BUTTER SHIPMENTS

Otago Daily Times, Issue 21919, 3 April 1933, Page 6

BUTTER SHIPMENTS

QUESTION OF RESTRICTION

"WOULD HAMSTRING INDUSTRY"

ATTITUDE OF DAIRY BOARD (Per United Press association.) HAMILTON, April 1. Mr Dynes Fulton, acting chairman of the New Zealand Dairy Produce Board, issued the following statement to the Press Association to-day: — In view of the criticisms levelled against the board and the side issue 9 that have been raised, it is desirable that I should restate the problem which New Zealand has to face in 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 restrictions be enforced, the whole dairy industry will be hamstrung. It would naturally follow that there would be no 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 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 butter whichcould be imported into Great Britain for the year ending June 30, 1934. The 1932-33 quantity is. likely to be in the vicinity of 120,000 tons, and after reducing 6 per cent, this would leave approximately 112,800 tons. It is true, however, that for many years there has been an annual 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 tons. 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 anproximately 10 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 401 b per head per annum is' the highest in the world, and absorbs about 26,000 tons of butter. This butter was selling retail at 9d per lb, and it is extremely unlikely that the local consumption would be increased to any extent if the retail price was only 6d. However, assuming that the local consumption was increased by 10 per cent., which would be approximately 2600 tons if the restriction were in operation, the price on the local market for milk would naturally fall, and there might be a further consumption of milk, representing about 2000 tons of butter These were assumptions which, were, of course, problematical, but even if correct it would still leave 15,000 tons of butter to dispose of. New Zealand had no markets other than Great Britain and Canada, and the United States had shut their doors against us by tariffs. Small quantities were going to Honolulu, the East, and the Pacific Islands, amounting to about 1250 tons; but, assuming that these could be doubled (which was very unlikely) we were still left with 13,750 tons to get rid of. The manufacture of cheese cannot be increased, as it has been clearly indicated that if a restriction applied to butter it would also apply to cheese. Mr Fulton proceeded: So far .as Australia is concerned, if the restrictions were applied on the suggested basis, provided there is no very great increase next season, they would only have a 6000 tons surplus to dispose of, and with the population of '6,500,000 people this could probably be absorbed in increased milk and butter consumption. Denmark in 1931 exported 169,000 tons of butter, of which 122,000 tons, went to England, 30,000 tons to Germany, and 17,000 to other countries. In 1932, owing to Germany shutting out 50,000 tons, the Danish exports to that country were only 13,000 tons, and the quantity going to Great Britain rose to 127,000 tons. The Danish, under the proposed restriction of 12 per cent., would require to find other markets for 15,000 tons of butter, 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 121 b per head per annum, which represents approximately 19,000 tons. 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 noted that Denmark actually imported 350 tons of butter in 1932 from Finland, Latvia and Esthonia. It has been said that New Zealand will make more money under the restricted quantity than she would by exporting the whole quantity available Let us examine the ■ statement. On an unrestricted market New Zealand would export approximately 132,000 tons, say, at 70s, £9,240,000; a restricted quantity of 112,800 tons at 70s is £7,896,000. Let us assume that there would be a rise of 10 per cent, in the price (and even the greatest optimists amongst the exporters have never suggested that such a rise would take place). With this 10 per cent, added the total sum given to New Zealand would be £9.475,200. There would still be left to dispose of approximately 20,000 tons of butter, cither by forced sale or destruction. There might even be a loss in the handling of this butter. It is quite impossible to prove that New Zealand's adherence to restrictions would do anything except assist the prices for the English dairy farmers 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 cablegrams 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. The exporters are reported to say that the Dairy Board is not facing the position. Lot it be definitely stated that the Dairy Board is vitally concerned with the future of the New Zealand dairying industry, and not for the benefit of any exporters. It would be guilty of a breach of trust if it glibly agreed to the restrictions which the London importers and their New Zealand representatives seem to imagine would be such a simple matter. While the press messages would give an indication that the importers in Great Britain are unanimous in recommending the producer to agree to restriction, already cablegrams have been received from important Tooley street merchants indicating that they entirely disagree with the suggested, restrictions, and consider that they are only a palliative, and would not bring about any permanent improvement. That it would be a distinct financial advantage to some of the merchants goes without saying, as fairly large quantities of butter have been purchased on an f.o.b. basis for shipment duriug the next three months, which must of necessity at present prices prove a loss to the final buyers. I make bold to say that a great deal of the propaganda that has some to. this

country from Tooley street has been influenced in tljis way. In conclusion, let me assure the industry that our own organisations in London are watching the position very carefully, and keep us fully posted almost daily.