U.S. dairy gift may damage N.Z. trade

Press, 26 February 1983, Page 2

U.S. dairy gift may damage N.Z. trade

NZPA Staff correspondent Washington ’ The United States has announced a SUSBO million (SNZIIO.4 million), gift ol dairy products to Mexico, a gift that is certain to hurt New Zealand's dairy trade with that country. The 20.000 tons of non-fat dry milk. 6460 tons of butter oil. and 2000 tons of Cheddar cheese follows up a sale to Mexico that was. in effect, subsidised of 60,000 tons of skim-milk powder. The deputy general manager, of the New Zealand Dairy Board. Mr Charles Patrick in Washington with New Zealand Government officials on what is officially described as a routine visit to the American capital to discuss trade issues — they include a burgeoning trade war between the United States and Europe which may threaten New Zealand’s dairy trade in other markets — had no comment on the American gift, saying that any reaction would have to come from the Dairy Board in Wellington. The American dairy products, drawn from enormous surpluses, would be used primarily for school breakfasts and lunches in Mexico, as dietary supplements for pregnant women and infants and at centres for the elderly the handicapped, and the mentally ill, said the secretary of the United States Department of Agriculture. Mr John Block. * Mr Block asserted that the gift would not displace dairy products normally bought on the commercial market, but trade sources in Washington say that the combination of the gift and the sale of 60,000 tons of skim-milk powder will fill a significant part of Mexico’s dairy needs at a time when that country is virtually bankrupt and would be hard pressed to pay for supplies at world market prices. That means New Zealand is likely to have to divert dairy products to other markets, with a consequent danger of a drop in prices. The European Economic Community also exports dairy products to Mexico, as does Canada, and the gift, in spite of the obivous good it

will do to people who are really hungry, may be seen in some Washington quarters as another punch at the E.E.C. as the United States — or at least the United States Department of Agriculture — tries to undermine traditional E.E.C. agricultural markets in a bid to force the Community to lower its subsidies to European farmers. (The United States Department of Agriculture, with solid support from the farming lobby and much of Congress, believes Europe is dumping subsidised farm produce in markets where United States farmers would otherwise be able to compete. The argument which is .opposed by the Departmeent of State and the office of the United States trade representative. is that a trade war will reduce' the European subsidises and put American farmers on a fairer footing at a time when the United States has growing surpluses of grain and dairy products.) . The Americans say that Mexico is a traditional dairy market (an assertion about which New Zealand has reservations). and so does New Zealand, and indications are that the United States has not honoured in full the obligation to consult countries sucn as New Zealand. New Zealand representatives, in spite of Mr Patrick’s "no comment." are believed to have made their feelings clear to the Americans and the dangers the situation poses to New Zealand’s livelihood. (Mexico had been regarded as an expanding market for New Zealand dairy produce.) A New Zealand diplomat has just gone to Mexico City to open the new embassy there. It will be headed by Mr Peter Fairfax, who has been appointed New Zealand Ambassador. The New Zealand Dairy Board’s general manager, Mr Bernard Knowles, said the American moves would certainly affect New Zealand sales in Mexico, reports NZPA. “I do not think we can do anything about it. other than state our continuing concern about non-commercial transactions from all sources.” he said. .