DANGER IN QUOTAS

Wanganui Chronicle, Volume 76, Issue 105, 6 May 1933, Page 20 (Supplement)

DANGER IN QUOTAS

ECONOMIST’S WARNING.' • Professor Belshaw, Professor of Economics, Auckland University College, according to the New Zealand Herald, supports New Zealand and Australian dairy interests in their rejection of a proposed quota for butter imported by the United Kingdom. Imports of butter into Great Britain have increased over 30 per cent, since 1929, according to Professor Belshaw. The alternative to a quota was said to be a price war. It might seem at first sight that a quota would be much preferable, but his view was that there were serious difficulties and some dangers to which the advocates of a quota had not attached sufficient importance, that the alternative was not necessarily a price war, and that even if it were, a price war might well be the lesser of two evils. Reasons Against Quotas. In view of the competition of margarine,’it was possible that the increase in gross receipts following the introduction of a quota would be less than was hoped. In any case, the competition of margarine defined the limits within which a price rise was likely as the result of restriction. Secondly, a quota must be imposed on foreign butter, at least as large as that imposed on Empire butters, if it was to bo effective. That would impair the goodwill of foreign buyers of British goods and might embarrass attenips to reduce world tariffs. Thirdly, if the policy were successful in. raising prices it would stimulate the increased production of butter in Great Britain, and the advantage to overseas producers would wholly or partially disappear. Fourthly, a quota would probably only delay, and not remove, the prospects of a price war. New Zealand would be in a stronger compelitivo position in a price war without quota restrictions than with quota restrictions. What Might Be Done. “Restriction iin the supply of farm products is faced with great practical difficulties,” said Professor Belshaw. He considers that more might be achieved by reciprocal trade agreements with other countries than by quotas. The possibilities should be explored of (a) developing new markets; (b) developing the local market in milk and cream; (c) improving marketing in Great Britain, more especially with a view to competing more effectively against Danish butter in the North and the Midlands; (d) developing a more diversified farming .in dairying districts; and (e) improving technical efficiency in farming and manufacture. No spectacular improvements should bo expected from these, he says, but they might quite well lead to a gradual amelioration of the position.