Deregulation ‘would bring benefits’

Press, 13 April 1984, Page 27

Deregulation ‘would bring benefits’

Under a generally decontrolled wheat industry New Zeland producers would lose the security of an almost guaranteed domestic market, the managing director of New Zealand Flourmills, Ltd, Mr Peter Allport, has said.

Speaking at the Federated Farmers seminar on cereal exports, Mr Allport said this would increase some of the risks associated with operations both domestically and on the export scene. “However, it should also increase the potential to improve rewards for those who accept the challenges

and meet these successfully,” he said.

Success or failure would be in the hands of the individual enterprise, which would stand or fall by its skills in the allocation of available resources, he said. Mr Allport also commented on the recommendations of the recent Government officials’’ Wheat Review Committee, which included the abolition of flour quotas.

New Zealand Flourmills is a member of the, Watties-. Goodman group, which has more than 60 per cent of flourmilling and bread-bak-ing industries.

He said there was no reason to suppose that a deregulated industry would create a less competitive environment. “The Wheat Board is a monopoly and we are all toll processors for the board. We are trying to get away from that,” he said.

Within a freer environment, Mr Allport believed, companies would tend to increase investment in product research and development and increase investment improved technology to produce new and innovative product variants and to reduce production costs. Companies would also

tend to increase investment aimed at securing and maintaining expanded and new export markets for wheaten products. He predicted a growth in exports of wheaten products of six to seven times over the next four years if deregulation went ahead but he conceded that such exports were small at present.

Investment would also be increased into development of improved wheat cultivars, both to make New Zealand more competitive on export markets as well as ensuring maximum export substitution of wheat products.

With a de-controlled industry, companies would also promote favourable consideration of regional investment in production facilities.

“From an export distribution viewpoint it is of reduced significance whether your manufacturing facility is situated at Auckland or Dunedin, Mount Maunganui or Timaru, provided there is reasonable access to exitport facilities,”

“However, from true raw materials’ cost point of view, the location of the production facility close to the source of the raw material* may assume considerable significance in the decision-making process.”

De-control would increase the employment of skills to service expanding export markets, he said. It would also increase and improve direct communications between the producers of wheat and the users of wheat to the general benefit of both sectors.

Conversely, Mr Allport said, under a continuation of the “current web of controls” he saw no compelling reason why the relative position of wheat products’ exports would improve significantly.