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Country's largest exporter stung with UK butter dispute bill

By David Barber

Friday 18th August 2000

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The Dairy Board has spent $35 million in legal fees defending itself against claims by British Customs it underpaid duties on butter shipped to the UK.

Despite winning 12 out of 12 court cases on the issue, it has so far got back only $10 million, chief executive Warren Larsen revealed this week.

The board's annual report said a number of civil proceedings claiming alleged arrears of duties remained outstanding and were being strongly defended.

The report said the claims related to alleged infringements of European Union regulations governing New Zealand's butter quota concerning the fat content, spreadable butter and product made by the Ammix process, the weight of butter and cheese and issues of import licensing and the time of taking goods out of bond.

Mr Larsen said despite New Zealand's successful strike rate in the courts, he could not be confident settlement of these cases would end what the board has described as harassment of its trade into Europe.

"I'm afraid it's not an area where logic comes in," he said. "It's a constant issue that anyone trading with the European Union, or any other major market, will always have to be mindful of."

Mr Larsen said enlargement of the EU would make it more complicated. "I don't see it getting any easier," he added.

Meanwhile, the board is actively seeking joint ventures and other associations with European dairy industries after being "savaged for a period" in the British butter market last year.

The annual report blamed pressure by major retail chains to force down pricing of many products, including dairy spreads, following the entry of America's Wal-Mart to the UK. It said the board's consumer business subsidiary New Zealand Milk was responding by reinvesting in the Anchor brand and promoting spreadable butter sales.

Mr Larsen added that profitability in Europe was limited by New Zealand's quota, which is restricted to salted butter eaten only in the UK and it was exploring ways to get more products in shops by partnerships with European interests that would broaden its range.

The NZDB, New Zealand's biggest single exporter accounting for 20% of export earnings, posted record sales of nearly 1.4 million tonnes, worth $7.7 billion last year.

It paid farmers $3.1 billion for their milk, putting an extra $500 million into the national economy compared to the previous year.

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