Butter Invasion

Sun (Auckland), Volume I, Issue 214, 29 November 1927, Page 10

Butter Invasion

NEW ZEALAND PENETRATION Canada and Australia Uneasy Xew Zealand’s Invasion of the Australian and Canadian dairy markets is reflected in developments announced m today’s news. Canadian dairy interests are agitating ifr the restoration of a dumping duty against Xew Zealand butter, and in Australia the Federal Parliament has increased ■ 6d a pound the duty payable on New Zealand dairyproduce. ' . . But, according to Auckland exporting agencies, there is no cause for alarm.

A USTRALIA is bound to New Zea- '*■ land by a reciprocal trade agreement, and must give to the New Zea-

land Government six months’ notice of her intention to readjust the duties. That, said one prominent exporter this morning, is a cheering feature of the raised Australian duty, which would be serious if it were to be suddenly imposed at this juncture, when New Zealand is at the flush of one of the best producing seasons in her

history. The six months’ grace would allow the producers of the Dominion to make the best of the good season at the encouraging prices now offering. Even at that, he doubted if the duty would materialise, considering rather that the Federal Government, even though It had authorised the tariff, would hold its actual imposition in abeyance.

PATERSON BONUS SYSTEM

Australia’s dairying activity, and her outlook toward competing interests, are affected by the Paterson system, by which a bonus maintains the Australian market price at 3d per pound above London parity, thus giving producers a firm and stable home market which permits them to export the surplus at a selling figure. The bonus is provided by a levy placed on butter sold in the Australian market. While the Paterson system may act satisfactorily within Australia, it creates a home market price which is admittedly fictitious, and which could be severely undercut by New Zealand butter In the off season. Thus the whole effect of the bonus system would he upset, and for that reason Australia must view with alarm any increasing invasion by New Zealand producers. To check New Zealand competition the Australian dairying interests sought a protective duty, and the increase sixpece is undoubtedly the result.

The Paterson system has attracted thg attention of Canadian producers, and an Auckland merchant this morning presented the theory that Can-

adians resented any system which allowed a country to export at less than its home market figure, as was the case with Australia. In view of the fact that Canada and Australia were working under a reciprocal trade agreement, some of the provisions of which were helping New Zealand exporters, he believed Canadians under the wrong impression that New Zealand, as well as Australia, was sending butter to Canada under the Paterson system. Thus deluded, the Canadian dairying interests were seeking protection from a non-existent danger, by the restoration of a dumping duty. PRODUCE FOR CANADA

It w r as difficult to believe that a responsible body of dairymen would labour under so incorrect an impression, particularly as the Paterson system, while workable in Australia, where only about one-third of the butter was exported, would be entirely unworkable in New Zealand, where onlv 10 per cent, of the produce was retained for home consumption. Goods exported- from New Zealand to Canada are subject, it has been pointed out, to the following clause:

Goods of a class or kind made in Canada shall be subject to a special duty when sold for export to Canada at a less price than for home consumption.

It was shown, also, that the margin allowed was 5 per cent. Hence New Zealand butter selling at a home price of Is Sd a lb. could still be sold in Montreal at Is s!d a lb.

The export to Canada has been increasingly heavy in recent seasons. The last shipment was of 42,000 boxes, sent by the Kia Ora, and this season the increased production from New Zealand pastures was greeted with the entry of Canada as a vitally important factor on the export market. As a result New Zealand was able to dispose at satisfactory prices of all her surplus produce. Production increased by 23 per cent, for the first three months of the current season, over the same period last summer, but the operations of Canada and Australia all" wed the stocks to be absorbed. It was a gratifying development. TRADE COMMISSIONER’S VIEW Canada’s share in this buying v-is dictated by sheer necessity, said Mr. P. Sykes, Canadian Trade Commissioner, this morning, and for that reason he thought it was inadvisable at this stage to take the reported agitation seriously. Canadian dairy producers, he pointed out, were like’ producers everywhere, and cherished a natural desire to keep their home t market free of competition; but the recent heavy demand for New Zealand butter removed the threatened danger from New Zealand’s point of view.

One factor Mr. Sykes mentioned was the fact that the trade agreement between Australia and Canada was extended to New Zealand, as far as such products as butter, cheese, meat and other perishable commodities were concerned. This allowed New Zealand butter to enter Canada under a duty of only one per cent, a lb., instead of six, and perhaps explained part of the uneasiness apparent among Canadian dairying interests. This misplaced alarm showed the desirability of New Zealand’s concluding a separate trade agreement with Canada, along the lines advocated lately by progressive elements in the Auckland business community.