Copra Marketing And Exchange.

More interesting information, bearing upon ihe problem of the cost of marketing copra on the world’s markets, has been made available.

WHEN, in the February Issue of The Pacific Islands Monthly, we sought to explain the relationship between the local price of copra, allowing for transport costs, exchange, etc., and the weekly price quoted in London, which is c.i.f., we stirred up a hornets’ nest.

Copra merchants have pointed out indignantly that our correspondents overlooked certain charges against copra; and that in seeking to assess a fair market price at Rabaul, we quoted the various charges (freight, handling, etc.) in Australian money, whereas those charges were in sterling—because they have to be paid in sterling.

We pointed out, in explanation, that the main item of cost referred to—namely, freight—was quoted at £3/5/-; and that as it is well-known that the mer chants ship this copra to London at from £2/10/- to £2/15/- per ton, we assumed that the freight, quoted

at £3/5/-, was in Australian money; and that, there fore, it must be converted into sterling to get the prevailing rate of freight—namely, £2/10/- per ton.

The merchants have replied to this by stating that the £3/5/- freight charged against copra in Rabaul is calculated in sterling and not in Australian cur rency. The merchants, in order to get a special freight rate of around £2/10/- per ton sterling, must guarantee shipments from Rabaul totalling not less than 60,000 or 70,000 tons per annum; and as they are responsible for providing this tonnage, they are entitled to the benefit of the lower freight rate.

Shippers by the “Bremerhaven,” for instance, must pay at least £3/5/- sterling per ton.

This appears to be a reasonable argument and we therefore have pleasure in making it public.

In response to our invitation, Mr. W. R. Carpenter has provided us with the following figures showing, first, the amount per ton, which his firm is paying to planters for copra delivered in Rabaul; and, second, the amount per ton it is calculated planters, ship ping independently, are receiving for their product.

As the usual method of independent shipment from New Guinea is per the “Bremerhaven,” Mr. Carpen ter has based his comparative calculations on a ton of copra bought by him in Rabaul; and another ton

shipped by the “Bremerhaven.” The statement is as follows:

“Thus it will be seen,” says Mr. Carpenter, “that the companies are paying to planters 3/6 per ton more than they get, it’ they ship direct themselves; and, in addition, they accept the risk of market, in surance (whilst in store awaiting shipment), rent (6d. per ton per week), handling charges, loss in weight whilst in store, interest and reclamations and - the greatest risk of all —a fall in the exchange rate, which may take place at any moment.

“The planter gets his money at once whilst, with shipment, he has to take his chance about payment.

“These figures, which cannot be challenged, put a different complexion upon the matter and show that those who ship are in a much worse position than those who sell.

“A glance at an account sales is very misleading, and gives the impression that it pays to ship; but

when one starts to make the correct deductions for loss in weight, interest, and all the other charges the complexion alters.”

In the calculations which we published in the Feb ruary issue, it was indicated that, taking exchange into consideration, Islands merchants were covering their costs and providing for their profit by paying a local price of about £7 per ton less than the price of copra quoted week by week in London. Later in formation seems to bear this out.

But the figures we published in February did not go quite far enough in stating merchants’ costs. The heavy cost of providing storage and shipping facili ties was not taken into consideration and this, in the aggregate, is a substantial item. Neither was risk of market and exchange sufficiently emphasised.

From about the middle of 1930 until nearly the end of 1931, the copra market fell steadily and the Islands merchants, who bought in the Islands for sale in Europe or America, must have met heavy losses. If they did not, the fact is a tribute to their foresight and shrewdness: and men are entitled to reward for those qualities.

The point is that a certain unknown proportion of the £7 per ton, to which we referred, is unquestion ably the merchant ’s profit. Some of the Islands pro ducers think that the rate of profit is too high. Mer chants, emphasising the enormous extent to which they support the Islands communities, and take the risks of market and exchange, declare that whatever profit they make is justified and earned. It is a mat ter of opinion. The discussion has had this value— that it has brought out for public consideration all the various details of costs charged against the mar keting of copra; and if there is any means by which producers and merchants can get together for the elimination of some of the many costs of getting the product to the world’s markets, there is little doubt there will be cordial co-operation from both sides.

Take copra at price as per “Sydney Morning Herald, 29/2/32, per ton in Europe £16 10 0 Less deduction made by merchants 3 10 0 Plus bonus £18 0 0 10 oo Price per ton for copra delivered at Rabaul 13 10 0 Shipment Per “Bremerhaven."

London price £16 10 0 Freight, £3/5/- per ton. plus 10% .. £3 11 6 Commission, etc., 3J% and loss of weight 6J% 1 13 0 5 4 6 Plus exchange (less allowance for inter- £11 5 6

est) 22}

2 9 6 Less duty 7/6, and wharfage 1/- £13 15 0 0 8 6 £13 6 6