BUTTER CRISIS

Evening Post, Volume CXV, Issue 77, 1 April 1933, Page 12

BUTTER CRISIS

NEW ZEALAND POSITION

GRAVITY OF RESTRICTION

DAIEY BOARD ATTITUDE

Mr. Dynes Fulton, acting chairman of the Dairy Produce Board, has today issue 1 a public statement defining the attitude of the board in the present ' crisis in the butter market.' "In view of the criticism levelled against the board, and to the side issues that have been raised," he states, "it is desirable that I should restate the problem which New Zealand has to face isi connection with the proposed restriction of butter' shipments. Under the proposed restriction New Zealand will be the most adversely affected of all the countries supplying dairy produce to Great Britain, and should the restriction be enforced the whole dairy industry will be hamstrung. It would naturally follow that would be do further land settlement; it would be unsafe for dairy .farmers to seek to improve their farms in any way which would increase production, either by using fertilisers or improving the herds by herd-testing. . "The proposal submitted to New Zealand is that taking the imports into Great Britain for the year ending June 30, 1933, there should be a deduction made of 6 per cent, from that quantity, and that this reduced quantity would represent the New Zealand buttpr which (Sould be imported into Britain for the year ended June 30, 1934. The 1932-33 quantity is likely to be i - the vicinity of 120,000 tons, and after deducting 6 percent., leaves 112,800' tons. DOMINION'S PRODUCTION.. "It must be remembered, however, that for many years there has. been an anmial increase in production of not less than 10 per cent. If this normal increase were •to continue for .the 1933-34 season, it would make the quantity available for export 132,000 ions. As New Zealand would be committed to ship not more than 112,800 tons, there would be a surplus left in New Zealand of nearly 20,000 tons, representing approximately 16 per cent, of the whole output available for export. "How is New Zealand to absorb or dispose of this. 20,000 tons?; Our present local consumption of . approximately 401b per head per annum is tho highest in the world," and absorbs about 26,000 tons. Butter ig selling at 9d per pound, and it is extremely unlikely that the local consumption would be increased to any extent if the retail price was only 6d. However, let us assume that the local consumption would increase by 10 per cent., which would be approximately 2600 tons, and, further, if the restriction were in operation the price on the local market in this country would naturally fall, and there. might be a further consumption of milk, representing about 2000 tons butter. These are assumptions which are, of course, problematical, but even if correct it would still leave 15,000 tons butter to dispose of. ' THE ONLY MARKET. , "New Zealand has no ,market 3 other than Great Britain. Canada and the U.S.A. have shut their doors against us by tariffs. Small quantities are going to Honolulu, the East, arid Pacific Islands, amounting to about .1250' tons, but assuming that these could' be doubled, which is very unlikely, we ,arb still, left with 13,750 tons'to get rid of. The manufacture of cheese could not be increased, as it has been clearly indicated that if a restriction1 applies to butter it will also apply to cheese. ''As far as Australia is concerned, if restrictions were applied on the suggested basis, provided there was no very increase next season, they would only hayo 13000 tons.surplus to dispose of, and. with;a population of 6,500,000 people this could probably be absorbed .in increased butter and milk consumption. ■ ' . "Denmark in 1931 exported 169,000 tons butter, of which 122,000 tons went to England, 30,000 tons to Germany, and 17,000 tons to other countries. .'• In LH32. owing '.o Germany shutting out 50,000 tons butter, the Danish exports to that country were only 13,000 tons, ■and the' quantity going to Great Britain rose to' 127,000 tons. The Danes under the proposed restriction of 12 per cent, would require to find other markets for 15,000 tons, or less than the New Zealand quantity. Denmark is already disposing of some of her surplus by shipping it as cream to Belgium, France, and Italy. The Danish local consumption is at present only 121b per head per annum, which represents approximately 19,000 tons butter. If the local consumption rose equal'to' New Zealand's they would absorb 40,000 tons, which is far more than the total quantity carried over by reason of the proposed restriction. It should be rioted that Denmark actually imported 350 tons butter hy 1932 from Finland, Latvia, and Estcrnia.' . . A SURPIiUS PROBLEM. "It has been said that New. Zealand will make more money under the restricted quantity than she would by reason of exporting the whole quantity available. Let' us examine this statement. On an urirestricted market New Zealand would export approximately 132,000,t0ns at (3ay) 705—£9,240,000. A restricted quantity of 112,800 tons at 705—£7,896,000. Let us assume that there would be a rise of 20 pelcent., and even the greatest optimists amongst the exporters have never suggested such a rise would take place. With this 20 per cent, added the total sum paid to New Zealand would be £9,475,200. There would still be to dispose of approximately 20,000 tons of butter, either by forced sale or destruction. There might even be a loss in the handling of this butter, to say nothing of the fact that it would ruin the local butter market and have the effect of materially reducing the price of milk.being supplied to consumers in this country. "It is quite impossible to prove that New Zealand's >adherence to restriction would do anything" except assist the prices for English dairyfarmers and foreign producers, and it is only natural to expect that if the' prices of dairy produce were to rise in Great Britain the quantity produced there would also rise, and call for further restriction. "Once restrictions are agreed to in principle it is almost certain that the demand would grow for further restriction. As a matter of fact, already cables are being received in New Zealand in connection with other products, indicating that a movement is already on foot in Great Britain, in this direction. J WHAT THE BOA Rp IS DOING. "Exporters are reported as saying that the Dairy Board is not facing the position. Let it be definitely stated that the Dairy Board is vitally concerned with the future of the New Zealand dairying industry, and not with the benefits of any exporters. It would be guilty of a breach of trust if it glibly agreed to restrictions which the London importers and their New Zealand representatives seem to imagine would be such a simple matter. "While Press messages would give an indication that the importing merchants in Great Britain are unanimous in recommending the. producers to agree to restrictions, already cables have been received from important Tooley Street merchants indicating that they entirely disagree with the suggested restrictions and consider- that they aro

only a palliative, and would not bring about any permanent improvement in price. That it would be a distinct financial advantage to a number of the merchants goes without saying, as fairly large quantities of butter have been purchased on an f.o.b. basis for shipment during the next three months, which must of necessity at present prices prove a loss to the final buyers. "I make bold to say," said.Mr. Fulton, in conclusion, "that a great deal of the propaganda which has come to this country from Tooley Street has been influenced in this way. I can see no advantage in calling the Dairy Board together at the present juncture. The board has already made its decision, and no new circumstances have arisen to cause it to alter that decision. The Australian Dairy Board have postponed making a decision until April 18 to allow of an opportunity of conferring with representatives' of the Dairy Board whom they invited to meet them on April 18. The Dairy Board will meet as arranged immediately on return of these delegates on April 28."