What role for the Wheat Board?

Press, 18 April 1986, Page 19

What role for the Wheat Board?

The Wheat Board might disband even earlier than the appointed date of February 1, 1989, if an acceptable and capable industry body arose before then, according to the deputy chairman of the board, Sir James Stewart.

The Government has approved a submission from the board, supported by much of the industry, that controls over the trading of domestic and imported wheat should go on February 1, 1987, along with controls on flour.

From early next year the Wheat Board will not have a regulatory function, such as it has had for 50 years, but only an advisory and monitoring function. That will continue for two years, until early in 1989, unless the industry forms a new body, said Sir James this week.

He was commenting on the form and the functions of the board during the interim two years, now that the proposed gradual deregulation of the industry has been speeded up.

It became obvious to many in the industry that partial deregulation was like trying to change over from driving on the left hand side of the road to the right, gradually, he said.

So the major thrust of the board’s submission to the Government earlier this year, was that wheat be traded freely from 1987, and not 1989 as originally planned by the Government. While the board will be empowered to stay on until 1989 by amending legislationexpected before

Parliament soon, said Sir James, it will also be able to recommend to the Government an earlier date for disbanding. “Some preliminary discussions have been held with the users and producers of wheat on the prospects of forming another industry body,” he said. Board staff contracts have until May, 1987, to run, with some incentives to stay until that date plus some redundancy provisions, but no decisions have been made on the number of people who will be required after then. For its administrative and regulatory functions the board has a staff of about 35, and an annual operating budget of about $1.2 million. The staff are the most experienced people in New Zealand in the logistics of moving wheat and flour stocks throughout the country and Sir James agreed that many could be sought after by private companies. Sir James thought that the uncertain outlooks for alternative pastoral products would keep growers in wheat during the transition to a market-run industry. He hoped the development of a high-yield-ing, low-inputs export wheat industry would also benefit growers although world prices right at the moment did not favour this option. “For growers’ confidence in wheat quite a lot is going to depend on the approach of mills to payment for quality, contract details and the like,” he said. “The board’s main aim

now is to try and ensure that the whole industry is in the best possible shape to meet the new market structure.” It was open to any reasonable request to assist sections of the industry to adjust. Its submission to the Government contained three major areas of concern for the board: an inadequate range of cultivars to meet the overseas challenge, the difficulty smaller mills might have preparing themselves for open competition, and the effectiveness of anti-dumping mechanisms. The board thought it could address the first major concern, the development of new cultivars, by funding rapid multiplication schemes, such as those under way for Kotare, Weka and Otane. It made no direct reference addressing the second concern — the ability of smaller mills to survive in a deregulated market. A majority of the milling capacity and bakeries in New Zealand are owned by one interlinked group, Watties-Goodman. The development of a quick and open exhange of information around the industry, using the Aratex videotex network, has been one attempt to aid smaller competitors in the market and sectors which might consider themselves disadvantaged by deregulation. Another is the provision of a futures exchange with wheat contracts and this appears likely to be operating shortly. Without a regulatory function the board would

have these remaining legislative functions, according to the report: © To encourage wheat growing and the use of wheat grown in New Zealand, having regard to the best use of the land available, the cost of imported wheat and other relevant considerations. ® To promote the development and efficiency of the wheat growing industry. ® A wide interpretation of these functions would embrace, said the board: 1. Support for the development and multiplication of improved cultivars. 2. Marketing advice at the request of companies in the industry. 3. Assistance and coordination within the industry in the area of dealing with unfair competition by way of dumping or Government subsidies on imports. 4. To provide a discussion forum. 5. Promotion of research. 6. Production statistics and market information. 7. Monitoring the operation of quarantine procedures and promoting quarantine safeguards. 8. Promotion of quality 9. Collection and distribution of industry levies. 10. Development of the electronic information system to the point where it was appropriate for it to be transferred to the private sector. 11. Technical consulting to the Futures Exchange. “The board itself is the best equipped to carry out these functions and the industry’s interests would be best served by it doing so,” said the submission. It would operate with a

substantially reduced staff. and its operating costs met during 1987 to 1989 by interest earned on funds. When the board was closed down on February 1, 1989 its assets would be vested in the Crown. The industry should work out what type of industry body was required from 1989 and how it would be funded. Wheatgrowers believed an industry body was necessary after 1989, said the chairman of United Wheatgrowers, Mr Ness Wright, with a number of functions and perhaps based on the Seeds Promotion Council format. The independent body would need to monitor all sectors in the industry, give advice to the Government, monitor imports and exports and ensure fair competition under the commerce Act, he said. Research and development fostering and industry promotion would also be high on the list for a new body to replace the Wheat board. Growers would want to collect and distribute their own levies for research and promotion within the industry under a similar structural set-up to that in the herbage seeds industry. A futures contract was certainly needed as soon as possible, said Mr Wright. United Wheatgrowers had submitted to the board that wheat be deregulated in 1987, that a nominal company be formed to oversee the exchange on information in the industry and that the board cease to exist in 1989