Falling indicator demands a wheat floor price: growers

Press, 16 August 1985, Page 17

Falling indicator demands a wheat floor price: growers

Meetings of Canterbury wheat growers to discuss the 1986 marketing scheme and quality index system have given farmers a chance to say how angry they are about the falling wheat price indicator.

This anger has resulted in a demand for the Wheat Board to set a guaranteed minimum price for the 1986 harvest which is not less than the equivalent price this year for average milling quality wheat. Growers have said they must have a guaranteed $260 to $270 a tonne at the farm gate next year (for Rongotea with a quality index of 88) to have any confidence in wheat growing for the future. At present the indicator works back to a farm gate price around $lBO a tonne for this average quality. They accept that 1986 is a transition year towards total industry deregulation but say that an $BO to $9O

price fall from one year to the next is completely unreasonable and must result in all the confidence that growers have in the industry evaporating. Some farm leaders have reported that growers would accept the change in quality index and marketing scheme if the price indicator was not falling like a stone. But farmers cannot be asked to accept a system which is going to result in substantial losses on crops which are already in the ground, let alone the risk of much lower prices in the future.

The chairman of the agriculture section of Mid-Can-terbury Federated Farmers, Mr Barry McLauchlan, reported after four silo meetings in his region that he had never seen growers so angry.

The falling international wheat price and the rising value of the New Zealand dollar had slashed $lOO off the indicator price in just

four months, he said, and growers had come to the meetings to protest and demand that something be done.

The indicator price published by the Wheat Board has fallen to about $234 a tonne, but this is for a wheat of index 100 quality either free on board or loaded at store door (f.o.b. or 1.5. d.). Mr McLauchlan said that this worked back to only $179 a tonne at the farm gate for index 88 wheat, which was an average milling quality Rongotea.

This year growers had received about $262 a tonne for the average milling quality wheat at the farm gate, so the indicator price was at the moment more than 30 per cent down. But growers also faced cost increases of 15 per cent on diesel, 33 per cent on nitrogen fertilisers and 30 per cent on chemicals as well as many other rises.

The 1986 scheme was meant to be transitional, said Mr McLauchlan, but it was now apparent that the industry could disappear during the so-called transition.

The chairman of United Wheatgrowers, Mr Ness Wright, said all sectors were now concerned that the low and falling prices could be the end of the local industry. He had found a great deal of sympathy among the other sectors for some sort of modification of the proposed scheme to limit the effect that currency exchange factors could have. United Wheatgrowers would put a formal proposal to the the board for a floor price scheme which, like the floor in the old marketing scheme, limited the fall in price in one year to 10 per cent maximum.

Mr Wright said this had the same effect as asking for a guaranteed minimum of $262 a tonne for next harvest. If this season’s milling price of $274 a tonne free on rail was put on the same basis as the f.o.b. or

l.s.d. proposal for next season it would then be $302 a tonne. Reduced by the maximum of 10 per cent it then became about $260 to $270 a tonne for average milling grade wheat. Both farm leaders pointed out that contracts were on offer from private companies which stipulated minimum prices of as much as $290 a tonne delivered. More silo meetings will be held late next week in South Canterbury and North Otago.

Mr Wright said North Canterbury arable representatives wanted to delay their silo meetings until the board was able to publicise the detail of pooling arrangements for next harvest but he thought firm dates could be set in about a week. He expected the North Canterbury meetings would be held at the same places as a round of silo meetings last April.

Also a newsletter would be published by the directors of United Wheatgrowers and the board about the end of August.