Electoral Committee MeetingMonday, 22 Nov, 2004
New Zealand wheat growers could be forgiven for wanting to ignore the reality of the world wheat market, as low wheat futures and the high valued New Zealand dollar drive down the cost of importing grain.
On current indicators milling wheat could likely be landed in Christchurch priced from $260 to $280 per tonne, ignoring the historical fundamentals of low world stocks. In the feed market the influence of Australian summer grains, low soya meal prices and alternative feed sources such as palm kernel and copra are having some influence on demand.
On a positive note, the last remaining under-grade and uncommitted 2004 crop feed wheat is clearing at values higher than international markets would indicate. This is again driven by a strong domestic feed market.
Positive international indicators are beginning to appear although price improvement is not guaranteed. The Australian crop does appear that it will be smaller than recently predicted and there are tightening supplies of high quality wheat internationally. This will likely provide some early support for pricing in early 2005 and is already providing improved protein premiums in Australia.
As we approach the new year's contracting season I hope that United Wheatgrowers (NZ) Ltd may be able to provide even better market news to New Zealand growers than previous years.
United Wheatgrowers (NZ) Ltd continues to support the businesses of wheat growers through its core roles and continually is fine tuning those roles in conjunction with The Foundation for Arable Research and Federated Farmers Grains Council.
We are pleased to continue to provide disaster relief insurance to wheat growers through FMG for the 2005 wheat crop. What we must strive to do is better educate wheat growers as to the insurance claim process and the nature of the perils covered.
Increasingly we are responding to claims by growers for losses not covered by the FMG contract. Growers need to be aware that the scheme provides cover for limited losses that arise from an "Act of God", hence the disaster relief status of the scheme. Losses that might have been preventable, such as grain heating in silos that could have been pre-warned through regular silo monitoring, are not and have never been covered by the scheme.
It is important for this organisation that growers are aware of the extent of the scheme that is funded by their levies.
QAgrainz audits have commenced recently and feedback to date is positive. The process is clearly not onerous for the professional growers we have in our industry. Both growers and auditors have found the process relatively harmless.
As with all samples of an industry we will almost certainly see some growers fail the audit process. Auditors have found limited numbers of growers who have been unwilling to cooperate and appear to have no recording system for crop inputs and grain storage. It would be wrong for the QAgrainz scheme to allow these growers to remain registered and tarnish the reputation of the committed industry players.
Richard Green is today standing down from United Wheatgrowers (NZ) Ltd directorship. Richard has been a director since 1998 and has proved to be a valued member of the board. Richard has been spearheading the insurance scheme and our relationship with FMG over recent years and his professional approach to all board discussions will be missed.
We wish Richard well in his future endeavours.
My recent Nuffield Scholarship award will provide personal challenges over the next year and take away my focus from this organisation. I am confident your board will provide the necessary leadership in my absence.
The subject of my study is an attempt to answer some important questions that our industry and many other primary industries are asking relating to the value of investing in longer term research with the aim of reducing reliance on commodity production.
Although I don't expect to return with all the answers, I hope to be able to report on some useful examples with both positive and negative outcomes.
I wish you all a successful harvest and prosperous New Year.
John Wright
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