Big Dairy Products Sale To Peru

Press, Volume CIX, Issue 32164, 6 December 1969, Page 52

Big Dairy Products Sale To Peru

(New Zealand Press Association) WELLINGTON, December 5. "The Government and the Dairy Board are to be congratulated on the excellent deal made with Peru for the sale of New Zealand milk powder in what is reported as being the biggest agreement yet for the sale of dairy produce outside of Britain,” said Mr S. S. Cox, president of the Associated Chambers of Commerce, tonight.

New Zealand is to extend to Peru a Reserve Bank credit of sB.9m to finance sales of this country’s dairy products there.

Agreement between the Governments of both countries was announced today by the Prime Minister (Mr Holyoake).

Mr Holyoake said the credit would be repaid over five years after a five-year grace period. There was also provision for postponement of principal repayments beyond that date if the commercial agreement was extended for another five years. Interest would be 51 per cent a year. The agreement was negotiated by a team from New Zealand, Messrs S. A. McLeod, of the Treasury, S. T. Murphy, of the Dairy Board, W. E. B. Tucker, of the Department of Industries and Commerce, and R. L. Knight. of the Reserve Bank.

Mr Holyoake said that under the contract for supply of dairy products, the Government of Peru undertook to buy annually from New Zealand, during the next five years, no less than 9000 metric tons of skim milk powder and 3500 tons of anhydrous milk fat

In addition, Peru might use credit to buy butter, whole milk powder and other New Zealand dairy products.

Sale And Aid Mr Holyoake said the man objectives of the agreement were to secure for the period of the supply contract “our established share of the growing market in Peru for dairy products while at the same time helping the Government

of Peru in its efforts to deal with short-term economic difficulties.” , Peru was confronted with a serious external debt problem, not because of the size of the debt which was less than the value of one year’s exports, but because twothirds of the amount owing was repayable ill the period 1970 to 1973.

Mr Holyoake said he had recently announced a smaller balance of payments support credit for Indonesia to help with the rehabilitation of that country’s economy. “Financial assistance of this -kind is a form of aid for developing countries which, as a capital importing country, New Zealand is not well placed to extend except in special circumstances. “We do not have the economic base to become a major creditor country.” Indication Soon Mr Holyoake said that if, as seemed likely, the Government of Peru would draw half

I or perhaps more of the credit Itn the coming year, there I would next year be a substan- ! tial increase in total financial resource transfers from New Zealand to developing countries.

The credit to Peru might be counted in assessing New Zealand’s performance in terms of the 1 per cent development assistance target advocated by the United Nations. Others Notified

Mr Holyoake said the New Zealand Government had notified other Governments with an interest in the Peruvian market for dairy products of the main provisions of the agreement, to enable consultations to take place on any effects the agreement might have on their trade.

Further, in support of New Zealand’s efforts to secure an international agreement under the auspices of G.A.T.T., establishing minimum prices for butterfat products and skim milk powder, the agreement with Peru provided that in the negotiation of prices for the sale of dairy products to Peru, New Zealand would take into account the relevant provisions of any international agreements concerning the sale of dairy products to which it was or might become a party. Mr Holyoake said the extension of a long-term credit to Peru was in line with

recommendations of the National Development Conference to explore new means and new areas for developing New Zealand’s exports. “The agreement will help

to safeguard one of New Zealand’s important dairy markets outside the United Kingdom and reflects the determination of the Government and the Dairy Board to combat the effects of dumped and subsidised competition which is still placing great pressure on markets for dairy produce." It was also a welcome development in New Zealand’s trade relations with Peru, a neighbour in the Pacific basin, with whom it was hoped increasing traue and other mutually advantageous relationships would develop. Board Pleased i The chairman of the Dairy Board (Mr F. L. Onion) said today that the board was very pleased at the successful completion of the agreement The Government and the board had worked closely together on the project, and the board was appreciative of the Government’s move. The Associated Chambers of Commerce had advocated the appointment of an official trade commissioner to the South American countries, and the new agreement emphasised the soundness of i this, Mr Cox said.