Fire sale suggested to rid Europe of dairy surplus

Press, 28 April 1984, Page 6

Fire sale suggested to rid Europe of dairy surplus

NZPA staff correspondent London A “fire sale” at cut prices to get rid of the E.E.C. dairy surplus has been suggested by the New Zealand Dairy Board’s chairman, Mr Jim Graham. “We have an opportunity now to say on the one hand the stocks have got to be dealt with internally — or by some type of fire sale, be it to Russia or anywhere

else,” he said. “We have that one opportunity, in my view, to strengthen the world price.” Mr Graham said that “failure to do that, in my opinion, will simply lead to a further retrogression in the amount of milk that can be produced in Europe and more problems for the farming community and for the taxpayer.” A real problem existed in lifting world dairy prices

when there was a butter surplus of about a million tonnes and a slightly higher quantity of skim milk powder, he said. Mr Graham, on a tour of European capitals with the board’s general manager, Mr Bernie Knowles, said that they had raised the idea of a “fire sale” in their talks.

The reaction generally had been “almost an air of disbelief that you could suggest that sort of thing.”

Mr Knowles said, “One fire sale at a giveaway price is a lot better than storing it up for three years when you are still left with the same problem.” Eastern European countries would probably be attracted to the idea of providing their people with butter in place of margarine.

“I can’t see any way else of doing it,” he said.

Mr Graham said the importance of co-operation with Europe to stabilise and improve dairy prices on the world market had been emphasised in their talks.

“For the moment there appear to be the first signs of a breakthrough in the international scene, and although the recent battles on common agricultural policy reform did not settle the access question, I would hope within the next few months the annual haggle over two or three thousand tonnes of butter will be removed from the scene and that we can get down to cooperating fully with Europe in the interests of dairy farmers and the Community as a whole,” he said.

The present level of international prices was totally unsatisfactory, Mr Graham said.

“With the strengthening American dollar and no corresponding adjustments to restitutions, world prices have been forced down to some 70 per cent of those applying a year ago,” he said.

“Consumption has not increased. Indeed it has fallen.”

It might be said this was at least good for the consumer. But, said Mr Graham, “Why the British and French taxpayer would want to subsidise the consumers in the Middle East and Japan down a price level which is only some 75 per cent of the cost of production of milk for the world’s most efficient producer — that is ourselves — baffles me. “We have also lost about ?180 million as a result of this change in values, although our market information shows that very little of the price reduction has flowed through to the consumer.” Mr Graham, who has had talks with the Irish Dairy Board in Dublin, said he hoped Ireland, having got new quota arrangements which allowed for increased production, would now stop mission proposals for a fiveyear agreement for New Zealand. Ireland has said it is willing to accept a five-year deal, but without any commitment on quantity which it wants fixed annually. “Naturally, as any trading nation, we regard the quantity as the essential element in the bargain,” Mr Graham said. There was a “degree of movement” on Ireland’s part, he said, “I think there are some encouraging signs in Ireland from my point of view.” New Zealand could cooperate with Ireland in a number of areas, particularly the United States market for casein. Mr Graham said he sensed a feeling in Europe that Ireland had been “a little unreasonable” over New Zealand butter access. “I think the Irish possibly are getting these sort of vibes as well,” he said. “I can’t see the logic’ of fiddling round and arguing over several thousand tonnes to the United Kingdom when there are so many things we could do together.”