DAIRYING IN THE ARGENTINE

Press, Volume LXX, Issue 21324, 17 November 1934, Page 22

DAIRYING IN THE ARGENTINE

COMPARISON WITH NEW ZEALAND .The "Review of the River Plate," a leading Argentine paper, devotes an article to the position of the dairying industry in that country and in New Zealand. The paper states that New Zealand complaints are not unlike those of the Argentine. As everyone interested in the dairy industry here, it proceeds, is only too well aware, the position of both producers and exporters is far from golden at the present time. . Recent action by the Government, together with a more intensive effort to expand local consumption, is doing a little to improve matters; though in the ordinary course of events it must be some time before the palmy days of the early post-war period come back, if ever they do so. Again and again it has been dinned into the ears of Argentine butter interests that New Zealand, thanks to its perfect methods and unapproachable quality of its products, was the paradise of the dairy farmer; something with which Argentina could scarcely hope to compete on level terms! Other people's geese are always swans, and it may be some slight satisfaction to Argentine dairy interests to learn that their New Zealand rivals are at the present time a little worse off, if anything, than they are themselves. A recent communication to London, published in the Chamber of Commerce Journal, declares that it is no exaggeration to describe the dairy industry in New Zealand as being in a highly critical position. "In the first place the price of New Zealand butter in the London market—and the United Kingdom is now the only free market open to butter and cheese from New Zealand—keeps obstinately at about 71s per cwt. At this price, notwithstanding the benefit of the 25 per cent, exchange rate on London to exporters, the value to producers is about 8d per lb, a price at which it is impossible for them to carry on. Cheese is in almost as bad a case at between 42s and 43s per cwt. Both are selling retail in England at Id or 2d or more per lb less than is being obtained for them here. Fears of imposition of a duty, if not of limitation of imports from the Dominion by quotas, when the Ottawa agreement with Great Britain expires are having a most unsettling effect upon the industry itself and on trade in general. Extravagant Land Values For some years past the dairying industry has been paramount in New Zealand, displacing wool at the head of the exports. Production is steadily increasing. Climatic and other conditions are highly favourable to this industry. It received a very great impetus during the war years when butter-fat was worth over 2s per lb to the farmer, as compared with 8d or less to-day, no matter whether the milk is used for the manufacture of butter or cheese. On the basis of highpriced butter-fat and in expectation of its continuance, farms were bought and sold with little or no capital, and mortgages were effected—in some instances three, four, or more on the same property and, of course, at increasing rates of interest the more there were of them. Quite as much land buying and selling was done as farming and values were forced to prices an acre at which it became impossible to make farms pay, even with butter at 120s per cwt in London. The legacy, or incubus, of inflated land values remains. It is the cause of most of the distress in the industry to-day. Special legislation, most of it of such a character as to be imposed in the interest of one section of the community at the expense of the rest, has been passed. But it can prove no more than temporary relief, costly as it has been and still is to the country at large. Costs of production have been cut down, economies effected, and great relief in reduced rates of interest and suspension of interest has been afforded not only by legislation, but by the banks and other lenders before such legislation was suggested or en-

forced. The mortgagee has been rather ruthlessly sacrificed. But the high cost of lands for dairying remains. No Retaliation It has been freely stated that the attitude of the British Government towards imports from New Zealand of butter and cheese has been influenced by the raising of the rate of exchange New Zealand on London almost immediately after the signing of the Ottawa agreement. That the effect of raising the rate was to impose an additional burden on imports of goods from the United Kingdom is not denied, but there is not a tittle of evidence to show that the suggestion of quotas -or other restrictions was dictated by reasons other than for the protection of the British dairying industry. Proposals made to meet the crisis in the dairying industry in New Zealand are many and various. One is the payment of a subsidy out of already overtaxed Government funds, another is to let down the tariff barriers to British manufactures regardless of the interests of New Zealand manufacturers, in return for free entry of New Zealand primary products to the markets of the United Kingdom. Quicker Argentine Improvement The position indicated above is indeed one that makes it reasonable to hope for quicker improvement in Argentina than in New Zealand. For, broadly speaking, the industry here does not suffer from unduly inflated land values, while here, too, production costs have been greatly reduced, without sacrificing in any way the quality of the finished product. On the contrary Argentine butter has become more standardised both as regards texture and flavour. There is, moreover, the added advantage of the better position of casein, while though cheese production here is comparatively small and its consumption local the business is one that is steadily growing and promises to become more and more important as time goes by. The references to the effect of the raising of rates of exchange in New Zealand on London, following upon the signing of the Ottawa, agreement, will also be noted with interest, inasmuch as it contains a valuable moral for Argenauthorities; as does the announce,-

ment that one of the suggestions towards the improving of the New Zealand position turns upon the lowering of tariff barriers for British shipments to that country. Unfortunately for both Argentina and New Zealand, pure cow butter in Great Britain is to-day somewhat of a luxury, margarine in its many forms, both animal and vegetable, being available at a price with which butter cannot hope to compete when cost is the deciding factor on the part of the consumer. Like so many other things, butter prices depend to a great extent upon the general recovery of world trade. Meanwhile where local interests are concerned the actual policy of the government in Argentina must be considered as an effective palliative of the worst features of the present depression, inasmuch as it enables both the dairyman and the exporter to carry on. Which is all that one can look for at the gresenfc tyna