No decision yet on butter sales in Britain

Press, 27 March 1979, Page 20

No decision yet on butter sales in Britain

By

STUART McMILLAN,

i, who recently visited

Britain and Brussels on a tour sponsored by the British Government.

“Scratch a New Zealander and the butter will eventually ooze out.” The observation was made in the context of New Zealand and Australian trade prejudices about each other. In fact, not a few trade negotiators around the world would echo the sentiment. New Zealand negotiators probably accept that whatever else they do, butter is always with them. In both London and Brussels the discussions about New Zealand butter were at their height in February. The European Commission is supposed to have brought down a report about how much access for butter New Zealand should have after 1980 when the agreement with the European Economic Community runs out. In that year New Zealand is allowed, under Protocol 18 of the Treaty of Accession signed when Britain joined the Community, to send 115,000 tonnes. The cheerful aspect is that the discussion about how much New Zealand will be allowed to send to Britain after 1980, not about whether New Zealand will be allowed to send any butter at all. Those who like the good news first and last should abandon this article at this point. The report was expected daily when I first arrived in Britain in February; when I

left at the beginning of March no-one had any idea when it would appear. One version of what happened appeared in “Agra Europe,” a well-informed weekly newsletter. It said that the Directorate-General of External Relations in the European Commission had prepared its own report and discussed it with New Zealand officials. The Director-ate-General of Agriculture, annoyed by this, had insisted that the report be rewritten. The External Relations Directorate had suggested that New Zealand should be allowed to sell 80,000 to 100,000 tonnes of butter a year after 1980. In fact, the New Zealand side is asking for 120,000 tonnes, but it is not unreasonable to regard that figure as an opening bid. To get access for 100,000 tonnes would be a surprising and pleasing accomplishment. One knowledgeable source estimated that New Zealand would get between 60,000 tonnes and 70,000 tonnes. His guess was the sort of thing to send clouds of gloom over the New Zealand camp. The New Zealand Minister of Foreign Affairs (Mr Talboys) described the “Agra Europe” report as putting matters too dramatically. The report had spoken of a row between the directorates. Row or not, it appeared

that substantial redrafting of the report was being done. It is not unreasonable to assume that the External Relations Directorate would be inclined to treat New Zealand more favourably than the Agriculture Directorate. What will the final figure be? Perhaps by now someone will have put a figure down that will be submitted to the Council of Agriculture Ministers, who will approve it or change it. Whenever the figure is put down the writer will have to show regard for the well-known fact that Europe is not exactly short of butter. In the middle of February it had 256,700 tonnes in public stocks and another 105,000 tonnes in private stocks. The surplus shows no signs of diminishing. Last year the quantity of milk delivered to the factories in the E.E.C. was between 4 per cent and 5 per cent higher than the previous year. That increase was about the same as New Zealand’s total production of milk. The increase came from improved yields, not from an increase in the number of cows. Britain, and the E.E.C.’s Commissioner for Agriculture, Mr Olaf Gundelach, want this ridiculous accumulation of surpluses changed — views that correspond with those of New Zealand. Not only do the surpluses limit New Zealand’s market in Europe, they are sold at low prices on world markets thereby thwarting New Zealand’s efforts to diversify its butter markets.

However, other E.E.C. countries (in particular, Ireland, Denmark, and the Netherlands) see their own farmers benefiting from the high agricultural prices. It is sometimes forgotten, too, that although West Germany is usually sympathetic to New Zealand’s position in the E.E.C., there are many farmers in the south of West Germany who do very well out of the Common Agricultural Policy and their politicians would interfere with that at considerable political peril. In the end, what the Commission finally recommends may not be a fixed quota at all, but a percentage of the British market. Such arguments have appeared before and show signs of being used again. New Zealand will fight this idea vigorously. The British market for butter is steadily declining. If New Zealand got 25 per cent of the market now, in a few years it would be supplying far less in actual quantity. My impression was that if the European Commission came down strongly on the percentage argument, Britain, wanting to support New Zealand, would oppose it, but would see the force of the Commission’s argument and would ultimately find its own position difficult. Other ideas appear to be floating around Brussels. One suggestion is that the E.E.C. could use New Zealand dairy produce as food aid. What that would do to alternative markets would disturb the Dairy Board. Whatever access New Zea-

land obtains will be for a limited number of years. Probably by the mid-1980s the question will come up again with a vengeance —

unless, as may be the case, the E.E.C. makes it clear that this period will be the last for New Zealand butter in Britain.