Decision On Wheat Prices Modified

Press, Volume CVIII, Issue 31672, 7 May 1968, Page 1

Decision On Wheat Prices Modified

(From Our Own Reporter) WELLINGTON, May 6. The present basic price for wheat—sl.4s a bushel in the South Island and $1.65 a bushel in the North Island, f.o.r. growers’ station— will be continued by the Government for the 1969 season.

A retention sum of up to 20 cents a bushel will replace the previously-announced reduction of 10 cents a bushel plus a retention sum of 10 cents a bushel.

The premium of Hilgendorf wheat from the 1969 harvest will be restored to 20c a bushel. These decisions of the Government, made after strong representations by the growers since the earlier announcement of a reduction in the price, were released tonight by the chairman of the Cabinet committee on wheat prices (Mr Adams-Schneider). “The basic price will continue for the 1969 season, but will be subject to the retention of up to 20c a bushel to cover any losses incurred in the marketing of wheat from the 1969 harvest, and the costs of storing and handling any wheat declared surplus to requirements from that harvest,” Mr Adams-Schneider said. “This decision was reached after full and sympathetic consideration by the Cabinet of the effects of seasonal factors on the production of wheat from the 1969 harvest, and of the serious loss of revenue suffered by many growers at a time when returns from alternative farm products are much lower than in recent years.” RAIN DAMAGE

Mr Adams-Schneider said that before the extremely heavy rain damage to the Southland and Otago wheat crops the best estimate available for the 1968 harvest indicated a production from that harvest of about one million bushels of millingstandard wheat in excess of estimated requirements for consumption and normal carry-over for stock. This would have meant the probability of this quantity hav> ing jo be carried forward to the next season, with a most serious over-supply in 1969. Because only a limited quantity of wheat of milling standard would now be available from the Southland and Otago crops, a surplus of milling wheat from the 1968 harvest was not now expected and there could be a need to import wheat for milling at a later stage.

“In these circumstances the Government has concluded that a reduction in the basic price for wheat from the 1969 harvest is no longer necessary, provided a satisfactory agreement can be reached with growers regarding their acceptance of responsibility for certain losses and costs

which could occur in the marketing, handling and storing of wheat from the 1969 harvest,” he said. TERMS AGREED The terms of the agreement between the Government and the growers are as follows: The policy to be followed in fixing the price for wheat and in the general administration of wheat marketing will be to make New Zealand selfsufficient in the production of wheat. To this end, the price fixed should be sufficient to attract the sowing of an adequate area in wheat.

If at any time through higher returns from alternative farm products or for any other reasons the sowing of an adequate area in wheat cannot be attracted at a price substantially in excess of that for imported wheat, the Government reserves the right, in consultation with representatives of the growers, to reconsider the policy in respect of future plantings. Where the price and conditions fixed lead to the sowing and harvesting of a quantity of milling wheat in excess of our annual requirements, the Wheat Board will dispose of the surplus to best advantage. The cost of such disposal shall be a charge against the growers through the retention from the growers* price of a sum to cover estimated losses and costs. The balance of retention money shall be paid out to growers as and when it becomes apparent that it is not required for the purpose for which it has been retained. In the event of retention moneys being inadequate to meet the losses and costs set out below the deficit will be carried forward against retention moneys from the following harvest. When submitting its recommendation to the Government on the price to growers for future seasons, the Wheat Board shall have regard to the existence of any wheat carried over for disposal from the previous season.

The price to. be paid for wheat and the extent of retention moneys will be fixed by the Government on the recommendation of the Wheat Board and in consultation with the wheatgrowers’ representatives. The growers will.accept re-

sponsibility for losses on marketing and costs of handling and storing wheat from the 1969 harvest as follows: Loss on the sale of an anticipated surplus of milling, standard wheat, if it appears necessary to sell at a price below cost to avoid an excessive carry-over of wheat to the next season. All costs and losses Incurred by the wheat board in storing wheat declared surplus to requirements for carry-over to the next season. Loss of wheat from the 1969 harvest carried over and sold in the next season, including interest on the sum outstanding and the cost of transport from point of storage to point of sale. All costs and losses incurred by the Wheat Board in exporting wheat surplus to requirements.

Costs of storage on farms of wheat surplus to requirements after the expiry of the final increment month or of the end of the season, as announced by the Wheat Board, or both. GROWERS BOUND

A firm assessment of the surplus from a harvest is not likely to be practicable until about November of the harvest year. At that point the Wheat Board will estimate the probable amount of the surplus. The acceptance of this estimate by the growers’ representatives on the board will bind the growers.

The Government’s view was that surpluses should be kept as small as possible, Mr Adams-Schneider said. “Otherwise very real problems of storage and disposal could be created and growers would be put to unnecessary cost and expense in handling, storage and disposal. The Government may therefore find it essential to rely on a change in the basic price in future seasons in order to help balance production and consumption of wheat rather than rely entirely on the withholding of a portion of the pay-out price.”