Lower contract prices offered to wheat growers this season could cost the Canterbury economy about $20 million.
Canterbury produced 84 per cent of New Zealand's wheat last year, and the drop in contract prices this season had been bigger than expected, said United Wheatgrowers chairman John Wright.
Contracts offered for milling
wheat with average protein levels are down about $30 to $40 a tonne on last year.
Growers were expecting a drop because of the strengthening New Zealand dollar and international prices, Wright said.
"But we weren't expecting such a significant drop."
When the mills set a contract price it is for next year's crop, so growers will not get paid for another year. This means payments can be well out of kilter with variables such as the exchange rate.
"My biggest concern is that they [mills] have factored in an appreciation of the New Zealand dollar," Mr Wright said. "If the price was based on the exchange rate now the contracts would have been better."
He said there was concern that further New Zealand dollar strengthening would lead to more imported wheat next season.
Milling contracts have been offered at about $300 a tonne this year.
Champion Flourmills grain buyer John Reece said the company had been pleased with the farmer take-up of contracts this year.
- NZPA
