COMMODITY MARKETS AND PRICES.

Manawatu Standard, Volume LX, Issue 97, 23 March 1940, Page 10

COMMODITY MARKETS AND PRICES.

INCREASED PRODUCTION. (By “Penloo.”) The call just now is for increased production and the producers the world over are doing tiieir utmost to moot the situation. The war has brought into operation new economic conditions which must be met. The increased production needed just noiv consists ol two main items—foodstuffs and raw materials. These again involve many commodities. In respect of foodstuffs the main items wanted are wheat, meat, butter, cheese, sugar, tea, coffee, and a lew others. In respect of raw materials the wants cover iron and steel, copper, tin, and several other metals, wool, cotton, rubber, oil, and several other less important items. New Zealand is most concerned with the production of foodstuffs, mainly with meat, butter, and cheese, and a few other items like pork: In raw materials wool is our chief product, and we also supply hides and skins. The call on our producers for increased production has come in the middle of our export season, when it is impossible to do very much. As a matter of fact the exports last January of the food products named were less in every ease, except mutton, than in January, 1939; but this may be more apparent than real, for the difficulties of shipping may have influenced the position. But there is no doubt farmers will take the necessary steps to increase the output in the next season. Of course for farmers to specially exert themselves there must be an incentive, and in this mundane world tile profit factor is the most powerful incentive, and the prices under the British commandeer are good. Thus the quantity of wool exported in January last was 115.432 bales, as compared with 118 318 bales in January, 1939, a decrease of nearly 3000 bales, vet the smaller quantity exported realised more money than Die larger, the figures being £2,000,774, against £1.729,268. If tire war ends, say. at the end of the year, and the producers are harvesting an increased production, what will he their position? Take the case of the dairy farmer. All producing countries are increasing their output of dairv produce; even in Britain this is the ease. But that may he regarded as a minor calamity, for the surplus production could be forced into consumption by a drastic reduction in price. In any case it may be difficult to carry the war time price into peace time. The retail price ol blitter in England is just ncr.v Is 7d per lb. which is a rather high price, and that this is so is proved bv the fact tliat supplies have accumulated to such an extent as to warrant the doubling of the ration. The consumptive demand for butter is being restricted through the of margarine, which is not rationed. Iho retail price of margarine is_Bd per ih. Moreover, it is claimed for margarine that with the scientific addition of the essential vitamins it is quite as nutritious as butter. 4he vast, majority of the people of Britain are now becoming accustomed to the taste of margarine, and the question is, will they revert 1o the consumption of butter when the war ends? They may do so if the price is attractive enough foi* a lengthy period, an attractive price to tlm consumer is a low one. Thus it will be seen that dairy farmers may have lo fare new and strange economic conditions when tiie war ends. There may he_ changes in production in other directions; for one tiling there is likelv to lie gieater efficiency under improved methods of farming. IMPORT CONTROL.

Bnsiness people are beginning to wake up to the fact that the object of import control has been achieved to a very great extent. r Llie combined effects of better prices lor our cxpoited primary products, and the handicaps on our import trade, have resulted in an increase in what is called tlie ia\ourahle balance of trade, that is to say an increase in our overseas funds. Tile total of these funds held by the Reserve Bank and the trading banks combined is not less than £20,000,000, more than enough as a working reserve. It would lie stupid to go on adding to this reserve, and deny ourselves tiie goods so sadly needed. A movement has been set on foot by importers in Auckland to have the import restrictions revised, and this movement .should receive the support of importers in all parts of the country. The position now appears to lie Dint wc can spend from £8,000,000 to £10,000,000 on imports almost immediately, and such an expenditure would bo helpful besides being of benefit to ourselves. Wliat the importers should demand is that import restrictions should he set free from bureaucratic control and the hanks allowed to manage the allair. They would do it i\ ithount causing any friction, and tiie discrimination would lie bettor. However, the volume ol overseas funds admits of an increase in imports. The Monthly Abstract for February gives tiie imports lor January, and these arc compared with January _ ol hist year, the second month of import restrictions. There arc substantial increases in several lines. Tor example, there were substantial increases in currants, raisins, sultanas and citrus fruits. There was an increase of 33 1-3 per cent, in the imports of rice, a small increase in sago and tapioca, sugar shows an increase of 70,000 cwt., and tea an increase of 600.000!b. ; rum increased from 952 gallons to 1259 gallons; whisky showed very little change; and cigarettes were 31.320,000 against 51,298,000. Manufactured tobacco was seriously affected, the imports being 29241 b. against 62,8711 b. ; and Die imports of unmanufactured were about hall tiie quantity imported in January last year. Wearing apparel and the etceteras of wear show heavy reductions based on values. The value of the lmts, caps, and millinery imported was | £15,925 against £36,314; hosiery £9416, against £20,910; ready made clothing, £10,730, against £121,950; footwear, £6661 against £26,684; motor spirits, 8,193,704 gallons, against 13,894,898 gallons, barbed wire 820 cwt against 3697 cwt; plain fencing, wire, 131 (lew t., against 3697 cwt. ; newsprint ll,ol2cwt„ against 53,85Gcwt. ; phosphates 7137 tons, against 35,148 tons, motor-cycles. 6 against 185; motorvehicles, 342 against 4061. The point to be kept in mind is that the spending power of the people has been in no way reduced, and more imported goods could be sold. By restricting imports prices for what can be imported have risen, lienee the standard of living is lowered. The advance in prices is officially stated as 13 per cent., but if imports alone were taken the increase would be greater. Out of every pound note j spent in the Dominion it is probable I that not less than about 8s goes on imported goods. There must be a

steady demand for imported manufactured goods, and to reduce imports while the consumptive demand is strong must cause considerable hardships. . The accumulation of sterling funds and Die prospect of further increases fully warrants easing off the restrictions. But reasonable discrimination must be exercised in this. There are quite a number of commodities apart from foodstuffs the imports of which should he increased, such, for example, as farm requisites and raw materials for our industries, and among the raw materials must he included newsprint, which is running low.