Dairy Leader Attacks U.S. Butter Dumping

Press, Volume CII, Issue 30094, 30 March 1963, Page 16

Dairy Leader Attacks U.S. Butter Dumping

I.\ew Zealand Press Association)

NEW PLYMOUTH, March 29. When a great and wealthy nation such as the United States had a policy of pricing butter off its own market and then dumped some of its surplus at low prices on the established markets of small, friendly nations it made nonsense of commercial trading, said the chairman of the Dairy Board, Mr A. Linton, today.

Mr Linton told the Stratford ward conference of the New Zealand Dairy Production and Marketing Board that although the United States President had announced a policy of liberalising trade New Zealand had been forced to reduce shipments of cheese to America and now found that United States butter surpluses were undercutting New Zealand’s established markets in the West Indies.

Mr Linton was reviewing the board’s "forward-look-ing thinking” in marketing. An example of this was the operations in Hong Kong and Singapore, he said. For many years, the board had had s >me connexion with these places artd had sold smatl quantities of butter, cheese, and milk powder. Realising that with rising standards of living people there would be able' to afford better diets, the board decided to establish a milk recombining plant in each place. It knew perfectly well that, until now. demand for liquid milk there was small and that mu h expense and hard work would be involved in building demand. "It is quite wrong to imagine—as many people do —that in these Eastern countries there are vast markets available. with millions of customers longing to buy our products.” said Mr Linton. "Almoet the exact reverse is the case The older people have never made milk a, part of their diet nor have they looked on it, as we do. S S 3 food. ”On the other hand, the b ard believes that the children there today, who are being ’aught in their schools the value of diet in maintaining health, represent a great potential market for the future.”' Following N.Z. Lead “Other countries are now following our lead and commencing recombining plants of one type or another in different areas.” said Mr Linton. ‘Sometimes armchair critics con-plain that they are getting ahead of us. Large amounts of capital are needed for these ventures and in some instances the dairy industries commencing them have Government backing through subsidies.

"Here in New’ Zealand the i dairy industry stands on its j own feet and the board must j carefully consider each pro- j ject in the light of its poten-| tial value as a market ” j The board was selling' wherever prices w’ere rea-1 sonably in line with those I it was securing elsewhere, I said Mr Linton. It was now’ I finding some of the surplus p-jduce from Europe competing n markets in various, parts of the world at very I low prices "The same is true of the . United Slates, whose Presi- i dent some time ago an-i bounced a policy of liberalisation of trade,” said Mr. Linton. “Far from being] allowed to export more dairy j produce to the United States. : we have been forced to re-; duce opr shipments of Colby i cheese and now we are find-1 ing that United States sur-1 plus butter stocks are under-, cutting our etsablished mar- i kets id the West Indies "It certainly makes non-1 sense of commercial trading; when a great and wealthy, nation like the United States! f.Jlows a policy that prices butter off its own market, and then dumps some of its surplus at low prices in the, established markets of small. I friewily r.ationc which dependon those markets for a i livelihood." he said. Japanese Market There was a potential market of great value tor dairy produce in Japan, but it was one that would only be realised by constant effort, said Mi Linton. Before the war there was no real dairy industry in Japan and milk was regarded as being something reserved principally for invalids Dietary habits bad changed tremendously the American Army of Occupation having been partly responsible through providing milk in schools for the Japanese children, many of whom were then suffering from malnutrition. There was now a vigorous dairy ’ industry in Japan, where more than 1 million dairy cows were milked by about 400.001 farmers. The manufacturing side was well equipped and doing an excellent job ip publicising dairy products and getting increased sales Butter and cheese, at about 6s a lb were very dear, particularly when the wage standard was considered The small dairy farmers had high costs ot production and their Government was determined to protect them in much the same way as European GovernnHnts were assisting their fumjers. The board was hopeful that, at some stage, a way would be found to nrotect the Japanese dairy’ farmer while giving the consumer there a lower-priced product If that could be done, -the pace of increasing demand would quicken.” said Mr Linton. One long-term idea the board had brought to fruition in Japan thia year was the supply of cheese for school lunch programmes. Both the parents and the Japanese Government were determined that their children today were going to be adequately fed and so the school lunch proKramme had been.built up. The Japan School Lunch Association provided W million children with a cheap lunch every day including cheese supplied at a cheap rate.

The bill for freights on dairy produce was now more ithan £6.500.000 a year, said Mr Linton. Last year, the industry had suffered a freight charge increase of about £350,000 which, under existing fcondi-, Ilians, it could ill afford, he said. The board was therefore fully supporting the investigation which was being carried out by two expert committees, one working in New Zealand and one in the United Kingdom. The length of time overseas ships spent on the New Zealand coast was one of the factors involved. The shipowners had produced figures showing that the average time spent on the New Zealand coast by the Conference Line ships was 62 days, an average of 24 days unloading and 38 days loading. If it were possible to find ways of reducing that time. much money could be saved over a year, said Mr Linton. “Breathing Space” With the failure of the Unired Kingdom to secure entry into the E.E.C, the dairy industry had a breathing space from the uncertainly about which it had been worrying during the last two years, said Mr Linton. The Government and the board had been fighting to secure the Dominion’s marketing rights in the United Kingdom whose market was essential for New Zealand. The board had had some success in opening up markets in other countries, but there was at present no untapped market for large quantities of butter and cheese.

"More than 95 per cent. ofj the world’s production of butter is eaten by people with Western standards of diet, the greater part of it in the European countries and North American continent,’’ said Mr Linton. “Of the remaining relatively small percentage sold in non-Europea'n countries a large part was eater, by Ehiropeans living in ‘ them." a The market for butter and cheese in tropical and underdeveloped areas would expand as living standards rose and home refrigeration became more widely used. That situation was developing rapidly in Japan, he said. If New’ Zealand wished to retain its market in the United Kingdom, what was it prepared to do in reducing some of the high protective tariffs and import restrictions on British goods entering New Zealand, asked Mr Linton. New Zealand must use the time available now to examine the w’hole trade policy with the United Kingdom If New Zealand went on as it had been It would face serious economic difficulties in ’he future “We cannot expect to con- ' tinue selling maximum quantities of our primary products to the United Kingdom if we continue with a policy that is continually squeezing her goods out of our market. TTiif is a really serious matter for New Zealand and we should lose no time in tackling it." said Mr Lin’on “The policy of the board in the United Kingdom is tfec same as in other markets, to get the maximum returns, over a period, for the goods we sell." said Mr Linton This policy demanded highly organised services of many kinds, that had been ! built up over the years, he I said. Tn the last few years he board’s organisation in 1 the United Kingdom had been put to a severe test but he thought rt would sbe agreed that its record wes satisfactory. Improved Price The outstanding feature of ! ‘he last year had been the I improvement in the price of i butter. ■ Butter sales of the board’s subsidiary company. Empire ! Dairies. Ltd., rose to record iheights, he said. “Anchor” j had kept its place as the biggest-selling brand of butiter in the United Kingdom. I with sales last year totalling 43.0 n 0 tons, while "Fernleaf” sales reached the total of 28.000 tons.

“The board is proud of its achievements in marketing our dairy produce around the world in recent years,’’ said Mr Linton. “In the present] year we are selling our dairy ; products in 70 different countries scattered throughout | the world.” The board could only sell its produce once during anv ; season and up until now had been selling all that ! was produced New Zealand was the only major country continuing to jdo this and the only one ! which, so far. had not had ,to dispose of surpluses at i sacrificial prices. I Last year, sales of New | Zealand dairy produce to all ! markets had increased by £5.500,000 to £77,400.000 During that same period, sales to markets outside the United Kingdom totalled £11.800.000. a rise of 50 per cent, or £4 million on the total four years earlier. Tbed>*vard’s view had been, and still was, that its first job was to supply the British I market, while losing no opportunity for building up worth-while markets in other ! countries.

Although some exceptions w ere made in cases where the board saw special opportunity for building up markets for the future, its general objective was to get the highest return it could for the dairy farmer and the country. In the eight months of the present season ending in January, about 10 per cent, of all exports of butter and other high butterfat products 'had been sold in markets outside Britain, together with 12 per cent, of cheese, almost 60 per cent, of milk powders, and 80 per cent, of casein, said Mr Linton. Surplus Schemes Although the Dairy Board bad Strongly opposed world commodity arrangements that invoiced brice, fixing and production 1 control, it would support proposals which aimed at using surpluses in a way that would assist in building future markets, said Mr Linton. “The major responsibility for financing and administering internationally sponsored dairy products surplus disposal schemes must rest with Governments in international association,” said Mr Linton. Producer marketing boards and representative producer organisations in various countries could co-operate in generally defining the areas that were: Existing commercial market; developing and potential markets; and suitable welfare and non-com-mercial avenues for disposal of dairy products. The only way in which schemes could,b? developed satisfactorily was by recognising that surpluses must not disrupt existing markets, he said.

The question of how dairy surpluses should be handled would be discussed at an international conference to be held in Dublin in May, at which the board would be represented. Before the conference, Mr Harold Woolley, the president of the National Farmers’ Union in Britain was coming to New Zealand and would be discussing the question with the board, Mr Linton said.