TEA IMPORTATIONS

Otago Daily Times, Issue 27388, 13 May 1950, Page 6

TEA IMPORTATIONS

Merchants Condemn Bulk Buying MARGIN BETWEEN PRICE AND COST With the removal of subsidies and the consequent sharp advance in the price of tea, speculation is rife concerning the actual cost of this household necessity to the Government, which has been the bulk buyer for some years. Merchants unhesitatingly say that they can import tea and retail it on the local market at a figure much below that which has been fixed by the authorities. Is the advance in price warranted, and was the Government paying a subsidy of Is 9d a pound? they ask.

To add strength to their assertions, a merchant has produced the following cablegram from a trading firm in Colombo, Ceylon, the country which supplies the bulk of the Dominipn’s tea supplies:—“ Market lower; prices as follow: —Common BP, 2s llid; common BOP, 3s l|d; fairy BOP, 3s 41; similar to Tembiligalla, 3s 6d; similar to Yahalateme, 3s 6Jd; similar to Ranatungoda, 4s 4d.” All prices quoted are c.i.f. and e. The Daily Times was informed yesterday that a big percentage of the tea consumed in the past was the fairy broken orange pekoe brand, quoted at 3s 4£d a lb. There was a duty of 3d a lb on tea, and landing charges would amount to slightly under ■ Jd a lb. This would mean the actual, cost to the merchant would be a shade over 3s 8d a lb. This could be sold, with a margin of profit for both wholesaler and retailer, at about 4s a lb. It was quite possible that a quantity of the dearer varieties as quoted was included in the Government purchase, the merchant said, but this, even if it were sold undiluted with poorer grades, could be retailed at 5s a lb. It could be assumed with some certainty that both the dearer ahd cheaper brands of teas had been purchased, for these were “ blended by the tea merchants within the country. It is contended that the bulk purchase of tea by the Government is the most costly and wasteful way of supplying the needs of the public, and that the practice should cease. Merchants and wholesalers with connections in the East consider, they could purchase to far better advantage and meet the needs of the public at a much lower cost.

Wholesale merchants, in common with the rest of the country, are in ignorance as to what quantity has been secured by the Government buyer, but applications for permits to import on their own have, it is understood, been lodged in several instances. It has been stated to the Daily Times that the Government purchase was made at the peak price period for tea, and it was to be hoped that a full year’s supply was not contracted for. Apparently it was the Government s intention to let commodity prices run free, it was stated, and that, if competitive trade were left to look after its own business, the public generally would benefit. Tea production was increasing enormously, but prices would never reach a reasonable level so long as the Government usurped the functions of traders.