A BUTTER EXPORT BOUNTY.

New Zealand Herald, Volume LXIII, Issue 19321, 7 May 1926, Page 10

A BUTTER EXPORT BOUNTY.

Canada's imposition of a dumping duty on Australian butter is apparently the first- foreign protest against an extremely ingenious scheme to increase the returns to Australian dair.Y farmers. The export bounty of 3d a pound which Canada has decided to counter-balance by a duty of equal amount is paid under the Patcrson stabilisation scheme, the name being derived from its originator, a member of the Victorian Parliament. It, has generally been represented as a device to stabilise the Australian market and to protect producers from the fluctuations of London prices, but Mr. Paterson has frankly disclosed its real purposo and effect, which is simply to increase the returns to butter factories on their whole output by raising the price in the domestic market. The local price of butter is based on export parity; Mr. Paterson easily convinced the dairying industry that any artificial raising of the export parity would involve a similar advance in local prices, and when he showed that this stimulation could be applied by the industry itself with substantial profit, there was an enthusiastic response. Over a period of five years, slightly more than one-third of the butter manufactured in Australia was exported ; by paying a voluntary levy of one penny a pound in respect of their total output, the factories would have supplied a fund out of which a bonus of threepence on all export butter could have been paid, and since local prices would consequently have advanced by the amount of the bounty there would have been a clear gain on the whole output of twopence a pound. The margin of profit depends upon the proportion exported : with an export of 25 per cent, the levy would be fd and the profit 2jd; with 75 per cent, exported, the levy would be 2]d and the profit fd. The scheme was linaLly adopted by an inter-State conference in Melbourne last November and was brought into operation on January 1, the rise in local prices anticipating it by a few days. It is administered by a committee of members of the Commonwealth Dairy Export Control Board, but neither State nor Federal Government has any association with it. Owing to the increase in the proportion of exports, the levy is being made at the rate of lid a pound, on the presumption that half the total production will be sold abroad. The scheme is being given a year's trial with butter and there is a proposal that it should be extended to cheese, with a bonus of lkl a pound. It is, of course, capable of almost indefinite extension, so long as the local consumers do not object to provide the funds, and since the bonus is simply an inversion of protective import duties, which play so large a part in Australian policy, their objections may not be very serious. The scheme would not offer such attractive advantages to New Zealand butter producers, for with an export of 82 pet cent. —according to figures given by the Minister of Agriculture last week—they would have to pay a levy of nearly 2kl to gain a profit of one halfpenny.