Milling Wheat Contracts Announced

11 May 2001 PR 58/2001

Milling Wheat Contracts Announced

The milling wheat contract recently announced by Champion Mills of $310/tonne for premium wheat, will not stop the decline in milling wheat production in the South Island, says Neil Barton, Chairman of the Grains Council of Federated Farmers.

“Milling wheat prices have tended to be the benchmark for the contract prices for other grain crops. We note that this contract price announcement by Champion is an increase of $41 per tonne on last year’s price based on a protein level of 11.6% to 11.7% (100 index points). The Grains Council believes that while this increase is welcome, it is insufficient to match the returns available from alternative crops or from the dairy industry.

It is disappointing that the price announced by Champion Flourmills has not fully reflected the increased price of imported Australian milling wheat. Most importantly the present trend away from grain farming to dairy farming in our major wheat production area, will not be curtailed by this modest increase in the price of milling wheat.

For cash flow reasons farmers will welcome the announcement of an advance payment of $140 per tonne payable on the 1st of May. The reduction in storage increment however is disappointing and negates any advantage gained by this advance payment to growers. The storage increment is not an interest payment to growers but is a payment in recognition of the costs of storing grain on farm, for the convenience of the flourmill.

We express disappointment at the late announcement of this contract. Farmers have been given repeated assurances over many years by mills that contract price announcements will be made in sufficient time to allow farmers to be fully informed of the potential profitability of autumn crop options. We note that the Champion contract is the only milling wheat contract announced to date,” said Mr Barton.

ENDS

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