Crop Report reinforces New Zealand growers' optimism
The latest crop report published by ABARE (Australian Bureau of Agricultural and Resource Economics) has reinforced our
predictions for higher grain prices in New Zealand in autumn 2003, says Grains Council Chairman Hugh Ritchie.
"There is little doubt that New Zealand spot market grain prices will reflect poor Australian yields", said Mr Ritchie.
"Rainfall in the major Australian grain growing regions between April and October has been between 40 and 60 percent of
average. ABARE has reviewed its forecasts and predicts that the harvest of Australia's four major winter crops will now
be about 42% of last year's.
"The wheat crop is expected to be about 10 million tonnes, down from almost 24 million in 2001. Similarly the barley
harvest is expected to be 3.3 million tonnes, down from the 7.5 million tonne harvest last year. The drought is expected
to reduce Australia's predicted annual economic growth by 0.7% or about A$5.4 billion.
"With Australia's supply shortfall, and much of New Zealand's crop already contracted, spot prices can be expected to
rise rapidly in autumn. New Zealand end users experienced similar large increases in grain prices in winter 2001 due to
the previous autumn drought in New Zealand.
"While growers will undoubtedly benefit from high short term prices care will need to be taken not to risk long term
industry viability.
"The improvement in the quality of New Zealand grain and the development of industry efficiency depends on maintaining
goodwill between seller and buyer through periods of price instability.