THE BUTTER DEAL

Otago Daily Times, Issue 26197, 6 July 1946, Page 8

THE BUTTER DEAL

Dollars for Britain PRICE FACTOR RECURS HUGE PROFIT INDICATED (Special) WELLINGTON, July 5. The astonishing deal in New Zealand butter by which 10,000,0001 b will go not to the people of Britain but to the United States troops has been the major topic of conversation in Wellington this week. Into the midst of the Food for Britain campaign is released the fantastic fact that this huge quantity of New Zealand butter will not reach British homes, but will feed American soldiers in the Pacific. It has been made clear by the Prime Minister, Mr Fraser, that the butter involved in the deal was the property of the British, not the New Zealand Government, when the negotiations started. This was so because under the long-term contract all New Zealand butter is sold to Britain. Britain after protracted negotiations has agreed to the sale of the 10,000,000 lbs to the United States, and will receive instead other types of fat from which margarine and other products can be made. While the American soldier eats the butter, the New Zealanders’ British relatives will eat less palatable fats. Substantial Monetary Gain

But here are some of the financial details behind the deal. The price the Americans will pay for the first shipment by the Mariposa will be 44 cents a pound. This is two cents less than the ceiling wholesale price at the beginning of the week m America. It is estimated in round figures at 2s 9d a pound in New Zealand money. Continuing in approximate figures. New Zealand receives from Britain Is BJd for the butter she is selling her. Under the deal New Zealand will still receive Is B£d a pound. Britain will receive the profit of Is OJd, none of which comes to New Zealand. This profit will become available to Britain m dollar funds, with which she may buy other urgently required goods that only the United States can supply. It will give Britain, if the whole 10,000,0001 b is sold at the same price, roughly £N.Z.500,000 in American dollars as profit. Here are some other figures:—Ten million pounds of New Zealand butter sold to the United States at 44 cents will make 4,400,000 dollars available to Britain. New Zealand can be paid in the usual way with sterling funds instead of dollars. Britain therefore has 4,400,000 dollars with which she will buy the substitute fats and any other products she urgently requires. It cannot be stated accurately what part of the 4,400,000 dollars will be required to pay for the substitute fats, and what will remain for other vitally important purposes, but the sum remaining must be considerable, as the fats Britain will buy will be much cheaper than the butter she is foregoing. Whether New Zealand will be granted any dollar funds from the deal has not been stated. What measure of pressure, if, in fact, any, was brought to bear by the Americans to force the issue, or whether the plan originated in Britain, has not been stated. These are some of the vital facts which the people who produce the butter may never be told. American Price Soaring A further highly significant development is the report to-day that butter on the retail market in America has reached 90 cents, or about 5s 6d a pound. Questions asked in Wellington now are whether future consignments under the London-Washington deal in New Zealand butter will be sold at a higher price than 2s 9d, thus giving Britain still more dollars. Waterside officials who had frank discussions with Mr Fraser are convinced that the British and New Zealand Governments had no option but to agree under pressure to the deal. They say they hope a better deal can be arranged in any future negotiations. It is widely feared that the news of the sale will have a seriously adverse effect on the Food for Britain campaign, and special appeals are expected for continuance of effort in the drive for coupon-saving. Even though a fuller statement has been made by the Prime Minister there remain so many points unclarified that it is considered impossible for definite conclusions to be reached about various aspects of the deal. The Prime Minister has said that New Zealand is simply the agent for the British Government in the matter, and that the butter in any case belongs to Britain.

Strange Alliance

In New Zealand the incident discovered the fanners and watersiders speaking in strange harmony. For once in a long time tney were together when they demanded the full facts of the butter deal, although the farming leaders deplored the direct action tactics of the watersiders. Another aspect causing concern among some farmers is the fact that Britain will be forced to continue and probably increase the use of margarine m place of butter. They fear that this may help further to establish the higher grade margarines as a competitor for butter. It is generally conceded that the watersiders in raising another public issue have this time taken action wljich is in sympathy with the minds of many thousands of New Zealanders. The watersiders claim, too. that the .ncident will awaken in New Zealand a great awareness of international problems of the present momentproblems developing, moreover, within the English-speaking sphere.