Big shake-up in arable sector called for

Press, 16 December 1988, Page 14

Big shake-up in arable sector called for

Single entry point selling for arable crops and a new arable authority have been recommended by a participant in the Lincoln College Rural Leadership Programme.

In a paper titled “Improving Export Performance in the Arable Sector,” Mr Bernard Duncan, of Darfield, said letting matters continue as they were was not an option for the arable sector. The indusry’s strength was in its diversity of products and commodities. That strength needed to be acknowledged and used to the economic advantage of the industry.

He said dividing grower representation among the maize growers’ subsection and herbage seed sub-section of Federated Farmers’ arable section, as well as United Wheatgrowers and the Pulse Committee, fractured the industry. They did not give the unity seen with other primary product groups. Establishing a new arable authority would help lift the industry’s profile. The Arable Section was already discussing draft legislation to establish an arable crops levy. It was in an effort to have the necessary legislation in place, when at some time in the future it was deemed necessary to levy cropping farmers for a particular purpose. The most likely purpose would be to raise and distribute funds for research and development, a task which could be undertaken by an arable authority. Because the arable sector was small compared with other industry groupings, any authority with statutory power would need to be “lean and mean” and match the industry’s ability to pay. A 3 per cent levy on production would be the maximum acceptable to cropping farmers and would yield $9.6 million. Special interest commit-

tees, such as the herbage seed sub-section, should continue to receive their existing levy from the total levy struck, he said. Mr Duncan suggested the board of the new authority should comprise the chairmen of the herbage seed sub-section, United Wheatgrowers, the maize sub-section, the Pulse Committee, and three further members with commercial expertise, one of whom was a Government appointee. A potential arable authority could also have the role of supervising a single entry system for selling overseas. He said that while the existing system of open competition should continue in the domestic market, changes were needed in export markets. A lack of strategic control and lower returns through New Zealand exporters competing against each other in the market place were among the reasons change was needed. A single entry point system, where exporters would apply for rights to a particular market or country, had many attractions for the arable sector.

The single entry point system acknowledged the importance of free competition on the local market and the exporting expertise of existing companies. Several companies would be able to supply an entry point through consortiums. An overseeing arable authority would not be faced with expensive administrative overheads with the system. "With exporters gaining sole rights to a market, the opportunity to shift from being commodity traders to marketers who invest long term, becomes more likely. It follows from this that the exporter can service his cus-

tomers more reliably. “The system encourages those involved in the industry to take a ‘N.Z. Incorporated’ approach to the international market where they compete with other countries for market share and not with other New Zealand companies. “The passing of the necessary legislation to give an arable authority power to establish and supervise a single entry system for the arable sector, would seem to be in the best interests of the industry,” said Mr Duncan.

Other activities a statutory arable authority could become involved in included providing market information to growers and exporters, promotion, co-ordination of shipping and quality control. The authority could carry out these functions itself or contract them out with, for example, market information being handled by the Meat and Wool Boards’ economic service.

“It should be remembered that the more functions a statutory authority has, the more expensive it is to administer.” The future arable authority or the Arable Section should develop links with the Horticultural Export Authority. “The function that body performs for horticulture is in line with the objectives of arable producers. It also sits neatly with the single entry method of exporting. “Cropping farmers need to either press for the establishment of a body similar to H.E.A. for the arable sector, or encourage the necessary legislative changes to allow H.E.A. to handle arable crops as well,” he said.