IMPORTS OF MEAT

Press, Volume LXXI, Issue 21418, 9 March 1935, Page 16

IMPORTS OF MEAT

Britain insists on Reduction TEXT OF WHITE PAPER New Zealand Government's Reply [From Our Parliamentary Reporter.J WELLINGTON, March 8. The full text of the British Government White Paper on meat imports, and the full text of the reply of the New Zealand Government thereto were made available for publication this evening. As the cabled summaries have indicated, the White Paper sets out in quite unequivocal language the firm intention of the British Government to safeguard its own live-stock industry, and its belief that the only practicable means of doing this is through a drastic reduction of meat imports. If, however, the consent of the countries concerned can be secured, the position might be met by a levy, with preference to the Dominions, says the White Paper. The reply of the New Zealand Government puts forward the claim that the Ottawa agreement, which has in spirit been scrupulously observed by New Zealand, has worked very well. It is also indicated that any big decrease in meat exports from this country would be a serious blow to the sheep-farming' industry, and a very unfair one, because the export from New Zealand is mainly of sheep products, while the whole problem of the British farmer has been brought about through the increase in British imports of beef. The suggestion is made that New Zealand may not be able to meet, her interest payments to British creditors if her expansion of exports is curtailed. It is also a contention that the very satisfactory tariff arrangements under which British goods enter New Zealand may have to be revised. New Zealand refuses to support voluntarily the suggestion of a levy.

The British statement reads:— Part I. 1. In a memorandum on the livestock situation issued as a White Paper • Command 4C51) in July last, copies of which were sent at the time to his Majesty's Governments in the Dominions and to the Government of Southern Rhodesia, attention was called to the very serious decline which had taken place in 1932-1933, and the first half of 1934, in the prices of fat and store cattle in the United Kingdom market. 2. The present crisis would appear to be due in the main to two causes. In the first place there is the general phenomenon of world depreciation and disproportionate fall of agricultureprices. Second, the meat industry has been specially affected by the expansion of overseas production which in some cases has been stimulated by the payment of subsidies. 3. It is clearly impossible for the United Kingdom Government to acquiesce in a situation which threatens ruin to the United Kingdom livestock industry. Part 11. 4. I! is important here to observe that the present difficulties of the United Kingdom livestock industry, as of United Kingdom agriculture in general, are not of its own creation. The agricultural industry in which breeding and feeding of livestock are an essential element gave employment in 1931 to nearly 1,500,000 persons, and its production was valued at £254,000,000, of which livestock and livestock products accounted for between 70 and 75 per cent. During the last 25 years the net output of meat in the United Kingdom has remained approximately unchanged. During the same period the total population has increased by 10 per cent.; the agricultural population has declined by 14 per cent., and imports of meat into the United Kingdom from all sources have increassd by about 33 1-3 per cent. 5. It will be apparent that neither the general fall in prices during the recent depression nor the special fall which is threatening disaster to the livestock industry are in any sense due to the development of production in the United Kingdom. 6. In this connexion it is to be observed that while agriculture is the biggest single industry in the United Kingdom, it is a predominating economic interest of the United Kingdom to maintain and if possible to expand her exports of coal and manufactured goods. It has ahyays been and is still recognised that the development of inter-Imperial trade is of primary importance for this purpose. In as much, however, as the rest of the Empire is not in a position to absorb the whole or even the major part of exports (and still less of potential exports), of United Kingdom industries it is an essential interest of the United Kingdom to maintain a substantial export of coal and manufactured goods to foreign countries. Part HI. 7. In devising measures to deal with the meat crisis therefore it is the task of his Majesty's Government in the United Kingdom to reconcile the need—(l) of safeguarding with due regard to efficiency the Home interests; (2) of providing for the due development of Dominion resources, and (3) of preserving trade with foreign countries which is essential to United Kingdom exporting interests. In endeavouring to meet each of these needs due regard must be had to the others. 8. In the Ottawa agreements with Australia and New Zealand provision was made for reducing imports of frozen beef and frozen mutton and I lamb from foreign countries by | amounts rising to 35 per cent, and for stabilising imports of chilled beef at the level of the basic "Ottawa" year, namely July, 1931, to June, 1932. The Dominions on their part agreed to certain temporary measures of stabilisation. The United Kingdom Government undertook not to place any restriction on supplies of meat from the Dominions before July 1, 1934.

ately to imports of Empire sources. Imports of chilled beef from South America have in fact been subject ti' I an average reduction of 10 per cent, since November, 1932. ! Part IV. 10. The ellect of these measures has been that the total imports of foreign chilled and frozen beef, veal, mutton, and lamb in 1934, decreased by 1.581,000cwt or by 13.55 per cent, as compared with "Ottawa" year. Imports of Empire dead meat of these categories in the same period increased by 1,123,000cwt, or 1G per cent. Taking chilled and frozen beef and veal alone, foreign imports decreased by 942,000cwt, or 9.64 per cent., and Empire imports increased by 1,338,000 cwt., or CI.B per cent. 11. In the case of beef, it now appears that these various measures were merely palliatives. The forces depressing' prices are again in the ascendant. The demand shows no definite signs of increasing and the weight of supplies on the market remains excessive, j 12. The price situation was summarised in a memorandum on "The Livestock Situation," published in July, 1934, referred to in paragraph 1. above. Since that date there has j been a marked further declination in I beef cattle prices which are well be- ; lew the already unremunerative figI ures of a year ago. Part A'. 13. In a memorandum of July, 1934, it was explained that the choice lay between (a) a drastic reduction of imports to the point necessary to sustain prices of United Kingdom livestock at a remunerative figure; or (b) the introduction, in agreement with overseas countries, of a levy upon imports, the proceeds of which would be available for the assistance of the Home industry. (In the part of this statement which follows, as in the memorandum of July, 1934, the term "meat" does not include bacon and ham.) In the latter ease it was explained that the quantity of imports might either be left entirely free or subjected to suc'.i moderate protection as might be thought necessary to prevent the market from breaking altogether. It was further pointed out that without the consent of the countries concerned no duties could be imposed on Dominion j meat before August, 1937, or on Ar- i gentine meat before November, 1936. 14. His Majesty's Go>r.rnmcnt in the United Kingdom are of the opinion that a plan based on a levy (with a preference to the Dominions) will afford the best long-term solution of the problem. The possibility cannot be excluded that in addition some regulation of the market may be desirable in the general interests of the producers in certain cases or at particular times, but the United Kingdom Government cannot regard as a satisfactory permanent arrangement a sysstem under which the responsibility for the regulation of the market would rest upon them alone. In their view the intervention of the United Kingdom Government should be limited to the collection of a levy on imports and the application of the proceeds to the assistance of the Home industry according to the needs of the market, overseas producers being thus left free to regulate their exports to this market themselves. 15. The immediate crisis was met by a temporary subsidy to the livestock industry, in order to give time for negotiation on the proposals for a levy. The Cattle Industry (Emergency Provisions) Act, 1934, provided for a subsidy not exceeding 5s per cwt live-weight, on certain classes of cattle for the period ending March 31, 1935. It was intended that any payments made under the provisions of the act should be recoverable from the proceeds of an eventual levy on meat imports. 16. The proposals for a levy have not hitherto proved generally acceptable, but as the only available alternative to a levy is a severe reduction of imports, his Majesty's Government in the United Kingdom desire to present the essential facts of the situation in the clearest possible light. It is with this object that the present statement has been drawn up. Part VI. 17. Failing agreement on the payment of a levy on meat imports, his Majesty's Government in the United Kingdom \vill have no alternative but to take steps to regulate during the currency of the existing agreements the quantities of imports to whatever extent is necessary to restore livestock prices to a remunerative level. 13. The primary object which his Majesty's Government in the United Kingdom have before them in this connexion is to assure to efficient home producers a reasonable return, and not to stimulate an artificial expansion of the United Kingdom livestock industry. 19. In order that the Governments concerned should have a further opportunity to consider the immediate problem his Majesty's Government in the United Kingdom have proposed to Parliament a continuation of the present Exchequer subsidy for a further short period; but it must be understood that they have no intention either of continuing the subsidy indefinitely or acquiescing in the ruin of the livestock industry.

9. After Ottawa the United Kingdom entered into negotiations with Argentina, a country which is not only at present by far the largest source of her chilled beef supplies, but in which she has immense capital investments and with which she carries on a very valuable trade. It was clear in those negotiations that the Argentine Government attached paramount importance to the preservation of the trade in chilled beef. Nevertheless, owing to the increasing difficulty of the supply situation, the Government of the United Kingdom reserved the right in the agreement that was made to effect a further reduction of imports of i foreign meat into the United Kingdom I by reducing shipments of chilled beef I fey 10 per cent, below the level of the '"Ottawa" year provided that the j amount so excluded was not effectively 'replaced by the Import of meat from , other sources except experimental shipments of chilled beef from the Do- : jglnlons. Any reduction by more than i •# per cent, was to apply proportion-

Tart VII. 20. To sum up ( s l) It is the firm intention of his Majesty's Government in the United Kingdom to safeguard the position of the United Kingdom livestock industry. (2) Having regard to the terms of the Ottawa and Argentine agreements, the only practicable means at present available to them for this purpose is a drastic reduction of the import of meat into the United Kingdom from all sources. (3) If, however, the consent of the Dominions concerned, of Southern Rhodesia and of Argentine can be obtained to the necessary variation of their respective agreements, it would be possible to deal with the situation by the imposition of a levy upon the import of meat into the United Kingdom with or without a measure of supply regulation. (4) The policy which his Majesty's Government in the United Kingdom desire to bring into operation as soon as they are in a position to do so is to assist the United Kingdom livestock industry, according to the needs of the market, from the proceeds of a levy on imports (with a preference to the Dominions), overseas producer:; being left free to regulate their own exports to this market themselves. (5) The question therefore arises whether with the consent of the Governments concerned a levy should be imposed upon imports forthwith as an alternative to drastic reduction of imports which would otherwise be necessary. (6) If so the following further question arises (a) Whether a*l] import regulations should cease as from the date on which the levy comes into operation, or whether there should be a transitional period, after the imposition of the Igvy, during which a moderate degree of import regulations would be maintained. <b) Whether the levy should be imposed on all meat or only upon beef. veal, and live cattle, bearing in mind that in the latter case a higher rate of levy may be necessary than if a levy were applied over the whole field of imported meat and that it would also be necessary to ensure that imoorts of lamb, mutton, and pork are adequately controlled. NEW ZEALAND'S REPLY SERIOUS EFFECTS OF LEVY REFERENCE TO POSSIBLE TARIFF REVISION On February 13, IfS3o. the United Kingdom Government cabled their long-term meat policy for consideration by the Dominions and Argentina Governments. This cablegram was published as a White Paper on March 6. Following is a copy of the New Zealand Government's reply: "His Majesty's Government in New Zealand have given full consideration to your telegram of February 13. "Since the Ottawa Agreement New Zealand has endeavoured to co-oper-ate with the United Kingdom in an attempt to correct the situation caused by the abnormal glut which then existed in the market tor meat. We believe that the arrangement made at Ottawa has so far worked satisfactorily. Despite dillicultics in the initiation of the plan, it will be appreciated that New Zealand has not acted in any way which is inconsistent with the spirit of the agreement made in 1932. It is our opinion that no aspect of New Zealand's policy in regard to meat has intensified the dillicultics of the British producer or run counter to the expressed wishes of his Majesty's Government in the United Kingdom. Low Tariffs "Further, New Zcaiunri ha:: indeavoured on her part to carry out the Ottawa arrangements in respect. ol tariff reductions both by action immediately following the conference and by a subsequent general review of the tariff. The result has been a marked lowering of duties over a wide range of British imports into New Zealand. Many duties on British imports have been abolished. In consequence the import of British manufactured goods has increased substantially. His Majesty's Government in the United Kingdom will appreciate that even before Ottawa New Zealand's tariff on British goods was approximately one fourth as heavv as were the comparable tariffs of other Dominions. "We desire to re-emphasise that the economic development of New Zealand has been contingent upon the expansion of our main export industries. This expansion was necessary to provide the means of payment of interest on British capital invested in this Dominion, and it enabled us to purchase increasing quantities of British exports. This was a mutually advantageous development. "In the light of the foregoing and of the sympathetic consideration of his Majesty's Government in the United Kingdom in the past, we lind it difficult to believe that the proposals for a levy on all meat imported into the United Kingdom from New Zealand will provide a satisfactory solution. It would be discriminatory in its effects and would involve New Zealand in serious economic loss. It would negative all the adjustments made in New Zealand designed to reduce farming costs. Small Beef Exports "The position in regard to mutton and lamb has been satisfactorily adjusted as a result of the Ottawa Agreement. The difficulties facing the United Kingdom are not directly influenced by supplies of mutton and lamb. The problem in the United Kingdom as stated in recent communications is primarily related to beef for which the demand of the British consumer hr»; been falling off, and it would appear that New Zealand's share of the beef imports is not such as would substantially afTect the situation. "The imposition of the proposed levy would not only terminate the Ottawa Agreement, which New Zealand has made strenuous efforts to observe, but would also inflict severe and undue hardship on the sheep industry of this country. In fact, our mutton and lamb producers would be heavily penalised to assist in the solution of what is essentially a beef problem. "New Zealand regrets that it cannot volutarily support the principle of a levy; and in the form proposed it is especially repugnant to meat producers and to the people of this Dominion. New Zealand, with a population of one and a half millions, with the highest per capita external trade in the world, with meat exports amounting to a quarter of our total export values—a proportion which is enormously greater than that of any other Dominion—would be called upon to carry a levy which is demonstrably a far greater burden to New Zealand than to any other British Dominion. We urge that the proposal is inequitable and discriminatory. "In our view the hope that the meat supplying countries would agree amongst themselves to restrict supplies to suit the need of the market for meat is slender, though if it is the wish of his Majesty's Government in the United Kingdom New Zealand would of course be prepared to join in any discussions. We think that any agreement should embrace all suppliers if reasonable price stability is to be achieved. The Economic Position "We consider that the proposal of the British Government would destroy the mutually beneficial results arising from the Ottawa Agreement. In the case of New Zealand it would be contrary to the policy of giving the

Dominions more favourable treatment than that accorded to countries outside the Empire, since New Zealand is the least able among supplying countries to bear the disproportionate and onerous burden of a levy. In addition we believe that the market would be heavily over-supplied and this would involve a heavy fall in prices. Thus New Zealand's economic position would be rendered precarious. "The long-term proposals cf the United Kingdom Government in regard to meat, as expressed in your telegram of February 13, may react on our tariff policy. We fear that the proposal to impose a levy on all meats imported into the United Kingdom would so damage our external trade as to bring into prominence the whole question of tariff revision in New Zealand. This we are most anxious to avoid. "Finally we would emphasise very definitely that any contemplated action which may be construed as undermining the principles underlying the Ottawa Agreement should be avoided, and before the Ottawa Agreement as it stands is amended a formal conference should consider and approve cf any alterations." A TEST CASE AUSTRALIAN C()MME NT (Received Mai eh 8, 10.50 p.m.) CANBERRA,v March S. Australia's attitude on the meat export, question will be set out fully and frankly in a statement in the House of Representatives next week by the Acting-Prime Minister, Dr. Earie Page, in reply to the British White Paper-. It is reported that the Commonwealth Government regards the meat negotiations as a test case for the whole of the Australian industries. Dr. Earle Page, Acting-Prime Minister. announced to-day that the Commonwealth will not accept the present British meat import proposals.