The Press SATURDAY, APRIL 12, 1958. Dairy Prices

Press, Volume XCVII, Issue 28559, 12 April 1958, Page 12

The Press SATURDAY, APRIL 12, 1958. Dairy Prices

The further decline in the price of butter on the British market, which is now about 60 per cent, of the New Zealand guaranteed price to dairy farmers, emphasises anew the difficulties facing the dairy industry—difficulties which have been discussed by the Minister of Agriculture (Mr Skinner) at a press conference in London, and by the chairman of the Dairy Board (Mr Linton) in an address reported this morning. Both asserted that the dumping of butter on the British market bears a heavy responsibility for the situation. Mr Skinner took a somewhat broader view than Mr Linton—properly so because, as a Minister, Mr Skinner must bear in mind that the dumping question is the subject of a British Government departmental inquiry prompted by New Zealand’s Mr Linton, under no such constraint, blamed exclusively “ a “flagrant and deliberate dump- “ ing policy carried out by “ various European countries ”, and insisted that Britain owes New Zealand redress. No-one would deny that there is a great deal in what Mr Linton said about the dumping of butter on the British market in the last six months, or that the consequences for the dairy industry must affect the whole economy of New Zealand and therefore the standard of living of everyone in this country. Everyone is concerned, therefore, with the dairy industry’s difficulties, and everyone will hope that these difficulties may be alleviated in some way by the discussions in London.

At the same time, many wHI question whether so much emphasis on the dumping question helps the industry to face its future realistically. Mr Linton claimed that New Zealand dairymen want no more than a reasonable price from the British consumer, and he expressed his belief that if dumping were stopped market prices would rise to “ reason“jble levels”. The validity of tms argument depends, of course, upon what is meant by “reasonable levels”. If there is a single thing upon which

students of the market are agreed, it is the improbability of butter recovering to anything approaching the present guaranteed price. Thus, whatever official measures may be found possible to strengthen the market, it seems inevitable that there will be a gap between market and guaranteed prices. This is the hard fact to which New Zealand must adjust itself, whether the market price be regarded as “ reasonable ” or “ unreasonable ”. As a matter of course, alternative markets offering better prices must be sought diligently; and marketing methods and practices must be closely scrutinised. Attention should be given to the price of butter in New Zealand which for years has been substantially below the guaranteed price. While these things are being done, there will be no alternative to meeting the market, which is influenced by many other factors besides dumped butter, not the least decisive being the keen competition from margarine. New Zealand must reconcile itself to returns from butter exports substantially below the guaranteed price. That will require radical adjustments in this country. Dairy farmers should not be expected to carry at once the whole burden of this sharp decline in the returns from their produce, which is still a major part of the national income. But it would be unrealistic to suppose that one of the country’s basic industries cannot be selfsupporting in the long run; it would cease to be a basic industry. A permanent subsidy, either from earnings on other basic export commodities or from internal ' funds would distort intolerably the economy of the country. The fact must be faced, therefore, that in the long run the costs of production in the industry must be adjusted to the true price level —that is, what the products will fetch on the markets. This is the industry’s basic problem, and it is undesirable that consideration of it should be clouded or deferred by preoccupation with the country’s grievances about dumping.