Price up but growers still unhappy

Press, Volume CXIV, Issue 33442, 25 January 1974, Page 22

Price up but growers still unhappy

Growers are unhappy about the price for wheal harvested next year—s2 per bushel plus an incentive payment of 3()c—although it represents a rise of over 40 per cent on that operating this harvest. It is possible to see their point of view when the Government is faced with paying between $4 and $5 per bushel to land overseas grain in this country to make up for any shortfall in requirements.

But in all fairness one cannot but feel some sympathy for the Government in having to set a price for wheat when prices overseas have rocketed to such high levels. A rise of 41 or 42 per cent is not an insignificant one and is after all apparently only a little —about 20c — behind the figure recommended by growers and the Wheat Board themselves. The device of an incentive over and above a basic price seems a good one in the present unsettled situation. It gives room for manoeuvre in the future, although admittedly it is difficult to reduce a price once it is set. Perhaps an even bigger incentive may have been justified in' the circumstances.

At the Lincoln College field day last November Mr B. J. P. Ryde, senior lecturer in farm management, in discussing activities on the mixed cropping farm, put wheat, at prices ruling this season, as only fifth in order of most profitable activities on the property. This week, after the new price was announced, Mr Ryde was asked to update comparative gross margins —gross revenue less direct costs—to see how wheat stands now.

At $2.30 per bushel, he said that the gross margin for a 70-bushel crop was about $l4O per acre, for a 60-bushel crop about $l2O and for a 50-bushel crop about $lOO.

At present prices in excess of $5.50 per bushel, he said that the comparative gross margin for Manawa ryegrass at 40 bushels to the acre, taking into account also saved straw and crediting also the amount of stock grazed on the paddock, would be in excess of $2OO per acre. The price of ryegrass would have to fall to $3.50 before the return from a 40-bushel crop would equal that from a 60-bushel crop of wheat. In the case of a 30-bushel crop of ryegrass he said that the price would have to fall to about $4.50 per bushel to equal the return from 60 bushels of wheat.

On the basis of figures given at the field day, Mr

Ryde said that a 4001 b to the acre white clover crop would still give the highest return. At 70c per lb it would give a gross margin of $250 per acre. But if the yield was to fall to about 2001 b to the acre the return would be equivalent to that from 60 bushels of wheat at the latest price. Production of pasture seed crops and running of stock also improved the condition of a farm, said Mr Ryde, so that a farmer could store in his farm a bank of fertility, which he could draw on when pasture seed prices fell, but such crops had a high risk factor being subject to weather hazards and also price fluctuations. Wheat was a crop that reduced the fertility of the farm, but was on the other hand one of the least risky crops, and as a hardy crop would still be grown in the farm programme at the college. However, the emphasis, under the present price situation and with access to irrigation, would be on ryegrass, white clover and peas and then wheat. Peas, he said, actually ranked lower than wheat, but had a short period of growth, followed a winter feed crop and provided an opportunity to control weeds through cultivation.

Growers were grateful for the increase in price, but taking into account all the factors involved and the alternatives open to farmers, it seemed that the Government may have misjudged the situation, said Mr D. Tutpie, the chairman of the agriculture section of South Canterbury Federated Farmers.

It was obvious that the price was the lowest that the Government could justify, and in view of the likely increases in costs that growers would have to face, he doubted very much whether it would be enough to maintain grower interest in the industry. Considering that the industry was a big user of petroleum products and oil, he wondered whether the Government was fully aware of what growers’ costs were likely to be. It was hard" to justify publicly paying something over $4 per bushel for wheat from overseas when

domestic prices were placed alongside that. This tended to give the farmer a feeling that the Government was not giving the lead to the industry that it required. Growers had considered that something like $2.50 or $2.60 per bushel was needed to hold interest.

The North Canterbury agricultural section would be meeting next week to discuss the situation and to press for a complete reappraisal of next year’s price and of future negotiations, said the chairman of the section, Mr N. Q. Wright. With increased costs of fuel and every other input into farming he said that the downward trend in the wheat acreage would continue, unless the Government was prepared to adopt a more realistic attitude to the industry in the present situation.

In recommending that the price be $2.50, he said that growers’ representatives had tried to be realistic—they had felt that while giving no guarantee of self-sufficiency it was a realistic price in comparison with returns from other crops. Ministers of the Government had stated on many occasions that they wished a price that was attractive enough to ensure that the country was self-sufficient in wheat, but the price announced this week would fail to attract the required acreage.’ With the present landed price of imported wheat $4.68 per bushel and the prospect of that price stabilising at about that level the Government and its advisers had failed to be completely realistic, said Mr Wright. In view of the returns that farmers could expect from other forms Of production it was difficult to reconcile the announced price with the Government’s avowed policy of selfsufficiency. said Mr S. J. Morrow, chairman of the Mid-Canterbury agricultural section. While the new price was a substantial increase on the price to be paid for wheat from the current harvest, farmers could not be expected to increase the acreage sown to. wheat when other crops and livestock farming were likely to be more profitable. Because of this and the increase in wheatgrowers’ costs, it was unlikely that the new price would result in a greater acreage of wheat than had been grown in the past season, leaving a substantial part of the country’s requirements to be imported at world prices. It was unfortunate that the announcement had been so long delayed, said Mr Morrow, as during the last month many farmers had made decisions that had reduced the 1974-75 acreage and increased the likely cost of the nation’s bread.