ATTITUDE OF THE BRITISH GOVERNMENT

Evening Post, Volume CXVI, Issue 61, 13 March 1934, Page 8

ATTITUDE OF THE BRITISH GOVERNMENT

CABLEGRAMS READ AT CONFERENCE

: Important cablegrams which have passed between the New Zealand Government and the British Government on the question of the quantitative restriction of ths importation of dairy produce were read today at a conference called by the Government to consider ways and means of improving the position of the dairying industry. The cablegrams disclosed a definite declaration of British policy to regulate the United Kingdom market in order to increase price levels and alleviate the position of the Home producer. The New Zealand Government asked whether the adoption of practically a free tariff so far as British goods were concerned would enable New Zealand to obtain'the free entry of her produce on to the British market, and the British Government replied that tariff and quota problems were quite separate, and that the British Government was already committed to a policy of regulation of importations. The Prime Minister (th 3 Rt. Hon. G. W. Forbes) took the view that the question of a quantitative restriction of New Zealand dairy produce would not arise until the termination of the Ottawa Agreement, and that New Zealand would have to compete on the open market for the next two years. The Minister of Finance (the Rt. Hon. J. G. Coates) pointed out that under the agreement signed at Ottawa either the United Kingdom or New Zealand had the right at any stage to raise matters set out in the Pact.

The Prime Minister presided at the conference, and other members of Cabinet present were Mr. Coates, the Minister of Agriculture (the Hon. C. E. Macinillan), the Minister of Lands (the Hon. E. A. Ranson), the Minister of Justice (the Hon. J. G. Cobbe), the Minister of Industries and Commerce (the Hon. E. Masters), the Minister of Native Affairs (the Hon. Sir Apirana Ngata), and the Minister of PublicWorks (the Hon. J. Bitchener). In addition, there were present representatives of the New Zealand Dairy Board, the Sew Zealand Farmers' Union, the National Dairy Association,' the South Island Dairy Association, the New Zealand Dairy Produce Exporters' Association, the New Zealand Free Marketing Association, and the nine wards constituting the electorate of the Dairy Board. The Prime Minister said he appreciated the acceptance by the various interests of the Government's invitation to attend the conference. The main motive for calling the'conference was to aiscuss ways and means of improving the present very low prices for dairy produce. The Government had thought it would be better to call together men -who had had practical experience of tho effect of the low prices with the object of ascertaining what views they held in regard to the future of the industry. The Government had been giving a great deal of thought to the dairy industry, and the whol-? position was causing Ministers a great deal of concern. At present the industry was be-ing carried on at below a",economic level, and with that fact those engaged in the industry and the Government were directly concerned. He proposed that the conference should proceed first to a general discussion of the problem so that suggestions could be put „ forward for an improvement. That having been done, the conference would .go into committee, under the chairmanship of the Minister of Agriculture. ■ rMr." Forbes said that a-great deal had been said of late on the question of the quantitative restriction of New Zealand's exports with Great Britain, and there had been suggestions that all the information had not been made public. It had also been suggested that nobody knew what, tho Government's policy was on the question. For that reason he proposed to read to the conference the cablegrams which has passed between the N,ew Zealand Government and the British Government on the subject. And t. give an outline of the discussions which he and Mr. Masters - had had with members, of the British Government. He would also call on Mr. Coates to outline what had, taken place at the Ottawa Conference. The question had been raised that if New Zealand were to offer practically a free trade tariff to Great Britain then there would be no question of the application of a quantitative restriction of exports so far as this country was concerned. In order to clear this matter up, the New Zealand Governmen1- had on October 25, 1933,' sent the following cablegram to the British Government:— •■ . With reference to the question of quantitative i-egulalion of agricultural produce imported into the -United Kingdom, there is a widespread belief on tho part of producers in New Zealand that if we undertook drastic ■reduction or removal of New Zealand's protective tariff on United • Kingdom goods his Majesty's Government in the United Kingdom would guarantee the continuance of unrestricted, entry for New Zealand •primary products. His Majesty's Government in New Zealand would be grateful if his Majesty's Government in the United Kingdom would indicate their attitude towards this suggestion. , ME. BAXTEE'S VISIT.' Mr". .Forbes said that beforo a reply was received to that cablegram, the New Zealand Government forwarded the following cablegram to tho British Government in' reference to the visit to New Zealand of the representative of the British farmers, Mr. T. Baxter: "With reference to. the recent visit of Mr. Baxter, representing farmers' organisations in the United Kingdom, and the proposals made by him regarding quantitative regulation of cheese shipments to the TJnited Kingdom, -the New Zealand Government, in, consultation with the Dairy Board, representing the industry, has given exhaustive consideration to these proposals. Mr. Baxter's frank statement of the views of United Kingdom farmers has done much to clarify matters, and his visit has been keenly appreciated in the Dominion^. In our deliberations we have had regard to the principles enunciated" by United Kingdom Ministers on the occasion of. the World Economic Conference, and particularly to the necessity for ensuring, firstly, that f any scheme should command the assent of a substantial majority of the producers within each country, and, secondly, that any scheme should be comprehensive as regards commodities so that it will not exclud, substitute products. XThe suggestion for quota on cheese definitely fails to satisfy these requirements. The Dairy Board is unanimous in rejecting the suggestion, and points out that it wouM be highly unfair to New Zealand as the main supplier of cheese to the United Kingdom to be thus subjected to special treatment. With this contention the Government is in' agreement, and we are accordingly unable in fairness to the Dominion to assent to the quantitative regulation of cheese aloneV The Dairy Board's further opinions may be expressed as follows: 'While again emphasising the very great reluctance on the part of producers and the Dominion generally to restrict in any way the normal flow of our exports, and expressing the belief that in view of improving conditions, restrictions will be unnecessary, we suggest that any scheme of restrictions should be in the nature of an Empire plan, and include all milk products, margarine, and other substitutes, whether of home manufacture or imported.' Should Fuch a plan be formulated it will receive careful and earnest consideration from the New Zealand Government, in consultation with the Dairy Board^( "We also feel that the greatest em-

phasis should be placed on the view that expansion of consumption rather than curtailment of production is to be sought, and the success or failure of any plan would be judged by the extent to which it could be shown to ensure regulated expansion as indicated jn discussions of quantitative regulation^ "Having regard to Mr. Baxter's impending arrival in the United Kingdom, please take early opportunity of advising the Minister of Agriculture of the views contained in this telegram. /" "IN THE INTERESTS OF ALL." Mr. Forbes then read 'the ■ following cablegrams which had passed between the two Governments:— From the Secretary of State for Dominion Affairs. To the Governor-General of New Zealand. 'Dated December 22, 1933. Your telegram of October 25, please convey the following message to your Prime Minister. ~ /l much regret delay in replying to your message, which required careful consideration in consultation with my colleagues. We desire in the first place to make it cleat that the policy adopted by his Majesty's Government in the United Kingdom is designed to promote planned marketing of agricultural products in the interests of all concerned and involves, where necessary, control of home production as well as of home marketing. Its object is, by correlating supply with demand, to raise prices of commodities concerned and to maintain it at a level at which it will once more become remunerative to all producers supplying United Kingdom markets. It is true that in the present circumstances regulation is likely to involve a check to immediate expansion, but orderly increase of production, as demand increases, with due regard to the maintenance of a remunerative price, is, of course, contemplated. TJie suggestion in your telegram would involve a modification of the United Kingdom policy indicated above, and could hardly be considered with reference to New Zealand alone. Nor, we think,' could an examination of such a question take place on basis of a suggestion put forward by particular trade interests. For this reason we feel hardly in a position to give any further indication of our attitude than that outlined above, though we are, of course, at all times ready to give full and sympathetic consideration to any proposals of the New Zealand Government for the development of mutual trade between the two countries. (Signed) Secretary of State for * Dominion Affairs. .;< "STATEMENT \U COMMONS. ylFvora the Secretary of State for DominI ill -ion Affairs to the Governor-General of mjL New Zealand. Dated February 22, 1934. ; ;Jf he following statement is being made by the Minister of Agriculture in the House of Commons this, afternoon:— The Government has been giving close consideration to the supply position of milk and milk products in. this country. As the House will be aware, there is a volume of milk surplus to present liquid requirements which is estimated to be little short of 20 per cent, of the total volume of milk sold under contract this winter, and is likely to be about 40 per cent, of larger volume of contract supplies available in the spring and summer. This surplus milk has to find a market in manufactured form chiefly as butter and cheese. Prices of butter and cheese are at a vejy low level owing to exceptionally heavy imports, and the present market condition generally. There is thus a grave danger, that the price structure of the whole milk produce industry in this country will be seriously undermined, particularly when the spring and summer flush of milk comes^ori to the market. An expansion of liquid milk consumption in the country would not only be of the greatest benefit from a public health point of view, but would alleviate in the most satisfactory way the difficulty of "surplus milk." If this increase in consumption is to be obtained it must be based on public confidence as to purity of supply. The Government accordingly proposes (1) that for two years beginning April 1, 1934, the Milk Marketing Boards shall be guaranteed by the Government, by means of Exchequer advances, minimum price of 5d per gallon in summer (April-September) and Bdjier gallon in winter, in respect of milk manufactured in factories in Great Britain. For. milk manufactured into cheese on farms, for which boards will have to assume responsibility, the same advances per gallon will be made. Details of the proposed arrangement will be found in White Paper. The advances from the Exchequer are estimated to amount to about from 1% to 1% million pounds in the first year. 2. For the purpose of launching a campaign for securing a purer milk supply the Government will provide from public funds a sum not exceeding £750,000 spread over next four years. It will be the responsibility of the boards to continue the campaign without further assistance as soon as they are in a position to do so. 3. The Government will be prepared to contribute from the Exchequer on a pound for pound basis to the milk publicity fund for a period of two years. The Government contribution will be limited to £500,000 in either year, according to the amount contributed by the Milk Marketing Boards. The grant will be contingent on the submission of an approved programme containing, infer alia, provision for the supply of milk to schools at reduced rates. The requisite legislation will be introduced at an early date. Canada 15. Commonwealth of Australia 12, New Zealand 8. (Signed) Secretary of State for Dominion Affairs. s From the Governor-General of New Zealand to the Secretary of State for 2 Dominion Affairs. Dated February 28, -. 1934; My Prime Minister has asked me to commtmicate to you the following message:— / His Majesty's Government in New Zealand have been approached by representatives of farmers' organisations regarding plight of dairy producers owing to current low prices in the United Kingdom market, and are anxious that amongst other possible measures for improvement consideration should be given to the policy of his Majesty's Government in the United Kingdom in regard to the regulation of imports.of dairy prodnce into the United Kingdom as indicated in the telegram from the Secretary of State for Dominion Affairs dated December 22, No. 71. It has accordingly been decided to convene for March 13 a conference of ter jpresentatives. of dairy producers through-

out the Dominion to discuss both immediate emergency and longer-term outlook. His Majesty's Government in New Zealand desire to co-operate with his Majesty's Government in the United Kingdom in any policy having for its object improvement of the conditions of both the United Kingdom and Dominion producers, and they would be grateful if his Majesty's Government in the United Kingdom would furnish them with full information regarding the proposals for a regulated market for dairy produce in the United Kingdom which they could place before the conference. In discussions here following points have been emphasised by producers as grounds for apprehension with regard to the suggested quantitative regulation of dairy exports to the United Kingdom:— 1. The possibility that such restrictions would involve a standstill in the development of the Dominion, thereby undermining the security of financial obligations both public and private. .2. The uncertainty of its effect in raising prices to a remunerative level. 3. The problem of controlling production in advance by reason of climatic and other varying factors and the consequent problem of the disposal of the surplus dairy produce since the dairying industry has been developed mainly on the basis of supplying the United Kingdom market. 4. The fear that a restrictive policy for dairy products will lead inevitably to its application to all other foodstuffs produced in the Dominion, and 5. The political factor in the United Kingdom which may reverse the policy after the adjustment has been made. In view of the foregoing his Majesty's Government in New Zealand would appreciate definite information by telegraph on the following points:— (a) Whether, in the opinion of his Majesty's Government in the United Kingdom, the present state of the market for dairy produce renders regulation necessary. (I)) The anticipated advantages if a policy of regulation should be put into effect. (c) Whether all milk products and substitutes, for example, edible fats, cither imported or otherwise, would be included within the scope of regulation. (d) What measure of restriction of imports from New Zealand, from other Empire sources, and from foreign sources would be deemed necessary and for -what period. (c) How far it may be within the contemplation of his Majesty's Government in the United Kingdom that in the administration of such a plan of quantitative regulation there' should be an opportunity for continuous representation of the views of the Dominion as any such plan would vitally affect the major industry of the country. His Majesty's Government in New Zealand would be obliged to his Majesty's Government in the United Kingdom for any information on the points raised herein, as well as on any other matters pertaining to a policy of quantitative regulation which would, assist the conference in arriving at a clear understanding of the proposals of his Majesty's' Government in the United Kingdom. (Sgd.) GOVERNOR-GENERAL OF NEW ZEALAND. Prom the Secretary of State for Domin- ./ -, "pon Aifairs, to the Governor-General New Zealand. Dated March 9, 1934. Your telegram of the 28th February. Please, convey the following message to your Prime Minister. We have heard with interest that his Majesty's Government in New Zealand is anxious to secure consideration by the Dominion ■ dairy producers of the principles(s) of (the) supply regulations as a means of improving mirket conditions, and that with this end in view you have convened a meeting of representatives of dairy producers on the 13th March who will have before them the policy and objective(s) outlined in my telegram of the 22nd December. Nor-71. You will, of course, appreciate that situation here has now undergone considerable change. You will recall the discussion (s) which took place early last year as to possible quantitative regulation of butter imports into the United Kingdom from foreign countries and the failure to reach a solution owing to reluctance of Australia and New Zealand to co-operate in a general scheme applicable to all export countries. Discussions were resumed in July last year, but with no better results. On the 13th February Sir James Parr gave the Minister of Agriculture here to understand that there were no signs of any.change in attitude of Dominion producers, and that the question would have to be left for the time being. Urgency of the situation from the point of view of our own producers was, however, such 'that we were forced to assist them in other ways. While butter of itself is of secondary importance to United Kingdom agriculture, the disastrous fall in the prices of both butter and cheese has threatened to undermine finances of Milk Board here. We guaranteed accordingly minimum return for manufactured milk for two years any advance(s) to be repayable in the following years as and when prices rise above stated level—see my telegram of the 22nd February No. 6, containing text of statement made in the House of Commpns by the Minister of Agriculture on that date, and White Paper (Command 4519) a copy of which was sent under cover of my Circular Dispatch C.46 28th February. Accordingly question is not now an immediate one as far as we are concerned. We assume that the meeting on March 13 will have before it the Minister of. Agriculture's statement referred to above, and if you think it helpful you will no doubt inform us of the considered views of, Dominion producers. Should they be disposed to return recent visit of chairman of Milk Marketing Board we would of course be glad to facilitate matter here. In that event question would arise whether and if so how representatives of producers from other Dominions should participate in the discussions as well. In : view of the circumstances explained above we have taken^ no steps to elaborate specific proposals for a regulated market in the interests of all suppliers, and we should be glad if you would regard comments given below on the various points indicated in your telegram as by way of explanation of general principles. 1. Regulation should retard development only so far as may appear indispensable to establish and safeguard a remunerative price. As demand increases there would be scope for- orderly expansion. 2. There would seem to bo a reasonable presumption that an adequate regulation of supply will result in prices being brought to a remunerative level. 3. The difficulty of controlling production in advance is of course realised but experience in other countries does , not suggest that it is insuperable. 4. Where and in so far as agricultural products are interchangeable piecemeal regulation may be ineffective. On this point see also (c) below. The question however seems to be one of degree. (5) We cannot of course bind Parliament or our successors but a satisfactory plan might be expected to endure so long as situation demanded. The answers to your direct questions are as follows:— (a) You will appreciate that in the changed circumstance!) this question is a difficult one for ,us to answer and that the matter is one primarily for Dominion producers themselves. (b) Msin advantage would no doubt be improvement in prices and relative security of market(s). Clearly, however, extent of benefit would depend on nature of arrangements. (c) Here again no specific answer is possible. As stated at (4) above where products me largely interchangeable cither at point of production (e.g. butter and cheese) or at point, of consumption (e.g. butter and margarine) regulation of one commodity may not be fully effective without regulation of the other. Where however object is to restore normal relation (s) between price of one commodity and that of others question may not arise. No general control of fat has so far been contemplated. (d) In negotiations which resulted in recent treaties with Denmark and other foreign countries endeavour has been made to keep position as open as was practicable but it is not possible to give a precise answer to this question which : clearly depends on supply situation existing at the time of any arrangement that may be made. (c) No plan would be complete which did not provide for proper consultation and liaison between Dominion Governments concerned and the Government of the United Kingdom. We hope the above information may

be of assistance to you in dealing with a problem which is not only very difficult and complicated but is also as we fully realise one o£ primary importance to New Zealand. (Signed) Secretary of State for Dominion Affairs.. DISCUSSIONS AT HOME. / Mr. Forbes went on to say that the question of the quota had been discussed by Mr. Masters and himself, as well as by Mr. lorns, with the British Minister of Agriculture (Major Walter Elliot), who had stated on many occasions that if the New Zealand producers could come to an agreement in regard to the regulation of the produce going into Great Britain they would be able to hold the British market very largely for the benefit of the British and Dominion farmers. What was feared was that with other markets being closed—Germany, for instance—a greater volume of produce would be likely to be put on the British market and cause the application of a quota. Ho had pointed out that unless he had the co-operation of the industry in New Zealand it was not possible for him to come to any agreement. Major Elliot had pointed out' that the British Government was anxious that it would be able to assure the British farmers that their scheme would not be wrecked by excessive imports of dairy produce. Mr. Forbes said he had told Major Elliot that he was sorry he could not speak for New Zealand unless the industry was prepared to support him in any policy of that sort. It was then that he had suggested to Major Elliot that in order that the question might be made clear to the dairy farmers in New Zealand a representative of the British farmers should be sent out to New Zealand to discuss the whole position in a friendly way. That had resulted in the visit of Mr. Baxter. /quota does not arise. "Now the British Government says that it has made other arrangements and that the question does not arise on their part in regard to the regula tion of exports," said Mr. Forbes. "Any question of that sort is now a matter for the Dominion farmers and not for the British Government. 1 think it is just as well that I should make these things plain, because 1 know we have been charged with trying to swing the dairy industry into line in regard to this question of regulation."i The question of regulation is out of the way for the next two years; that is. until the expiration of the Ottawa Agreement. So far as the Ottawa Agreement is concerned, the British Government has said it will abide by that until the end of the term. (Hear, hear.) The British Government has made other arrangements to protect its own farmers. ATTACKS ON FARMERS. Mr. Forbes said it was very desirable that New Zealand should do everything possible to retain the goodwill of the British people. He had just received the following cablegram from Sir James Parr. There is an unfortunate recrudescence of attacks on New Zealand farmers, and next Tuesday's* meeting is being anxiously watched here. At the formal opening of the Produce Board's exhibition store at Liverpool today I suggested that; both parties should attempt to arrive at a mutual understanding with the object of raising prices to a. payable level. "We should do everything we can to maintain the friendly atmosphere that has obtained in the past and the friendly relations with the British farmers," said the Prime Minister. He said that anyone visiting Britain could not but notice the change which had taken place in the feeling of the British farmer towards the New Zealand farmer, and everything should be done to improve that feeling. Mr. W. J. Poison: Are the British farmers critical of the Danish farmers? "No. No question arises so far as the Danish farmer is concerned," Mr. Forbes replied. The quality of New Zealand produce, he said, did not seem to be standing up to the test, and he felt they should devote attention to the improvement of both butter and cheese. There was no doubt that so far as butter was concerned the British people, rightly or wrongly, were preferring the Danish product. He had received the following cablegram from Sir James Parr:— The general opinion here is that if the British milk scheme results in increased production of choose here, as seems probable, this would render imperative moro intensive research into our cheese problems. While this season's cheese shows a definite improvement, there are still important defects militating against realisation of higher prices, and it is imperative to eliminate these. NO SACRIFICE OF QUALITY. Tho improvement of tho quality of butter and cheese was entirely a matter for the dairy industry to deal with, said Mr.' Forbes. We have to fight along in the face of intense competition, he said, and we cannot afford to lose anything in quality. Mr. Forbes also suggested that the conference might consider ways and means of improving the marketing of Now Zealand produce. He assured the conference that the Govorjiment would be only too happy to assist' the dairying industry to achieve anything it thought was desirable in thejnterests of the industry.