COMMODITY MARKETS AND PRICES.

Manawatu Standard, Volume LIX, Issue 23, 24 December 1938, Page 5

COMMODITY MARKETS AND PRICES.

RESTRICTION ON IMPORTS. (By “Penloo.”) Tho decision of the Government to license imports into New Zealand has naturally caused some alarm among British and Australian exporters who want to know their position. Licensing or rationing imports is generally resorted to in a time of emergency, and it cannot be claimed that an emergency exists in New Zealand. It is quite true that sterling funds of the banks have been greatly reduced in recent months, but this is not due to imports which are actually less than they were a year ago. But a mere statement may not be convincing, so given below are the imports for six months :

A decline of £2,748,000 in six months is very substantial, and proves conclusively that imports have not been responsible for the extraordinary demand for sterling exchange which was a marked feature of recent months". That was duo to causes now well known.

i It is much to the credit of importers that they were quick to realise that the steady decline in exports would have a serious effect on the spending power of the people, and they promptly took steps to curtail imports. In the months of August and September, when the bulk of tho imports arrive for spring and summer trade, it will be noted that the reduction in imports amounted to the substantial sum of about £1.500,000. On the face of these facts and figures there does not appear to be any warrant, or any sound reason, for seeking to limit imports. The authorities must have some other reason, or possibly are developing a new policy in connection with expanding local industries. By restricting imports local industries would have a larger share of the local market, and would therefore be encouraged to expand and absorb more labour, But such a policy would be a breach of the Ottawa Ag' “lit. The rights of British pro.’.! ws are clearly stated in the agreement, for it is provided that “tho New Zealand Government will fix its tariff at such a level as will place the United King-

doin producer in the position of a domestic competitor—that is, that the protection afforded to the New Zealand producer shall be on a level which will give the United Kingdom producer full opportunity of reasonable competition on tlic basis of the relative costs of economical and efficient production.” The Ottawa Agreement has worked smoothly for quite a number of years, and the reason for its breakdown now is. that local costs of production have been arbitrarily raised by legislation, and tho New Zealand producer now finds it difficult to face up to the competition of imports. The logical tiling to do under the circumstances is to reduce costs. But that again is beset with difficulties. In production costs, about 80 per cent is due to labour, and therefore to reduce costs means reducing wages, and that would bo at variance with the policy of the Government. In order to give local producers a better chance to compete with imports without reducing wages, it is proposed to restrict such imports as come into serious competition with local products. The restriction applied to foreign countries would be quite in order, but applied to British merchandise it would be a breach of' the Ottawa Agreement. Most of our imports come from the United Kingdom, and the British producer is the greatest competitor with the New Zealand producer, end if restrictions cannot be placed on imports from Britain the lot of the local .producer would in no wise be improved by the licensing system. The position is a difficult one. THE WOOL MARKET.

About half-a-dozen wool sales have been held in the Dominion, three in each Island, and the reports from all selling centres clearly indicate that the demands of overseas buyers are mainly for crossbred wool, which is wanted for a particular and urgent purpose, and that is for uniforms. The finer wools which go to make up civilian clothing are not in equally good demand and tho reason is not far to seek. The principal consumers of wool are the peoples of Europe, and with few exceptions all European countries arc in financial straits. Germany, in the past, has been a very prominent consumer of raw wool. To-dav Germany’s economics are in a parlous condition. Her imports for eleven months ex- . eeeded her exports by £17.000,000, and in addition there are the debt services to be provided for. To rehabilitate her economics Germany must restrict her imports and increase her exports, and how she is to do that is her great problem. Germany cannot buy wool to anv extent, and therefore she must rely on wool substitutes. Italy is in a worse position, and the latest economic gesture in that country is to impose another canital ley. It is never safe to forecast the wool market, for forecasts even by those experienced in the trade have been falsified again and again. For all one knows wool may be on the eve of a great revival. DAIRY PRODUCE. The London butter market is erratic. After falling to about 105 s per cwt, there was a recovery to 112 s owing to a temporary shortage of supplies, and to the usual Christmas demand But t.he butter position is overshadowed by the accumulation of supplies, and if this is the case now | what is likely to be the position when] the heavy shipments of January and February come on the market?

1937 1938 Decrease £ £ £ May 4.441,000 4,184,000 257,000 Juno 3,961,000 3.583.000 378,000 July 4,843,000 4.611.000 232.000 Aug 6.008,000 5,063,000 945,000 Sept 5,403,000 4,821,000 582,000 Oct 4,270,000 354,000 29,280,000 26,532,000 2,748,000