Business and Development

Millers Say They Can't Afford

To Stay In Fiji

March 17, 1970, should be added to Fiji’s list of significant national dates. On that day, with bell, book and candle —but in its most gentlemanly, board-room manner—the Colonial Sugar Refining Co.

Ltd. of Australia, cursed the Denning report on the Fiji sugar industry in a 48-page pamphlet, and announced its withdrawal in 1972 from milling operations in Fiji.

CSR first went to Fiji in 1882, and has contributed mightily to the colonising and development of the archipelago.

The announcement was no surprise to those who had studied the Denning report, published on January 27 ( PIM , Feb., p. 23).

The 10-year contract between millers and growers, which expired on March 31, was based on the Tristram Eve report. The 15,000 growers never ceased to inveigh against it. .

Denning accepted their view that it favoured the millers. He submitted another kind of contract, covering 1970-1980, which he himself said favoured the growers.

Fiercely protesting, the millers signed it—but promptly availed them selves of a clause permitting with drawal upon giving at least two years’ notice of their intention. They said they would crush the 1970, 1971 and 1972 crops, and, after that, out.

No profit

In their pamphlet, the millers said they could not make a profit under the new conditions. Their statement that, if the last eight years’ operations had been under the Denning instead of the Eve contract terms they would have made a loss of about SFIO million, was widely publicised.

Before making their announcement, CSR men from Sydney had a series of interviews with Fiji’s Chief

Minister and top Fiji Government people.

CSR said it did not wish to harm Fiji with which it had had more than 80 years of “happy association”.

CSR realised the welfare of 15,000 growers, and 2,500 mill workers, and the scores of thousands of folk dependent upon them, was vital.

But, said the millers, they could not now go on without a subsidy.

Would the Fiji Government pay a subsidy? Alternatively, would the goverment buy SPSM (CSR’s Fiji operating subsidiary)?

In the latter event, CSR would give every possible help in research and marketing the sugar.

It was not really a suitable time for such a proposition.

At the moment, it is really a ternporary Fiji Government, holding position between the old constitution, and the new one that in April is to be shaped at a special conference in London.

It could not, even if it wished— which emphatically, it did not—accept

responsibility at this stage for back ing the future of Fiji’s sugar industry.

So the government’s answer was a definite “No”, and the CSR’s an nouncement followed.

Examining the situation, there are four factors to be considered in a politico-economic situation wi.hout precedent in Fiji’s century of British rule: • The world is almost always over supplied with sugar. The free market price almost always is well below Fiji’s cost of production. There is an uncontrolled output of sugar from the world’s cheap labour countries, • Sugar in Fiji has survived only because (a) Britain, under the Com monwealth Sugar Agreement, subsi discs sugar from British sugar pro ducers in various countries and (b) CSR employs its skill, experience and influence in marketing Fiji sugar, • Britain and a proposed Dominion-status independent Fiji dare not let the Fiji sugar industry collapse.

Sugar is Fiji’s biggest export, (Over)

• Discussing the Denning Award in Suva on March 17, Mr. J. C. Potts, chair man of directors of South Pacific Sugar Mills Ltd., a subsidiary of the CSR (left); Mr. R. G. Jackson, a senior executive officer of the CSR; Mr. A. J. Campbell, senior executive officer with the CSR; Sir James Vernon, general manager of the CSR and Mr. J. M. Dixon, deputy general manager of the CSR.

Dependent on sugar

ThomanrU xr••• A A on suear P P 6 " P K • Far-reaching economic troubles could follow dislocation of Fiji’s sugar. The industry must be most efficiently managed and controlled if it is to make, out of the over-supplied world market, a sufficient profit to provide the cane-grower and millworkers with an income which will maintain their standard of living.

A *, i . .

Any failure here means political trouble.

• CSR’s decision to cease milling after 1972 appears irrevocable.

The alternative to industrial, economic and political trouble is that the sugar mills be taken over, by a group, or groups, that can carry on efficiently. That calls for millions of dollars, plus the co-operation and goodwill of the retiring CSR.

Fiji has not got that kind of money (about SF23 million). Overseas in vestors, in the circumstances, will be shy.

The Sydney Morning Herald, in its leader of March 18, after pointing out that Britain’s withdrawal from South-East Asia leaves Australia as the “guardian” of the South Pacific,

said Australia has a “moral obliga tion” to assist Fiji.

“Fiji has long been to all intents and purposes an economic colony of Australia,” the leader said. It argued that Australia would be wise to assist Fiji interests to take over the sugar industry when CSR withdraws, for defence and national prestige reasons.

Editorials apart, reconciliation of all those difficult viewpoints is the task of Fiji’s Chief Minister, Ratu Sir Kamisese Mara. None envies him.

It is most unfortunate that this sugar trouble has arisen just when he is beset by the problems of ham mering a new and workable con stitution out of the part-agreement (between his party and the National Federation Opposition) which they are taking to London arbitration in April (they were to depart April 10).

However, it is obvious that if agreement is finally reached in Lon don, where the political climate is friendly, Sir Kamisese will have a further and a tougher task in Can berra.

Australia always has been exceed ingly afraid of getting itself tied up in the British-made problems in Fiji, the Solomons and the New Hebrides.

But events in the past decade have moved inexorably towards a closer association at governmental level.

Many people believe that the able Sir Kamisese is just the man to give shape and substance to that asso ciation.

Huge debt

For the record, CSR’s observations on the controversial Denning report will be carefully noted by Australia should Sir Kamisese succeed in in volving Australia in the future of the Fiji sugar industry.

CSR claimed its 98 per cent.-owned SPSM would have been in SFIO million debt had the Denning con tract operated in Fiji over the past eight years.

SPSM would have had a good profit only in 1963, the year sugar boomed.

In each of the years 1965 to 1969 there would have been losses or very small profits, CSR said.

It claimed that the concept of a guaranteed minimum price for cane, proposed by Lord Denning, was “apparently, unique in the world”.

“To the extent that the miller is called upon to make good the guar teed minimum price of cane, his position would be worsened still further,” CSR said.

“The miller’s income would be re duced even more if sugar prices and proceeds fell. It will be reduced as costs inevitably rise. The miller could

xpect minimal profits at best: it is lore likely that he would experience übstantial loss: he could have alamitous losses.”

Another statement from CSR said wnership of the crushing mills must hange.

“The directors of SPSM have finally oncluded that the only practicable ourse of action is for SPSM to an ounce that it will sign the Denning ontract,” the statement said.

“It will mean that crushing can tart up and the marketing of sugar an proceed smoothly and without elay.

“But SPSM directors wish it to be nderstood that the matter cannot nd there; it is not feasible for a ommercial milling enterprise to en age in the Denning contract on a mg-term basis.”

The directors were open to “con ductive suggestions” regarding action 3 be taken—and they hoped that ransfer of the milling enterprise to ew ownership would be made on “a air and sensible basis”.

CSR’s assistance would be available n the Fiji sugar industry for as long s Fiji wanted it.

The company would provide tech lology, management and marketing ervices during anv period of tran ition of owner and for as long after wards as Fiji desired.

CSR land leases

While Fiji in March pondered the announcement by CSR, publicity was given to another aspect of the com pany’s investment in the colony.

Correspondence was being ex changed among the CSR, the Native Land Trust Board and the Fiji Gov ernment over 47 leases CSR wished to relinquish.

The company had 17 Crown leases on which it had about 1,200 sub tenants, and 30 Fijian leases on which it had about 2,900 tenants. All were in cane areas and the sub-leases were not surveyed.

The Crown and the board had opposed the termination of the leases because granting of registered leases to the sub-tenants would involve con siderable expense for the 4,100 tenants.

Last year CSR applied to the Agri cultural Tribunal for a declaration that the notices of termination it had served on the board and the Crown were valid, but the application was opposed by both head landlords.

In October, the tribunal gave an opinion that the company was acting within its rights.

Disease lowers P-NG

cocoa production

Cocoa passing through Administra tion inspection posts in New Guinea in 1969 was more than 1,000 tons less than the previous year. It was 24,206 tons. Output for 1970 is expected to fall again.

Last year’s setback was due to diseased trees; dieback continues to cause concern, although this does not seem so severe as it was some years ago, cocoa brokers Kleinwort, Benson Ltd. say in a recent circular.

Kleinwort say Pantorhytes, a wood boring insect, which feeds off the trunk of cocoa trees, has also become a menace.

This year severe winds and heavy rains have caused loss of flowers and an increase of black rod disease, the brokers add.

Hydro-electric

plan for Tahiti

A company to study the technical aspects of a hydro-electric plan for the rugged Papenoo Valley of Tahiti was set up in Papeete at the end of January.

The company is called Societe d’Etudes du Barrage de la Papenoo (SEBAP) and has a capital of 12 mil lion Pacific francs (about $A110,000).

French Polynesia’s Territorial As sembly set aside 2k million Pacific

francs from its current budget last October to establish the company.

Mr. Yannick Amaru, a member of the majority coalition in the As sembly, was elected president of the company’s board of directors at a meeting in Papeete on January 22.

Several other members of the coalition are also on the board, as is Mr. Yen Ken Howan, a local engineer, who has worked in recent years on Egypt’s Aswan Dam, the Yate hydro-electric scheme in New Caledonia, and on similar schemes in the United States.

Mr. Howan has already made a private study of the Papenoo Valley as a site for a hydro-electric scheme for Tahiti. It was this that led to the establishment of SEBAP.

Mr. Howan believes his plan would satisfy Tahiti’s power needs for the next 30 years or so. If carried out, it would cost about 2,000 million Pacific francs (about $A18.2 million).

Mr. Howan’s plan envisages the construction of a barrage at a place called Titiafatau, where the Papenoo River bends several times and where it would be relatively easy to join two spurs to form a barrage.

The barrage would be 230 feet high, and the generating station about 100 feet below it, so that there would be a total drop in the water level of about 330 feet. The barrage at its base would be nearly 1,000 feet across, and the lake behind it more than three miles long.

Mr. Amaru told the Territorial Assembly in October that if a com pany to study the Papenoo scheme were set up immediately, work on the barrage itself could start in three years.

The scheme was described at that time as “vital” to the development of Tahiti.

Aust. exports go

up and down

In the six months ended Decem ber 31 last year, Australian exports to New Guinea, both Samoas, French Polynesia, New Caledonia, Nauru, Fiji and the Gilbert and Ellice Islands all improved.

Australian exports to the Solomons, New Hebrides, Norfolk Island and Tonga disappointed.

According to the Australian Bureau of Census and Statistics, New Guinea showed a massive rise, with Aus tralian exports for this period jump ing well over 50 per cent., from $48,733,000 to $76,756,000. In 1968, Australia had about 54 per cent, of this market.

New Caledonia, which former Australian Trade Commissioner for the Pacific Islands, Mr. W. R.

Carney, predicted had most potential for exports, was next best, with a $9,079,000 Australian import bill, as against $6,909,000 for 1968’s last half. Australia had 18.4 per cent, of this market in ’6B; its share could now be over 20 per cent.

In French Polynesia, where Aus tralia has less than 3 per cent, of the market due mainly to inadequate shipping, exports rose about 30 per cent. Both Samoas, to which Aus tralian shippers are also let down by poor shipping, each took just under $50,000 more Australian products.

Nauru improved about 30 per cent., taking $2,096,000 of Australian products, instead of $1,668,000 for the corresponding previous six months.

The GEIC also took about 30 per cent, more Australian goods in a period in which the US made an abortive attempt to enter the market and the Japanese succeeded in in creasing their 4 per cent, share with shipping connections and higher sales of motor vehicles.

Fiji imports from Australia went up over 10 per cent., pointing to a $2O million-plus 1969-70 year.

Australian exports to the Solomons dropped nearly $300,000, to just over $2 million, reflecting Japanese in cursions and increased Honiara buy ing from Europe and Singapore.

New Hebrides imports from Aus tralia increased only fractionally, with competition from France and Japan.

Tonga imports fell $37,000 from Australia, much to the glee of New Zealand exporters, whose sales improved.

On Norfolk Island, where Aus tralia has its biggest share of any Islands market (60 per cent.) exports improved marginally, by $13,000.

Dolly damaged Cooks

banana industry

Although the main brunt of Hurri cane Dolly came no closer than 70 miles from any of the Cook Islands in late February, big winds and rains accompanying Dolly ruined an esti mated 40 per cent, of Rarotonga’s export banana crop and 50 per cent, of Aitutaki’s banana trees were blown down.

Palmerston also suffered consider able damage.

Dolly passed Palmerston with gusts of over 60 knots flattening all banana trees and one thatched house.

The royal yacht Britannia called at the island on February 25 and the ship’s doctor went ashore and gave Islanders a medical inspection.

Aitutaki’s damage is a serious set back to growing banana exports.

New bank notes

in Noumea

New 500-franc bank notes have just been circulated in New Caledonia and French Polynesia. Issued by the overseas “Institut d’Emission”, these notes follow the new 100 and 1,000 franc notes issued last year.

The new banknote is predominantly blue. The front depicts a Polynesian fisherman, framed by a scene from the Marquesas Islands. The reverse shows a Caledonian from Ouvea Island (Loyalty Group) with a back ground of rocks at Hienghene, east coast mainland.

The new note measures 6 in. x 3i in. and it’s value is SUSS. Visitors should also take care to distinguish between the 100 and 1,000 franc notes, which are both of similar orange-coral shades, the larger de nomination being less than a,i inch longer than the 100 franc note.

Search resumed for

P-NG bauxite, gas

The tiny sub-district headquarters of Morehead, Western District of Papua, will resume its role as base for a Texas-financed search for bauxite in April which, if successful, could result in alumina smelters and a natural gas industry for Papua- New Guinea.

Mclntyre Mines (Aust.) Pty. Ltd. will put two men from Australia into Morehead to continue searches begun by this company last year for econo mic deposits of bauxite in nearby low-lying grassy regions. To date, Mclntyre has not found bauxite, only indications.

Soil sampling stopped late last year because of “the wet”, which made research conditions impossible.

Mclntyre, an affiliate company of the Keck family of Houston, Texas, is working closely with another Aus tralian affiliate of the Superior Oil group. Canadian Superior Oil Aus tralia Pty. Ltd.

Canadian Superior has a 15 per cent, interest in the Papuan offshore gas fields, for which Phillips Aus tralia Oil does the operating.

Canadian’s interest is that the gas could be used for a local industry— alumina smelters—and while no natural harbours are known in the area for a suitable export port, Canadian feels a deepwater wharf could possibly be built near the mouth of the Fly.

Both gas and bauxite are the prerequisites.

Mr. Johnson socks

it to 'em

Resigning P-NG Assistant Adminis trator for Services, Mr. Les Johnson, has rather plainly thrown the ball back mi;o the court of the Papua- New Guinea Federated Chambers of Commerce, who in February chal lenged the Administration to rapidly develop a native middle class of genuine businessmen.

In one of hus farewell speeches he as much as asked members whether they thought they had done enough to encourage and sponsor the creation of native businessmen and their par ticipation in P-NG business. Race relations in the future would hinge on Australian and other expatriates doing much more and quickly.

No, he didn t use those exact words, because, although Les Johnson has a reputation for directness, he is rareiy blunt. He told 45 chamber members at a luncheon that the most sensitive area of their relations with New Guineans was how aspirations might be satisfied.

Race relations were amicable enough now, although in the towns they were pretty remote, and there was widespread recognition by the native people of the need for “ex patriate expertise”; there was also no sign that the natives wanted to squeeze the expatriate businessmen, but if this happy situation was to continue, there would have to be some big changes.

The way things looked now, at the time of self-government, there would be a parliament and many of the top Public Service positions occupied by native people, while there were largely Australians and other expatriates ir all the private business executive positions.

Australians and others should think why they were in their present positions in the territory’s business— education, experience, a strong sense of responsibility, hard work, capital, and a lot of self-confidence had put them there, he continued.

New Guineans found it hard to equip themselves with all these attributes. A united effort was needed by businessmen to raise living stan dards by allowing New Guineans to have more ownership of or share holdings in big business, by helping create more native entrepreneurs, and by raising more native employees to executive roles.

Many attempts to start native entrepreneurs had failed, but the Papua-New Guinea Development Bank couldn’t hope to do it all, and businessmen had to help on an or

ganised scale, even at the cost of jetting up competitors. They needed lirect advice and preferential treat nent to get started.

Mr. Johnson said he was glad to hear that the Rabaul Chamber of Commerce was going to make a panel available to help native busi nessmen, “I’m optimistic about the territory’s future and the future of Australians in it, but only if we make some concerted effort to solve these prob lems so Papua-New Guinea will not be an expatriate Australian business empire,” Mr. Johnson added.

Shake-up in Tonga

Copra Board

Mr. Stan Brown? 62, manager of the Tonga Copra Board for 15 years, resigned on March 11. He had joined the board as a general elerk in 1944 and was appointed manager in July, 1954.

At the same time, the Tonga Gov ernment audit department continued investigations into the board’s finances.

Shortages of over $T 100,000 in the board’s general finances were re ported and a “loss of profit” in the board’s canteen of $50,000.

A number of employees was suspended during the investigations, but two senior officers were later reinstated.

With Mr. Brown as manager, the board extended from buying and sell ing copra to include the establish ment of desiccated coconut and ex perimental rope-making factories, shipping and the formation of the Tonga Construction Company as a subsidiary Following his resignation, the board appointed former audit department chief clerk Sione Kinahoi, acting manager.

Brokerage houses

in Fiji, P NG?

The Fiji Development Bank in late March was considering proposals to open up later this year a brokerage house in Suva which would buy and sell shares in public companies.

The bank has a large parcel of shares in local cement maker, Fiji Industries Ltd., and would offer these shares for sale. Shares in other firms in Fiji, with interests in manufac turing, tourism, mining, tourism and retail activities may also be bought and sold through the bank’s broker age house.

Assistant manager of the bank, Mr.

R. H. Glover, visited Australia in early March. He examined operations of stock exchanges in Sydney and Melbourne and talked to executives of lan Potter and Co., Fiji Government underwriters.

Fiji moves towards a brokerage house, and possibly a mini stock exchange at a later date, co-incided with predictions from New Guinea that a brokerage house could be set up in that territory. There is potential trading in the large number of shares to be held locally in the Bougainville copper project.

CRA UDOrodcS

Dougchnyiiic Of©

CRA, in March, upgraded the re serves of its copper ore on Bougain vjue by nearly one-third, from 760 million tons to 900 million tons.

Average grade went up marginally from 0.47 per cent, copper to 0.48 per cent., but gold average dropped from 0.4 dwt. per ton to 0.36 dwt. per ton.

The previous figures were an nounced in March, 1969 ( PIM , Apr., 1969, p. 31).

(More commerce, p. 129)

British petrol giant, British and Islands trader, Burns fflilp have clashed over trademarks n New Guinea. The British have ost round one, and taken round two.

Round three is coming up.

The petrol group applied to lave a subsidiary registered in Moresby, called BP New Guinea Pty.

Jd., but this request was rejected by he Moresby company registrar, ipparently because “BP” was lynonomous with “BP’s” in NG ninds. So the petrol group applied lirect to the NG Administrator, Mr.

David Hay, who reversed the Registrar’s decision. BP achieved in :orporation.

But BP’s are fighting back. They iay that they have sold petroleum jroducts in NG for many years, and 3P and BP’s are too similar. So the irgument hasn’t yet been settled. • Coffee prices in March reached lighest level for 13 years—and were itill rising. New Guinea prices umped to a high of 52 cents a lb