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Historical documents

35 Notes by Department of Commerce and Agriculture

Extract CANBERRA, July 1949


Measures taken by Australia to assist the United Kingdom, or to
sustain sterling, which have involved some sacrifice by Australia
Throughout and since the war, Australia has had long-term
contracts with the United Kingdom covering a number of major
commodities. Chief among these are the contracts on meat, butter
and cheese, eggs and sugar.

In each case Australia has admittedly enjoyed the advantages of
market security but this has been in a period of high prices for
foodstuffs and raw materials. On the other hand, the prices at
which Australia has supplied have been reasonable and, at times,
considerably less than those paid by the United Kingdom to other
countries. In some cases the alternatives facing the United
Kingdom have been payment of higher prices (sometimes dollars) or
doing without.

For example, the price for best quality beef in the present meat
contract with Australia is 7 and 1/8d. E.C. [1] per lb. compared
with an average price for all carcase meat of 10/ 1/2d. E.C. per
lb. under the new agreement between the United Kingdom and
Argentina. There is a similar disparity in canned meat prices. The
current price paid by the United Kingdom for Danish butter is
271/6 sterling per cwt. compared with 251/- sterling for
Australian. The price of Australian eggs in 1948-49 was 2/4
Australian currency per dozen compared with 3/3 A.C. per dozen
being paid by the United Kingdom to Canada. (Note all prices are
f.o.b. More details are available in Attachment A).

Additionally, some of these commodities could have been sold in
dollar markets (thus increasing Australia's direct dollar earnings
and the United Kingdom would have been obliged to purchase in
dollar or hard currency markets to fill at least part of the gap.

The U.S.A. and Philippine markets for beef and lamb have been and
remain attractive at better than U.K. contract prices. The same
applies to butter, whilst the sugar market in Canada would absorb
quantities of Australian sugar in excess of those at present being
shipped to that country. Nevertheless in each case Australia would
have been obliged to market part of her surplus in the U.K. This
latter did not apply to copra in 1948 and early 1949 when we sold
12,000 tons of Territories copra to U.K. which quantity was
saleable at better prices in U.S.A. (U.S.A. prices are however at
present lower than the U.K. contract price).

To help Malaya's food supply, practically all Australian rice
production is being shipped to that country but only by
prohibiting its sale in Australia. The availability of Australian
rice in Malaya in so far as it assists food supplies and hence
Malayan production generally is a factor in the dollar drive as
well as a saving in Egyptian or Brazilian currency.

Butter rationing and the ban on domestic consumption of fresh
cream in Australia are successful measures which account for the
availability of over 25% of our total butter exports and, last
season, helped us earn 11/2 million dollars from sales of butter
to Canada.

Sales of scrap metal to Canada, steel to Hong Kong and pig iron to
U.S.A. are examples of dollar sales of secondary products which
could have well been retained in Australia. On the other hand, the
United Kingdom has been saved hard currency expenditure by the
Australian sale to her of over 100,000 tons of steel at prices
which have remained unaltered since the contract was made in 1945.

(For details see Attachment A).

The comparatively low prices at which Australia has supplied
foodstuffs to the U.K. have been an important factor in the cost
structure of United Kingdom industry, particularly export
industries, and in the cost of her domestic price subsidies.

1 English Currency.

[AA: A10817, 4]
Last Updated: 11 September 2013
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