Imports of wheat

Press, 21 April 1982, Page 20

Imports of wheat

The prospect that New Zealand will have to import considerable quantities of wheat to make up a deficiency in domestic production may seem strange for a farming country, tut it is no novelty. The system of setting the price paid to New Zealand wheatgrowers is continuing to sustain the industry at a level that provides the bulk of New Zealand’s requirements without running the risk of building up large surpluses which might have to be sold at a loss if prices are low on the world market The surplus would be more embarrassing in most years than a relatively small deficit.

A shortfall of domestic wheat production would be alarming if wheat to meet domestic requirements had to be imported at great expense. World prices are reasonably low at present and the cost of the imports will not be a great strain. The price paid to New Zealand growers is now related to world prices. A three-year moving average of the price of Australian wheat is the figure taken. If there were a marked and sustained drop in world prices, New Zealand growers might be forced out

of wheat-growing entirely. There is a “floor” below which the New Zealand price does not fall. When farm costs are increasing inexorably, alternatives to wheat would look increasingly attractive to farmers if world prices remain low. One of the reasons for this year’s shortfall is that many Canterbury farmers were attracted to barley which can be exported, at prevailing prices, for a better return than wheat could produce on the domestic market.

Were the world price for wheat to drop or remain so low that New Zealand farmers gave up growing wheat altogether, the Government might have to look at the pricing system again, even though imports of wheat would be cheap. Such a dramatic drop in world wheat prices seems unlikely. The merit of the present system is that, if world prices continue to rise, making importing, wheat in significant quantities a serious drain on overseas funds, .the rise will be reflected in the price offered for New Zealand wheat.. This should ensure that wheatgrowing will be sufficiently rewarding to encourage ample sowings.