Products Of The South Seas

Present Condition and Probable Future of Copra Industry

TWO years ago, in August, 1928, when the current quotation for copra was in the vicinity of £27 c.i.f. European ports, there were many copra produ cers in the South Seas inclined to be critical. They did not believe at that time that they were receiving the price to which their products were justifi ably entitled. If they had been able to look into the immediate future, they would have felt that not only was the 1928 price satisfactory, but they would have been carefully banking £3 or £4 per ton as a reserve against the bad days to come.

Ever since 1928, copra has been de creasing in price, and, during the pas six months, the decline has been very steady and very marked. Week by week, right up to the present month the quotations have shown a reduction of a few shillings per ton, until now a rate has been reached which rep resents a price that does not anything like cover production costs.

There are many reasons provided for this very alarming decline in the staple product of the South Seas.

The Depressing Factors

The first reason, of course, is the re cent general fall in prices of all food stuffs and raw materials throughout the world—the combined result of con siderable over-production and of general deflation of the false values which were created in the post-wai period. The world is seeking an eco nomic re-adjustment, and every class of product is being affected thereby No one can say when the new basis of values will be reached, on which all future prices will be stabilised. Gen eral appearances suggest that the bot tom has just about been reached.

The next factor affecting copra prices is the fact that practically the whole of the European consumption of copra with the exception of Italy and Spain is controlled now by the Unilever com bine, which is enormously powerful and which can fix its own prices. Uni lever does not completely control the Marseilles market, where there is still independent consumption; but an examination of price movements for the past few months shows that the quotations in Marseilles move exactly in sympathy with the quotations in London, Rotterdam and Hamburg.

Some months ago, Messrs. Brown and Joske Ltd., of Fiji, in their admirable and authoritative summary of the copra position, estimated that the Uni lever consumption represented about 40 per cent, of the total European im ports. Later advices suggest that it is considerably greater than that. If, as indicated, the Unilever combine com pletely dominates the European mar ket, anyone can see that this is a fac tor of much importance to the planta tion owners of the South Seas.

Another, and a very important fac tor, is that this year there has been tremendous over-production of oils and fats, apart from copra products.

Record quantities of whale oil, olive oil and bean oil have poured into the world’s markets, and one recent au thoritative estimate was that there were one million tons of fats available in excess of requirements. This over supply has been accentuated by the fact that the price of butter has fallen considerably, resulting in a correspond ing decrease in the use of margarine.

In recent months, when the significance of this accumulation of oils and fats was recognised, there was a rush into the market by the copra producers of Ceylon, Malaya and Dutch East Indies, who appeared to be determined to clear at any cost.

In view of all these circumstances, it is not at all surprising that there has been this marked and steady decline in copra quotations. The surprising factor is that the fall has not been greater.

What Of The Future?

Now, as to the future. The planter recognises all the things we have

enumerated. What he wants to know is whether he Is likely in the future to receive for his product a price that will pay him to carry on—which we imagine, on a general average of costs, to be about £14 or £15 per ton on the plantation.

Generally, the outlook for the imme diate future is not encouraging. Un questionably, there is over-production, not only of copra, but of other oil-pro ducing substances; and there is cor responding eagerness on the part of producers everywhere to sell. Standing against the clamorous mass of unor ganised producers is a closely-organised phalanx of buyers, who naturally are going to secure the utmost possible ad vantage from a situation that has de veloped overwhelmingly in their favour.

Present appearances suggest that while it is unlikely that prices can fall very much further, it is likely that they will remain at a low level until such time as the law' of supply and demand operates, so that the accumulation of oil products can be absorbed, and the production from the various oil-produ cing countries reduced.

There is no doubt in the minds of skilled economists that the world will, at a comparatively early date, swing back to a sounder basis of trade than we have known lately. The final re adjustment of values will not be long delayed and. sooner or later, with the clearing off of accumulated stocks, there will be keener and sounder buy ing. The markets of the world will be gin again to absorb their normal amount of material, and prices must improve accordingly.

This seems to be the time when the wise planter will conserve his resources to the utmost, and do everything with in reason to reduce production. In view of the world position, nothing pos sibly can be gained by attempting to counter reduced values by increasing production—that will only make the present position more difficult. There is a point at which continued production becomes suicidal—but no one can as certain that point until world values, now in a condition of flux, become stabilised. It must always be borne in mind that there is a powerful combine of buyers virtually in charge of the market, and that the only way in which they can be controlled is to keep pro duction as close as possible to the capacity of the market.

One comforting feature of the situa tion is that the buying combine is it self very largely interested in copra production, as owners of plantations.

These plantations are conducted under conditions similar to those owned by private planters. Although, of course, one never knows the tactics likely to be followed by “big business,” it is un likely, on the face of it. that Combine plantations will be deliberately con ducted at a loss. In other words, it is likely that the price at which copra will eventually settle down, will be a price which will Erive plantation owners reas onable profit.

Can Producers Combine?

It does appear an extremely desir able thing that there should be closer consultation and general understand ing between organised bodies of plant ers. While planters in territories like New Guinea and Fiji are close together in district organisations, there does not seem to be much consultation between the councils—and practically no official communication between bodies of plan ters in the South Seas and in Malaya, Ceylon, etc.

With the vastly increased copra pro duction of the past decade, the grow ing competition from such commodities as whale oil and soya beans, and the alarming tendency of buyers to operate jointly as a gigantic combine, it does seem an essential thing that the copra producers of the Pacific should get together for a closer consideration of their common interests.