THE FERTILISER INDUSTRY

Hawke's Bay Herald-Tribune, Volume 81, Issue 46, 17 November 1937, Page 4

THE FERTILISER INDUSTRY

-Press ABSooiation.)

Cheap Production Depends on Large Outputs NAPIER PLAN EXAMINED

(By Telegraph-

WELLINGTON, Last Night. In a statement to-day xegarding the proposal to establish a superphosphate works in Hawke's Bay, the Hon. D. G, Sullivan, Minister of Industries and Commerce, pointed out that this was an industry that could only be conductea subject to the issue of a licence. * A number of applications for licences for further phosphatic fertiliser works had been received, including those from the' Hawke's Bay and North Auckland districts. A committee of the Bureau of Industry had visited Hawke's Bay and was not satisfied at the time that the proposed works could secure sufficient output to warrant the nece3sary capital expenditure. r ' "It is generally agreed," V.aid theMinister, "that works of less than a 40,000-ton capacity would not be .an economic unit, and it is estimated that in the case of works of this capacity, operating on an output of 30,000 tons, that is, 75 per cent. of its capacity, overhead, costs of inter'est, depreciation and obsolescence would be 5/- a ton more than when operating at full capacity.'* The Minister added that the capacity of the five North Island works was sufficient to meet the normal requirements, though last season . there was congestion through orders being given much earlier than usual, with the requirement of prompt delivery. Production Increase, Since 1931, when the Government granted a subsidy to encourage the use of superphosphate, the production had shown an increase from just over 200,000 tons per annum to the present level of approximately 400,000 tons per annum. From 1928 to 1931 the price of superphosphate in the North Island was £4 17/6 a ton. Th.9 Government subsidy enabled a price of £4 to be maintained for four years .during the depression, while the subsidy was being gradually reduced year by year. The present price of £3 16/- (without subsidy) in comparison with the 1928-31 price of £4 17/6 had been achieved, not so much by reduction m costs of materials and production coste, Sut by reaison of the increasing output enabling the manufacturers to spread their overhead cbarges over a larger tonuage and st-ill make reasonable provisiou for depreciation and dividends. The Bureau of Industry, in considering the applications, had to be assured beyond all doubt that an opening existed for new works, and that existing works would still be able to secure sufficient output that would enable their works to continue to operate as efficiently as before the new works were erected. One very important factur that was inclined to be overlooked was that . under the Board of Trade Begulations one price for superphosphate operated in the North Island, and that price was based on the cost of production and a reasonable return on capital invested. Absorption of Output. It was obvious that before further capital should be brought into th'e industry it must be shown that the output of the new works could be fully. absorbed without detracting from ihepresent output of the existing works. Whereas a few months ago the Bureau of Industry would probably have declined a licence, indications today were much more favourable. 'The changed conditions had necessitated further conferences with the manufacturers and a draft plan had been prepared for the establishment of works in Hawke's Bay, but definite decisions must await the outcome of the .discussions. The matter- must be considered from the viewpoint of the industry as a whole. The works at Napier would require the adjustment of deliveries from existing works, and co-operation between all the companies would become increasingly necessary to secure the benefits of a rationalised indulstry.