Copra Rises!

Price Up £3/5/ -per Ton in Five Weeks

THE copra market has moved at last, and in no uncertain manner.

Sundried and smokedried is at £12 per ton, London, which is equal to £15 per ton Australian; hot-air-dried is at £12/15/- London, or just under £16 per ton, Australian. This is a rise, within five weeks, of £3/5/- sterling per ton — an astonishing development.

These are the best prices since Janu ary, 1933.

Economic conditions in Europe are better, if anything—certainly, they are no worse—but the real cause of the market improvement comes from the other side of the world. Several months ago, the United States adopted a new tariff ar rangement, which virtually shut out all Philippines copra and threw it onto the depressed European market. Recently, there have been some readjustments: with the result that Philippines copra is flowing back to U.S.A. We do not know, yet, exactly what has happened; but it is clear that, under the rearrange ment, the Philippines shipper gets about 10 dollars per ton more by sending his copra to U.S.A. than to Europe. The consequent improvement of the European market has been marked.

Another factor, we are informed, is Mexico. This big country, for some reason, has become a large and active buyer of Pacific copra; and this is help ing the market. Other factors are a tem porary butter shortage in Europe; and a great improvement in the German poli tico-economic outlook.

Copra producers are beginning to enjoy again three square meals per diem; but the price must hold to its new level and even improve further if the plantation owner is to make a fair return on his enterprise and invested capital.

Certainly, during the disastrous 1932- 34 period, production costs and over head charges have been ruthlessly cut down, and it is most unlikely that these charges will ever return to the extravagant levels established during the post-war boom period. For that reason, some planters probably will be better off with copra at £15, plus exchange premium, than they were in the good old days, with prices around £25 per ton. There are some very shrewd observers in Sydney to-day who fore cast £14 or £15 per ton, c.i.f. London, at no distant date.

Information is meagre, and it is diffi cult to say whether this new rise will hold. Cautious merchants say that this “jump” is the result of European con sumers being caught short by the Philip pines development, and that the price must soon fall back a little; but they think that perhaps two-thirds of the new advance will hold.

But, if the copra industry is to be stabilised at from £12 to £15 per ton, within the next year or two, much atten tion will have to be given to the problem of capital costs. So far, the thorny sub ject has been left well alone. Govern ments, banks and trading houses have declared a kind of general moratorium, by simply refraining from trying to col lect interest payments, or reductions of principal, from plantation-owners. But the fact that all these thousands of plan tations still are loaded with debts, based on valuations made when copra was

away over £20 per ton, is something that is much in the thoughts of both planters and financiers.

Little has been said on the subject by either class. The planters have been only too glad to let the subject lie dor mant; while the financing institutions, with their thoughts on the assets column of their balance-sheets, have allowed the matter to sleep, in the hope that copra may come back to profit, and thus re store the earning capacity and capital value of the plantations. Copra may come back to £15 or even £17 per ton; but, unless there is a far-reaching inter national development that now is en tirely unforeseen, the price will not in this or the next decade be restored to £25 per ton. This means, simply, that there must be, sooner or later, a writing down of plantation values. And who will bear the loss?

The problem is not peculiar to the copra business. It is common, just now, to every primary industry that “boomed” between 1920 and 1928, and then fell into the depression. The occupiers and part owners of producing lands are holding on grimly, hoping against hope that they may not be dispossessed; while the finan cial institutions, equally grimly, are holding on to and trying to maintain their equities in scores of thousands of properties thus affected.

Where the solution lies, no man can say. It is not a pretty picture. How ever, the comforting fact remains that copra prices are returning to a point where at least they will allow the planter to live.

Mr. G. G. Smith, of Port Moresby, Papua, and Mrs. Smith, have been spend ing a holiday in Melbourne.