Wheat floor price set at $274 a tonne

Press, 31 August 1985, Page 3

Wheat floor price set at $274 a tonne

By

HUGH STRINGLEMAN

farm editor

A wheat floor price of $274 a tonne for quality index 100 wheat has been announced by the Wheat Board for the 1986 crop. However, the bulk of the crop is expected by the board to score less than 100 on the new quality index system and so most prices to farmers who supply the board will be less than $274 a tonne f.o.b. or loaded at store door. Farmers will also receive considerably less than they did for milling grade wheat from the 1985 harvest, which was bought by the board at $274 a tonne, because the basis of payment has been changed. The deputy chairman of the board, Sir James Stewart, noted that payment this year was free on rail but

that next year payment will be free on board or loaded store door, which puts extra transport costs and charges on to the farmer. The announcement of a floor price follows up a submission by United Wheatgrowers on behalf of its members who were very concerned about the recent fall of more than $BO a tonne in the board’s nominated wheat price. Next year is a transition year towards full deregulation of the wheat industry and it had been agreed that the board would pay on the basis of world wheat prices. It started publishing a nominated price, which was the Australian standard white f.o.b. price, in United States dollars per tonne, expressed in New Zealand dollars at the current exchange rate. In May the nominated price was about SNZ33O a tonne f.o.b. but falling world wheat prices, as reflected through the Australian quotation, and the rising value of the New Zealand dollar, dropped the nominated price to $246 last week.

Meetings of growers throughout Canterbury have protested that this sort of price reduction, should it persist into next year’s delivery period, would shatter confidence in the New Zealand wheat industry. Growers would switch to other crops. It would be like presenting New Zealand’s annual milling wheat requirements

of up to 400,000 tonnes on a plate to Australian growers, allowed free access to New Zealand after 1987.

Self-sufficiency in wheat used to be a strong point with successive New Zealand Governments and generations of growers but in recent years cost competitiveness with Australia, under the C.E.R. agreement, has been emphasised instead.

Sir James said yesterday that the board thought it desirable to maintain a level of confidence in wheatgrowing by providing a price buffer for one year. Although the role of the board in 1987 and 1988 had yet to be determined, Sir James said, because of the special circumstances the minimum price was being set for 1986 only. Beyond that year prices to growers would be set by market forces only, he said. The board has had monopoly control over all milling wheat until now but that control has been partly relaxed to allow for direct

contracting between flour millers and growers for up to 50 per cent of the mills’ requirements in 1986. Some mills have offered a floor price which is now above the board’s current indicative price.