Selling Cheap; Buying Dear

Press, Volume LXXXVII, Issue 26465, 5 July 1951, Page 6

Selling Cheap; Buying Dear

Discussions at the conference of the Associated Chambers of Commerce at Wairakei and remarks by Mr B. K. Keiller in his presidential address at the Royal Agricultural Society’s annual conference at Lincoln College express the growing concern about New Zealand’s trading arrangements. For the time being, at least, New Zealand is at a disadvantage. On the one side government - to - government agreements for the sale of New Zealand produce hold prices (that can be varied only moderately from year to year) at levels below world parities; but there are no restrictions on the other side. New Zealand buys independently from British manufacturers on no favoured terms, but at current and often inflated world prices. In terms of goods—for instance, carcases of mutton against a tractof —the trend has been, unquestionably, to the advantage of the buyer of primary products and to the disadvantage of the buyer of manufactured goods. This disparity tends to widen rather than shrink as the years go by, as Mr Keiller noted. It is probably correct to say that without the big accretions to New Zealand’s overseas funds from phenomenal wool prices the terms of trade between New Zealand and Britain would have been a matter of urgent practical politics in New Zealand long before this. While wool has saved the situation, the example of wool in a free market has increased New | Zealand farmers’ restiveness at bulk buying arrangements which, they believe, are responsible for holding meat and dairy produce sales below world parities. Meat producers, tied to bulk purchase agreements with ‘ the British Ministry of Food, have ’ resented receiving prices very considerably below those Britain is paying to its own producers and to other countries. Producers of dairy products, similarly tied, have been dissatisfied with the disparity be- j tween the prices paid for New Zea-! land and Danish butter and New Zealand and Canadian cheese. Of course, a balance of the advantages

and disadvantages of the long-term contract system cannot be confined simply to terms of trade. New Zealand has the strongest of reasons for helping Britain to maintain her new economic stability, which could not have been won by hard work alone but has needed such substantial buttresses as the loans and gifts from the United States and Canada. New Zealand has helped by selling cheap and buying dear. Again, the value of long-term guaranteed markets cannot lightly be disregarded in New Zealand, no matter how harshly the system presses at the present. It is easier to see the disadvantages of the present system than to see remedies. The British Ministry of Foodbuyer of the great bulk of New Zealand’s meat and dairy producesubordinates all other considerations to the aim of keeping down the British cost of living. It has little interest in equating buying levels with selling levels of British goods—except when forced to, as in the case of Argentina. Nothing has been said or done in Britain to encourage a hope that the markets in meat and dairy produce may be freed in the early future. Diversion of some produce to other markets where it will command better prices would help both to widen New Zealand’s too-narrow trade channels and improve its trading position. The dairy industry usefully helped itself in both respects last season; and in January the Meat Board tried to arrange a shipment of meat to the United States. This venture, which came to nothing because of Britain’s grave shortage of meat, was to be, as the general manager of the Meat Board (Mr J. J. Evans) said, “ not a hunt for dollars, but a “ serious attempt to lay the foundations for a permanent trade with “ North America for our meat ”, For their several benefits, efforts to widen markets should be continued; and although in present circumstances they cannot be expected to give substantial relief, New Zealand must take the long view. This cannot fail to take into account the imprudence, not to say improvidence, of relying on wool prices continuing to make good trading deficiencies caused by selling other farm produce too cheaply.