Fresher light on market signals

By Glenys Christian

Over the gate

Farmers would much rather be told the brutal truth about what is happening in their overseas markets as soon as it occurs. By a later time they might have made commitments which in hindsight seem most unwise.

So it was with apples last week, when the Apple and Pear Board admitted problems with Braeburn sales and reduced growers' overall expectations from $14 a carton to between $7 and $9.

To many this would have seemed like a bad-taste rerun of recent seasons, where prices were pitched at a high level as packing began but steadily fell as the selling season went on.

Dairy farmers used to have the same gripe - but back to front.

The Dairy Board had a reputation for starting off the season with a less than confident milk payout prediction which would steadily be topped up by good news throughout the year.

This led farmers to add mentally a further 20c to 50c a kilogram of milksolids on to anything the board said. Over the past few years the board has been at pains to stop that sort of thinking, reiterating that what it says is what it means.

With the proposed new megacoop structure in place, market signals are likely to be much more transparent, having to pass through just one set of hands before they reach the farmer, rather than through the board and nine different companies.

But farmers are only too aware that corporates can get it woefully wrong. Pumped up half-year predictions of a full-year dividend can turn to dust.

Dairy farmers are faced with deciding whether they wish to be empowered with the corporate solution to the problem, which is the ability to sell their shares, or a version of the cooperative solution, which runs along the lines of the oft-repeated reasoning that next year can't possibly be worse.

Kiwifruit growers are on track to the best of both worlds.

Under the share offer for Kiwifruit International announced last week, they can make up their own minds if they wish to invest in the growing offshore crop to keep the Zespri brand before shoppers year round.

Their entitlement to shares is limited by their production in the 1998 year but they can on-sell these shares to other growers.

So they are in the driving seat at the beginning of perhaps the most important, and certainly most controversial move the industry has made since it opted for a single-seller structure 10 years ago.

Producers in other sectors will watch the new shareholders' actions with great interest - particularly apple growers who had put to them a similar option which did not proceed.

One of the producers' qualms was whether their marketer had sufficient intellectual property or marketing skills to work on a range of different fruits sourced around the world.

Kiwifruit growers who do invest in Kiwifruit International will be put to the acid test.

Will they be ringing their next-door neighbour wanting to sell their shares at the first sniff of bad news from the markets? Or will they resolutely hang in there, seeing this investment as just another sign of their total commitment to their industry?

The free market will be at work.

* Glenys Christian can be contacted on email at glenys@farmindex.