Whither goes N.Z. wheat?

Press, 9 November 1984, Page 19

Whither goes N.Z. wheat?

By

HUGH STRINGLEMAN

The Government has thrown the wheat industry in the air, expecting that

the good grain will be saved and the chaff will be blown away.

no longer required to buy domestic wheat and flour so that a new board would need to be able to act as a domestic and export marketing agent on behalf of growers — a sort of official co-operative, he said. The agriculture section of North Canterbury Federated Farmers has already formed a board structure to present to United Wheatgrowers. The chairman of that section, Mr George Hutton, said it was hoped that the board would comprise 11 members: seven producers, three independents chosen by the board and one Government nominee. He would also work towards a ward system of election to the board and not an electoral college system.

Within days of the Government’s announcement to remove flour quotas and restrict the role of the Wheat Board from February 1, 1987, growers moved to form a new Wheat Board and meet the challenges of an unrestricted domestic market open to supplies from Australia.

Suggestions for the makeup and powers of the new board have been put forward and the electoral committee of United Wheatgrowers will discuss these suggestions at its bi-annual meeting in Christchurch on November 27 and 28.

Wheatgrowers have been told that it is now up to them to decide what controls over domestic wheat marketing and form of Wheat Board they want after 1987.

The deputy chairman of the current board, Sir James Stewart, said the future role of the structure of the board would depend on what the growers resolved to establish to manage their interests in the entirely new market situation.

The executive officer of the agriculture section of Federated Farmers, Mr Bruce Robertson, has said that growers must submit to the Government a proposal for a new board.

He thought that the growers must decide on the extent of controls they wanted and then devise a board structure to suit.

By 1989 New Zealand millers and bakers would be

costs; a pricing arrangement for growers reflecting quality according to commercial criteria; smoothing of the transition to open competition in the flour trade; termination of the contract system for bran and pollard and decontrol of their prices. Sir James indicated he did not believe that the jigsaw of the industry would fall smoothly into place merely by removal of the board’s statutory control. The board’s officers had a very demanding task in steering the industry into its new era, after 20 years operating under the present regulations. The Government’s adoption of the recommendations of officials did not reflect dissatisfaction with the board itself, Sir James

In his statement after the said. announcement of the Gov- “It was abundantly clear ernment’s decision, Sir that the Government’s deciJames Stewart said there —sion related to the incompawas a great deal of industry tibility of the Wheat Board reorganisation to be carried Act with the provisions of out by the board. C.E.R. and the evolution of It would hold industry current economic policy,” discussions as soon as pos- he said. sible and move as quickly The board was also lookas feasible to implement the ing at the future competiGovernment’s priorities. tiveness of South Island The Wheat Board would milling wheat against Aushave preferred a longer tralian imports to the North period to “orchestrate the Island; the ability of South changes that will be neces- Island mills to survive open sary to avoid competition from the large during the changeover to vertically integrated groups; free market conditions for the security of bran and wheat and flour,” said Sir pollard supplies to indeJames. pendent feed compounders;

He mentioned the key the prospects of a substanareas of attention for the tial export trade in feed board as: a wheat pricing wheat and lower quality system to mills which re- milling wheat; and the prosflected location and freight, pects for exports of flour-

based products from the South Island.

The industry will be keen to get some sort of agreement on the shape of the future (because there is nothing in the Government’s announcement which suggests controls on domestic wheat marketing after 1989) to retain wheatgrowers during the interim and into the 19905.

itself to growers by its performance on price, policies and personnel.

Fortunately, the anticipated basic price for milling grade wheat in 1985, calculated at this stage to be around 5270 a tonne, will maintain a healthy margin in favour of wheat over export malting barley pool results of this year. But of course growers have long since made their decisions to grow or not to grow wheat in the present season.

The massive increase in barley plantings and harvestings in recent years has raised the prospect of a New Zealand arable industry which cannot be bothered growing wheat. Troubles with weather and wheat quality in the last two harvests (1984 in Canterbury and 1983 in Southland) have also dented growers’ confidence in the crop. The wheat industry has long been regarded as conservative, despite the innovators such as the Mulholands, Wrights and Morrisons involved in it, and it spent a good deal of time arguing over the first step towards a freer market structure, payment for quality. The suspension of the wheat pricing formula for the period of the wage and price freeze also chilled the hearts of growers and warmed them towards the alternative arable crops. At first the threat of unlimited access by Australian wheat and flour to New Zealand under C.E.R. seemed a long way off, but the New Zealand Government, by its actions, has foreshortened considerably the time for deliberation.

Under a free market system a new Wheat Board will have to recommend

In this context, the industry is also debating a change to the pricing formula which would mean the New Zealand price reflected much more quickly changes in the price of Australian standard white.