Cutting back butter exports

Press, 11 July 1980, Page 12

Cutting back butter exports

The formal proposal by the European Commission on the amount of butter New Zealand should be allowed to export to the European Economic Community after this year, details of which were made public this week, contains some positive aspects as well as the unsatisfactory features that New Zealand has come to expect from the E.E.C. The best aspect is-that the access will.not be temporary. Doubtless there will be reviews, but the principle is that New Zealand will have continuing access to the E.E.C. for butter. The second aspect to be welcomed is that the price should be good. A third is that the levy will be fixed instead of being variable as at present. All of these aspects should enable dairy farmers to plan with some certainty. The recommendation does not mean that the proposal will be adopted by the Council of Agricultural Ministers. At least it will be fought for by the commission as well as New Zealand’s friends in the E.E.C.

The amount proposed—9o,ooo tonnes —is not as high as New Zealand would like and the time that it reaches that figure is one year earlier than had been expected. If the proposal is adopted, New Zealand’s exports of butter to the E.E.C. will drop from 115,000 tonnes this year to 90,000 tonnes in 1984. In 1971 New Zealand exported 160,000 tonnes of butter to Britain. In slightly more than a decade

the fall will be 70,000 tonnes. It is a fall decided elsewhere under a system over which New Zealand has no influence—a system of high prices producing surpluses which are sold at subsidised prices on markets to which New Zealand could have turned as substitutes for the market from which it is being excluded. The proposal will help New Zealand in one way, but will do nothing to correct the distortions in the world dairy trade brought about by E.E.C. policies. The reform of the Common Agricultural Policy has long been discussed; little has happened. Perhaps Mr Finn Olav Gundelach, the Commissioner for Agriculture, who will be in New Zealand next week, will have some news on how long the C.A.P. can be expected to last without change. The further reduction in butter sales to Europe will leave the Dairy Board with problems not only of disposing of the butter elsewhere but of obtaining the finance to do its own restructuring. At the beginning of this month the Dairy Board had its plans for a loan for restructuring rejected by the Prime Minister (Mr Muldoon) on the ground that the interest rate offered at 15| per cent was too high. The Dairy Board believes that it needs between S6OO million and $7OO million for its programme. It is a vigorous industry, facing the change forced upon it. The changes are necessary and some way must be found to finance them.