Surprise At Concern Over Butter Quotas

Press, Volume CIV, Issue 30688, 2 March 1965, Page 13

Surprise At Concern Over Butter Quotas

(Special Correspondent N.Z.P.A.)

LONDON, March 1.

Reports from Wellington that New Zealand is “worried” about the implications of the new butter quota arrangement, and that the system is “now little more than farcical” have been read with surprise by traders in Tooley Street.

One commented: “We had-a price of 285 s cwt for New Zealand butter when quotas began, and this was considered too low. There was every likelihood that the price might go even lower to the catastrophic level of 1958.

“Quotas prevented the price going lower and improved it to an economic level. Since quotas were introduced there has been a 65s cwt rise for New Zealand, and at 350 s it is away past the figure of 315 s—which the leaders of the New Zealand dairy industry indicated was an economic price at which they could continue to operate. “All through the second half of 1964, New Zealand and Australian butter was selling at 3505, although all other butters were away above that level —simply because New Zealand and Australia were holding the price at a figure below what the market could stand. “This irritated the trade here because it was unable to meet all the orders it was getting for New Zealand and Australian butter. It had to accept a phoney price because those countries would not allow it to rise, since it would have been ‘politically unacceptable.’ “If there were ever any likelihood of New Zealand butter slipping back below 320 s it is pretty certain that extra allocations would be stopped. “In point of fact, Britain

is not going to get all the butter this coming year that she is threatened with politically. For instance, South Africa won’t be an exporter, but an importer, and it is fairly -definite that none will come from Kenya. “The only way in which New Zealand might have cause to be really worried would be if she lost her prcentage of the market because of her inability to send her share of the extra quotas. “Last year, New Zealand was entitled to send more in the way of extra allocations if she’d had'the butter. But she hadn’t got it, and so her percentage of the market was lower than in 1963. But nobody here is to blame for that.” Another trader said: “Farcical is rather a strong word to use about the quota system, I would say. The price of

New Zealand butter has gone up by about £25 a ton every year since quotas were introduced.

“I should have thought the quota system had been pretty well justified from New Zealand’s point of view. She asked for it, it has helped her, and it is still there to be used in case there is any future move towards dumping surpluses here. “The effect in Tooley Street of the announcement on the new quotas? Hardly any. Perhaps it has quietened the market a bit since nobody knows how much butter will really be coming in. For the time being nobody is going to buy more than they need. “The real crux is: nobody knows the level of supplies we are going to get. There may be some pressure on prices, but we can only guess what they may be.”