Thursday, December 7, 2023

Milling wheat shake-up has industry on edge

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Significant adjustments to the trading dynamics in the milling wheat industry have farmers and the sector nervous as they await the detail of the change.
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Mauri, formerly the Weston Mill, has advised farmers that from 2022 it will be procuring all its South Island wheat requirements from Wilmar Trading.

In doing so, it recommends growers contact Wilmar Trading directly if they are interested in growing milling wheat.

Wilmar Trading is a large scale Australian-based, integrated commodity merchandising and supply management company.

Mauri is a leading supplier of bakery ingredient solutions across Australia and New Zealand.

As this decision will significantly change the trading dynamics in the milling wheat industry, urgent clarification is being sought on the new procurement policy, Federated Farmers arable chair Colin Hurst says.

“We are in discussion, seeking a please explain, to understand the reasoning behind what they are doing, why they are changing and what this will mean for growers and our associated industry,” Hurst said.

“At this stage we don’t have detail, but we do have concern, we have asked the questions and we are waiting on answers.”

Historically farmers have good relationships with their grain and seed companies who breed the seed, sell to growers and market the grain.

“Farmers need these seed companies in their integrated systems for crops other than milling wheat and for a lot of arable farmers, they also work with the same companies in the livestock side of their business,” he said.

This flies in the face of the industry’s strategy to grow more milling wheat by 2025.

Over the past two years there has been significant increases in the volumes of milling grain grown, with the South Island currently producing 110,000 tonnes of milling wheat.

“We want that growth to be maintained and we will be seeking support for that, it is very important for the South Island,” he said.

United Wheatgrowers chair Brian Leadley says growers are struggling to get clarity.

“As I understand it, Mauri will no longer release contracts through a brokerage firm, so in effect, no longer purchasing direct from farmers,” Leadley said.

“While the Mauri mill still needs wheat, this has potential to add cost.

“We do have our concerns, it appears about 80% of milling wheat will be one buyer, effectively losing the competitive edge in the market.

“As we move into this new phase our growers need to be aware.”

The 2022 contracts due out anytime will be through Wilmar Trading.

“We hope we see these very soon, as farmers are planning both areas and varieties now and need to know,” he said.

NZ Grain and Seed Trade Association (NZGSTA) general manager Thomas Chin says industry 100% backs NZ-grown grain.

“If new trading dynamics detract from homegrown, that will not be a good outcome for our growers, our industry, nor from a food security perspective.” Chin said.

NZGSTA grains and pulses chair Ed Luisetti says while feed wheat varieties may transfer readily from the Northern hemisphere, milling wheats do not. 

“It is NZ seed companies that undertake the breeding of new milling wheat varieties and seed companies have been contracting milling wheat between the flour mills and farmers for as long as the two have existed in NZ.

Luisetti says this contracting process helps pay for the breeding programmes which deliver the new varieties of milling wheat that are constantly being introduced to the market, all of which offer incremental improvements in areas such as yield, disease resistance and baking quality.

“If seed companies are discontinued in the contracting of milling wheat between farmer and mill, the entire NZ milling wheat breeding effort is at great risk and the financial implications may cause these breeding programmes to be shut down entirely,” he said.

“This would be a huge loss not only to the industry but the country as a whole, as it would inevitably lead to much less milling wheat being grown here and much more milling wheat being imported into NZ.”

Mauri is at this stage committed to NZ-milled grain.

“We will continue to procure domestic grain,” Wilmar Trading NZ agent Brad Davies said.

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