Butter dumping’s effects ‘not lasting’

Press, 10 November 1984, Page 34

Butter dumping’s effects ‘not lasting’

PA Hamilton The E.E.C. disposal of 400,000 tonnes of butter at cut-rate prices on its domestic market should not have any long-term effects on New Zealand’s share of the market, said the chairman of the Dairy Board, Mr Jim Graham. Speaking after the annual industry conference in Hamilton, Mr Graham said that the E.E.C. sale was a political move. The cut-price butter was a trade-off with the E.E.C. consumer so the community would not cause a lot of flak over sales of stockpiled butter to Russia, he said. On the British market the cheap butter would affect New Zealand butter sales for two to three months while customers bought increased quantities of cheap butter and stored it. But he said he believed that over-all New Zealand butter sales would not be affected by the cut-price

Discussions were still taking place on the E.E.C. application to sell some of its 1.2 million tonne stockpile to the Soviet Union, he said. The E.E.C. has sought an exemption to sell below the General Agreement for Tariffs and Trade’s (G.A.T.T.) minimum price. Mr Graham said the E.E.C. butter surplus had affected world prices for butter and feared that not only dairy fat prices could be hit by the surplus but also skim milk powders and other dairy products. The board was likely to agree to an exemption from G.A.T.T. for a specific time and a specific tonnage because of the effect on prices the E.E.C. surplus was having, he said. “We can then go back to G.A.T.T. pricing having achieved a major reduction of stock.” - Mr Graham said he was pleased the E.E.C. was now

moving on its surplus butter problem. “We have been expecting it to happen for some time and when it is behind us it will be all the better. “While we have a stockpile it will always have an effect not only on the butter market but an effect on the other products as well.” Mr Graham said that the next step would be to look at increasing the price for dairy products, which had dropped by two-thirds over the last two years. Every country in the world had restricted dairy production, he said. The Australians were down from six million tonnes to 5.3 million, the E.E.C. from 104 million to 99.6 million and the United States achieved production cuts of about 5 per cent. A 10 per cent cut had not been achieved so price cuts of about 8 per cent were also proposed. Mr Graham said he was still optimistic about the

future of the dairy industry. “We are well placed for it to come right We have still $350 million in reserves which could be used to improve payouts over the next two years until the disposal of the European butter.” Application would be made to the price-fixing authority early next year for an increase in payout as a result of devaluation, he said. The increased costs as a result of devaluation were expected to be known by February but Mr Graham said he would not predict next year’s payout until then. “There is no value in projecting any figure until all the costs are known.” But he said it was unlikely that last year’s 350 c kilogram milkfat payout would be boosted 20 per cent to reflect the full devaluation figure.