The Outlook for N.Z. Exports

New Zealand Listener, Volume 31, Issue 800, 19 November 1954, Page 16

The Outlook for N.Z. Exports

Extracts from a recent commentary on the international news broadcast from the main National Stations of the NZBS PLL LLL LOL OA OO err

look the ‘existence of. the British farmer when we consider our marketing prospects in the U.K. We've been accustomed for years to regard Britain as an urban area vitally dependent upon imported food, and chronically unable to produce enough from her own constricted farm lands. We've furthermore taken it for granted that a policy of encouraging "maximum output from those tight little acres was not only good strategy in a world troubled by the threats of war, but good economics as well. In fact, however, the policy of encouraging high outputs from British farms has now reached a point where some distinctly odd things are happening. Britain’s farmers are reacting to their political position as their U.S. counterparts have done. They are producing too much. Please don’t misunderstand what I mean by this. Such terms as "over production" and "surplus" when applied to agricultural products do not mean that the world has suddenly grown immensely wealthy overnight, or that everyone on earth has as much to eat as he wants. It means that, in a ruling structure ‘of prices and incomes, there is too much food and too little of other things. In Britain, for example, the farmers are pushing on to the market more pork and bacon than British housewives want to consume at the prices paid to those farmers. very easy tor us to over-

The bacon story, in fact, so well illustrates the present situation that I'll enlarge it a little. The two main suppliers of bacon to the British consumer are Denmark and the home farmer. Apparently Danish bacon is rather better favoured. on the British market, and fetches slightly higher prices in the shops than the local product. Now Denmark, a country whose prosperity, like our own, is bound up very largely with the price she can sell her primary produets for in Britain, has just concluded a contract to sell bacon in the U.K. The contract runs for the next year or so, and was apparently the result of what is usually reported as "prolonged negotiations." The Danes finally got nu increase; they finished up at a price of 237/6 per cwt. They could presumably have got more on a free market, but they plumped for security of income, for "reasons we can clearly understand in New Zealand. But the British bacon producer is getting around 400/- a cwt. for his bacon, Note the enormous gap--237/6 for the imported against 400/- for the home-grown, with quality favouring the imported commodity. And, further, this price is pushing British pig production to levels where the factories and slaughter houses can hardly cope with the rush. And the price difference is resolved like this. Each week the Ministry of Food reaps a profit of a round quarter of a million pounds on sales of Danish bacon. This makes an interesting prospect for the Danish farmer. But, the quarter of a million goes out each week to subsidise the high cost British producer. But that’s not enough; rather more than another quarter of a million has to be paid in direct subsidy, that is, by the British taxpaver. to make up the price to the British farmer. There you have the bacon situation: | in the interests of a thriving farm in- | dustry in Britain, the: British taxpayer

and the overseas supplier are both getting heavily squeezed for finance. To some extent we~in N.Z. accept this as a nec@ssary burden of Commonwealth food strategy. But how far should we accept it? To admit the British farmer to a position of special privilege is one thing; but there must surely be a ceiling to this sort of thing, and the bacon situation appears to have already got rather out of hand. You may still say that this is all very well, but surely this is mainly a problem for Denmark and Britain in which we stand pretty well on the side Jines. True, our bacon sales to Britain are small enough for reasonable peace of mind on this score. But this is not so regarding our sales of cheese. Here we're getting into a position like that of the gloomy Danes.

Cheese, as you all know, is made from liquid milk. In Britain high levels of. production for liquid milk have been long encouraged by subsidy and exhortation. The Welfare State thrives on milk. And for many years this was rationed in Britain, at times very severely, But those days are now over. In the last few years the British farmer. urged on by the profitability of milk production, has. poured in millions of extra gallons of the nourishing stuff. And the result has been a glut, more particularly, of course, during the flush months of summer production. A good deal of this spare milk has been made into cheese. In fact, production has been quadrupled ih recent years. And that’s where we get hit. Publicity has thrown its light mostly on the butter-margarine warfare, But the most serious problem is for us to sustain cneese saies to a Britain who is getting flush supplies of her own product, and more meat, a partial substitute for cheese, at the same time. Just, then. as the Danes are probably feeling that subsidised British output of bacon has gone rather further than good sales relations can stand, so we are likely to be thinking soon that our sales goodwill with Britain is being drowned ina sea of subsidised British milk. The result is all the more unhappy in that the forgotten man of the 20th Century, the consumer. still comes out on the wrong

side of the account.

A. J.

DANKS

October 23, 1954.