The agricultural sector is export driven and market based. Average farm size is 219 hectares.
Agricultural policy. Beginning in the mid-1980s, the government has removed itself from direct and most indirect involvement in agriculture. Producer boards continue to play a major role in marketing some key agricultural products, although the extent of control varies.
The Dairy Board and Kiwifruit Marketing Board continue to serve as single sellers and control exports of their respective products. But similar authority for the Apple and Pear Board was removed legislatively within the past two years, and the Meat Producers Board is facing increasing pressures from free-market supporters.
The meat board is not the sole exporter, but has exercised control over exports. In 1992-93, the Meat Planning Council, a liaison group between the meat board and processors and exporters, has coordinated exports by allocating markets and volumes to private companies based on historical production. Companies pay a bond to ensure they will not compete outside their markets and will adhere to pricing guidelines. The purpose is to prevent competitive price cutting, which would tend to force down producer prices.
But plans recently emerged to change the meat board's structure and authority. In mid-1995, the government announced a legislative proposal to reduce the meat board's statutory powers, lessen its export authority and require one-third of its directorships to be held by exporters, processors and marketers.
The issue stirred controvery among those who preferred the status quo and those who thought even more change was desirable to take advantage of the expected export openings stemming from world trade reforms. The proposal was to be submitted to parliament in late 1995.
Other changes have affected New Zealand's agriculture, with environmental, sanitary and quality issues increasingly influencing policy. The Resource Management Act, which took effect in 1992, is designed to ensure that all economic activity is environmentally sustainable, while the Biosecurity Act of 1993 addresses health issues related to organisms and pests threatening food safety. Both have affected production agriculture and the processing sector.
Change also was in the works for the Ministry of Agriculture and Fisheries, which was scheduled for restructuring effective in July 1995. Under the plan, MAF was to be split into two separate and autonomous organizations, one overseeing agriculture and the other fisheries. The remaining MAF core was to retain authority over policy, regulation and quality management.
One section will develop and implement trade and domestic agricultural policy and conduct economic analysis. The regulatory section will set sanitary and phytosanitary standards and conduct audits, while the quality management section will enforce the standards and policies established by the regulatory section through meat inspections, border control, disease surveillance, export certification and animal welfare issues.
Flour milling. New Zealand has 15 primary flour mills, with a total annual capacity of 283,000 tonnes. Eleven of the mills are members of the The New Zealand Flour Millers Association in Christchurch, which represents the industry.
Estimated flour production for the year ended June 30, 1995 was 236,000 tonnes, wheat equivalent. Defiance Milling, Goodman Fielder Mills and Allied Mills are the top three milling companies in terms of production and are highly vertically integrated with the baking industry.
Of the total mills, one has a capacity of 288 tonnes per 24 hours, and four have a capacity of 120 to 168 tonnes per 24 hours. Four other mills have a capacity of 72 to 120 tonnes per 24 hours, and the capacity of the remaining six mills is less than 72 tonnes.
Two mills are located in the city of Auckland on the North Island, while the remainder of the island has three mills. The remaining 10 mills are located on the South Island, with three in the Christchurch area.
To keep pace with consumer quality demands and competitive pressures, some mills use the most modern technology; three of New Zealand's largest mills are less than 10 years old. In general, equipment and plant modernization is an on-going process for the industry.
Flour storage capacity for the typical mill is equal to about five days of production. Flour predominantly is packaged in 20 to 25 kilogram multi wall paper bags and shipped locally by truck or rail for longer distances. Some inter-island transport is by sea.
As most of New Zealand's wheat is grown in the South Island, mills in that region obtain virtually 100% of supplies from local producers, who store wheat on-farm until required for milling. The wheat consists of hard and semi-hard types for bread flours and soft types for biscuit and cracker flours.
In the North Island, wheat is imported, generally on a quarterly basis in amounts of between 5,000 and 15,000 tonnes. Primary sources are Australia, Canada and the United States, which provide both hard high protein and soft wheats.
About three-fourths of flour production is consumed by the domestic industrial market, with 24% going for home use. Only 1% of flour production is exported; New Zealand provides no flour export subsidies. Some mills have developed niche markets in Pacific Islands.
The flour industry was deregulated in 1987, and the government is not involved in production or marketing. But under the Resource Management Act, the government does conduct regular environmental audits of all mills to assess environmental emissions and controls.
New Zealand has a sophisticated consumer market, with demand increasing for a wider variety of bread products. Annual per capita bread consumption is 53 kg, or about 1.4 loaves per person per week; that compares with Italian and German consumption of 77 kg each, U.K. consumption of 45 kg and U.S. consumption of 37 kg.
Demand for specialist flour for pizza, premixes, breadmixes and muffin mixes is increasing, as well as flour demand from instore bakeries. As consumers look for new and innovative products, demand for flour for niche bread also is on the rise, as is demand from fast food outlets.