EXPORT MARKETING

Evening Post, Volume CXVIII, Issue 94, 18 October 1934, Page 21

EXPORT MARKETING

NEW/REGULATIONS

SHADOW OF THE QUOTA

LONDON OPINION

In a discussion of the problems of export marketing,. the Commission expresses regret that it was unable to obtain direct evidence regarding many important aspects of marketing in the United Kingdom. It is pointed out that its conclusions on this question are tentative and are in the nature of suggestions as to the lines on which further inquiries should be made.

"We are firmly of the opinion that, a confidential investigation should §>c made in the United Kingdom of the system of marketing New Zealand dairy produce, with a» view to ascertaining the precise. nature and extent of the difficulties that gave rise to the present regulations, aud evolving satisfactory means of removing those difficulties," states the report. "It is necessary, too, that the inquiry should be directed to the discovery of means of improving the: whole system, and obtaining .the - widest possible distribution of New Zealand butter and cheese throughout the country. We are satisfied that suet an investigation and inquiry can best be made by a small eomjmittee familiar with New Zealand conditions and the views held by the industry in New Zealand, and free from any suggestion of being influenced by sectional interests. It is particularly important, because of the uncertainty and suspicion that pxist, that the members of any committee sent to' tho United Kingdom, should be absolutely impartial, so as .to ensure gaining the | confidence of importers and merchants. It is very apparent to us, from tho confidential communications made to us by the representatives of many interests, that importers and merchants are apprehensive of the sectional cleavages in the industry in New Zealand, and are not prepared to commit themselves to definite statements unless assured that they will be • regarded as confidential. It is essential that we should not take any action that-might forfeit the good will of importers, and that we should endeavour to secure their co-operation in extending /the distribution of our produce. , '-,'.' In a review of the new marketing regulations issued by the Dairy Export Control Board, the report states: — "The effect of the regulations is that, in place of free marketing of New Zealand'dairy produce,, there is now a system of regulated marketing. For the current ..season, a. list of _ some thirty licensed importers, who are all consignment, agents, .or are regarded as such, has been prepared by the board, and alibcati'oiis- of all the exportable surplus oi':-'Miibv and cheese have been', fri^d-e' to1 these importers. These ■allocations' are- subject .to subsequent i':o;bt andc:i:f.'sales. \ There are also three-lic;eiised:> import brokers; who purchase :f?o.b. or- c.i.f. for .clients in the United Kingdom. The board has placed on its.list, of importers all tho im-. porters and import brokers who handled 'Row-^Zealand Gutter or cheese during ,'tiie" 1933-34.. season, and has allotted to them': approximately the same respective quantities as were handled by •them, during that season. Its intention is-to maintain a close scrutiny of- the operations, of the licensed importers, and to increase or diminish their allocations m future years according to their efficiency in distribution, and from year to year, as occasion warrants, to license other importers. There is, however, no provision for removing an unsatisfactory importer from the list, or cutting down his consignments, or allotting consignments to importers not on the list before the end of a season. The board has agreed with the importers' Association not to add anymore importers to its list without first consulting the associated importers. We'arc of the opinion that it is unwise to obstruct the obtaining of supplies by a bona-fide importing agent whose financial standing and business reputation are good, and who has a, genuine distributive- connection, and is prepared to agree to reasonable conditions of trading.: We think, too, that the system of allotting consignments, for a year ahead, of our whole exportable surplus of butter and cheese, subject only to subsequent f.o.b. and c.i.f. sales, is objectionable because of its inflexibility. A system that would permit of more frequent rearrangement of consignments and the unfettered-re-cognition of'sound importing agents, would, in our opinion, be preferable. We do not suggest that the value to the industry of a consignment agent should- bo judged on the basis ot returns from a few shipments, but we think that when, from a consideration ot all the circumstances, it appears that_ an aeent is unable to dispose to the best advantage of all his supplies, the question of revising his allocation should be gone into. GENBEAL TRADING POLICY.

"Wo are inclined to the view that, as a matter of general trading policy, it is reasonable to require importers who are consignment agents to undertake to act solely in that capacity in so far as Now Zealand butter and cheese are concerned. The marketing regulations of the board imposo this requirement, for thoy prohibit the purchaso of New. Zealand dairy produce either in New Zealand or afloat, by importers on their own account. This does not preclude the purchase on spot, in the United Kingdom, of New Zealand dairy produce legitimately, reouired by them for their regular trade outlets, nw does it prevent; them from purchasing f.o.b. or c.i.f..,for bona-fide clients,' but it aims at the prevention of speculative purchases on their own aC"We think- that, after the expiration of-the current season the board should be-able, to devise a system of output Allocations that would best serve the requirements of the industry. The present year niay be regarded as a trial period, during which.the results of the new system can be- estimated, and any weaknesses and imperfections discovered. ■In determining, an any system of allocations, it is desirable that the board should mako allowance for sup■■plies or ' increased, supplies, that maY bo required by importers who do not at present receive supplies or who could'effectively handle larger supplies, nnd particularly by those importers whose areas are served by ports other-than. London. We are of the opinion, also,, that while the board should endeavour to co-operate fully with importers and merchmits,

and should be free to make all inquiries and engage in all consultations that it may consider necessary, it'ShouM not in any way hamper—its freedom of action by entering into any obligation in this respect. • . BUTTER VERSUS MARGARINE. "An important matter on which the London Committee reported was the extent to which the displacement by butter of margarine as a food would be maintained if butter prices were raisod as a result of a reduction of importations. The Committee considered that if the average retail price of imported butter did not exceed Is per pound, there would bo no considerable increase of margarine consumption. In so' far as New Zealand butter was concerned, the information received by the London Committee was that the annual consumption would be reduced by 10,000 tons if the retail price reached Is per pound. The two statements appear to be contradictory, but the probable explanation is that many persons who had, during the recent period of low butter prices, purchased butter instead of margarine would continue to purchase butter in spite of a moderate increase in price; but that if New Zealand butter reached Is per pound, and other imported butters were at a lower price, consumers of New Zealand butter to the extent of 10,000 tons per annum would purchase the cheaper butters, In the light of .this information, we desire to stress the point that it is essential, if we are to maintain a price of even Is per pound, that wfe concentrate on improvement of quality, better conditions of marketing, and widespread and continuous publicity, in order to create such a constant consumptive demand for our butter as will enable the increasing quantities that are being shipped to the United Kingdom to be absorbed at an economic price. "Regarding the possible effect of the agricultural policy of the United Kingdom Government on the capacity of the United Kingdom market to absorb New Zealand dairy produce, the London Committee expressed the opinion that no restriction would be imposed before 1936. In this connection, it is to be noted that the provisions of the Ottawa Agreement relating to dairy P*°duce are subject to revision after July, 1935, but that, owing to the existence of trade treaties between the United Kingdom and the Argentine Republic, Denmark, Sweden, and other countries exporting dairy produce to the United Kingdom, which do not expire until 1936 it is unlikely that any restrictions on imports from *he dominions will be imposed, except with the consent of all the Governments concerned, until the whole position can be reviewed on the expiration of the treaties. This is doubtless the ground for the Committee's opinion.. The Committee thought that in 1936 the Government of the United Kingdom might attempt a scheme of quantitative regulation of dairy imports from all exporting countries. WIDER DISTRIBUTION. "Commenting on the question as to whether an exclusively consignment policy was to be preferred to the present system of forward selling f.o.b. and c.i.f. combined with consignments, the Committee reported in favour of the existing'system, but urged for widor distribution of -supplies. In particular, the Committee stressed the necessity of arrivals at more regular intervals of steamers serving Avonmouth, Liverpool, Manchester, and Glasgow. The irregularity of arrivals caused local sluts, and shortages. It was desirable to make an adjustment in the arrangement of calls at the New Zealand outports delays at which were the effective cause of irregularity in arrivals. Tho Committee reported that direct shipments of Australian dairy produce to Hull had gained favour, and recommended that we should inaugurate a monthly service to that port, and consider extensions to Newcastle-on-Tyne aD"On the. question of the probable reaction in the United Kingdom of. any plan of direct subsidy to producers or of indirect subsidy through raising the local price of buttery the Committee | did not express its own opinion, but stated that all witnesses agreed that no adverse reaction need be anticipated-

"Tho London Committee recommended the prohibition of the export of second-grade and whey butter. The recommendation was made with the object of conserving the high reputation for quality that is possessed by New Zealand butter. At the present time, our second-grade and whey butter are consigned to one importer in the United Kingdom, on the strict understanding that they are not to be sold as New Zealand'butters, and arc to be sold only for manufacturing purposes. If this system does not prove effective, wo agree with the Committee that the export of these butters should be prohibited."