The Evening Star THURSDAY, NOVEMBER 30, 1933. DAIRYING’S DARK DAYS.

Evening Star, Issue 21582, 30 November 1933, Page 8

The Evening Star THURSDAY, NOVEMBER 30, 1933. DAIRYING’S DARK DAYS.

A long-range duel has broken out again between Mr Thomas Baxter and the New Zealand dairy producing interests. The British Government has decided that the British farmer has a right to his own market, and the board over which Mr Baxter presides is one of the instruments designed to that end. During his recent visit to New Zealand Mr Baxter saw the extent to which New Zealand depends on her dairy produce export and gave a warning that, unless some other outlet was found, Britain’s power to absorb it would be so very inadequate that markets would collapse to a point even more unremunerative than now. He made no secret that the British Government’s policy would be the fixing of quotas as soon as the expiry of the three-year Ottawa agreement permitted, and in the meantime he suggested that New Zealand’s exports take the form of butter rather than cheese, so as not to compete with the home-made cheese into which the surplus of British liquid milk production is to be turned under direction of bis board. It now appears that the British farmer rs too impatient to wait for the expiry of the Ottawa agreement. The British market is glutted with dairy produce imports, which means that home-made cheese at least suffers in price, and this adversely affects tho price per gallon paid for milk by the Marketing Board. Consequently the National Farmers’ Union in Britain lias asked the British Government to legislate at once against the possibility of a continued glut. The British farmers’ proposal is in essence, though not in name, a Customs duty, the proceeds of which would be shared by British dairy farmers. They seek “ immediate legislation compelling importers of milk products to [iay a levy to form a fund to compensate the British dairy farmers.” Their contention that this would not violate the Ottawa agreement is too thin. The agreement was to continue until November 15, 1935, “ the free entry into the United Kingdom of eggs, poultry, butter, cheese, and other milk products from Canada, Australia, New Zealand, Newfoundland, and Southern Rhodesia.” Forcing those handling our butter and cheese at the port of discharge in Britain to pay a levy is not “ free entry,” and we are sure that the British authorities would not so regard it. Their resistance to such pressure from the National Farmers’ Union may be accepted as a foregone conclusion. New Zealand’s export trade in dairy produce is in such a parlous state at present that any fresh handicap would surely be the last straw. This week’s report from Loudon describes the butter market as “ demoralised.” New Zealand butter is on offer at 70s to 73s per cwt, whereas Danish butter is quoted at 112 s, which latter includes 15s per cwt duty. Thus the Danish producer receives, less charges, 97s per ewt as against the New Zealander’s 725, despite the latter having a preference of 15s under the British Customs tariff. The difference of 10s per ewt, or lid

per lb, which the British consumer is willing to pay to secure Danish butter is inexplicable. In pre-war days New Zealand butter brought within a lew shillings per cwt of Danish, but the difference between them has been steadily widening, until to-day it is causing heart-searchings among those engaged in the New' Zealand industry. It has to bo admitted that this is the end of the Northern Hemisphere producing season, and Danish supplies are light, while on the other hand enormous shipments of Australian and New' Zealand butter are at present afloat, and this tact is forcing the market for it steadily downwards. The low prices at which the English consumer has been able to buy New' Zealand and Australian butter (down to 8d per lb during part of this year) have undoubtedly stimulated consumption. Seven years ago the consumption of imported butter in England was 5,500 tons a week, prices then being high. As prices went down it rose to 7,500 tons a week, 'and now it is estimated to be 8,000 tons a week. Unquestionably cheap butter has cut heavily into the margarine trade, and Australian and New Zealand butter has also cut into the Danish trade, which has not increased its shipments to England, although Continental restrictions have led to a decreased Danish production of 1,000 tons a month. But it is of little use New Zealand pursuing this trade at a loss. The present value of butter for export to-day m New Zealand is about B.Jd per lb, while the cost of production of butter fat is estimated at lOd per lb. That is a fact w'hich is darkening the horizon of those interested in primary production in New’ Zealand, despite the offset which the rise in wool values provides. It appears to us that Mr Baxter has the tacts and the logic on his side. Ho says, in effect: “Restrict supplies in your own interests, and thus bring prices back to payable levels.” Through its London office the New Zealand Dairy Produce Board protests that such restriction would be a negation of Ottawa, and therefore it claims the right of the New Zealand dairy farmer to pile up losses at a faster rate than ever. But Mr Baxter has made the very discerning remark that the New Zealand Dairy Produce Board looks at the matter from the dairy factory rather than the dairy farmers’ angle, being chiefly interested in getting the largest possible number of tons through the factory. Between the two Lord Bledisloe has interposed. Speaking at Cheviot yesterday, His Excellency (referring to a recent statement that before long Britain would become self-supporting in the foodstuffs which constitute New' Zealand’s staple exports) said: “That is a big illusion. There is a population of 46,000,000 to be fed there and the population is increasing. There is going to be an unlimited demand for the best produce that New Zealand can supply as long as the quality is uniformly good. Your safety lies in tightening up the grading of your produce for export rather than putting on the market third rate produce.” There can be no denying that His Excellency speaks with far more than average knowledge, but for the immediate present there seems little sense in accentuating an evident glut in one commodity. The recovery in wool prices has been largely due to a world shortage, and recovery in butter cannot be expected while what Mr Baxter calls the “insane practice ” of swamping one particular market continues. If it does, it may be that long before November 15, 1935, Australians and New Zealanders will be negotiating among themselves as to an export quota arrangement.