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Waikato Times, Volume 125, Issue 20957, 9 November 1939, Page 2

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DEFICIT EXPECTED

DAIRY PRODUCTION PROGRESS OF NEGOTIATIONS (By Telegraph.— special to Times) WELLINGTON, Wednesday “ There is a suggestion now that the United Kingdom Government wants to buy only a certain quantity of our dairy produce,” said the Minister of Marketing, the Hon. W. Nash, in an address to-night. The Minister reviewed the progress of negotiations between the New Zealand and United Kingdom Governments concerning the purchase of the Dominion’s exportable surplus of primary products. It was hoped that there would be a favourable result, Mr Nash said, in connection with the purchase of dairy produce. Meanwhile, the New Zealand Government would purchase every pound of butter and cheese produced. As far as the price at which the United Kingdom would buy dairy produce was concerned, the figure named in a cablegram received last night would result in a deficit in the Dairy Industry Account, he continued. This seemed to be almost the last word, but as a result of the continuance of negotiations New Zealand was in a slightly better position than that of two weeks ago. He hoped to announce the price and the conditions of purchase before the end of this week, or early next week. Causes of Low Production

In reply to an inquiry from a Taranaki farmer as to how the Government expected a greater production to be achieved on last season’s guaranteed price and this season’s higher costs, Mr Nash said that the inference was that high prices brought more production. He would remind the correspondent that in 1930-34 when prices were at their lowest and butter ranged from 65s to 75s per cwt, production went up by leaps and bounds. Recent lower production was due almost exclusively to climatic conditions and disease among stock.

The Minister said that on laift season’s operations the deficit on butter, up to November 2, was £1,349,807, and on cheese. £1,202,728. The total deficit would be slightly below the sum of these two amounts, because there was still about 7000 tons of last season’s butter for which New Zealand had not yet received a return from London, and 7200 tons of cheese. “ We will be about £2,500,000 down for the year,” Mr Nash said. If, however, the Government had not been handling dairy produce the country would have been still further down, because there would not have been the same organised marketing. Increase Not Warranted “ Had there been no guaranteed price and organised marketing, the dairy farmers would have received £3,000.000 less than they did receive,” the Minister added. There were two reasons why the guaranteed price was not increased for the current season. One was that the facts did not warrant an increase, and the second was that an increase would give the industry more than its share of the national income, and might produce inflation. “As a result of the exchange of cables in the last week, and of representations made by the Hon. P. Fraser and the High Commissioner, Mr W. J. Jordan, to the British authorities, a more favourable position is in view,” the Minister said. It was, however, impossible to say yet whether the British Government would pay the full price f.o.b. Another question still to be decided was that of payment for storage over a certain period in New Zealand. High Import Prices “We suggested that, if the price of British manufactured goods rises by 10 points or more, the British Government should be asked to reconsider the prices for our exports,” he said. “ This is still being discussed. A cablegram came to-day to say that it was doubtful if the United Kingdom Government would agree. We have pointed out 'that New Zealand would be in a very disadvantageous position if we sold our exports at an agreed price and ■were then compelled to pay abnormally high prices for imports. I hope that we will get somewhere near finality in the next few days.” There was also the question of the transition, after the war, from the total purchase system, Mr Nash concluded. He said that it was the aim to achieve this with the least possible dislocation, but no final statement had yet been made, and cablegrams were still passing between the two Governments.

The Minister paid a tribute to the work done in connection with the various negotiations by Sir Harry Batterbee, High Commissioner for the United Kingdom in New Zealand, and Mr Jordan.