H—3o.

INTERNATIONAL TRADE IN DAIRY - PRODUCTS. 27. International Trade in Milk : It is authoritatively stated that milk and milk-products contribute more to farm income throughout the world than any other single agricultural product. Although probably more than half of the milk produced is consumed in liquid form, liquid milk does not enter to any extent into international trade since, by reason of its bulk and the difficulties attendant upon its distribution, it must be produced either in the country in which it is consumed or in countries immediately adjacent to it. Small quantities of liquid milk and cream are imported by the United States from Canada, and occasionally by the United Kingdom from the Continent of Europe. Milk .that is surplus to local needs in dairying countries is converted into butter, cheese, casein, and dried and condensed milk. All these products enter into international trade, but butter plays by far the most important part. . A world-wide increase in the production of milk lias been a notable feature of the dairying industry during the past half-century. The most rapid development has, however, occurred during the past decade. In the early stages, development was fostered both by an increasing demand for dairy-products and by the fact that greater profits could in most countries be derived from dairying than from other forms of farming. In particular, dairying was found to be more profitable than grain-growing. Hence, milk production expanded first by the diversion of grain-growing land to dairying purposes. Later, the opening-up of new dairying-lands, especially in Empire countries, and, finally, improvements in farming methods and in animal husbandry accelerated the process of expansion. Improvements in farming methods and in animal husbandry have been outstanding features of the present age in all countries, whether they import or export. This great increase of production has occurred wh le the rate of increase of population of the white races has been declining ; and since the white races are the only important consumers of dairy-products, serious problems in international dairy trade have arisen, and are likely to increase. 28. International Trade in Butter : Butter is the most important dairy-product entering international trade. At the present time the leading exporting countries are Denmark, New Zealand, and Australia, which together account for fully 68 per cent, of the butter exported by all countries, the individual contributions being respectively about 27, 24, and 17 per cent. Other important countries are Russia, the Baltic Secession States (Finland, Latvia, Estonia, Poland, Lithuania), Netherlands, Sweden, Irish Free State, and Argentina. Hungary and Austria and the Union of South Africa have recently developed an export trade. The United Kingdom is by far the most important importing country, the proportion of world exports absorbed by it having risen from just over 63 per cent, in the period 1928-30 to approximately 82 per cent, in 1933. The only other important market is Germany, but the restrictions imposed in the past few years have caused a rapid contraction of imports, and the proportion of world exports taken by that country has declined from over 27 per cent, in 1928 to approximately 11 per cent, in 1933. 29. Development of International Trade in Butter : The development of the butter trade can be divided into fairly distinct periods : (a) The period of gradual expansion dating from the " eighties " of last century till the beginning of the war ; (b) the war period (1914-1918); (c) the period (1918-1923) of post-war recovery ; (d) the period of rapid expansion (1923-1931) culminating in marketing difficulties ; (e) the period since 1931, during which protective measures have been developed to protect local production in importing countries ; and (/) the period since 1932, during which subsidies and other devices have been adopted in exporting countries to relieve dairy-farmers of burdens caused by low prices. _ Period (a). —During this period Denmark, already fairly well developed agriculturally, built up and organized her dairy industry and created for her butter a goodwill which still excels that of all other exporting countries. In this period Russia, Holland, Sweden, France, and Ireland were all exporters of butter ; but Australia and New Zealand were only commencing to develop their dairying industry. The United Kingdom was the principal market, with Germany next in importance. Period (b). — During the Great War, international trade was largely dislocated. Neutral exporting countries of Europe had to reduce production on account of abnormal trading and shipping conditions. Trade in belligerent countries was entirely upset, and, although these countries made every effort to increase imports of butter, they were forced to rely on increased local production to meet their requirements During this time, the Russian Revolution entirely destroyed the Russian export trade in butter, and similarly the dairying industry of Ireland was affected by disturbed political conditions. Period (c). During the years 1918-1923 European countries were engaged in post-war readjustment and reconstruction. Denmark quickly recovered and actually increased production, but New Zealand even more rapidly increased her output of butter, and became the second exporting country of the world. In the same period the Baltic Secession States proceeded to organize their dairying industry along Danish lines, and supplied part of the market previously served by Russia. The gross international supply was readily absorbed by the United Kingdom and by Germany, which again became an important importmg TOun 1g23 and ]931 all European exporting countries rapidly increased their butter-production, and Russia once more took part in the export trade. Even greater progress was made first by New Zealand and later by Australia. Increased world production was at this time fostered by the relatively higher prices received for dairy-produce than for other forms of agricultural produce. In 1931 international trade in butter reached its peak, and competition made exporting countries exploit

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