Warning of cuts in dairy returns

Press, Volume CXII, Issue 33096, 11 December 1972, Page 2

Warning of cuts in dairy returns

(New Zealand Press Association)

NEW PLYMOUTH, December 10.

It is important that dairy farmers should be prepared for a substantial reduction in returns from butter and cheese from Britain’s joining the E.E.C., says the chairman of the Dairy Board (Mr F. L. Onion). x

He gave this warning when opening the Moa Farmers’ Co-operative Dairy Company’s sl4m milk-powder plant on Friday.

Mr Onion said he had given a warning of the fall in prices on his return from talks in London nine months ago.

“I said the prospective price adjustments had not been fully appreciated by many New Zealanders, and that it was important farmers should know about them and be prepared for them,” he said.

“Since then, the price of New Zealand butter in the United Kingdom has fallen from £550 to £430 a ton exstore, and butter of other origins is selling well below this level. A great deal of butter of other origins is being sold at £370 a ton exstore and less. Consumption down “The butter consumption in Britain is down about 24 per cent compared with 1970, and our price from next February could be lower than £4oo—though I hope not much lower,” said Mr Onion. Cheese had remained New Zealand’s best-paying product. It was still selling at £4BO a ton, but would probably fall by about £l5O, or 30 per cent, next February. The final stages of negotiations were now taking place between Britain and the European Economic Community on the New Zealand Protocol, Mr Onion said.

“I know the Government has been fighting as hard as it could to stabilise the situation for us, but some extremely hard bargaining is going on,” he said.

Precise terms “It is probable that some time this month we shall know the precise terms under which we shall be trading with the United Kingdom, at least for the first year of the agreement.” A decision had still to be reached on the procedure that would provide for the review from time to time of the conditions of New Zealand trade with Britain.

“I have pressed the case with British Ministers for an annual review of the conditions of our trade,” said Mr Onion. New Zealand was also seeking to guard against the further erosion of returns because of currency depreciation. This was a matter on which New Zealand placed the greatest importance. “Of all the butterexporting nations, New Zealand alone has been guaranteed access for substantial quantities of butter and cheese, and an assurance that it shall be enabled to sell the quantities for which access is arranged.” Butter stocks

Mr Onion said that during 1972 the E.E.C. accumulated

ilarge stocks of butter. Its I total stocks were about 370,000 tons, of which 1200,000 represented an absolute surplus. “To solve a recurring surplus problem with attendant misuse of resources, Europe must recognise that a fundamental revision of its agricultural - support price policies will have to be carried out,” he said. “In the 19605, we suffered severely from widespread European dumping. This year, the exchange of information between us and good will on both sides have meant that we have not been so seriously affected.”

Depressing effect However, it was obvious that the mere existence of large surpluses had a depressing effect on prices. Progressive increases in European export subsidies had forced a sharp decline in world market prices. The situation had worsened because of Australia’s loss of its British outlet for butter and cheese. Australia had markets for all the cheese it could produce, but it had a substantial butter surplus. “Our trade with Japan has increased this year because of sales of more than 5000 tons of butter. The potential of this market is undoubtedly very large,” said Mr Onion.

“New opportunities”

The South-East Asian nations’ economies were booming, and the prospects in this area had never been better. “In the immediate future, new opportunities will be opening in Indonesia, IndoChina and Burma, while from Singapore, we expect to develop trade with other more distant areas,” Mr Onion said.

He said heavy stocks of skim milk powder in Western Europe and Canada had weakened the market for this product. Tire outlook for casein had been complicated by the loss of trade in the paper-coating industry. High casein prices last year had led some paper manufacturers to switch to cheaper substitute materials.