Butter Price Drop May Cause Dairying Deficit

Press, Volume CV, Issue 30952, 7 January 1966, Page 1

Butter Price Drop May Cause Dairying Deficit

(From Our Own Reporter) WELLINGTON, January 6. The London price for New Zealand butter, down by 10s a cwt to 3125, is at its lowest level since mid-1962.

if the new price holds it will produce a deficit in the Dairy Account for the season and in a full year cost the country £1.7 million in overseas exchange. The London market equivalent of the domestic basic payout to dairymen is about 330 s a cwt. Harder-than-ever bargaining is now certain when officiallevel negotiations and supply quotas for the year beginning April 1 open in London within the next few weeks.

When current quoi the price at the time v dropped three times sin< At that time, dairy leaders in Wellington predicted the present difficulties before the season ended, because of the additional authorisations

las were set last year, ras 350 s a cwt. It has :e then. above basic quotas allowed by Britain. They qualified their forecasts of a price fall by saying it would ocbur “if the butter was available.” It has been. “We have come through hard times before,” said one industry executive tonight. “But let’s make no mistake about it —we must face the fact that there is an awful lot of butter available in Europe. “European countries will be pressuring Britain to allow them to supply even more. When it comes to the

crunch, it will be the trading power of Europe against ours.”

Mr A. H. Ward, general manager of the Dairy Board, has also blamed pressure of supply for the price fall. He foresaw no early return to higher prices for the product. “This could affect our whole economy.” It would now be “touch and go” whether dairy trading for the June season showed a surplus, said Mr Ward.

On the latest, and even on the previous price, butter alone would show a deficit. But pooled rewards from cheese might help yield at best a slight surplus. Dairy Board accountants had begun checking the position. Cheese prices were stable, but the outlook was uncertain The European surplus of milk

products could well encourage Continental nations to manufacture cheese, which could be supplied to Britain free of limits.

“The cheese price is, by tacit understanding, fairly inelastic,” said Mr Ward. “If much more reaches the market, it could collapse.” He said the outlook for the 1966-67 quota negotiations was not encouraging. Even if the British were to carry forward the present global basic quota of 420,000 tons, they would have to add another 10,000 tons granted to Eire under the recent AngloIrish free trade pact.

The expected British domestic production of 45,000 tons would mean a quantity of about 475,000 tons available for the year. In itself, that would require consumption at the high rate of about 9000 tons a week without taking any heed of additional authorisations or of stocks. Stocks at present are high. The current quota year began with stocks of 34,000 tons, which within weeks moved up to 65,000 tons, 29,000 tons more than a year earlier. By the end of the quota year, according to Mr Ward, stocks will stand at between 80,000 tons and 90,000 tons.