Mar 30, 1985
TALKS ON PRICE REDUCTION OF DAIRY PRODUCTS TO CONTINUE.
GENEVA, MARCH 28 (IFDA/CHAKRAVARTHI RAGHAVAN)— The three protocol committees of the international dairy arrangement in GATT, after three days of discussions here on saving the arrangements, are to meet again on April 17.Some compromise ideas on minimum prices, adjustment of prices, and disposal of "old butter" in storage, that came up at the meetings that ended Thursday, are to be considered in capitals, before delegates come back to see whether any decision is possible. The difficulties over the arrangements, negotiated as part of the 1979 Tokyo Round negotiations and fixing minimum sale prices for several dairy products, has been in trouble since last november, when the European Community decided to dispose off what it called "old butter" at prices below those fixed under the arrangement. The EEC which in October, 1984 was estimated to have some l.25 million tonnes in storage in its "butter mountains", announced its intention to sell the old buttery which it defined as "18-month old butter" at reduced prices, along with sales of fresh butter. The average prices would have worked out to 800 U.S. dollars a tonne, as against 1.200 provided in the arrangement. The dairy Council thereupon in effect authorised others also to sell below the market prices to safeguard their market shares. This compromise, and the EEC sales, led to the U.S. walking out of the arrangement, effective February this year. Since then, the other members of the arrangement have been struggling to preserve the arrangement among themselves - all of whom, except for Argentina and Uruguay, come from the industrial world. In March, the Austrians sought a reduction in the minimum price, or at least a waiver for them. When this was refused they announced their intention to withdraw from the arrangement, but have not so far given the notice. At this week's meetings, four issues have surfaced, and some compromise ideas have been put forward that delegates have agreed to refer to their capitals and come back to at the next meeting. On the question of minimum prices for butter, the Austrians had originally proposed reducing it from 1.200 dollars per tonne to 800 dollars. Since then the EEC and New Zealand have put forward some figures in between, and at the meeting the chairman, G. A. Stuntzi from Switzerland put forward some compromise figures. Under this, the price for butter would be reduced to 1.000 dollars from the 1.200, for anhydrous milk fat to 1.200 from 1.400, and for whole milk powder to 800 from the present 950. The impression of some participants at the meetings was that while there was unhappiness over the proposed reductions, particularly from the southern hemisphere producers, and specially Australia (which argues there is no case for reduction nor that the market is in trouble), there is a consensus on need to compromise and save the arrangements. The second issue relates to the need for revision of prices, under some automatic formula, at least to take care of the currency fluctuations. The sharp rise in the dollar values vis-à-vis other currencies over the last year or so has meant that when the minimum prices were translated into local currencies, there have been sharp appreciation. An idea on the table now is to link the minimum price (to be revised) with the European currency unit (ECU), the basket of the EEC currencies (excepting the sterling), and have a trigger point at which the prices would be discussed and adjusted. A third issue that has surfaced now is for some kind of waiver being granted for the disposal of "old butter". Such a waiver would benefit the EEC, which has large butter stocks, but not many other countries who have no such stocks. While other members had some "unhappiness" over the idea, discussions were centered around what conditions should be attached to such waivers, and the time period. A final issue, where a decision would depend on decisions on the three earlier issues, relates to the rescinding of the November 1984 decision, authorising other members of the arrangement also to sell butter at below minimum prices to safeguard their market shares. The U.S., having withdrawn from the arrangements, has not been a party to the discussions this week.