FRIDAY, MARCH 27, 1936. DAIRY EXPORT TRADE.

Ellesmere Guardian, Volume LVII, Issue 23, 27 March 1936, Page 4

FRIDAY, MARCH 27, 1936. DAIRY EXPORT TRADE.

A brief but interesting paragraph appeared in the cable news of the daily papers a few days ago to the effect that the negotiations for a renewal of the trade agreement between Great Britain and Denmark had collapsed, as a result of which the British Government contemplated giving the Dominions, particularly Australia and New Zealand, a larger share of the imports of dairy produce into the United Kingdom. This statement is a most interesting one to the industry in this country, and if the result of the breakdown in the negotiations is as anticipated, it will have important results so far as expanding imports of butter are concerned. Very little is known in New Zealand as to the cause of the breakdown in negotiations, but the stumbling block is considered to be the trade treaty recently concluded between Denmark and Germany which provided that in return for increased exports of butter and other farm products to Germany, Denmark was to purchase German manufactured goods of equal value, the sum mentioned being £3,500,000. The increase in the quantity of butter which Germany had undertaken to purchase from Denmark is about 12,000 tons which, on a basis of £100 per ton, would mean £1,200,000, the balance of the £3,500,000 having to be made up in stock and other farm products. Denmark's export of butter to Germany last year was equal to 25,000 tons of butter. In connexion with the present position, an article written by the Copenhagen correspondent of the "London Times" will be of more than usual interest, as it gives a suggestion of the factors which no doubt caused a breakdown in the Anglo-Danish trade treaty negotiations.

"Knowing that Great Britain would ultimately be compelled to take steps to reduce her heavy adverse balance of trade with foreign countries, the Danes began to increase their purchases of British goods some time before the treaty was signed. The chief purpose of the treaty was to accelerate this movement and so diminish the gap between Danish sales to Great Britain and Danish purchases from Great Britain. While admitting that some improvement may still be possible, the Danes declare that they have done more than was thought possible in the time limit set by the treaty, and that to go faster would be to risk grave economic dislocation and at the cost of antagonising other countries, particularly Germany, which are also important buyers of Danish agricultural produce."

After analysing' the trade statistics of Danish imports of British goods and manufactures, the article says: "The fact remains that since 1934 Denmark has decreased her purchases of British piece-goods, British boots and shoes, motor cycles and machinery, pig iron and earthenware products. . . . The decline is not due to any falling-off in the Danish demand, but to the arbitrary curtailment by the Foreign Exchange Control of the licenses issued for the importation of British manufactured goods. The control in, the past has greatly benefited British trade by switching over Danish imports into the channels required by the AngloDanish Trade Agreement. But it seems that the control has now altered its aim and that its first objective, after preventing an excess of imports from imperilling the stability of the currency, is to safeguard Danish industry and to protect Danish wage rates. And, while allowing total imports from and through Great Britain to expand gradually, it achieves its purpose by giving the preference to raw materials required by Danish industry, at the expense of such British manufactures as

are competitive with local industries. British exporters feel that this is contrary to the spirit of the treaty and that (apart from the tariff rates conventionalised 'in the agreement) there should be no restriction whatever on the flow of British manufactures so long as the Anglo-Danish trade balance remains heavily in Denmark's favour. . . . Since 1932 British imports of Danish bacon have been nearly halved. The financial yield, however, has fallen by only about 30 per cent., so that the Danes do not for the moment complain of British quota policy. Though farmers at firstopposed the quota, they admit that it has so raised the price of bacon that Danish agriculture has been saved from disaster, and they would not now object to the introduction of a quota on butter, with the aim of raising the price of that commodity also. But they have no guarantee the present bacon policy is going to be maintained. They have heard with dismay the British suggestion that the present quota might be raised and a small duty imposed on imports. This would reduce their incomes from the industry, and unless it were compensated in other directions might plunge the Danish farmer into ruin. In this uncertainty it is not surprising that the Danish Government tries to build up industries to provide alternative economic activities against the day when the British market again shrinks. Nor is it surprising when the Government gets an offer from Germany to buy more agricultural produce, that it should embrace the opportunity of easing the farmer's lot at the cost even of disappointing the British merchant."