Special Price Needed For Butter

Press, Volume CX, Issue 32351, 17 July 1970, Page 4

Special Price Needed For Butter

(N.Z P.A. Staff Correspondent) BRUSSELS, July 15. The special trade pact New Zealand is seeking for its butter when Britain enters the Common Market will need to involve a special price, as well as simply providing access. This is the background to the talks the Minister of Overseas Trade (Mr Marshall) had in Brussels this week with the E.E.C. official concerned with agriculture, Dr Sicco Mansholt First, unless New Zealand butter can be offered in an enlarged E.E.C. at a price competitive with local butter it simply will not sell. And second, the price negotiated must bring an adequate return to New Zealand farmers. The 170,000 tons (or more) of butter New Zealand now sends to Britain each year sells very readily for bne simple reason it is 6d to 8d cheaper than local butter or imported European butter. The position will be very different when Britain is in the E.E.C. Restrictive Rules

The present E.EX. rules for butter imports are tremendously restrictive. First, the exporting country gets for its butter sold in the E.E.C. not the “London” price which is SUS 69 per 100 kilos (315 s per cwt) but what the E.E.C. calls the “world” price. This is the lowest price at which butter is traded between nations, and is ridiculously low SUS3I per 100 kike,

between Morocco and Russia. Second, the imported butter incurs a levy to bring the world price not just up to the E.E.C. butter price of 8U5173 per 100 kilos, but up to a special protectionist “threshold" price of 5U5191.25 per 100 kilos. Thus New Zealand could try and sell butter in France today. But it would get only about 10 cents per lb for it, and no-one would buy the butter anyway because the levies would push its market price above that of local butter.

What Mr Marshall has to do in the year ahead, and what Britain has to do for Mr Marshall in its negotiations, is obtain dispensations for

New Zealand at both ends of the butter scale.

For New Zealand’s special arrangement to work its butter will have to sell in Europe no more than the price of local butter. This means the protective threshold price will not apply. Secondly, New Zealand farmers will have to get for their butter at least the London price, and not what the E.E.C. calls the world price.

Mr Marshall said on Monday that the balance between pushing for quantity and for high price had been considered very carefully. But New Zealand had decided it must push Britain and the E.E.C. to accept large quantities of butter, and to negotiate a price for those quantities.

“We have rejected the theory of sending half as much butter and getting twice the price for it,” he said-

After his talks with Dr Mansholt, Mr Marshall held out some hope that the E.E.C. would before long be ready to lower its amazing butter price of around 90c per lb. But this would not happen within a year, he said, and there was no guarantee it would happen at all, much as New Zealand hoped it would. Price Cuts Proposed

The background to this is that Dr Mansholt has twice proposed price cuts for butter to ttie E.E.C. Council of Ministers, and neither proposal has been adopted. In 1968 he proposed a 30 per cent cut in the butter price paid to E.E.C. farmers, with a compensating rise for skim milk payments. This

was intended to persuade farmers not to make butter. The ministers rejected this proposal outright. Dr Mansholt is a vicepresident of the E.E.C. Permanent Commission, and as such is not an elected official or minister, but Mr Marshall rejected a reporter's suggestion that Dr Mansholt was “philosophical” and hardly practical. Mr Marshall described Dr Mansholt as a man of influence and importance in European affairs. Butter Agreement

He said he had also discussed with Dr Mansholt the E.E.C.’s slow movement towards a world agreement on butter and butter oil within the General Agreement on Tariffs and Trade. “He was helpful and I think we impressed upon him the need for constructive action in the interests of New Zealand, the E.E.C. and all butter exporters,” said Mr Marshall. “We raised specifically the question of E.E.C. dumping of butter around the world.

“I now hope for and think we will get further meetings of the G.A.T.T. dairy produce group in October and November at which constructive proposals will be made.” Mr Marshall emphasised, however, that achievement of an agreement on butter dumping would merely patch up some of the worst of the present chaos in world butter trade. It would not solve the basic problem of dairy surpluses in Europe, and how New Zealand could sell butter and cheese to a United Europe afflicted with these surpluses.