Japan now third-largest market for N.Z.

Press, Volume CXI, Issue 32612, 21 May 1971, Page 2

Japan now third-largest market for N.Z.

Japan was cited yesterday by the Associate Minister of Finance (Mr H. E. L. Pickering) as a “striking example” of the success of market diversification. But the investment and time required to bring industries such as forestry, tourism, horticulture, and manufacturing to a stage where New Zealand could rely on them as major sources of earnings were so great that existing pastoral exports must be maintained as New Zealand’s major source of revenue.

“There is just no other course open to us,” said Mr Pickering, addressing the Lincoln College farmers’ conference. The possibility of Britain joining the European Common Market had been with New Zealand for a decade, Mr Pickering said. During this time, new markets had been found outside the United Kingdom for 35,000 tons of lamb, 8000 tons of butter, and 16,000 tons of cheese. Yet slsom of New Zealand’s overseas exchange—a little under a quarter—was still earned by exports of those products to Britain. This reflected the fact that Britain was the only country in the world where import conditions and consumer tastes allowed New Zealand to sell large quantities of these products. On the dairy industry, Mr Pickering said that diversification of markets for products other than butter and cheese had been pronounced, most sales being outside the United Kingdom market. However, it was not possible to produce casein and skim milk powder, or any other derivative of milk, without selling the butterfat content at remunerative prices. "Attempts to diversify within the dairy industry bring us back to the overriding need to be able to sell butterfat in large quantities,” Mr Pickering said. “The British butter market is the only one of its size in the world, which is the reason why New Zealand remains insistent that a special arrangement, in the event of Britain joining the E.E.C., must enable us to sell present quantities of butter and cheese to Britain.”

Certain members of the E.E.C. had suggested Japan as an alternative market for New Zealand’s dairy products —but it had been pointed but to them that the Japanese market was virtually closed, and was likely to remain so. New Zealand had seen its exports of butter to Japan drop from more than 17,000 tons in 1967 to only 16 tons last year.

“Thus, one of our largest potential dairy markets is drying up at a time when we need to expand butter exports to new markets,” Mr Pickering said. He also said that the E.E.C., in itself, had restricted New Zealand’s efforts because, until recently, huge butter stocks in E.E.C. countries resulted in massive subsidies of exports in all markets where entry was not restricted.

Mr Pickering hoped that the improvement in the dairy market would be more than “a temporary phenomenon.” But after Britain’s entry to the E.E.C., there was likely to be great uncertainty with the phasing out of minor suppliers from the British market. These suppliers accounted for 100,000 tons, the displacement of which quantity would create additional problems for New Zealand. Mr Pickering described fat based dairy products and lamb as products “which resist diversification.” This was why New Zealand must seek and obtain a special arrangement in the E.E.C. negotiations. A striking example of the success of market diversification was the development of trade with Japan in mutton and timber. This year. New Zealand’s exports to Japan —now the third-largest market —were confidently predicted to produce a record sllom.

After referring to the •owth of trade through the

New Zealand and Australian Free Trade Association, and the recent sale of dairy produce to Chile, Mr Pickering said the Pacific Basin could well become as important a market in the future for a new and expanding range of exports, as Britain had been in the past for agricultural exports. Forest products offered immense potential for expansion and promotion, Mr Pickering said. As an example of the development of diversification in the last 10 years, trade with Britain had risen from s32om to s3B3m; Australia, from s27m to $80m; Japan, sl7m to slo6m; the United States, s77m to sl64m; Canada, s7m to s4sm; the E.E.C. countries, 'sloom to $ll Im; and other countries, ss3m to sl73m. But because of the time and investment required to build up other industries, existing pastoral exports would have to be maintained as the main source of revenue, Mr Pickering said.

To a question on what would happvn if Britain’s effort to join the E.E.C. failed, Mr Pickering said there would be a feeling of elation in New Zealand, but it would be temporary, and lead eventually to New Zealand’s disadvantage.

The photograph above shows Mr Pickering addressing the conference, held In the new lecture theatre at Lincoln College. When it was filled, closedcircuit television was used to relay his address to farmers in an adjoining room.