Government regulated pricing within the Australian wheat industry, through successive 'stabilization' schemes, has been a feature of rural policy in Australia for many years. Of late, the policy has become a contentious issue among wheatgrowers. Those in favour of regulated pricing point to the security of income they allege it provides. On the other hand, those against it argue that the policy has resulted in marketing and handling systems that are not as cost-effective as they might be, and that as a result growers have received lower return?
A policy of this kind has broad implications for the whole economy. It is towards these broader aspects of regulated wheat pricing that the thesis is mainly directed. Basic principles of welfare economics are used to estimate the effect that wheat price stabilization has had on the total economic welfare of the Australian community and the way it has affected the distribution of income, over the past 30 years.
The results of the quantitative analysis presented in the study and the discussion of the economic issues involved indicate strongly that both the Australian community as a whole and wheatgrowers themselves, have paid a high price for government attempts to 'stabilize' the wheat industry. Furthermore the economic evidence considered suggests that the industry would operate more efficiently, if the concept of the administratively determined home consumption price were abandoned and a more flexible pricing system introduced on the domestic market.