Wheat Growers Won't Rush To Sign Contracts
"Wheat growers are not rushing to sign contracts currently on offer. Flour millers will have to be willing to lift their offers for milling wheat if they wish to be sure of New Zealand supply," Chairman of the Grains Council of Federated Farmers of New Zealand said today. Mr Barton's comments followed the announcement of the 2002 contract price offered by three leading flourmills. "Whilst the Canterbury Flour offer is better than that offered by Champion Mills and Weston Milling, the prices will not change the relative profitability of arable framing compared with the profitability of dairy farming," said Mr Barton.
Canterbury Flour's contract offers $325 per tonne for Premium 1 Grade wheat at 11.6-11.7% protein and represents an increase of $60 per tonne from last season. Last week Champion Mills and Weston's Milling announced their contracts offering $310 and $319 per tonne respectively.
Champion has since recognised that they have pitched their prices too low and have raised their offer to $317 per tonne.
"These prices are inadequate and must show greater movement. MAF Farm Monitoring study of Canterbury farms has clearly shown a return on capital of dairy farming of 12% whereas arable is only 4%. Unless arable returns improve the trend towards dairying farming in major cropping areas will not diminish," Mr Barton said.
"Canterbury Flour's price best price of $325 is still well below the average price $366 per tonne CIF of wheat imported into New Zealand from Australia in the January-March 2001 quarter. Recent Australian regulations require all wheat exports to be sourced through the Australian Wheat Board. This move will increase the price of premium grade milling wheat by an average of a further $10 a tonne for all milling wheat imports." "Unless miller's begin to offer truly competitive prices arable farmers will not enter contracts, millers will face a shortfall and the 'black and white tide' of dairying will not subside," said Mr. Barton.