The_Open_Door_deel1

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The charge of 3.44 cents per pound for processing costs is very
high as compared to Malaysia, Indonesia, Thailand, and Sri Lanka
in the Far East (almost twice as high), even though several of
Firestone's cost items should be lower owing to e.g. duty
exemptions (still enjoyed in 1973). This deduction of almost three
and a half cents per pound may have yielded the plant an extra
profit of one and a half to two cents per pound.
In purchasing crude rubber from Liberian farmers, processing it
into its own grades, shipping and selling, Firestone ties up its
money for about three months and therefore charges an interest
based on 10? per annum. Thus, the Interest on Funds deduction is
interest on the money paid by the Firestone Plantations Company to
the farmers for the period between the purchase by the former and
the sale to its U.S. parent company. In the light of the interest
free loans the Firestone Plantations Company gave, and gives, to
the Firestone Tire & Rubber Company it appears that the Liberian
farmers are paying for a suppliers credit granted by the Firestone
Plantations Company to the U.S. parent.
The Liberian farmers are also paying for Firestone's Income Tax as
1.27 cents per pound was deducted for "Profit before Tax". This
charge also means that even before selling the rubber to Firestone-
Ohio, the Firestone Plantations Company has already made a profit
on the rubber purchased from Liberian producers. The "net" profit
of 0.70 cents per pound, calculated on the basis of an Income Tax
rate of 45?, is added to the other profits made through excessive
deductions, duplication of charges, and the use of services of
other subsidiaries.
There is another disputable component of Firestone's pricing
system: the use of FOB Singapore prices although Singapore lies
much further from the U.S.A. than Liberia. If New York prices
had been used (as they were in the past, prior to the 1950's)
this would have been more beneficial to the Liberian rubber
growers and the Liberian Government. The choice of Singapore
instead of New York prices resulted during 1972/73 and 1973/74 in
net losses for Liberia of $ 175,000 and $ 832,300 respectively
(78).
As far as the buying of latex is concerned, the Firestone Tire &
Rubber Company made the following two deductions from the price
paid to Liberian farmers, in addition to (some of) the charges
mentioned in the example of the dry rubber: a deduction for ocean
freight (including insurance), and one for terminal and tank car
expenses. As the price for latex is a FOB vessel Monrovia price
a deduction for ocean freight is very arbitrary and inappropriate.
The same applies to terminal and tank car charges as they refer to
unloading in New York. Another charge, the deduction of 0.5 cents
selling costs relates to the costs made by the Firestone Tire &
Rubber Company when selling the latex in the U.S.A. It is
strangely enough the Liberian farmers who have to pay these costs.
It is moreover a duplication of the 0.5 cents sales commission
which is also deducted, as in the case of coagulum.