1924.
V ICTOHI;•.
REPC)R1'
oF THE
ROYAL CC) ~1 :YIISS I 0 N
TO INVESTIGATE 'rH:E<J
PH ICES OF BREAD, \VHEAT, AND FLOUR.
REPORT No. 2.
OrdereAl by !M Legislative Assembly tn be printed, 9th September, 1S2·l.
~V
H
No- 15.-jls.]--14400.
J
;'l\uth"ritv,
UtHtEN, GOVImX:;tmn PlU:-iTim1 on;J..OUIJH:-;E,
BY 'ffiE HoNORA.BLE. ~JR Leo FINN
Bv.r.XARD
CussE:>:, Acting Chief Justice and Senior 1)uisnc .Judge of the
Supreme Court of Victoria, as Deputy for His Excellenoy the Governor of the State of Victoria, in
the Commonwealth of Australia, &c., &e,, &c~
To JAMES THO:tTAS SUTCLIFFE, Es,Juiro.
GREETING:
I, ::;m Lrm Fr:s~ Bgn:KARD CusSEN 1 .as Deputy for His Excellency the Governor of the State of
Victoria: in Hte Commonwealth of Anstraiia, with the advice of the Executive Couneil of such Stat<\ de0mingit expedient
that a Conun!c;slou should forthwith issue to inquire generally into the subject of the cost in the State of Victoria of
Bread and of '\VIH·at ~tnd of FJonr held or eontroll<>d hy millers or bakNS and more particularly into the cause or causes
of the recent rise or vrogressi\'n ;ises in the prices of the commoditi<_•s rPfcrred to, more especially hread,and bow far the
in('r<~us<J on ar~y oec;tsion in the price of u:ny such t;ommoditk·s tvas justifiable or othenvisc: Fu:&THEU to inquire into
1he exiBtenf·e and naJ·ur~ of a.ny combination of :Mil1ers, Flour Dealers, or Balu·n; collectively or hf>tween m~mbers
of ::my group or groups of members of any o{ the trade,; referred to amon~ thf~mseh·Po to agree to ra.ise the price of the
1'0mmoditi1·s dealt in hy t1t<:: pcrRons concerned to the prejudici' of tl1e c'msumer or be~roml what was reqllirPd to bring
in;:~ fJ.ir and r~asonable profit, aml inddentally to inttuin: ::uul ascertain approximately th.:- quantity of wheat and flour
held by partict1lar mill(•ro or hakPrb prior to the re{'ent rise in th(' prire \If bread, the price or pric0s paid individually
hy parti{mla:r millers, or geuPraUy by members of that traJe for such '\YbC'at ,an(! the rates chargctl for flour by the miller
or millers rdtrred to: ~ ow K;-{01Y YE that, reposing great trust and confi&1cnec i11 your lmmvlcdge a.nd ability; T, \'.Tith the
advice of t.h(' Exf·j_·uti\te Council of such State, lH;rt>by constitute and appoint yon, JAJ.ms THO:\L'>-:4 RcTCLll't•'E, to be a
Commissioner for the. purpos·~ afnn::~:w.ld, and I do by tlmse pn·stmts givl' and grant unto you full powr•r and authority t(l
eaU befor(' ;:ou surh person ur p<'.rsons as you shall ?udg·!~ likely to afforrl you any infonnation upon tlw subject of this
ConmtiBeion) nnd to inquire· of and c-oncern)Hg t.lw fH't>-tuis('f! hy all oth,•r lawful \'-"ays and means whatsoever. This
Commission r;h::dl continne in fnll forr<· aud virtue; and you as sueh Commiooionn shaH aw-l may from time tn time i\Hd
rtt any pla(·e or places proceed with the 0xecntlon t.heroof 1 and of every matter and tl1ing herc·in eontalued althonglt tln•
same beuot (~~mtinuod from. tlme to time hy adjournment: A:-Jn L~\~TLY 1 you arc l1erehy direcH>d \\ith a6 little df'lay a.~t
posliible to n:port hJ the (ffnT('rtJOr in Cnnr,cH of the Stat>: flf Vict.orin. nuder your hand and f!eal ynur opinion f{·sultin~
from the said inquiry.
\\1 HERRA~
Jx TES'I'D-IOXY WHKilEOP thesl' pn:s.cJ1ts are mad" pat-ent and t-he SN!l of the said State of V!doria her('nnto affixrd.
}1A:tn; ny :Ill<:, 8m T_.rw Fr~:s BEK\'Am; CGRSEXc as Deputy for Hie Excellency 1'lu:. Governor of the State of
Vict-oria, in the ConmtomvcJ.hh of Attstralia, at Mdbourue, t-his thirtieth day of Jttly 1 One thousand uinn hundred and
hrcnty~four 1 and in the fifteenth yt>ar of tl1(; reign of His )!ajcsty 1\.ing Goorge Y.
By His lt"ttdlcney's Command,
T. T\J:.INECLH'li!•:.
Entcrnl on Heemd hy me in Hcgi6ter nf Put•'ilts Hook ~o. :!'J, Jlag;: 146, this thirhc·th day nf ,July, One thousand
nlue hundred aml twenty-lour.
W. F, HEATHERSHAW,
11EPOHT No. 2.
-··---·---
To His Excellency the llonorable Sm LEO FINN BERNARD CussEN, Kni,qht Bachelor,
Acting Ohief Justice and Adrnif!!istralor of tAe State of Victoria and its Depcndettci.K'<
in the Oornmonwealth of Australia, &c., &c., &c.
MAY IT J>I,EASE
Yol'R
ExcELLENCY:
On the 25th day of August, 1!!24. T had the honour to submit to your Excellency my first
Repmt on prices of wheat. flour, and bread. That Report dealt with the questions of combinations
in the wheat, flour, and baking imhlstries, and the n1anner in which prices are regulated, and
contained my recommendations in reg!Ud thereto.
In this, my second Report, I give the re.•mlts of my investigations in regard to the prices
being charged for flour and bread and the eauseB of t.he recent progressive riseo in these
commodities. I deal first. witll flour prices.
J.-FLOD'R.
] ' r illustratetl in my first Report the ehan!!eS which have taken place in the price of
flour as the result of the pr·ice-fixing arrangement. of the Yietorian Jlill-owners' Asso(•iation. I
now proceed to gi1·e the basis upon which those pri<·es are jixerL
2. The method of fixing prices adopte;l h1· the Mill-owners' ARsociation is of such a
character as to deserve considerutio11.
] questioned the Secretary of the :bsociation (lt c·ousider;J.b[,, length in r,,fc>renee to this
mutter, and the answers I re('<eivetl may be summ<~rized a3 follows:
The price of flour is fixed by l·uking, first of all, the prk" of whot~t awl theu nmking
calculations t1S to the nmnher of bushel' of wheat reqnirerl t<) pmduee a. ton of
flonr ; the quantity and v·alue of " offal '' .. -bran and pollard-resnltin;.( from
the milling of t.lw.t wheat and the nmr,gin to eover mauufaeturing and
distribt.ting costs, and profit~. The whe;tt price tuJ;en is the \Vhear-growors'
Cmporation price, or, u8 sometimes happens, when the overseas parity changes
eonsiderably durin).!; a month. as was tllC ('a"e in .Tuly, then the prine taken ma,l"
be the overseas parity price. ·when fixing the prirc of flour the caknlatiou is
made in the following manner :--
Wheat at 5s. 3d. per lmshcl :
48 · 7 bushels of wheat. at 5s, ;j,l
[.,ss 8!l4 lb. offal at £6 per ton
£ s. d.
p•.> :J \)
2 u 8
Jlanufanuring, distributing. and prn!it
10 JO 1
:2 7 2
12 17 :3
:3. There are two f;u•tors in this ealcnlation on which T sougl1t to sceure informat.ion(a) How the number of bushel:~ requil'ecl to produc€. a ton of flour was fixed:
(b) How the mar).!;in to cover nwnuinctming costs and protit was 1hct1.
With regard to the former, I \'htS handed ll copy of a letter reeeive,L by the se(·retary of
the Flour Millers' Association from the St'cretan· tu the Fair Profits Commio;sion. That letter
was dated 12th Oct~l1er, Hl20. J was told tliat the m1rnber of hm;hels was fixed upon the
information contained in that letter. It seems remarkable that upon a matter of snel1 moment
so great an importance has been attached to that letter, for after all the letter gave what is c;tated
to be a purely arbitrarv ealculation i'! order t.o >Jsecrtain what would be the best method of
dete·rrnininy the llillili!Cr of llilslrel, of wheat gristcrl per tou of flour. The letter rloes fiOt say that
6
the Fair Profits Commission 1md actually determined that the calcufation given was accurate
or fair. Up to that time the price of flour had not been fixed by the Fair Profits Commission,
but had been left for some time at £17 per ton, whieh the Commission considered to be a fair
price, on an undertaking hy the Flour Jl.iillers' Association that prices would not be ,raised by
its members without the consent of the Commission. Two applications were made in accordance
with this agreement for permission to increase the price of flour. The first of these was made
on the 11th March, 1920, for permission to increase the price by 3s. 6d. per ton. This
application was refused. A second application was made (date not given) for pe.rmission to
charge extra when flour was delivered in 50-lb. or 25-lb. bags. This application was granted
on certain conditions. Then in August, 1920, the Fair Profits Commission found that certain
millers were charging more than the association prices for bran tmd pollard. As the Commission
had no power to take action in view of the fact that prices had not been fixed it came t{) the
eonelusion that in the interests of the consumers it "·as necessary to proclaim nmximum prices
for flour, bran, and pollard " to prevent over-charging by non·c(mforming members of the
association, to prevent enhancement of prices by · bidding,' and to bring section 11 of the Act
into operation." It does not appear that the Commission made any further investigation, as
the report states-" The Commission has in all respects adopted as maxima for Flour Millers the association's own actual priee lists and conditions."
4. The price which the Commission fixed was therefore £17 per ton for flour and £8 10s.
per ton for bran and pollard in 1\felbourne. Prices were fixed for a large num her of distriets,
and that for flour varied from £16 5s. to £17 7s. 6d., while the price of bran and pollanl varied
from £8 10s. to £9 7s. 6d. On the 16th September, 1930, the Victorian !\fill-owners' Association applied for permission to increase prices equal to 5s. per ton on flour on the grounds of
extra cost due to (a) Increase in wages.
(b) Reduced working hours.
(c) Reduced supplies of wheat.
•
On the 12th October, 1920, the Commission increased the price of bran and pollard b 0l0s. per ton, but left the priee of flour at £17 per ton. This increase in bran and pollard was
equivalent to an increase in the price of flour of 5s., the increase asked for by the Association ;
the production of bran and pollard being approximately half that of flour.
5. It was also on the 12th October that the letter already referred to was sent to the
'Mill-owners' Association by the Commission. In his evidence before me the Secretary of .the
liill-owners' Association explained that, taking the arbitrary calculation given in the letter and
the prices at which the ]'air Profits Commission had fixed flour, bran, and pollard, they arrived
at the determination of the balance which they concluded was the amount considered by the
Commission to be a fair margin to cover manufaeturing costs and profit. At that time the price
of wheat was 7s. 8d. per bushel, and the calcnlation works out as follows:£
48 · 7 bushels of wheat at 7"· Sd.
Less 44 · 7 bushels of bran and. pollard at £9 per ton
8,
18 l:l
4 ()
d.
4
(j
14 12 10
1 ton of flour at £17 per ton ..
17 0 0
The balance, £2 7s. 2d., according to the evidence given before me in this inquiry, is the margin
which the Association ha~ worked to ever since.
6. ] endeavoured to aseertain from the Secretar.y of the Association, and from individual
millers, whether any investigation had been made to determine the ad.equacy or ot,herwise of the
two fadore,..(a) The margin for manufacturing costs and profit.
(b) Bushels of wheat required to produce a ton of flour,
The Se<:retary of the Association said, with regard to (a), " All we say is that, if the Fair Profits
Commission, which was a Commission appointed by the Govemment to fix prices, found that a
margin (which is stated) was a fair margin, and that the Association apparently would be right
in working to that margin ; that so long as we kept to that margin we were justified."
7
7. The replies of the millers themselves to these qowotions were not very satisfactory; and,
consequently, I have had to fall back upon the returns submitted by them. Some difficulty
arises, even in this rourse, owing to the fact that. the costs of selling and delivering flour for local
consumption are necessarily som0what higher than the costs of selling and delivering ilonr for
expori. \Vhat this difference is I am unable to accurately determine, owing to the fact that.
accounts are not kept in such a wa!· as would enable the differenee to be readily ascertained.
8. The average of retmns from 24 millers shmvs that the milling and delivering costs,
including management expenses nnd interest at 12§ per cent. on capital, amount to £2 2s. !)d,
per ton of flour. 'l'he average of the metropolitan mills is £2 Os. 5d., and of the countr:; mills
£3 ls. lOd., but from the latter allowance has to be made for the lower cost of wheat,* which
is equal to approximately 8s. per ton. of tbe flonr produeed. This would reduce the avemge
cost in the country to £2 l:ls. lOd.
9. The StatB Royal Commission on High Prices, reporting in 1919, said :
''The estimates of mnnufaeturing and overhead charp:es per ton of flour produced,
and which have been submitted to the. Commission, vary as widelv as from £1 12s. 9d.
per ton to .£2 7s. 6d. per ton. As the difference 'betwee,:, these figtires is as much as the
best net profit per ton the miller aime at, there is a difi!culty in determining n prorluetion
cost which would give the small miller an opportunity of making modest profits without
giving the larf!er miller an excessive profit.."
As stated, the average of manufacturing and overhead eharges per ton of flour produced
is, for the metropolitan millers, £2 Os. 5d., and for the conutry millers, £2 1:3s. lOd. This shows
an increase of 7s. Sd. and 6s. 4d. respectively on the lowest and highest rates given by the High
Prices Commi~sion. These increases are accounted for by the increase in wages amounting
approximately to :35 per cent .. reduction in the uumber of hours worked from JS to 44. and
increases in freights and other eosts.
This analysis seems to eonfirm the opinion I formed during tl1e hearing of the evidence
that the amount of £2 7s. 2d., which the Mill-owners' Association adopted as their margin in
1920, was the amount neeessary to give tfw least efficient mill a profitable basis of working.
10. Coming now to a consideration of the other factor in the determination of the price
of flour as fixed bv the ::VIill-owners' Association. The returns show that on the average of town
and country mills· 47 · 5 bushels of wheat were sufficient to produce 1 ton of flour and ·ill hnBhels
of offaL A ton of flour and 41! bushels of offal amount to 2.830 lb., while the total weight in
47l bushels of wheat is 2,850 lb., leaving an average waste of 20 lb. of wheat, out of 2,850 lb. used.
11. Combining the results arrived at, both with regard to wheat required and costs of
manufacturing, the following table shows the aetual average cost, including interest on capital,
with wheat at 5s. per bushel and otial at £6 10s. per ton, according to the methods of calculation ;.. ARSOCIATIOX METHOD.
Whent-48 · 'i bmshtls at 5R.
Les$ 44 · 7 bushel!'! offal at £6 1Os. per ton
AccORDINo TO REsULTS OF
£ s. d.
12 3 6
2 18 1
Cost of \Vheut, lt>oss return frotn offal
;~
..1Ia.nufacturing costs,. &c.
2
Flour-Selling price pt:r wu
G D
7 ~
11 12
7
J.,\ TEST
"\Vh('ttt-47 · 7 bu>i11els at tis.
Lr8,;, 41 ·5 bushf'is offal at £6 10s. per
RETURNS.
£ s rL
I I 17 6
trm ..
CoHt of wh1,at, ]eRl'l return from oft'al
}1anufacturing costs, &c.
Flour-···· Selling price per ton
2 Jj
0
9 ~5 6
2 2 9
11
6 "
"
This shows a difference of 6s. 4d. per ton; but it must he remembered that the costs in
the Association method are presnmahly based upon the tost of producing and delivering flour
for local consumption, while the average costs (£2 2s. 9d.) of the returns now being eonsidered
are the average of production and delivery of both expori and locally-consumed flour.
12. I am unable, without a much more lengthy inquiry, to determine aeenratelr the
appropriat€ proportion of cost which should be allott.cd to export and local sales of flour.
lf the millers worked on a margin arrived at by taking the average cost of all their trade
it would probably result in their not being able to compete in the world's markets for flour.
:Further, while the average proportion of export trade to local consnmption trade is twothirds to one-third, the proportion varies very considerably among the millers, and a margin
fixed on the average costs of expori and local trade would not he sufficient for those millers
whose trade is principally locnl, while it would be t.oo great for those whose export trade i~ a
large proportion of their total trade .
.. Thls allvwanLt: IF m;~dv in e()n~Nitwn.._e <>f Hw J>a'iin!£ of frri::rilt on the w!,cat a~ o:-Umrxue4 wlth (he mctrovolllnn milh::r,.:, and jt1~t ;d.cot
otxtrA !Xhtt o£ d~;~lh•er~· whkh thr wuntry mill~t·lm~ t<.1 f"II' fo~: &ur de!Ji·en·<J to M,.ll.o<.>lHll<' rot ~l:l:pmeni, or to S.l.l}'JJly metroJ)Qlltnu httkct~.
k.J;,nce~
1C·1·
8
The maro·in of £2 7s. 2d. cannot be conRirlered excessive. for manv of the smaller rountrv
milffi, but probably is still more than sufficient for the larger and more efficient plants.
.
13. It is further elear that the avera.l!e mnnber of bushels of wheat required t<() produce
a ton of flour on this yea.r's experience is not 48·7. but about 47·5; bur even if this lower weight
of whea.t was ailopted it, would, in itsel£, when the lesser quantity of offal is taken into account,
only make a difference of ls. lld. per ton of flour. This is illustrated as follows :-·
48·7 bushels whvat at, 5s.
Less 44.-7 bushels offal at. £6 I Os. per ton
£ ,. d.
12 3 H
2 l' 1
I.
9 5 5
47·5 bushels wheat at. 5•.
Less 41· 5 bushels offal at £6 !Os. per ton
£ 8 d.
11 17 6
2 14 0
9
3 6
To these amounts must be added the margins to cover manufacturing and distributing
costs and profit.
14. Whilst some millers make no clifference in their 1-,rristing for export a.nd local
consumption, I am informed that in some cases it is the practice to take a higher percentage of
the flour from the wheat for certain classes of export trade. As this does not affect the
price for local consumption, however, I ha,ve not gone further into the matter.
15. It is necessary to draw att<mtion to the practice of the 1\:[il\.owners Association of
basing t,he price of wheat upon t.he world's parity and not upon the actual price paid. Thus
in July, 1924, though t.he wheat for local consumption was fixed at 5s. 5d. for the whole of the
quota' for that month, the flour price fixed on this basis at £1:~ per ton was increased ultimately
to £15 per ton because of cha.nges in worl<l's parity, notwithstanding the fact that supplies on
hand on the first of that month, including the quota, won M average only 4s. 11 · 07 d., would last
towards the end of September, and i1om 1\'0nld t·osl: on the avemwl based on t.he association
methods only £11 16s. Even w}Jen the August and tleptember qnotas are atlrled, which gives
supplies to the third week in Norember, the <Cvcrage prke of whmt would be 5B. 3d. and the
corresponding average cost of flour £12 12s. Tint fFom the middle of J11l? to date the association
price has been £14 or over. 1md was for August £];) l:2s. 6d. and .!!Hi 7s. 5d., and at the 1st
September £14 15s. It appears, however. th::t tl1e bakers have succeeded up to the present in
evading these high prices, <tnd, owing to advance booking~. have generally snflieient flour at well
nn<ler present prices to last them for some t.ime to come.
II.-BRT~AD
PRICES.
16. The priee of bread has been investigated at various times, and before giving the result
of the present investigation T propose to brief!!· review t.hese in<]niries. The Commonwealth
Prices Commissione.r under the \Yar PreeRntions .Act (Prices Hegulation) in .July, 1916, fixed the
price of the 4lb. loaf within 4 miles of the G.P.O .. and in certain imlnstrial snburlus outsi<le
this radius, a.t a flat rate of 7d. cash or b'•oked aml <lt shop or deliYerecl. The prices in other
districts were for a 4·lb. loaf. 6·~d. at the I' hop. 7cl. dcli,·ererl, with a hooking charge of ~d. in each
case.
The Interstate Commission, in 1917, inquired into the eauc;es of the increase in the price of
bread. At the time the price was that fixe.! bv the Prices Commissioner as given above. The
members of the eommission, in answer t"' queS't.ions oubmitted to them bv the Commonwealth
Government, reported :~~.
" That the increase in price of bread was chiefl)' due to the rise in the price of flour,
and hardly at all to increase in wages or other materials of the baking trade."
17. On the :~rd Novm;1ber, 1919, the State Royal Commission on High Priees reported on
the pnce ofhrea~. Aft.er d1scnssing the problems connect"d with the question of delivery, and
the pnce·fixmg operations of the Master Hakers Assodation. it proceeded to teRt the jnst,ness of
the current prices ;..
·
(a) " By examining the aetual co~t of material, manufactming oost~, overl1ead costs,
and delivery costs. and comparing the total cost thus ascertained with the
price charged."
··
{b) "By _comparing 1913 prices (assuming them to have been reasonable) with present
pnees and 1913 costs w1th present eosts."
. With regard to test (a), the report of the commission shows that the average costs (including
dellver.y) of the. returns frt>m the metropolitian bakers anil from the Ballarat and Bendigo Cil~
operat1ve Societies came to 7·77d., and the priee being chnrged wa~ 8d. Bv test (b) the commission
came to the con<:;<lusion that:- compared with a price of 6d. per 4·lb.loaf in i91:1, .the price of 8d. per
4-lb. loaf m 19BJ waR JUStified when the mcrea.ses m wages and other matenals and costs were
allowed for. The price of fl.our at that time wa.s £12 per ton.
9
I8. The Victorian Necessary Commodities Control Act was passed in 1919, and in Ma,rch,
1920, the Chairman of the Fai~ Profits Commission recommended that the highest price at which
bread rmght be sold or sur:phed should be proclaimed as prescribed in section 10 of the Act.
These proclaimed pr~c?s varied from lOld. per 4-lb. loaf in the closely-settled metropolitan areas
to _lid. peT 4-lb. loa! ·m other met!opolitan districts and in country cities, towns, and boroughs
(W!th eertam exceptions). The pnce of flour was then £17 per ton.
. 19. In .Tt~ly, I921, Mr. H ..J. Baker, A.I.C.A., investigated the increase in the price of bread,
whwh at. that tune was 2ld. per loaf above the price fixed in March, 1920. Flour had gone up
to £21 per ton. He found that the following increases were justified :-·
Cost of flour . .
..
..
..
·. . 1 · 45d. per 4-lb. loaf
Operatives' wages
· 36d.
,
,
Bread-carters' wages
· 36d.
,
,
General charges ·
· 08d.
,
,
Total increase
2·25d.
"
20. The High Cost of Living Commission in :\fareh, 1924, reported as follows :" With flour at £11 5s. per ton, the conclu$ion of the Commissioll is that 9!d.
represents the fair cost of production (including distribution)."
Tt is stated in the report that this cost is the aveml(e in the metropolitan areas comprised within
a radius of 10 miles from the General Post Office. ·
21. '!.'he Commissioner of l1 rices, Brisbane, aft.er a very full inquiry in January, 1922,
decided that with flour at not more than £14 per ton, lOd. was a fair and reasonable price for
the 4-lb. loaf. It is stated that the bakers in Brisbane at that time considered 5d. cash waa a
fair price with flour at £13 10s. to £13 15s. (for the 2-lb. loaf). On the 25th August this year
the Commissioner altered the maximum price to lld. per 4-lb. loaf delivered, the reason for
the increase being that the pric.e of flour in that Rtate is now £16 to £16 5s. per ton.
22. The returns whieh haYe been submitted to me have been carefullv analysed and
tabulated in two metropolitan areas-Geelong and Ballarat-and for a number ~f other centres
eombined. The n•tnrns for Bendigo are unsatisfactory, and the results such a.s to lead t£J grave
doubts as to their correctness. I have not, therefore, included them in the tabulation. In
order t-o make them of anv use it will be neeessa.rv to visit Bendigo and examine the bakers'
books and accounts. This examination will be made next week, a.nrl after it has been finalize{!
l will complete the 'Report by furnishing an addendum with regard to Bendigo.
23. It is necessary, in the first place, t£J stnt.e what. allowances have been rnade in preparing
the table of costs which follows. All the costs submitted by the bakers have been carefully
( hecked. An allowance for the cost of management has been ·;nade according to the size of tli~
business. Where the business is small, and the proprietor himself works in the bakehouse or in
delivery, wages have been allowed in the costs. Tn addition, an allowance of 12! per cent. for
interest on a.II capital invested in the business has been made. All other char;leS incidental t£J
the ma.nufactnre and delivery of bread have been included. It may be mentioned here that.
bread-carters in the metropolita.n areas are receiving £5 per week, thon11h the lateilt wages board
determination provides £4 12s. 6d. as a flat rate for Vict.oria.
24. Tn previous inquiries estimates hfl.ve been made as to the unmber of loav<'s whioh can
be produced from I ton of flour. The returns submitted to me show that the number varies
with different bakers. In some cases as many as 686 4-lb. loaves to the ton of flour are given;
but after careful consideration I have come to the conclusion that a safe number on which to
base caleulations as to the cost would he 670. This is the number used in all subsequent
ealculations in arriving at the cost ol flour per 4-lb. loaf. The results of the analysis and
ta bula.tion of the returns receiYed from ha.kers are shown hereund(•l' :--- ---!- --
i
I
J'n rt-kt!l.~ f".
!lrrl;m!(-
1nu!!lr
' ..
""_nr~~~~~-~~ i- St:l:_ur~:_-~nm.+--~-------l
4 ·00
2·18
3 ·92
2·07
d.
3·93
2·25
!·]~
l2ii
I ·42
d.
}"'lour
Bakohonl:\~ coats .
Geucral nxpvnR<''j and l!tt~>rP.'it
"
.
Bnl!arnt.
Otlwr ('mti;TO' ...
Outllr
!
d.
---~-
d.
3·8D
I ·37
~·4R
d.
4·04
2•97
1 ·34
Selling prite at bakehom;p
Dclivf.ry cost
HiO
2·21
2·~2
~elling
9·el
l0·87
price-- Deli"_ered.
10
25. Taking now the various inquiries to which reference has been made, it is interesting
to compare the allowance made in the various inquiries. The results are given in the following
table:PRICE oF BREAD.---SUMMARY m· CosTs.
I
Y<!U.
All Omtttl'i\ (lt!d
Flour
Co~t.
;
:\JannfaeturlnJ.: CoHt"-.!
induding lnterest
on C'\\)llt~l,
~-
I
l'cr 'run.
:\hHtaJl:(•llwnt. and
Di'lit>il1yCo.;t~<,
Pt•r ·Hb. Loaf.
I
Tut:d ('o;,.t«
(Pl'l· J.lh. Lo.1l).
I
-·-~~·-·-~
1919
1920
1921
1922
1924
1924
1924
£
High Prices Commission
"
Fair Profits Commission
Mr. Baker's inquiry ..
Pric.es Commissioner. Brisbant~
High Cost of Living .Commission
Prict~ of Bread Commission
..
Prices Commissioner, Brisbane
"
"
"
"
"
"
8,
d.
12 0 0
17 0 0
21 () 0
13 12 6
11
11
5 0
0 0
16
()
0
I
I
i
i
!
3·41
4 32
6 ·18
7 ·63
4·88
4·05
4·00
5·73
5·12
5 ·12
:i·20
I
~
d.
7·77
10•50
12·75
d.
d.
4·36
··-
10·00
9·2'J
5·18
9 ·18
5 ·27
1 [ ·()()
I
All these calculations, V~-ith the exception of the High Cost of Living Commission and, of
course, Brisbane, are based upon the costs in the inner suburban metropolitan area of Melbourne.
The finding of the High Cost of Living Commission refers to the whole of the metropolitan area
within a radius of 10 miles from the General Post Office.
26. No reason was given by the Fair Profits Commission for the big increase in costs from
1919 to 1920, and, as in the case of the millers, it appears that the prices fixed were those being
charged at the time the proclamation was recommended. The report of the commission says" The prices which the commission is recommending are in the main the prices
which are actually being charged by bakers, who also, for the most part, say that they
are getting a reasonable profit at the price."
Making allowance for the increases in wages which came into force in 1920, there is a remarkable
agreement between the finding as to cost in 1920, 1921, and 1924.
It follows, therefore, that if 4 · 32d. in addition to the cost of flour was a sufficient margin
to give a reasonable profit when flour was £17 per ton, and if 5 ·12d., which is based on the
highest wages that have been awarded, was suffieient margin to give a reasonable profit when
flour was £21 per ton, then 5 ·18d. must be a sufficient margin with flour at £11 per ton.
27. I have already drawn attention to the fact that the bakers, with very few exceptions,
have flour bought at below present prices. Flour millers who are members of the association
agree not to book more than two months' supply in advance to any baker, that is, delivery of
all flour must be taken by the baker within two months of purchase. The inquiry, however,
disclosed the fact that this condition is not very strictly enforced, and, further, that by buying
from several millers it is possible for bakers to book supplies for many months ahead if they are
able to arrange finance and storage. If the bakers had bought on the first of each month from
.January to September sufficient to last during the month at the association prices, the average
price for t-he nine months, including one month at £15 12s. 6d. and one month at £1415s., would
be £12 7s. 6d., and the selling price of the 4-lb. loaf on the basis worked upon since 1919 would be-Per 4·11>. Loof.
d.
Flour
Other charges and profit
4'43
5•18
The price has never been less than 1Od. per 4-lb. loaf delivered, consequently there can be no
justification for any increase on lOd. for the inner suburban area. If the price charged had been
les..q than 10d. when flour was £11 per ton then it might have been considered reasonable to
increase the price when flour went up to £15 12s. 6d. or to £~4 15s., which is the present price,
if bakers had been compelled to pay these pricBB, which does not appear to have been the case.
The position is, however, that even if the flour supplies for the next. three months bave to be
purchased at as high a price as £14 15s., the average cost for the year would still be under £13,
and on t.he margin, which in several inquiries has been found to be sufficient to cover all costs
and. provide a reasonable profit, the average fair selling price of the loaf would still be not more
than lOd. in the inner suburban area.
11
28. With regard to the cost of bread in t,he, less densely populated areas of the metropolis
the FaiT Prices Commission allowed ~d. per loaf extra. The tabulation on page 12 shows
that this extra eharj.(e of ·~d. per 4-lb. loaf is at, the present quite ample to cover the extra cost
of delivery. The returns show that the cost at the bakehouse is practically the same in both
areas. anri that the extra cost of delivery is not more than }rL per 4-lb. loaf. There does not,
therefore, appear any justification for the present extra charge of ld. per 4-lb. loaf, but that the
extra charge of ~d. should he re;·erted to in accordance with the ascertained difference in this
and previous enquiries.
2\J. ln Geelung the extra cost of manufacture, including all charges, management, and
interest m\ eapital, and delivery compared with the inner suburban area of Melbourne is just
over ~d. per 4-lb loaf. ln Ballarat the extra cost amounts to just over ld. The actual average
cost, iucluding the cost of flour shown by the returns, is I0·23d. in Ballarat and 9·81d. in
Geelon)! compare,d '.vith 9· 18d. in the itmer' suburban area of Melbourne. This extra cost is due
principally to the smaller but'inesses in these two towns cJml the more scattered distribution
of +he population.
30. Hetnrns have been received from various other centres in Victoria, and the average
of d1ese shows that the eusts of manufacturing, including interest and profit, is 4 · 31 d., or Id.
higher than the inner surbu:rbau area of Melbourne, and the delivery costs 2 · 52d. or · 65d. higher.
On the returns received. therefore, it appears that, in order tu secure to the bakers in these
scattered areas a return on their business equivalent to that received by the metropolitan bakers,
an Pxtra charge of at least l!d. per 4-lh, loaf is warranted if bread is delivered.
:ll. J drew attention in my previous report to the charge.s being made in Ballarat and
Ucclom.(, and to the fact that I could see no reason why (,he cost should be higher by 2d. in
Gcelong than in Ballarat, except the relative strength of the Master Bakers Association in these
two places. The table on page 9 shows that the comment was justified, as, according to the
returns received, the actual selling price should have been less in Geelong by at least !d. per 4-lb.
loaf.
32. The practice of delivering bread to customers has become so universally established in
Victoria that there does not appear to he much gained by considering the saving if bread was
purchased over the counter. :\evertheless, it i" clear from the returns that the saving which
could be effected if :ouch a method were (Ldoptcd would amount to nearly 2d. per 4-lb. loaf in the
inner suburban area. and to over 2d. per loaf in the outer suburban area and in country centres.
:33. The policy of the bakers seems to he to discourage over-the~eounter purchases, as in
most cases a flat rate is now charged whether the bread is collected at the bakehouse or is delivered
at the dour of the customer. The question of reducing the cost of delivery by some means of
eo·operation was discussed by witnesses before the Commission, hut the difficulties which have
to be overcome before such a system could be adopted arc very great. I ca11 only suggest that
the must fea:oible solution appears to me to be t,he establishment of a co~operative delivery system
in the various suburbs. A central depot might he established to which all the bakers who are
parties to the agreement would send Nteir bread, and from which it would be delivered by carters
who would earry supplies of the various bakers interested, and calling at every house in the area
allotted to him, he would be in a position to give the customer the choice of several bakers' bread.
[ eau foresee many difficulties tu be surmounted before such a scheme would be willingly adopteAl,
and even if adopted the saving at the must would he ld. per 4-lb. loaf or id. per week per
household on the average.
34. On the 15th August the average price of bread per 2-lb. loaf in the capita.! cities was
as follows.
The fixed price of flour is also given for comparative purposes :
Town
l'tkl' of
}:r~a•'
l'rir,;' of F!ollf
'l'~r TniH
;l'<•r :'"IJJ, LO;;::.
d.
5·25
Sydney
Melbourne
Brisbane
Adelaide
Perth
Hobart
~-~
..
~~-
-~,~~-~~·-~,_,
t'V20
5·00
5·50
5·50
" Ttrr 11rkc t r fkH:r iu B;t-'h;nw nlnl llobar! ;.,
t;<;~
a •ni:,.l_,!('
~
Tlw
H.
d.
]l)
0
15 7
6
15
•
7 6
14 15
[)·50
____
£
15
*
~---~~~--~·-~~
np;::i,,~
ior tl:H!i'
l>l.l<'t~
il
.HP
~in'\
--~
n 11\ll!l !! "' ntl q ;:/!ltr'-. :oiJ(l ·tiu-;. ;ux• not .fixed
lr, 11fi)"l>":H:!iliOII
The price of hread in Brishane waR ine rea sed by proclamation on the 25th August to 5 · 50d.
per 2-lb. \o;1f.
12
35. A comparison of wages paid m the baking trade m the capital cities of the various
States is as follows :.
Pf,r..,.-,n, ffi;tk!nu Don;<lt
h\- :\f:IC 1•ihcs.
FtH't"IIl&!l :ut•l 'iinul\'
Hrmd:11.
'l'OIIIL
W:'t~~-
Hnnr<-.
\Vl\21'>'.
I
R<;\1fS.
fnlu'r~
for
not p:ovid;!d
l~l""w<!Rr•·-
\ra.:m"
I
nrP(I~I·r·lrltr".
Ho\1f~-
\\",:,;;!'~
TTIH1f•t_
!
Melbourne, 23rd April, 1923
Sydney, 1st January, 1924
Brisbane, 1st May, 1922
"
"
..
cl.
'·
128 0
125 6
to
130 6
no
d.
S,
48
46
i
110 ()
103 0
to
6
44
105 6
103 ()
105 0
48
48
''
..
to
Hobart, 13th .Tune, 1921
122 6 •
95 0
46
s. d.
120 0
i 120 6
I
105
6
105
6
to
Adelaide, 7th .June, 1924
Perth, 7t.h February, 1924
I
·~8
I
4·!
..
I
"
10.1)
()
I
48
46
I ..
"
"
..
I
!
I
50
!
+X
86
0
48
8R
6
51
I
!
48
s d.
t92 6
I 94 11
"
"
"
'
I
4R
H2
0
I
to
lOO 0
III.-COMPARTSON OF PRICE OF FLOUR AND BREAD IN
AUSTRAUA.
'B~NGLAND
AND
36. At.t{:ntion lHJ$ been dm wn to the bel that a.ccordiug to returns published in the
]}finistJ'Y of Labo111' Gazetlc, issued by the Minister of Labmu, bread has been •clling in J;]ngland
for 8!d. per 4-lb. loaf at the sam<> time that the ·1-lb. loaf was selling in il{elbourn~ for lOd. am!
lid., and in 1kndigo and Geelong as high as 12d.
.
37. Several factms have to be considered in thiB respect. Tt htts to he remembered that
in !J:ngland in addit.iou to Anst.mlian wheat, wheat from Canadt<, America, England, and other
countries is used. Hcturns extracted from t.he 1'£mes Trade Supplement show that the English
price.s of Australian wheat were generally higher than for the English. f.a.q. and American, ami
about on a par with Canadian best. In February, 1924, when the price of Australian wheat for
gristing in Australia wa~ 4,.
per bnsheL the price of Australian wheat in England was from
6s. to 6s. 5d. per bushel, whilst English f.a.q. \\·a,s from 5s. 4d. to 5s. 7id. Dul'ing the same
month the quotations for va:riou~ kinds of flour varied from £11 ls. 5d. for flour made from all
English wheat to £13 lls. 5d. for llr!llr from good Canadian wheat. The Victorian Millowncrs'
Association priee of flour f(!r loml consmnptio11 wns £11 5s. for .January anrl February of this
year, and for export £l0 7s. Aft<er adding freight and other ch,uges the cost of the Australian
flour exported to Englaml woultl pwbably be higher t.han the flour made from English wheat.
and lower than that made from good Cauarlian wheat.
nd.
:.18. fu Australia with wheat at 4s. 7~rl. per bushel flour was sold for £115s. Jn England,
with English wheat at. 5s. 4§d. per bnshel, flour WRS sold for £Ills. 5rl. I am informed tbat the
gristing of flour in Rni!:land is dnne somewhat differently to the praetice in Anstmlia. Whereas
in Australia only about i2 per cent. of flour is extraderl from 100 per rent. of fionr and offaL in
England nearly 80 per tent. is cxtra<'tecl. This means that a larger percentage of tl1c wl1cat
gristed is turned into flour. which sells at a r·o1niderably higher price than the offaL
39. In addition, T have made a eomporison of the w<tges being paid in the flour-milling,
industry in England and Vktoria, and find that they al'e nearly 80 per ecnt. higher in Victoria.
The two factors will probably uceount. for the fact that with wheat at 7d. m· 8d. it bushel dearcr
the English miller can produce flour at the same or a lower cost than the Victmian miller.
40. -With flour at about the same price as in Victoria the English bakers should be able to
produce cheaper bread when it is rec0[!11ized that wages a.re consirlera.bly lower in England.
41. Oven-men in London receive 60s. 6d. per week and in Melbuurue I20s. 8ingle hands
6ls. 6d. in Londou and 128s. in Melbourne. Dough-makers in Low ion 65i1. Gd., alHl in )Ielbourne
l20s. Bake-house wages in 1\lelbourne mpresent approximatek lld. per 4-lb. loaf. In London,
where wages are little more than half those pairl in J\ldbuurne, the cost would be probably under
zd., or u saving of at least id. per loaf. Fnrtlwr, the pri<-•' quoted in the J!i".i8try ~f Labonr GazettP
is obviously the price over the counter.
13
42. Therefore, taking all t.hese facto rH into consideration, the priee of 8id. over th~ counter
m England is as good as, if not better, than lOd. delivered in Victoria, so far as returns to the
baker are concerned. I have alreadv 6hown ihat if bread in Victoria was sold over the counter
the price could be reduced by appn;ximately 2d. per 4-lb. loaf and still give the baker the same
margin of profit as he reeeives at the pre:;ent t.ime.
43. I wi~h to express my appre.ciation of the work of the staff associated with me in this
inquiry. Mr. Jelley's experience with the Commonwealth Prices Commissioner and the mquiry
into prices by the Interstate Commission has enabled him to render me valuable a33istance. The
secretary, Mr. W. G. Embury, a gualified accountant, and his assistant, Mr..J. D. Sutcliffe, the
remaining member~ o[ the staff, ha.ve given very valnable and efficient service. The extent of
the investigations covered has only been tmv\e possible, in the short period that has elapsed, by
their efficiency and close application to duty.
SUMMARY OF FINDINGS AND RECOM'\IENDATIONS.
1. The priee of flour is fixed by the Victorian Mill-owners' Association upon a ba.sis
determined in 1920.
2. The returns show that the basis was not determined upon any adequate investigation,
but by adopting a formula based upon the price of wheat in that year and the proclaimed price
of flour.
3. Practically the same margin ha,; been allowed since that time, though wages and other
costs have increased.
4. It is possible to arrive at but one conclusion, namely, that the basis Wlll5 at the time too
high.
5. At the present time the basis is probably more than sufficient for the large and more
efficient mills, but not too high for the smaller and less efficient mills.
6. The practice of the Victorian .Mill-owners' Association in varying the price of ilour
according to increases in overseas parity occurring during a month does not appear t{) be
warranted when it is remembered that the millers are supplied with tJJe whole of their
requirements for that month at a :fixed priee.
7. Comparisons have heen made as to the selling costs of bread arrived at by previous
investigations.
8. 'J'he returns received in this inquiry show that bakers were working up to the end of
June with flour at about £11 per ton, and that the average selling price of bread after making
allowance for all manufacturing costs, management, and interest on capital at 12! per cent. was
as follows :-
d.
Melbourne-Inner Suburban
Outer Suburban
"
Geelong
Ballarat
Other country centres (excluding Bendigo)
9 ·18 per 4-lb. loaf
9•49
"
"
9•81
10. 2.'3
10•87
"
"
"
"
"
9. Further investigations are being made in Bendigo, as the returns received are not
satisfactory.
·
10. A table is given on page 10 shmving the margins allowed t{) cover all charges and
costs, including interest, management, and ilelivery. This table discloses a remarkable agreement
between the conciUBions of different investigations.
11. Bakers have still substantial stocks of flour at under £13 per ton. Even if they had
bought each month at association prices the "verage price to the end of this month would only
be £12 7s. 6d., and the selling price of the 4-lh. loaf on this basil! would he nnder lOd. per 4-lh.
loaf for the inner suburban area.
12. }~ven if for the next three months bakers have to purchase flour at the present price
of £14 15s., the average price for the year woul{l still be under £13 per ton, and the avemge
selling priee for the year of the 4-lb. loaf under 10d.
la. Tile investigation shows that on the average the extra cost of deliverv in the outer
suburban area is less than kd. per 4-lb. loaf. At present the extra charge being made is ld.
----··-1
14
14. The extra cost of manufacturing and delivering above the cost in the Melbourne inner
suburban area is, in-·-
d.
0•63
1•05
1·69
Geelong ..
Ballarat ..
Other coU11try centres
15. The average cost of delivering bread varies from 1· 87d. in the inner suburban area
of Melbourne to 2 · 25d. in the outer suburban area, and to 2 · 52d. in the scattered country
centres.
16. It would be possible to reduce the cost of delivery if the bakers could agree to some
co-operative system of block delivery.
17. On page ll comparisons are given of flour and bread prices, and of wages rates in the
capital cities of the Commonwealth.
18. The price of the 4-lb. loaf in England, as quoted in the Ministry of Labour UazeUe,
was, up to lat€st advices received (June, 192·!), 8}d. This is apparently tlw price over the coLmter,
and when the difierence in milling practices, the lower wages, and the absence of delivery costs
are taken into account, the price compared favorahly, from the Victorian consumers' pol!lt of
view, with that being charged in Yictoria.
The conclusions contained in this, and my :First Report, I have the honour to submit for
Your Excellency's consideration.
JAS. T.
W. G. EMBURY, Secretary,
Price of Bread Commission,
Electricity Commission Buildings,
22 William-street, lielboume,
5th September, 1924.
Dy Auttwrity: H- J. GREEN, Gowmmcut Printer, Melbourllll
SUTCLIFFI~,
Commissioner.