TRADE WITH BRITAIN

Otago Daily Times, Issue 22277, 1 June 1934, Page 4

TRADE WITH BRITAIN

COSTS AND PRICES DAIRY INDUSTRY'S PLIGHT DISCUSSION,BY FARMERS’ UNION Aspects of New Zealand’s trade in primary products with Great Britain wore discussed at the annual conference of the Otago Provincial Council of the New Zealand Farmers’ Union yesterday. The discussion, which was opened by Mr F. Waite (Balelutha) was based on the following remit:—r > v “ That the free and unrestricted entry of our products into the J British market' is so vital to the. prosperity of the Dominion :that : negotiations should -be entered intowith the British Government to’ ascertain on what terms this privilege could be secured and what con-, cessions should be made with a view to obtaining it.” , . MR F. WAITE’S VIEWS ?“ In our trade with Britain,” Mr \Vaite' said, ,in moving the adoption, of the remit, “and particularly in the dairy business,. we are going through a -;'serious transitional stage which/ however painful it has been up fiH 'how,- may get. increasingly serious ahd painful to us before there is any. definite improvement. The extreme nationalistic policy of most countries is the outstanding feature, of recent years. Each nation, fearful of the future, decides to make its own national life more and more selfcontained. As New Zealand, per head of population, has the greatest overseas trade of any nation, we accordingly must suffer severely. lu the case of dairy produce, Canada and the United States, and every country in Europe, have practically prohibited entry of bur dairy produce. Germany, France and Italy shutting out Danish and other Baltic butter/have made Great Britain, 'our best market, the dumping ground for .the world’s dairy produce. There is not too much butter and cheese being produced. Even with butter at lOd retail ii» London, and 2s fid per pound in France and Germany, a World Economic. Conference to ; break down, or reduce barriers, was a failure. Indeed, since that conference restrictions of all (Sorts have’ increased. .> - ;•? •, “ Great Britain, seeking, to protect her farmers, asked us to .Consider quotas. This .was top much of a shock to us, and we refused, through the Dairy Board (and the board was supported by the Farmers’ Union). We preferred t 6 keep the protection of the Ottawa agreement, . “It might have been wise to agree to quotas six months ago, but this is ho, time for post mortems. ■ We have to consider the position as it is. Above all, we must keep from further estranging the people at Home/

“ Perhaps we hardly realise the significance of the following statement of the position in.Britain:— . J, ,/ V t ■; About 150,000 producers of milk are

taking part in the.greatest experience of the kind that British agriculture has known. Over 96’ per cent, of those who voted on the milk scheme said ‘Yes,’ and in doing so started a new era. They have chosen to march together instead of as individuals, to strive side by side for a'greater measure of prosperity, to subject themselves to a new discipline, and to share the results on an entirely oaovel basis. • r V / BRITISH POOLING SYSTEM. Ih Tact, at Home they have elimk. hated? price* cutting, -p They now have wholesale‘and retail prices fixed. Their pooling system means that whether a producer sells milk, liquid milk at something over Is per gallon, or milk for manufacturing into cheddar cheese, which may net only 4d per gallon, all returns are pooled, and in final payments all-receive alike.?

“ As surplus milk has to be made into cheese at ■ cheese/factories, and as this factory made cheese 1 has to meet the composition of New Zealand cheddar cheese, then the price returned from this milk will be somewhere about 4d per gallon. It was this factor—our cheese limiting the price of British factory-made cheese—which brought Mr Baxter out to New Zealand. He concentrated upon trying to get a quota against cheese. “ The net result of ns refusing to agree to a quota against our cheese was that the British producer had to sell much of his milk at 4d. This pulled down the pool price. The British Government, determined to help the British produce, then said in effect: ‘ Well, sell your cheese at whatever you can. to meet the competition, and. we will subsidise your milk made into cheese up to 6d per gallon.’

“So we may be entering a period when we will be facing fierce competition from British cheese. The British producer will not suffer; he will be subsidised. He will go on, and get perhaps a pooled return of ISld.for his milk, while our cheese factory suppliers will be getting 34d per gallon. “ This subsidising of , milk at Home has already resulted in largely increased supplies of milk. The surplus is being made into cheese. Here is an extract from a Scottish paper received last mail:

Production of milk is increasing rapidly, and is already far ahead of the country’s requirements. The Scottish Milk Board is bound to find a market for all milk tendered. . . . The only alternative is to send the surplus milk to factories. Butter making on a large scale is out of the question. Even with the Government subsidy it cannot be produced at a price which will compete with foreign supplies. . . . There remains only cheese and cream. The board has ordered creameries to go full speed ahead on the manufacture of these two.

Cheese is being produced much faster than it can be sold. It is piling up at the creameries.

51 “If this is the situation in April (a spring month at Home which compares with our October) then when the flush of summer arrives, the British-made cheese may pile up faster; and in the next British spring and summer, with subsidised milk at Home, and with an unrestricted market for Dominion and foreign butter and cheese, we may have to experience even lower prices for our butter, and particularly for our cheese. “ If the cost of producing a pound of butter-fat is lid, and if this season the payout is Bd, how will the dairy producers fare? Thoughtful dairy farmers everywhere are facing up to these questions. In the next 18 months can we (1) get butter .and cheese prices up, or (2) get costs down; a third question is sometimes asked, can we temporarily bridge the gap with a subsidy or loan; or fourthly, may we have seriously to face up to the extinction of the dairy industry?, The extinction of the industry would be. a great national loss, and a very severe personal loss to those of ua with all we have sunk in cows and plant. •The dairy farmer will not give up the fight easily. , “What can we do ourselves? First, we must take the mdst*stringent precautions to improve quality, so that we can sell in the face of the fiercest competition. Secondly, we must still press for a reduction in farming costs. We have cut costs to the bone on the farm, but there is still a great gap between the dairy farmers’ costs and prices, and we can do a good deal in stopping overlapping and competition between cooperative factories.”

Mr Waite added that their internal trouble was to cut down the gap between Costs and prices. How long could the dairy farmers continue to export with that great disparity between costs and prices? The life blood of the dairy industry was its overseas trade. They must export or expire. They could not ask Great Britain to take their goods if they did not take goods from Britain in return. They were passing through a crisis and people did not realise yet the serious competition they had to face. They had been producing at a loss and the question was how long could they keep it up? ! “ BUY BRITISH ” Mr W. Lee (Goodwood), seconding the motion, said he thought the real cause of restrictions in Europe was the world war debt. When that debt was written off restriction of trade would disappear. The subject of restriction had proved a very handy weapon for the opponents of the Dairy Produce Board. Still he thought that if the board had agreed to 'the . proposed restrictions .it would have ‘been false to the interests it represented, The sheep men had brought dairy men to their present plight. Sheep men, in an, endeavour to escape low wool prices, had •? turned to dairying and bumped up production too high. They could not be blamed for that, but it was a disastrous policy. The Dairy Board certainly could not be blamed. When the first overtures were made the board took a definite stand against fixed quotas, and when. the board Objected the Government upheld it. The board finally agreed to keep back 1000 tons per month for. three' mouths if Australia would do the same. That arrangement failed. The attempt- of the British Government through Mr Baxter to put the “ whole damned burden ” on New Zealand, as Mr Coates put It, was unsuccessful, mainly on account of the opposition raised by the board. The Dairy. Board’s approval of restriction comprised an acceptance of a system of restriction which would embrace all parts of the Empire and cover all milk products. But notwithstanding the current unsatisfactory comment on the situation he • was convinced. that the dairy industry would pull out of the trouble, but everything depended on quality and the reduction of tariffs. y FREETRADE SUGGESTION Mr C. Inder said that taking everything into consideration It was not surprising that Great Britain should want to protect her farmers by imposing restrictions on the imports of certain produce. The crux of the position was how far. New Zealand was prepared to stretch a point in favour of Freetrade. EXCLUSION OF SHEEPMEN ' Mr R. J. E. Smith (Wedderburn) suggested that no farmer with more than 1000 sheep should be allowed to sell either cream or milk to a dairy factory. Sheep farmers had to do something for dairy , men, and this seemed to be a way of doing so. CAUSE OF RESTRICTIONS The Dominion president (Mr W. J. Poison) said the whole principle of quotas was wrong because it would probably (have the most serious consequences. New Zealand must have free access to British markets. What New/Zealand wanted was a bi-lateral agreement covering New Zealand and its dairy produce export, instead of the multi-lateral agreement embracing all dominions and all produce for which Britain tv as working. There would be general stagnation in this country if the principle of quotas was accepted. To avoid it they mast secure a general reduction of tariffs. A gradual reduction was no good as its benefits would, be. too long accruing to Britain. They must act now and act quickly, and by so doing secure the sympathy; of the British people. He was quite 'surc they could get it if they went about it in the right way. QUOTAS DISASTROUS Mr R. S. Thompson said that the figures quoted by Mr Poison surely showed the necessity for purchasing more goods ..from Great Britain. Just on 12 .months ago 86 ships came to New Zealand with - ballast. How. could they expect the sympathy of British manufacturers in the purchase 6f their goods. They had to step out quickly and purchase their requirements from Britain. It w,as up to the - Farmers’ Union to give the lead, and to purchase British cars. He hoped also that farmers ,would not purchase American wireless sets ’in preference to British. The motion was carried unanimously.