THE PRESS SATURDAY, OCTOBER 9, 1982. Butter threat still strong

Press, 9 October 1982, Page 14

THE PRESS SATURDAY, OCTOBER 9, 1982. Butter threat still strong

The United States has not yet announced what it will do about the 250,000 tonnes of butter that its Agriculture Department considered selling on the international market. The total New Zealand exports of butter amount to slightly more than 200.000 tonnes so the prospect of seeing the American butter turn up on the international market can be viewed only with dismay. Of the New Zealand production, it is hoped that 89,000 tonnes will be taken by the European Economic Community, though the 1983 quota has not been set. this amount should be safe. The rest of the market would not be safe. In the trading year ended June. 1982, New Zealand’s export earnings from butter' were $511.1 million. Of this, $324.5 million came from the E.E.C. Markets worth about $2OO million would be put at risk if the Americans dumped butter in large amounts.

The damage may not stop there. Such an attack on world markets would be likely to make European butter producers even more resentful of New Zealand’s access to the E.E.C. The 1983 quota for New Zealand is under consideration. The quotas for the years after 1983 are not even under negotiation. The American

action would amount to waging of a trade war against the E.E.C. and New Zealand cannot be isolated from the effects. New Zealand and the E.E.C. co-operate in third markets to try to ensure that the markets are not damaged and it must be hoped that the co-operation would continue after the unloading of the American butter.

The United States would be reluctant to dump butter in large quantities before the Ministerial talks of the General Agreement on Tariffs and Trade next month. The object of this agreement is orderly marketing and more open trading practices. In dumping the butter on the international market the United States would be observing neither the letter nor the spirit of G.A.T.T. One argument is that the sale of 250,000 tonnes would end American surpluses. Although reduced prices are expected to lower output from the American industry, the strategy will take time to prove itself. The Secretary of Agriculture in the United States had power to lower the price of milk to the farmer by 50 cents a hundredweight at the beginning of this month. He did not lower the price. Assumptions about future production would be unwise.