Markets for N.Z. Butter

Press, Volume CV, Issue 31052, 6 May 1966, Page 12

Markets for N.Z. Butter

The entry of the United Kingdom into the European Economic Community will mean “the end of the “ present quota system ” for butter imported into the United Kingdom, according to Professor L. V. Castle, Associate Professor of Economics at Victoria University. The emphasis in Professor Castle’s statement was on the word “ present for it seems inevitable that Britain’s entry to the Common Market would be followed by some form of regulation of the imports of butter more restrictive than the present quotas.

Although New Zealand protested formally against the imposition of quotas on imports of New Zealand butter in 1962, on the ground that any restriction on imports of New Zealand butter was a breach of the United Kingdom-New Zealand agreement providing for unrestricted access to the British market, the quotas have not, in fact, damaged New Zealand’s trade in butter with the United Kingdom. New Zealand’s share of the annual quota has been sufficient to provide for virtually all the butter the New Zealand Dairy Production and Marketing Board has wished to send to the United Kingdom since 1962. And without the limitations on the British import of butter from other sources, total imports from all sources would have been higher, with a consequently lower price on the United Kingdom market and a smaller return to the New Zealand dairy industry.

Britain’s 55 million people import about half their annual food requirements. The prospect of increasing their share of this trade is one of the main inducements to the present members of the Common Market to invite Britain into the Community. In its negotiations with the Six, Britain will, no doubt, point out the difficulties which New Zealand will face in marketing dairy produce if Britain’s Commonwealth imports are “phased out” too abruptly. But Professor Castle, who is a specialist in international economic relationships, has warned New Zealanders that they were wrong if they thought concern for them was going to affect the negotiations. The only safeguards for Commonwealth trade, Professor Castle added, would be those acceptable to the Common Market countries.

Butter is the most difficult of all the commodities likely to be discussed in the negotiations for Britain’s entry to the Common Market The best New Zealand can expect from the negotiations over butter is a modest reduction in the level of British imports from New Zealand, spread over a five-year or ten-year transition period, and the imposition of a small duty. To achieve this “ best deal ”, all the skill of New Zealand’s bargainers and the utmost goodwill of the British negotiators will be needed. Until the outcome o f the negotiations is known, it would be prudent for the New Zealand dairy industry not to rely too heavily on the United Kingdom market for butter in p'anning beyond 1967.