they enter the market or an annual subscription of 5s. At Ipswich, King's Lynn, Spalding and Peterborough Corn Exchanges, the fee payable by farmers is 2d. on entering the market or an annual commutation fee of 5s. At Cambridge, a similar charge is made, but is only payable after 3.30 p.m. each market day in order to encourage the early closing of the market. At Norwich and other markets, the entrance fee for sale by sample is 3d. per person. Farmers attending Newbury Corn Exchange pay 15s. per annum, or 1s. a visit if transacting business; if not transacting business, a fee of 3d. only is charged. At Salisbury, the charge is 6d. per day or 1. 1s. per annum. In the majority of cases the charge has not been increased during or since the war.

(C) TRANSPORT OFF FARM.

56. As we have shown, the general practice is for the farmer to deliver his grain to the local mill or to the nearest railway station, the sale in the latter case being free-on-rail. The cost of carting varies according to the distance. Producers' representatives calculate the cost at 18. to 2s. 6d. per quarter of grain up to a distance of 8 to 10 miles. With the development of motor transport, there is an increasing tendency for both merchants and millers in individual cases to collect grain from the farms.

(D) MERCHANT'S COMMISSION OR PROFIT.

57. Merchants selling wheat on commission for growers usually charge from 9d. to 1s. per quarter, or from 2d. to 3d. per cwt. for their services according to the quantity handled. In cases where the higher charge obtains, the merchant frequently bears the sack-hiring charges. When merchants buy outright, the margin necessarily depends upon movements in the markets, but appears to range, on the average, from 6d. to 1s. per quarter, or from 1d. to 3d. per cwt. This gross margin covers not only the market risk, but also the cost of sack-hire and storage to the extent to which these charges fall upon the merchant.

58. Barley is more difficult to handle than wheat, and losses are more frequent than in the case of other grain. As a rule, therefore, the commission charged by merchants, or the gross profit aimed at, is slightly higher, but does not on the average appear to exceed 18. per quarter or 3d. per cwt. for malting barley, though a profit of from 18. to 28. per quarter or 3d. to 6d. per cwt. is not unusual when grain is bought outright on a favourable market. We understand that in Scotland, although the rate of commission during the war years and the post-war "boom" rose to 1s. a quarter, it is now generally 6d. a quarter. When handling grinding barley, the merchant is generally satisfied with 1s. per quarter, or approximately 3d. per cwt., on re-sale. The average gross margin of profit taken by merchants when selling oats usually ranges from 6d. to 9d. per quarter, or from 2d. to 3d. per cwt. Where, however, the merchant has to carry out the dressing of the oats, the margin, we are informed, may be anything up to 2s. 6d. per quarter or 10d. per cwt., according to the condition of the individual consignment.

59. As we have stated, merchants operating in the Corn Exchanges are charged rents for the use of stands, desks or space on the market floor. The rents appear to range from 21. 28. per annum, as at Leicester, to 8l. 178. 6d. per annum as at Bristol. At Colchester, which is a large and important market, merchants are charged rents ranging from 71. 10s. to 281. per annum for separate offices within the Corn Exchange, or from 51. to 77. 108. per annum for stands. These rents represent an increase of 25 per cent. over those obtaining before the war, but, in a number of other cases, the rents charged show no increase. Even where increases have been scheduled, no alteration has been made, in many instances, in the rents charged to existing standholders. Merchants who are not standholders are charged varying fees ranging from 11. per annum at Peterborough to 21. 2s. per annum at Newbury, while a daily fee of 1s. for casual buyers is usual at a large number of markets.

60. We have no information of a comprehensive character with regard to the charges and profits of merchants before the war, but the evidence at our disposal does not suggest that there has been any excessive increase. Producers have made no complaint and are apparently satisfied that having regard to the difficult nature of the trade, the judgment and experience demanded, and the long hours that have to be worked for considerable periods at a time, the corn merchant does not derive an undue profit from his transactions. Nor does the system of distribution employed appear to be complicated or to impose a serious burden on the industry.

V. CO-OPERATION OF PRODUCERS.

61. In England and Wales, a number of farmers' co-operative societies perform the same functions as merchants, and undertake

the sale of their members' grain. Such societies are almost invariably multiple-purpose organisations, being also engaged in the collective purchase of requirements, such as seeds, fertilisers and feeding stuffs. The advantages claimed by advocates of co-operation for this method of sale, as compared with sale to a merchant, are :—

(1) The society, through its manager, is in touch with a wider range of markets than the individual producer can' hope to be, and by handling larger quantities, is able to obtain better prices and to reduce the distributive margin by selling direct to miller, maltster or consumer.

(2) The activities of a society in a district tend to raise the local level of grain prices generally.

(3) It is frequently possible to arrange inter-trading in cereals between societies in producing areas and other societies in consuming areas, thus eliminating all speculative profits and bringing producer and consumer into direct touch, the only intermediate charge being the small commission of the societies to cover cost of handling. The Preston and District Farmers' Trading Society, for example, is a large buyer of wheat and oats, taking in the course of a year 2,600 tons of wheat and 2,000 tons of oats, and constituting a good outlet for societies in grain-exporting

areas.

(4) The farmer is saved the time and trouble involved in the customary practice of offering his samples on markets. He also obtains disinterested advice as to the most opportune time to thresh and sell.

62. We have received particulars of a society that deals direct with the consumer through its own retail depôts which have been opened in urban centres for the sale of grain direct to poultry keepers and pig-feeders. This method is adopted for grain which, though possibly not top-grade, is thoroughly sound and sweet. Experience shows that if wheat, barley and oats are slightly discoloured, or show traces of "smut," a heavy discount is frequently demanded when such grain is marketed in competition with first-grade material, and it is in respect of this class of produce that the farmer has often to make sacrifices which the difference in quality does not justify. The society buys as much of this class of grain as possible, and, by selling direct to the consumer, claims to be generally in a position to give members as good a price for their second-quality cereals as could be obtained were the material first-grade and disposed of to manufacturers through the ordinary channels of trade.

63. A number of societies buy their members' grain outright, paying the price ruling in the district and relying on the competence of their manager to sell with a satisfactory margin of profit, which is eventually returned to the members in the form of bonus. We understand that this practice is not encouraged