U.S.—N.Z. surplus butter sale ‘provoked strong response’

Press, 17 August 1981, Page 10

U.S.—N.Z. surplus butter sale ‘provoked strong response’

NZPA Washington The United. States Congress may investigate the sale of iOO.OOO tonnes of surplus American butter to New Zealand after increasing opposition to the deal from . the American dairy industry;:' /. The revelation of a previously/'secret proviso in the agreement, which gives the New .Zealand Dairy Board veto /powers over any exports of American butter for .the next 12 months, had sent ■ “shock waves”. through the American industry, said a congressional staff member; He said the deal had provoked- a very strong re- . sponse. “We are considering what course of action we will take."

He said the committee might hold hearings on the deal when Congress resumed next month or ask the General Accounting Office — the investigative arm of Con-

gress — to hold an inquiry. The New Zealand Dairy Board says it is. not. concerned about any Congressional .investigation' of thebutter purchase. / .' A- .spokesman, for ‘The board,; Mr Neville Martin, csaid yesterday the board was unconcerned about the outcome of any investigation.

The board saw the veto as essential to keep/ world markets stable, and expected the United States’, surplus left when New Zealand took its .100,000 tonnes to be sold by the Americans , domestically;

The “National- Dairy News,” a weekly trade publication, said in a front-page report' this week that New Zealand had “locked up the world butter market.” It said American butter traders were upset about the deal and quoted one as saying “somebody up there likes New. Zealand. ,What a giveaway.”.

The “New York Dailv News" attacked the deal in an editorial as a “sleazy subterfuge," saying it gave New Zealand “a tidv profit for no effort."

Opposition . to the deal originally centred on the price being paid by the New Zealand Dairy Board ?USISS million, or 70c a pound compared with the ' world price of SUSI.OS. • -The "National Dairy' News’? said the United States; Government had turned 1 down several bids of $1.05 a pound by American But. the ■ price issue has now been overtaken by the revelation that the Americans agreed to give -the New Zealand Dairy Board veto rights, over any future export sales of United States surplus butter for the next year. This aspect of the deal was not published when it was announced last week. Revealing it on Wednesday, the National Farmers’ Union said it was an “unbelievable

decision to put control ’of United States dairy export policy in the hands of a foreign country.” New. Zealand officials have defended the export veto as “normal, commercial com-mon-sense.”. Their view is that having, bought half the American . surplus to preserve the stability of the international -.markel, the Dairy Board had no alternative but to insist that the United States did not undermine world prices by unloading the remaining 100,000 tonnes of its surplus overseas.

, The proviso does allow for the movement of United States butter as "official aid for restricted welfare uses.” New Zealand officials have also defended the price paid, saying that the surplus butter was old — some of it was made in 1979 — that it was not up to top international specifications, and that nobody would have paid the. full market price for it.

But American traders insist that the United States could have sold it to the Soviet Union for $1.05 a pound, and say the United States Agriculture Department had almost completed a deal on these lines before the State Department blocked the sale.

New Zealand has agreed not to. sell the United States butter to Russia. But American traders assert it can be used .to replace other New Zealand commitments, leaving New Zealand butter available for sale to the Soviets at the world price.