COST OF TEA

New Zealand Herald, Volume LXXVI, Issue 23487, 26 October 1939, Page 10

COST OF TEA

SHARP RISE SOON DELAY WITH IMPORTS COSTLY STATE POLICY FINANCE DIFFICULTIES Consternation exists in the tea trade owing to the apparent inability of the Government to provide sufficient fur,dg to finance tea imports the customary manner. It is estimated that the delay caused will cost New Zealand from £75,000 to £IOO,OOO more for exactly the same grade of tea than it would have cost had the normal procedure been adopted. For the past three months importers have been endeavouring to secure mora workable arrangements from the Gov. ernment, but without success. Overseas prices have risen by 9d per lb. since the outbreak of war and are still advancing. Although it was inevitable that the rise would be reflected in New Zealand, the effects would have. been delayed if normal credit facilities had been available. Rise in Overseas Markets "People in New Zealand must be prepared to pay about 6d per lb. more for tea in the near future,' 7 r sa id o ns merchant. "The action of the Government is responsible for the increase being necessary so soon, as if credits had been available, we could have made provision to a certain extent for the rise in overseas markets." It was pointed out by another importer that as the Government had agreed to allow tea to be imported up Co the value of last year's figures, it might appear that tea packers were in a privileged position. This, however, was not the position. Shippers Require Gash Consignments .of tea for New Zealand are sold at auction each week in Colombo, cash settlement being made at the close of each auction. The only basis on which tea import licences have been issued so, far is for payment in from six to nine months. This is-un-acceptable to shippers, who are finding it extremely difficult to secure Eufficient supplies for other markets for which prompt payment is guaranteed. The licences are on a sterling basis. As no additional licences will be granted, every increase in purchase price means that packers are faced with the problem of, doing less turnover on the same fixed overhead. A packer apparently can secure permission to increase the price of his tea by the amount of the rise in his cost per unit, but is not allowed to take into account' the increase in overhead charges caused by the reduction in turnover, and he is therefore faced with another impossible position. <