of Sterling

Copra Price Under Fire

Complications Caused By Depreciation of Sterling

THE Copra Agreement has been under fire lately.

The Agreement was framed in 1948, by the British Ministry of Food; and it was brought into operation, as from the beginning of 1949, between the Ministry and various British Colonies and Dominions —especially Fiji, the Gilbert and Ellice Islands, the Solomons, and the Australian Pacific Territories. It has a currency of nine years. In 1949, the price was £4B Sterling, FOB; and it was agreed that, in the subsequent years, the price —to be arranged each year—would not rise or fall more than 10 per cent.

The merit of this plan, it was claimed, was that it stabilised the hitherto un certain copra market for nearly a decade.

But trouble developed at the end of 1949 because the British Ministry wanted to revise the copra price downwards, while the tendency of the free world price was upwards; and also because, during 1949, Britain had de-valued Sterling. Obviously, if Sterling were depreciated in value in relation to gold, the amount of Sterling paid for copra (which holds its value in relation to gold) should have been corres pondingly increased. Copra is an inter national and not a British commodity.

One British Dominion, Ceylon, rebelled against an obvious injustice, and broke away from the Agreement, and went on the free market. Ceylon produces the world’s highest quality copra.

The difficulties of the position were effec tively set out by Mr. Charles Sullivan, well known South Pacific merchant, of Sydney, in a letter which he sent to the Sydney Morning Herald on March 22—and which the Herald, for reasons of its own, did not publish. Mr. Sullivan said:— “It was reported on March 22 that Ceylon’s Minister for Commerce is con sidering a United States offer to buy Ceylon’s entire exportable surplus of coconut oil, up to June 30, 1951, and that this vindicates his policy of not entering into a contract with Britain at the pries the British offered last year.

“It is also reported that Canberra offi cials say that the Australian Copra Agree ment with the British Ministry of Food provides a price-stabilisation scheme over a long period, and gives growers an assured price, even if open market prices drop.

“They omit to mention that when ne gotiating the Agreement they apparently overlooked the possibility of currency de preciation; and, as a result, New Guinea and other Pacific Islands producers are getting 30 per cent, less for their copra than the growers outside the Agreement.

“Incidentally, shiploads of copra sold by Australia under this Agreement have gone direct from the Islands to dollar markets, so that Britain is getting not only the profit but the dollars also, while Australia is losing the handling of millions of dollars badly wanted for development here.

“Since Stafford Cripps, after solemnly assuring the world that he would not allow any depreciation in the pound sterl ing, allowed it to be depreciated 30 per cent., it will be noted that goods manu factured in England from foreign raw materials —such as cotton, etc. —have ad vanced sharply in price (as was only to be expected); but Australia is not pro tected against this.

“If the pound sterling declines further in terms of the dollar (which is probable, seeing that in the free currency markets of the world the dollar now sells for more,

and the peund for less than the “official” rates) it will mean that the real money value received for our copra will be even less than it is to-day, when compared w.th copra sold in the free market.

“It would appear that the officials of the Ceylon Government showed far more business acumen than their Australian confreres. In my opinion the Menzies Government would be justified in de manding that this copra contract with Great Britain be reviewed in the inte ests of copra producers and Australia generally.”

Australia Renews Agreement

IT would appear, however, that the Aus tralian Government is not awake to the unfavourable developments caused by the depreciated currency, as set out in Mr. Sullivan’s letter. On March 24, wa received the following letter from the Department of External Territories, dated March 22; “I desire to advise you that agreement has been reached with the United King dom Government regarding the price to be paid during the second contract yea“,

commencing on March 1, 1950, for copra purchased from the Territory of Papua and New Guinea under the Australian- United Kingdom Copra Agreement.

“The new price for fair merchantable sun-dried grade copra, f.0.b., Territory ports, for shipment to the United King dom, is £Stg.4B 10/- per ton.. This rep resents an increase of 10/- Sterling per ton in the price for the previous contract year. The price is subject to a premium up to £l/5/- for superior grade and a discount of 12/6 per ton for smoke-dried copra.

“Prices payable to producers in the Ter ritory are being reviewed in tha light of this increase and the new Territory price will be effective from March 1, 1950.

“I note that the February, 1950, issue of the Pacific Islands Monthly makes the following statement;—‘The Br.tish-Aus tralian contract was made in March, 1949, and was retrospective to January 1 . . .' Although certain increases in Territory copra prices were made retrospective to January, 1949, the Australian-United Kingdom Copra Agreement is actually operative from March 1, 1949.’’

Official Statement Is Due

IT is hoped that, as a result of his visit to the Australian Territories and his conversations with planting interests, the new Australian Minister, Mr. Spender, will realise that an official statement, clarifying the copra position, is much overdue. New Guinea copra producers most definitely want to know:—

• Why should they accept a reduction of 25 per cent, in the price paid by Britain for their product (the result of British de valuation in 1949 of the £Stg., and of Mr.

Chifley following suit with the Australian £) when copra has retained at least its full value in terms of gold (that is, as an international commodity) ? • Why should Britain be permitted to sell New Guinea copra, bought with a de preciated currency, in the world market, for dollars, thus getting the full benefit of the 25 per cent, currency depreciation? • In view of the extraordinary posi tion created by devaluation of the English and Australian £, d' s the Australian Government not V ik that the 1950 copra price of £4B. *o'- Stg. should be adjusted? • When is the Australian Government’s instrumentality, the Production Control Board, going to cease deducting the “stabilisation tax” of at least £6 per ton from payments due to planters, and when will it’ give an accounting of the £500,000 now believed to be accumulated in the Copra Stabilisation Fund?

New Guinea planters could get no satis faction from the late Minister, Mr. Ward, in relation to these things. That is the sort of cavalier treatment that all private enterprise can expect from Socialist Gov ernments. But they do expect more con sideration from the Government represented by Mr. Spender, which is sup posed to treat all classes with impartial justice.

Interest In Fiji And Solomons

PLANTERS in the other South Pacific Territories —especially Fiji, New Hebrides, Tonga and Solomors—will be interested in any official reply in Aus tralia to the first three questions set out above. They also are getting the equiva lent of £4B/10/- in a devalued currencv.

All copra-producers within the Sterl ing area, knowing what their conra is worth in the free market, as a dollar earner, must feel that they have ex perienced something resembling a con fidence trick at the hands of the Food Ministry cf the British Socialist Govern ment.

Mr. A. H. Green, who is well known in several South Pacific Grouos, and has lived recently in Malaya and Thailand, left Australia for a holiday trip to the UK and Europe in March.