Economic factors affecting wheat areas within New Zealand

Abstract

A stated objective of the current Government's wheat policy is that New Zealand should be self sufficient in the production of wheat. A means by which this could be achieved is through changes in the announced price for milling quality wheat. This price is currently decided by Government in conjunction with the Wheat Board well in advance of harvest, in fact, prior to sowing. Historically, the price has often been constant for periods of several years at a time. Also, since World War II the price of wheat has never fallen below that of the previous year. In contrast, the area of wheat harvested over recent years has been unstable. This instability has made the self-sufficiency objective difficult to achieve and at times it has been necessary to import large quantities of wheat to satisfy domestic demand. The principal objective of the present study is to measure the major relationships describing the response of wheat area harvested within New Zealand to changes in economic conditions, using an econometric model. This type of model could prove valuable as an aid to policy makers in their attempts to achieve the objectives of a particular wheat industry policy.