Growers want $250 a tonne for milling quality wheat

Press, 26 December 1986, Page 15

Growers want $250 a tonne for milling quality wheat

Farmlands Grain in conjunction with United Wheat Growers have established a New Zealand milling grade for wheat, which they hope will return an average of $250 a tonne to growers. About 30 per cent of the 1987 national wheat crop has been committed by farmers to Farmlands Grain which has decided it was time to take a positive stance in the market, said Farmlands’ chairman, Mr Graeme Robertson.

Farmlands was going to be a price-maker rather than a price-taker, said Mr Robertson.

A price of $250 a tonne

(delivered port or mill) was fair to farmers and to the milling industry, said Mr Robertson. He emphasised that fanners, by setting a price for wheat, were not trying to hold a gun to other sectors of the industry.

The suggested price would allow growers to approximately break even financially and was about the same level as farmers were getting for wheat from the 1986 harvest, but less than the 1985 price. An estimated 80 per cent of New Zealand wheat will qualify for the Farmlands milling grade. The specifications are:— Test weight 74kg a hectolitre, falling number 200, moisture 14.5 per cent, screenings 2 per cent with deductions to 6 per cent, and protein 9.5 per cent. Premiums and discounts for various quali-

ties will be charged to buyers and passed back to fanners. The grade will be reviewed at the end of the season.

The action by Farmlands has been taken in response to low contract prices from mills which were uneconomic to most farmers and undervalued New Zealand wheat relative to wheat that might be imported.

Mr Robertson said mills had not expressed any wild enthusiasm for the price suggested by Farmlands. But provided farmers were strong enough the price of $250 was a realistic goal and he urged fanners with uncommitted wheat not to panic.

“We would like them to hold the line and look for $250.”

The Wheat Board had estimated that about onethird of the wheat crop

has been contracted to mills, leaving about onethird uncommitted.

Although Farmlands would obviously like to have more than the 30 per cent committed by growers, it was pleased with the response and felt it had sufficient to take a stand in the marketplace, said Mr Robertson. Tests carried out under international testing criteria by the Bread Research Institute in Sydney had clearly demonstrated that New Zealand wheat compared very well with the quality of Australian standard white wheat, says a circular to growers from Mr Robertson and Mr Mervyn Gray, chairman of United Wheat Growers. This refuted claims that New Zealand, wheat was inferior to A.S.W.

The Farmlands price of $250, although higher than

the Australian f.o.b. price, was competitive once the cost of shipping to New Zealand was taken into account, says the circular. "Therefore, we believe it is a price that is fair to both the grower and flour miller, particularly as the flour milling industry will retain protection from imports for at least 80 per cent of the flour market

"It appears we could be very close to self sufficiency in wheat in 1987 and we had hoped by now the Government would have taken action to limit wheat imports.” Mr Robertson said at prices of $l5O to $l9O there would be very little wheat planted next season, but international studies showed that wheat consumption could soon exceed production, indicating that the industry could be turning the corner to better prices.