Aid For Fiji Copra Growers

A REPORT of a valuable character dealing with the position and prospects of the copra industry was submitted to the Legislative Council of Fiji on March 23J The committee was appointed in October, 1933, and has made a very complete investigation.

The report is of a voluminous character, and the following is a summary.

THE value of the Fiji copra industry is estimated at £2,000,000. About £1,000,000 of European capital has been invested in coconut plantations. The industry is of such importance that it is recommended that copra producers should receive temporary assistance from the Government.

The fall in the value of copra is shown by the following prices (c.i.f. London): 1893 £14 per ton 1903 £14 per ton 1913 £28 per ton 1923 £26 per ton 1933 £8/10/- per ton After investigation the committee agreed that profitable production is im possible at the present rates. With one dissentient, the committee reported that relief grants from Public Funds should apply equally to all sections of the copra producing community. It suggests that income from the Immigration Fund should be used for relief of copra producers.

Apparently the committee argued the proposition that the Fiji exchange rate on London should go from £112 Fijian (to £100 sterling) to £125 as a means of assisting copra producers, but, by 4 votes to 3, decided against it. The com mittee, however, urged that all export taxation on copra (port and customs

services, 1/- per ton; wharfage, 6d per ton; export tax, 1/6 per ton; making a total of 2/6 per ton) should be removed.

Export Bounty.

The committee recommended the pay ment of a temporary export bounty on copra and suggested that for this purpose the following sums be utilised: £3,000 p.a. from the inter-insular services taxa tion; Immigration Fund interest £5,500 p.a.; £2,100 p.a. now paid to the coconut committee —equal to £10,600 p.a. The committee was opposed to the idea of a copra marketing board financed and con trolled by the Government. On a majority decision it agreed in principle that the introduction of copra grading is desirable.

Interest Reduction.

The committee recommended legisla tion requiring reduction of interest on plantation mortgages and loans to 5 per cent, and the declaration of a moratorium for 5 years.

Empire Tariff.

Dealing with the fact that Great Britain recently removed the tariff of 10 per cent, which, she had imposed upon foreign grown Soya beans, the committee ex pressed the following opinion: ‘‘The unrestricted importation of this and other foreign oil products which are sold

in competition with copra and coconut oil is causing grave disability to the in terests of the whole of the copra pro ducing territories of the Colonial Empire, and the Secretary of State for the Colonies again should be requested to give consideration to tariff protection, on the basis of that granted to sugar and butter, for Empire oil products against foreign oils and oil seeds.”

The committee recommended the re duction of rentals of Crown lands leased for coconut cultivation.

The committee said that it had received evidence that the opinion is widely held that copra prices are being affected by the operations of monopolistic combines: but had no evidence on which to form an opinion.

Local Oil Mill.

The committee did not favour a plan for local processing of copra because there is no local market for oil cake and the importation of oil containers would be costly. It also was opposed to a plan for more copra shipping ports in Fiji because of lack of port facilities outside the three main ports.

The committee pointed out that its proposals, involving taxation relief and an export bounty, would be equal to a direct subsidy to copra producers of 10/2 per ton. In addition, copra producers would benefit from the reduction in Crown rentals, reduction in interest rates, moratorium and copra grading.

Mr. Joske’S Report.

A subsidiary report was submitted by Major Joske, who said that he was not in agreement with the majority of recom mendations of the committee on two points.

The committee said “a further depre ciation of the currency in order to benefit

all exports would scatter the relief over the whole country, benefiting all ex porters and all debtors and penalizing all importers and creditors.”

Major Joske concludes his lengthy, cogently-reasoned arguments in favour of a depreciation of currency (higher exchange rate) with these observations: “It seems axiomatic that the interests of the primary producer should receive pri mary consideration. ... It seems equit able therefore to give prior consideration to the effect of a higher exchange on the primary producer rather than the effect upon the salaried or investing class.”

In regard to the proposed export bounty tax, Major Joske closely examines the economic condition of the Colony wfith the result that he argues that the finan cial salvation of the copra producer could be achieved more effectively and cheaply by a direct Government subsidy based on all wages paid on coconut plantations.

C.S.R. Operations.

It is clear from Major Joske’s interest ing arguments that Fiji has a economic problem of a peculiar character. The complicating factor is the presence in Fiji of the Colonial Sugar Refining Com pany, whose huge operations are respon sible for the bulk of Fiji trade, and w r hich is largely owned outside of Fiji. The trade figures of Fiji show an enormous surplus of exports. But payment for these exports does not come back to Fiji except in a limited degree. A large proportion of the payments made for sugar exported from Fiji goes to Australia and else where, and into the pockets of C.S.R. shareholders. The payments for sugar exports which go back to Fiji are suf ficient merely to pay for C.S.R. operations.

The surplus is not spread around in Fiji for the general benefit of the country— it goes elsewhere. Therefore, leaving the sugar position out of account, one finds in Fiji an economic position very different to that which is suggested by the totals of imports and exports; and a position, moreover, which gives a large measure of justification to Major Joske’s interesting demand for the depreciation of the Fijian currency.

The same considerations—namely, the somewhat overwhelming effect ol; C.S.R. operations on employment and wages conditions—affect the plan for an export bounty on copra. Major Joske’s idea is to give the benefit directly to the Euro pean copra-grower, and he argues that this can be done more effectively by a subsidy on wages rather than by a bounty on exports.

Mr. Edward Duncan, another member of the committee, also arguing in favour of a higher exchange rate, points out that the utmost relief provided for in the plan by the committee’s recommendations is 12/- per ton. He urges that 30/- per ton at least is required. He points out also that for several months (in 1932-1933) the 25 per cent, exchange rate ran in the Colony without marked harm resulting.

Mr. Duncan also argues strongly for compulsory grading of copra in Fiji.

The recommendations of the committee came before the Legislative Council in Suva on March 27.

The Governor, Sir Murchison Fletcher,

discussing the committee’s report, ex pressed the opinion that, owing to very recent developments, temporary financial relief wmuld not tide the copra industry over its present depression. The only recourse was to the British Government —some tariff assistance must be given by Great Britain to the copra industry just as she had given it to the sugar industry. The Governor said that if the American tax became effective he could see an enormous quantity of Philippine and other copra being thrown on the European market.

Commenting on other proposals, His Excellency said that if the exchange rate were altered in Fiji, the vast majority of residents there would secure little benefit.

He hesitated to give tax reductions and a reduction of mortgage interest in the manner proposed—if such relief were to be given, it should be given to the com munity as a whole, and not to any par ticular section. He would not agree to any law which would interfere w T ith pri vate contracts.

American Tax.

The subsequent discussion was vitally affected by the news, just then received in Fiji, that America planned a prohibi tory tax on coconut oil. Most of the speakers took the view that, in the cir cumstances that this development had created, the only possible salvation of the copra industry lay in assistance from Great Britain.

Sir Maynard Hedstrom declared that if the American development had been cor rectly represented, the outlook for the copra industry was very black indeed, and it would be foolish to strain the finances of Fiji in order to provide an export bounty that would be of very little value in the long run. If there was any prospect of a recovery in the industry, however, he thought assistance along the lines suggested would be justified.

It was finally agreed that strong repre sentations should be made to the British Government in relation to the matter.

Meanwhile His Excellency said that he wmuld carefully examine the whole plans for giving some temporary relief to the coconut planters.