THE BACON QUOTA

Hawke's Bay Tribune, Volume XXV, Issue 163, 26 June 1935, Page 10

THE BACON QUOTA

A Failure in England CONSUMPTION FALLS The failure of the bacon quota scheme is exposed in a striking manner in a report which has just been completed by the Production Section of the Manchester Chamber of Commerce, says the “Manchester Guardian.” The report has been issued by the directors of the chamber, who state that they feel that the experts of tho Produce Section have made out a good ease to show that the quota system is not a success so far as bacon is concerned. But while concurring in this view they are careful to add that this “does not affect their conviction that in certain other direcions, where tariff differentiation is impossible for treaty reasons, notably in overseas markets for British textile exports, quota measures remain a necessity.” In the course of its report the Produce Section points out that it was at the very beginning opposed on several ground?! to the idea of a bacon quota. The quota has now been in operation for two years, and one result has been to put an unexpected subsidy into the pockets of foreign producers. This is shown by the following table, which gives the volume of bacon imports into this country and the average price per cwt. at the port of entry over the past three complete years:— 19.34. 1933. 19.32. Cwt. Cwt. Cwt. £ £ £ 7,598,922 9,084,363 11,390,839 30,052,275 29.928,221 .30,289,052 1934 1933 .1932 Per cwt. Per cwt. Per cwt. Average price at port of entry ... 79/1 65/2 54/8 The Produce Section reports that it. “regards these figures as proving that the quota has been costly to the consumer out of all proportion to its benefits to the home producer. The T 933 average price of 65/2 was a paying proposition to the foreign producer. Comparing the 1934 average of 79/1 with the 65/2 of 1933 the difference of 14/- per cwt. or Ijd per pound, has been paid by the consumers. CANADA. “The Produce Section has not overlooked the fact that one of the consequences of the quota system was the opportunity provided for Canada to increase her exports of bacon to the Mother Country. This has been realised, and Canada is now the second largest supplier of bacon to the United Kingdom. In 1932 she sent 181,580 cwt. valued at £524,938. In 1933 the trade increased to 506,906ewt, valued at £1,600,751, and last year (1934) it had advanced still further to 894,643 cwt, valued at £.3,460,488. But the increased imports from tho Empire and any increase in home production have by no means equated the drop in imports from foreign countries. The quota restrictions have in fact resulted in such increases in prices within the United Kingdom (not, be it noted, elsewhere) that the public has found itself unable or unwilling to purchase bacon in the normal volume. Total consumption has been thereby very much decreased. “Such a situation must be detrimental to all concerned. Not only does it weaken tho future prospects of the home producer, but it is equally prejudicial to the long view outlook for the foreign supplier. It is true that, up to the present, the foreign supplier has received approximately the same sum of money for reduced quantities, but he cannot regard that as a healthy state of affairs. In the opinion of the Produce Section, the quota system is contrary to the interests of home, Empire, and foreign producers since on present indications sections of -the British public are generally being forced into a position of learning to do without bacon as an article of food. THREEFOLD PROBLEM. “The problem seems to the Produce Section to be a threefold one. The announced desire of the Government, which the section fully understands and does not oppose, is to assist home producers and encourage Empire trade. Situated at the heart of an area which embraces a large proportion of the consuming population of the United King dom and is at the same time engaged in manufacturing for the export trade, the Produce Section cannot overlook the national importance of maintaining reasonable and equitable reciprocal trade with foreign countries. It seems to tho Produce Section very important for the Government to consider whether all these factors in the problem would not be more satisfactorily met by a tariff on foreign bacon with a preference to Empire countries. It is not improbable that a reasonable rate of import tariff would enable the foreign supplier under present conditions to deliver bacon duty paid at a mutually satisfactory price. The revenue from such a tariff applied as a subsidy to home producers should enable them to compete, and thus relieve the consumer and taxpayer of a very heavy burden. With a freer market, competition should keep prices reasonably low and consumption correspondingly high. RECOMMENDATIONS. “After giving this matter the most serious consideration, the Produce Section desires to recommend the Hoard of Directors of the Chamber to endorse the following recommendations as to a new policy in dealing with tho question of bacon imports:-— That the present quota system be discontinued. That, with the position thus clear, the Government should examine the best measures which would have as their primary and twofold object (I) the assistance to the home producer, and (2) the encouragement of Empire trade in pig products. At the same time, full consideration should bo given to the importance of doing nothing which would unduly prejudice the reciprocal trade between the United Kingdom and the foreign bacon-pro-

ducing countries. In this connection, doubtless the Ministry of Agriculture and the Board of Trade would confer together in order that any new basis decided upon would be calculated to have the least disturbing effect on these channels of trade. If, after a full examination of the matter, it is found that for national reasons some measures must be taken in regard to foreign bacon imports, there could be imposed a moderate specific tariff. The revenue so derived should be utilised to confer direct benefits to the, homo producer. PURCHASING POWER. The report goes on;— “The experience of former years proves that tho present consumption of bacon is capable of considerable expansion, and it cannot be too strongly emphasised that the chief hope of the 7 per cent, of our population who are engaged in agriculture is an increase in the purchasing power of theif customers, who arc the remaining 93 per cent, of our people living in the towns. This can only be achieved by a revival in international trade. “It should be noted that if the suggestion contained in the third recommendation should be adopted by the Government the greater the quantities of bacon imported and the lower the price the more will be the revenue available to make up the deficiency to the home producers, “The chief anxiety of the produce section is to see the adoption of a new policy which, while not interfering with the agricultural plans of the Government, will free the trade from the present restrictions of the quota, thus ensuring a return to larger consumption, which in itself is so important to the future of the home producer.” The general terms of the report wore strongly approved by members of the Produce Exchange. A leading authority among produce merchants said it had been proved up to the hilt that the chief advantages derived from the quota had gone to foreign producers. In 1934 Denmark received from Great Britain a considerably larger sum for a much smaller export of bacon than the did in 193'3. This was absurd in view of the fact that the quota system was instituted to reduce imports and to encourage the home producer. ONE-QUARTER. “There is another absurdity,” he went on. “When our negotiators were at Ottawa the bacon consumption of this country was put at 10,600,000 cwt. per annum. When the quota system was instituted Canada was given a quota of 2,500,000 cwt. onequarter of our total consumption. It is doubtful whether Canada had as large an exportable surplus as that. Even so, the figure was extraordinarily big in view of her export of only 181,000 cwt. in 1932. Her exports of bacon to Great Birtain have increased remarkably, and she has been getting the advantage of the increased price. Yet she will not give the country an appreciable concession of any kind in the matter of cotton or woollen textiles. That ig something about which I feel strongly. How absurd it seems considering that the quota was intended to reduce imports and assist the home producer.”