The price of wheat

Press, Volume CXV, Issue 33928, 22 August 1975, Page 8

The price of wheat

When the Minister of Trade and Industry (Mr Freer) announced in February that the price for wheat to be paid to growers for the next harvest would be 895.54 a tonne the figure was called “ unrealistic and insulting” by an Opposition spokesman, and North Canterbury Federated Fanners accused the Minister of “gambling with the nation’s bread supply”. The warnings that the quantity of wheat grown in New Zealand might decline further have been belied by the sales of seed and by reports that in some areas plantings will increase by as much as 80 per cent. New Zealand will not be self-sufficient in wheat after the harvest next year, but the quantity which has to be imported will be reduced. Since the New Zealand dollar was devalued. Mr Freer has said that the payment to wheat growers will not be increased. A change now would not make much difference to the harvest next year. Earlier this year when the price of wheat on the international market was falling there appeared to be no compelling reason why New Zealand growers should be encouraged unduly to make the country self-sufficient Since then, New Zealand’s foreign exchange problems have become much worse and are not likely to be solved for some time; returns for the products which farmers might produce as alternatives to wheat remain uncertain; even if the area sown for harvest in 1976 is 25 per cent more than this year, devaluation will mean that NewZealand's import bill for wheat will be almost as large. Worst of all, the world demand for wheat is likely to be substantially more than was forecast six months ago As the “ Guardian ” commented in London two weeks ago: “ The shambles of Russian agriculture is now again likely to raise the price of food all over the world

American farmers, who had been encouraged by the Secretary of Agriculture (Mr Butz) to plant “ from fence to fence ” across the country, have been predicting a record harvest in anticipation of Russian purchases of 14 million tonnes of- grain. Now the Russians' inability to feed themselves has turned out to be much worse than was expected. Purchases from the United States, Canada, and Australia already exceed 14 million tonnes; the Russians are shopping for more in France and West Germany. Mr Butz has revised his forecast to suggest that Russia might want as much as 20 million tonnes from America The Americans will be reluctant to sell, no matter how good their harvest, unless the price improves. The country’s farmers are still smarting from the " great grain robbery- ” of 1972 when Russia and China bought heavily while prices were low in anticipation of a world shortage. If the United States limits sales, or pushes up the price, prices everywhere else must also rise and such small importers as New Zealand will have no choice but to pay them

While it is too late to do much to improve the New Zealand harvest for next year, it is not too soon for the Government and the Wheat Board to consider whether a price should be offered to farmers sufficient to make New Zealand self-sufficient in wheat from 1977 onwards. Fluctuations and shortages in the world grain supply are likely to become worse rather than better. The case for New Zealand to conserve its foreign exchange is becoming stronger. The Government must remember, however, that the incentive to produce an exportable surplus will be at the expense of the taxpayer through the subsidy on flour. The benefits of other uses of wheat-growing land will certainly be taken into account if other produce seems likely to command a consistently better return from abroad