PRICE OF RUBBER

Hokitika Guardian, 3 November 1930, Page 2

PRICE OF RUBBER

INDUSTRY IN THROES

UNTAPPED SUPPLIES. RESTRICT! ONS’S AFTERMATH

Thirty years ago rubber was practically unknown. Last year 820, GOe tons was produced. In ]9io it sold at 12s Cd per lb., in 1922 at G]d per lb., and in 1925 at 4s 8d per lb. To-day its price is around Id per lb. Jn 1904 only 50,000 acres of land were planted .with rubber trees. To-day tlie acreage is 0,500,000, and it is still growing. Rubber is used in a.r. infinite variety of industries, aUhougl the bulk of the world’s production goes into tires for road transport purposes. It is a necessity the world cannot do without. Yet the industry at the moment is facing wholesale bankruptcy (writes a special correspondent of the London “Observer.”) Such in Uriel' is this great industry in which British investors are estimated to have lost £120,000,00 in the last two years. The figure, for which Mr James Fairhairn is respon ible, is certainly an alarming one. It must not be overlooked, however, that the losses ol to-day are far more, than couiiter-baiaiioing t»y the profits of tho pitsti ft is only witliih the past teli years that the rabbet’ shareholder lias bad reason to- be discontented with his lot. Tint period has been one of constant alarums and excursions. AY ben, in 1922, the price of the commodity fell at 6]d. per lb. ruin was freely predicted for the greater number of producers. The Stevenson restriction scheme brought temporary relief. For six years the British section of the industry stood still while the Dutch and Asiatic producers who stood aloof from the restriction schema profited largely. Their output expanded enormously. Their market wa.s improved by the withdrawal of some of the competition, while the restriction imposed on British producers proved just sufficient to assist the price, with the aid of a growing world demand.

TEMPORARY BRITISH ADVANTAGE.

It is true that for the time being British producers gained some advantage from tlie scheme. The average price throughout the six years was Is 7£d per lb., a notable advance on the figure to which it had fallen in 1922. It is now befooling evident, however that the advantage has had to be paid for dearly. On November 1, 1923, the operation of the Stevenson scheme ceased as the result of an inquiry and report made by tbe C*ivil Research Committee. The decision aroused violent controversy, but no useful purpose would be served by recalling the arguments oil oiie side or the other. The net result was that a flood of rubber was set loose on the world far in excess of almost every export forecast, and before, very long it was found that production was outstripping demand. Stocks grew steadily. Then came the collapse of the world trade boom, compelling widespread (curtailment of expenditure and adding under-consumption to over-production. Even the Dutch producers who had benefited so substantially from tbe sacrifices imposed on their British contemporaries became alarmed. They found that the profitable years had ended. British estates were again pouring their full quota, into the market. Restriction, anathema to them for six years, became a slogan and tliev entered eagerly into discussion with British groups in the united effort to find a means of bringing production and consumption into line. Every effort failed. Then they went to tlie British and Dutch Governments and asked that compulsion might again be instituted. After long months of waiting the answer has come in definite and unmistakeahle terms. There will he no restriction by Government action. “Economic laws must take tlveir course.” THE NATIVE PRODUCER.

The great snag on which all the carefully prepared schemes of restriction, either voluntary or compulsory, have been wrecked is the native producer, lit cannot be induced to enter into a volutarv scheme, while as for compulsion the Dutch Government, mindful of its duties to the large native population for which it is roponsible, will have none of it. The native producer, it declares objects to being controlled. He is only amenable to economic laws and already owing to the low prices he can obtain for his output he is ceasing to tap his trees and turning to other sources of livelihood.

Sir Eric decides, the chairman of the Dunlop I{libber Company, wliicli has consistently opposed every form of restriction, has declared that the six years of the Stevenson scheme resulted in an enormous increase in Asiastic ownership on the Netherlands East Indies Exact figures are not availble, but it is estimated that the planted area under 1 Asiatic ownership, which in was 3110,000 acres, is now at least 1,300,000 acres. Expert observers state that at the end of last year only one-third of this area was being tapped, the ifall in price having driven the owner who was able to employ hired labour back to the family tapping system. Last year this native-owned planted area produced about 100,000 tons of rubber, A rise in price to over 9d per lb. would bring presently untapoed areas into operation to an increasing, extent as the price went higher. It is estimated that a price for rubber of Is 7JUI, the average of the Stevenson scheme, would release a potential production from those native-owned plantations of at least Br 98 r 9 000 tons.

Thus it would seem that the Stevenson scheme created something akin to Frankenstein’s monster, and that today hundreds of thousands of untapped rubber areas uncontrolled by any European influence are ready at any moment to fling their output on the market.

There is only one way, now that Government control is ruled out, by which this potential native production can be kept under. The price of the commodity must be kept low enough to make it impossible for the native to extend his tapping profitably.