Butter-Dumping ? SUPPLIES AND PRICES IN BRITISH MARKET

Press, Volume XCVII, Issue 28541, 21 March 1958, Page 10

Butter-Dumping ? SUPPLIES AND PRICES IN BRITISH MARKET

[By a Reporter of tha “Financial Times”] (Reprinted by Arrangement)

The Board of Trade is currently considering two applications for an anti-dumping duty on butter.

The New Zealand Government has recently complained to the Board of Trade that Sweden, Ireland, and Finland are dumping butter in the United Kingdom. The National Farmers’ Union and the Milk Marketing Boards, too. have protested against these countries but have also alleged that Austrian butter is being dumped in Britain. What evidence is there to substantiate these complaints? To secure the imposition of an anti-dumping duty, it is first necessary to prove that the goods have been dumped—that is, sold at an export price which is below the “fair market price” in the exporting country. It is also necessary to prove that “material injury” is being done or at least threatened either to United Kingdom producers or to the country which is making the application. “Material injurv” has never been defined but it is generally taken to cover cases where the domestic producers’ income is falling or their share of the mar-

ket is declining. In addition when the applicant is a third party, such as the New Zealand Government, the approval of the contracting parties to the General Agreement on Tariffs and Trade is needed. Grounds for Complaint What, then, are the grounds on which the complaints of butter dumping have been made? The main reason for the applications is the trend of prices for butter on the London Provision Exchange. There butter prices have been falling since the beginning of 1956. In January. 1956. “New Zealand Finest” was being quoted at 397 s 9d a cwt., but had fallen to 260 s a cwt. by the end of last year. The average price over the whole year was 12 per cent, lower than in 1956. The weakness of prices has continued during this year with the price falling to 256 s in January and 240 c in February. While prices have been falling, the volume o f imports has been rising. In 1956 they increased by 15 per cent, and though the rise slowed down last year, there was a further increase of 3 per cent. But the pattern of the sunpliers was changing. For imports from the Commonwealth—mainly Australia and New Zeafell and imports from Denmark showed only a small increase.

Smaller Suppliers In contrast, several of the smaller suppliers who had not been exporting to the United Kingdom in 1955, such as Fihland. Sweden, and Austria, started to send butter, and Eire and Argentina greatly increased their butter exports to the United Kingdom. In addition the amount of butter produced in the United Kingdom increased between 1955 and 1957 by 130 per cent. Can it be shown that their export price is less than the fair market price in the exporting country? It is said that the difference in the two sets of prices is considerable, and is as much as £l2-£l3 a cwt for Einfiish butter. In Eire, where the difference between the prices is smaller than in the other countries except Austria, the home market price in December was 438 s fid a cwt,

while the export price ,was esti-* mated to be 247 s sd. On the question of “material injury,” it is believed that the National Farmers’ Union's appli. cation states that the falling butter prices are hitting the United Kingdom milk producers. But tha effect is indirect. Lower butter prices affect the realised price for , milk and so reduce the guaranteed price for milk. This average guaranteed price has been falling for some time, as there has been a growing surplus of milk, and liquid milk consumption fell last year. But the United Kingdom producers have increased their share of the butter market, though they Still supply only 8.5 per cent of the total. The New Zealand Government also claims that the New Zealand producers have suffered “material injury”. The Dairy Industry Account has been making losses since March, 1956, and the receipts from butter in 1957 were only £39m, compared with £ 49.5 m in the previous year. Though there is a considerable difference between the home market prices of butter in Finland,

Eire, Sweden and Austria and the prices at which butter is exported to the United Kingdom, the United Kingdom provides the only market in which butter can be sold without quota restrictions and in which prices can move freely. So a divergence between home and export prices could be expected on these grounds alone. It is not only in the countries mentioned in the applications for an anti-dumping duty that there is a difference between the export price and the domestic price. On January 30, for example, butter of the same quality was quoted at 373 s 4d in Sydney and 249 s on the Txmdon Provision Exchange. Consumption Trends Butter consumption seems, however, to have been stimulated by lower prices. Last year, when most butter prices fell by 14 per cent., consumption increased by 14 per cent. Though butter consumption in the United Kingdom reached 17.31 b a head last year, it is still 28 per cent, below the pre-war level. While the consumption of butter was rising, that of margarine was falling—it fell by over 8 per cent, to 15.61 b a head last year—but-is still nearly double what it was before the war. 'lt seems, therefore, that an increase in the price of butter might turn consumers to margarine again. At present some types of butter are cheaper than the most expensive types of margarine, and this appears to have more than offset the effect of heavy advertising by the margarine industry. Last year margarine producers spent nearly £l}m on press and television advertising—more ■ than three times as much as was spent on advertising butter.

WHO SUPPLIES THE U.K.’s BUTTER (’000 tons) 1955 1950 1957 Australia .. 73.2 75.8 53.4 New Zealand 121.8 155.8 146.2 Eire 1.0 0.3 14.5 Argentina 7.3 10.3 12.4 Austria — 1.3 Denmark 84.8 88.5 87.0 Finland —— 9.4 20.2 Sweden 1.4 14.1 Total imports 308.0 354.0 365.3 U.K. Production 14.8 25.1 34.1