U.S. considers dumping butter excess on world markets

Press, 11 May 1981, Page 1

U.S. considers dumping butter excess on world markets

HZPA “ ' Washington New Zealand, its easein and lamb exports to the United States still under threat, now has agricultural trade worry—the prospect of a flood of American butter upsetting the world market.

The United States Administration is seriously considering a proposal to start unloading some of its butter surpluses, which now total a''/ut 170,000 tonnes. It has its eyes on the Soviet Union and Eastern Europe as potential customers. New Zealand has protested about the plan, which it fears could cause a slump in the world butter price. It has rejected as unworkable United States Department of Agriculture assurances that “safeguards” would be built into the sales system to prevent this happening. The sales would be heavily subsidised by the American taxpayer, though United States officials have pledged that exports will not be sold at below the ruling world price, at present about 5U52300 to SUS24OO a tonne.

Trade officials at the New Zealand Embassy went to the State Department to discuss the matter on Friday, but neither side would comment later on the outcome. The State Department would say only that it had not approved the d- .1, and that it was still under consideration. New Zealand officials have long feared that the United States would attempt to sell its Govern-' ment-held butter stocks, which have more than doubled in the last year.

The Government is legally bound to buy surplus butter under its dairy price support scheme. The scheme is so generous that farmers have been producing butter far beyond domestic requirements. In recent weeks the Government bought nearly half the farmers’ output. There has been mounting pressure to o Jt rid of some of the surplus, though the United States does not normally sell butter on the international market.

Some officials of the Department of Agriculture apparently felt .it time to sell, because E.E.C. stocks are low and New Zealand is in its off season. “We think there is a market out there, which is not being- satisfied,” said one official.

The proposal under consideration calls for the United States to sell about 90,000 tonnes of butter initially to private American companies. They could then negotiate overseas sales.

Informed sources said the Government’s proposed conditions are that the butter be sold only to the Soviet Union, Eastern Europe, the Middle East or North Africa, and that it be sold at ruling world prices. However, the world price is about SUSIOOO a tonne below the price the Government is paying American farmers. It

would have to be sold to United States traders at below the world price to make export sales economic.

New Zealand is believed to be concerned about the principle of a major intervention on the world market by heavily subsidised United States butter. The E.E.C. and Australia are also expected to protest.

The Administration is concerned about a possible domestic backlash. If the sales go ahead, it could mean that Russian housewives will be able to buy American butter, at half the SUS 4 a kilogram United States shoppers are now paying.