A New Factor In The Copra Market

IT is not easy to assess the value of what Britain has done to stabil ise the price of copra; but unquestion ably the guarantee of the British Ministry of Food marks a new era for the coconut palm industry in the South Pacific. Copra production always has been something of a gamble—especially since the market fell into the clutches of an inter national combine; but the gamble now is partly replaced by an element of. certainty.

Coconut planters in all the British Territories of the South Pacific— which means all the Territories ex cept New Caledonia and French Oceania—are assured until the end of 1957 of a price which will not fall below a figure that they themselves may calculate. The Fiji planters, in October, were the first to accept the 9-years’ guarantee; and the system quickly was accepted by other Ad ministrations, until now it has been extended to Papua-New Guinea.

As explained elsewhere, it repre sents an important immediate ad vance for the Australian-Pacific planter. He apparently is going to receive £6OA per ton in 1949, com pared with an average of less than £4OA in 1948. He may do much better than that.

In a praiseworthy attempt to pro vide against the recurring disastrous slumps of other years, the Australian Government, in taking over and pay ing for all NG copra, has withheld from the producer about £8 per ton,

which has been put into a “stabilisa tion fund.” The idea was sound; but the manner of its administration was typically and undesirably Wardist.

The producers have been given no indication of the amount of the fund, of how it is being held and adminis tered, and of the conditions under which it would be distributed. How ever, it is believed that there is somer thing approaching £400,000 in the fund; and that, as Britain’s guaran tee over nine years makes “stabilisa tion” no longer necessary, the fund will be distributed at an early date.

This could mean that a NG planter, now producing 30 tons per month (which he has done also in 1947 and 1948) would find himself passing rich n 1949, thus:— 360 tons at £6O per ton £21,600 720 tons, delivered in 1947-48, and now returning £8 per ton from distribution of “stab ilisation fund” 5,760 £27,360 Although production costs have soared in startling fashion, the New Guinea planters have been making a goad profit on £4OA per ton. Under the new conditions, they should show some really bonny balance sheets— and good luck to them—it took in testinal fortitude and a strong faith in the future to go back to war wrecked New Guinea, and start all over again. production is the one industry that is common to all Pacific Islands—it affects all classes,

from the wealthy European land owners to the smallest Polynesian village. The fluctuations in copra price, so common in the Between-wais Period, after Unilever was established, were quickly reflected in Islands economy. The new system of a guaranteed price must make for more stable and happier conditions throughout the South Pacific. What ever happens, we shall not experience in the ’fifties the deadly slumps of the ’thirties.

Britain’s policy of giving coconut planters a price guarantee over five years is so welcome that Britain may be regarded as a benefactor. So she is—but her guarantee is not based on altruism. As a matter of fact, her decision to enter into a contract to buy all South Seas British copra for nine years shows a very shrewd ap praisal of the world’s food situation.

There is not, nor is there likely to be, anything like enough good animal and vegetable fats and oils produced in the world this side of 1960; and Britain is making sure of some of her supplies—and at the same time pro viding a section of her Empire with a stabilising economic factor.

It must not be forgotten, however, that the great copra-producing Terri tories of the world—Philippines and Netherlands Indies—lie outside the British Empire, Under the stimulus of high prices, the countless millions of native copra-makers in those countries are coming back rapidly to pre-war production. If the history of the last 60 years goes for anything, the world price of copra will begin to fall sharply as soon as world produc tion begins to overtake demand. Then, what will happen?

The copra production of the South Pacific is such a small proportion of world production that it is unlikely that the world market will be affected one way or another by the British- South Pacific guarantee. If the world market reacts in its usual calamitous fashion to over-produc tion, and prices fall steeply, will Britain remain content with her South Pacific contracts under which the prices can be affected by slump only to the extent of 10 per cent, in one year?

Under present conditions, it is an excellent arrangement. Under other conditions, which easily may develop within the nine-year period, it could cause confusion and embarrassment.

The South Pacific planter must not imagine that the British guarantee means that the Millennium has ar rived. At the best, it means a good price for several years. At the worst, it would cushion the impact of slump —postpone the effect for two or three years.

IN these days of feverish uncertainty, the tendency among all classes is to think only of a short life and a merry one. We are inclined to spend easily to-morrow the money that comes easily to-day, for next week we may be over the precipice, into the inevitable atomic war. It does not seem to be a time when one can fittingly advise prudence and caution.

Yet the wise planter should take fullest advantage of this opportunity to consolidate his position and pro vide for the swing of the pendulum.

The international sky is very black, but war is not inevitable. With copra at around £4B sterling, the margin is big enough to allow the planter to do the things he naturally wants to do —and also to put away the few pounds per ton which will wipe off the mortgage or build up the old re tirement fund. The 1939-1946 period was one of cruel loss and sacrifice.

See that this post-war development of 1949-1957 (which is a direct result of 1939-46) really does compensate you for your sacrifices.