A big increase in the area planted in milling wheat in Canterbury is being attributed to a new flour mill in Timaru, which is committed to using only locally sourced grain.
Farmers Mill chief executive Grant Bunting said the new venture, opened in May, seemed to be giving arable farmers the confidence to plant more milling wheat.
"I'd like to think we were responsible in part for that, because the mill's certainly firing on all cylinders, so to speak.
"We're not at capacity - that's probably to be expected - but our volumes are certainly on the up.
"We've probably given the growers an option in our commitment to sourcing the wheat locally."
New Zealand's only grower-owned and operated flour mill, Farmers Mill will produce up to 28,000 tonnes a year and has already secured contacts with sizeable bakers, including Griffins Foods and Couplands Bakeries.
"Certainly, indications now are that the flour's being well received, and in turn the requirement for grain increases," Mr Bunting said.
Plantings of milling wheat in Canterbury are up 24 per cent this year, according to the latest AIMI (Arable Industry Marketing Initiative) survey.
"Milling wheat is contracted by the mills, and they'll make decisions in relation to how much they've got in stock from the previous year and how much they think the international market is going to supply, and their ability to source grain internationally," said Foundation for Arable Research chief executive Nick Pyke.
"Obviously, [farmers] feel there's more demand for New Zealand milling wheat, and have increased areas. Part of the reason may be that we've got a new flour mill. How great an impact that's having, I don't know."
Mr Pyke said he hoped the increased demand would lead to increased returns for growers, but prices had not moved much so far.
"There's probably not a whole lot of change in real terms. It'd be nice to see it go up so arable land use was more competitive with dairy, but I guess end users pay what they need to pay. If they can get it cheaper internationally, that's what they'll do."
Looking further into the future, demand for locally produced milling wheat was likely to rise, Mr Pyke said, because of rising international demand for Australian wheat.
"Flour consumption in Asia is going up at a huge rate as they become more Europeanised in what they eat. They still eat a lot of noodles, which is demanding a lot, but there's more breads and biscuits and those sorts of things being eaten as well.
"Australia's very focused on delivering wheat into the Asian market, so if they continue to increase their exports into Asia as they forecast, then almost all of their wheat - in fact, more than they produce - would go into the Asian market plus their domestic market. They will have wheat shortages if their predictions ring true."
He also believed there was scope to increase domestic consumption of arable farming produce. "Health advisers say we should be having four to six servings of grain-based foods a day, and in New Zealand the average is somewhat below three, I believe."
"The vegetable industry has had this very active campaign around Five Plus A Day, and we've possibly been remiss in that and never said it's important to eat these things. They're very good for lowering cholesterol, improving heart health - you can roll off all those things that they're brilliant for."
Mr Bunting said he was not yet sure what the international demand for Australian wheat would mean for New Zealand growers.
"I've heard for a number of years now what everyone thinks is going to happen with Australian wheat, and I don't think any of it's ever come to fruition."
"But I think long-term, there's certainly an argument that the Southeast Asian area will consume more cereal grain, and Australia's probably better positioned to take advantage of that, and I guess the more Australian wheat that finds itself not coming to New Zealand will increase the volume that's grown here." Fairfax NZ
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