NITRATE SUPPLIES

Hokitika Guardian, 6 October 1928, Page 6

NITRATE SUPPLIES

G UAEANTEED PRICE, I f CHILEAN SCHEME OUTLINED. LONDON, Aug. 23. Nitrate of soda which New Zealand imports from Chile, the Dominion’s only foreign source of supply, is now to ho added to the rapidly increasing number of products,' the market of which is to be subjected to something approaching world control.

The scheme has been wrapt in mystery, but this week some information, has become available and New Zealand farmers will doubtles he glad to hear something about it. \ Hitherto, the “Financial Nefys” says, supply and distribution were- two separate processes between winch np necessary connection existed. Now the two are to he component parts of thj) industry under one central control* ami the position of the old mcrcluiuts and distributors "rill he. considerably altered. Tho control of Die whole nitrate in--dustry is now to be centralised ini Chile and the essential reform that is to be made is that the producers ares, now in control of all departments.!. But their control is not absolute. The Chilean Government, by maintaining: the old nitrate duties and from them making grants for the industry’s benefit, has become an important partner in the industry’s direction; and lias secured a most effective veto over any action of which it .may disapprove.' Distributors being/no longer independent, merchants' will in future receive commissions on sales. Many Chilean nitrate companies which established strong working-connections with particular firms will—provided these distributors are ■ selected —continue to market their produce.' through these distributors. Some companies, however. sold their - produce f.o.b. at* the Chilean ports to whomsoever would give them a satisfactory price, and will now have to frill into line, hud appoint their own consignees. 7

In .view of the experience New Zealand'has had of export control a pm.it made by the “Financial •News” deserves to he noted. The appointmentof special consignees, it says, is.- designed to give producers as intimate a. knowledge as possible pi the .consuming markets which they are , to serve. It is not intended to divide up producers according to those markets. Different prices'may be fixed for different markets so that since tire "if vote companies will in future specialise in their own market an iujus-ti>-e tiiidJ’t he suffered by those who were tied to the lover prices. To meet this difficulty all/ revenues are to be pooled and then divided among the com oar lies pro rata to their production.

It is at this point the Government grant will come in ami. 17s r»er- metric quintal is the price the Government gu a fantees producers. The price for the consuming markets has not. been fixed, but it is anticipated that it "’id he lower than T 7« and the Government subsidy will therefore serve to make up the difference. ft is understood that the Chilean companies are, on the whole, satisfied with the new system. They recognise that, although the Government subside will rot he equal to the dufy paid on - nitrate exports, the Chilean a a t'oii dcemls on that for a considerable part of its revenue, and has a rieht 1o a voice in the direction of so essential a national industry. The price of 17s per metric quintal has the advantage of being a guaranteed price whi'li may be relied on, and is su.ffi-

cent to cover • most companies’ expenses and obligations. That it will provide high dividends on ordinary s'hai'e capital is thought unlikely. Some conn panics may pay 10 per cent, or even a little more, but? this is not a high return on investment in a concern which is working a wasting asset,’ and w hose dividends • arc in part a return of capital..