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Competition Concerns Spook Bread Wheat Growers

Uncertainty over restrictive new buying practices and competition from the feed wheat industry has seen the nation’s arable growers cut back on sowing milling wheat - the wheat used for bread.

"It’s worrying that buying practices we believe may be anti-competitive, coming at a time when growers are able to receive better prices for animal feed wheat, may result in New Zealand becoming more reliant on imported milling wheat for a staple food," Federated Farmers Arable Industry Chairperson Colin Hurst said.

Feds are keen to discuss the situation with the Commerce Commission and have also approached Commerce Minister David Clark.

The just-released 1 July AIMI (Arable Industry Marketing Initiative) survey shows sowing (and intended sowing) of milling wheat crops are down 27% on last season, with growers instead opting to sow wheat for feed. Historically, prices for milling wheat exceeded that of feed wheat, given the additional time and effort required for producing wheat for flour.

Last year there were three buyers purchasing NZ-grown milling wheat for local flour mills. This year just one agent is handling the purchase of milling wheat for two of the buying mills that Feds understands represent up to 60% of the home-grown product. Of further concern is that the agent owns one of the mills, Colin said.

"We’ve just had a draft report from the Commerce Commission that says our supermarket duopoly makes it more expensive for New Zealanders to put food on the table.

"For a staple like bread, surely we want to encourage competition throughout the supply chain and give the right signals to our wheat growers that the pains they go to in growing quality wheat for New Zealanders is valued and suitably rewarded."

New Zealand already imports around 230,000 tonnes of milling wheat, mostly from Australia. We’d been steadily growing local production to around 110,000 tonnes, making us more resilient to disruption and shipping restrictions from the likes of Covid-19.

"But growers are clearly not being incentivised to grow milling wheat and are voting with their feet by switching to other crops," Colin said.

"We think the government should be interested in this situation, given the NZ crops and seeds sector has raised gross revenue from $655 million in 2017 to $940 million last year, not to mention the growing interest we’re seeing from New Zealanders in wanting to support locally grown produce."

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