166 Record of Meeting between Officials and New Zealand Dairy Board Representatives

Wellington 23 April 1981

Partecipants: Messrs Charles Patrick (NZDB); Woodfield (DT); Kerr, Shallcrass (Treasury); Durrant (MAF); McDowell (MA

Mr Patrick began by reviewing the history of relations between the Australian and New Zealand dairy industries. The Australian industry was nowhere near as homogeneous as the New Zealand industry. Instead of having one Board pulling together all the strands of activity and acting as a trading organisation internationally, the Australian industry was split geographically, was split by having a multiplicity of trading organisations and often ran into problems arising out of State/Federal relationships. The Australian Dairy Corporation was a regulatory body not a trading body, and had changed considerably in its complexion in the last 10 years. Before that it had been producer-dominated so the NZDB and the ADC had tended to see eye-to-eye on many questions. Apart from the historical sharing of the British market, they had cooperated in many other external markets. With the exclusion of the Australians from the European butter market a decade ago, however, the ADC had been converted into a body with a non-producer majority, so relations between the two boards had not been as close in this period.

  1. Mr Patrick went on to describe the discussions of the previous week between the NZDB and the ADC. Partly because the Deputy Chairman of the ADC (Mr Pyle-described disparagingly as a 'dairy politician' by Mr Patrick) [was absent]1 from the meeting a good rapport had been re-established between the two sides. It was not felt that there was any need to modify current arrangements for dairy products in the light of the CER exercise. In the view of the NZDB, the New Zealand side should not push things but should 'wait for the plum to fall'.
  2. Mr McDowell commented that if milk production had fallen by 30 per cent in Australia in the past decade [does] this2 not indicate that the less efficient dairy farmers had fallen by the roadside and that those who remained were a pretty impressive lot? Mr Patrick said that by and large this was so. In his personal view, the logical places in this part of the world for dairy industries were Victoria, Tasmania and New Zealand. They were now very much more on a par in Australia with New Zealand producers than had been the case in the past. Mr McDowell asked what was the nature and species of the 'plum' to which Mr Patrick referred, and when would it fall? Mr Patrick said that the Dairy Board had two objectives in mind: first, the removal of the Australian dairy industry from the export scene. This was happening. They were virtually out of the butter market internationally and were phasing out of the casein market. Secondly, to become the 'bahincing supplier' in the Australian market. Mr McDowell asked whether these objectives might not be more quickly achieved in some ways through the CER arrangements. Mr Woodfield said that if things changed there was a risk that the present flexibility would be lost and Mr Patrick echoed this, asking why any restrictions should be placed on a trade when these did not exist at the moment.
  3. Mr McDowell suggested that the NZDB's position that there were no restrictions on access at the moment beyond cheese, was a matter of semantics-New Zealand had little effective access to the Australian market, as opposed to its theoretical access across the board. Mr Patrick commented that this was not the position of the NZDB. Mr Kerr said that he was not attracted to the volume approach but asked where the gain for New Zealand came from just sitting tight as Mr Patrick was advocating. What were the Dairy Board's ambitions in the Australian market-and could the CER exercise help out in any way. Mr Patrick reiterated that the CER 'does not come into it'. Mr Kerr suggested that perhaps the process of entering the Australian market could be speeded up in some way through the CER. Mr Patrick thought that this was unrealistic. He said that the Dairy Board had never had any great ambitions to penetrate the Australian domestic market. The total butter market was 50,000 tonnes there, but we could not hope to get more than a small proportion of this. The NZDB had no fixed dogma, but its political judgment was that it would get further by just working in with the Australian industry. It was a matter of political judgment how and to what degree the Australian market could be penetrated, and NZDB preferred to exercise that political judgment itself without any regulation or restriction.
  4. In response to questioning, Mr Patrick admitted that the 'self-sufficiency' argument might well come to the fore at some stage, with the Australian producers arguing on this basis for keeping out New Zealand imports.

[matter omitted]

[ABHS 950/Boxes1221-1226, 40/4/1 Part 36 Archives New Zealand/Te Whare Tohu Tuhituhinga 0 Aotearoa, Head Office, Wellington]