B. —6.

Overseas trade.

During the past financial year the whole of the Dominion's exportable produce has been made available to the United Kingdom Government. Largely as a result of increased production and in spite of shipping difficulties, our export values reached the record total of £71,200,000. Imports for the period totalled £47,900,000, resulting in a record excess of exports over imports of £23,300,000. This considerably strengthened our financial position overseas, and made it possible to reduce the Dominion's indebtedness to the United Kingdom Government by £4,000,000 sterling. After this was done overseas assets of the Reserve and trading banks as at 31st March last showed an increase of £6,700,000 over the amount held at the same date in the previous year. The outcome of last year's budget, a surplus of £1,726,000, is further evidence of the fact that our financial position is sound and well under control. This surplus is being transferred to the War Expenses Account to assist in meeting this year's war-costs. As the war effort in New Zealand and in other parts of the British Commonwealth grows in magnitude and intensity, the reactions on trade and industry will inevitably become more widespread, and in one way or another major adjustments will be necessary. It is the policy of the Government to ease the difficulties arising out of the war as much as possible, and to ensure that its burdens and costs are spread as equitably as possible over every section of the community. Particulars of the contracts and other arrangements made with the United Kingdom Government for the disposal of our dairy-produce and meat have recently been announced by my colleague, the Honourable Minister of Marketing. For the current production season now drawing to a close the United Kingdom Government have treated New Zeal arid very fairly in agreeing to purchase, shipped or unshipped, 248,000 tons of meat, 120,000 tons of butter, and all the cheese available. Even so we are faced with storage problems of considerable magnitude, particularly for meat, where the carry-over at the end of September is likely to be as high as 108,000 tons. In anticipation of such a contingency, arrangements have already been made for additional storage facilities throughout the Dominion at an estimated cost of over £500,000. To make more meat available to the United Kingdom Government than can be lifted in available refrigerated ships, the canning plants in. the Dominion are being considerably extended at an estimated cost of about £300,000. To meet the needs of the United Kingdom Government we have undertaken to increase cheese supplies for export to 160,000 tons. This involves a widespread change-over from butter-production to cheese, but with the full co-operation of the industry it is being carried out. In one way and another financial assistance is being given to farmers and to factories concerned to enable necessary plant and equipment to be obtained. Special measures are also being taken to provide housing for additional cheese-factory employees and some compensation to butter and cheese companies for the increased costs arising from the change-over. It is difficult in present circumstances to assess the real cost to the State of the change-over, but the best available estimate is over £500,000. The agreement recently finalized between the United Kingdom and New Zealand Governments for the coming and subsequent seasons' produce constitutes in principle a distinct departure from the previous agreements which have been on a definite quantitative basis. Briefly, this new agreement provides— (1) The United Kingdom Government are to purchase and pay for all the New Zealand produce that can be shipped in any given season : (2) New Zealand primary industries are to make every effort to adapt their production to actual shipping possibilities—that is, by adopting every possible economy such as the deboning, canning, and pressing of meat, and the possibility of processing whey butter, &c. : (3) Alternative markets are to be developed wherever possible : (4) Reserve stocks of storable foodstuffs are to be agreed upon between the two Governments, and to be determined in relation to —- (a) Probable demands during or after the war ; and (b) The importance of the industries to New Zealand :

United Kingdom Government purchases.

Produce contracts.

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