DAIRY CO. AFFAIRS.

Franklin Times, Volume 9, Issue 722, 11 April 1922, Page 4

DAIRY CO. AFFAIRS.

PATUMAHOE SUPPLIERS MEET. DIRECTORS EXPLAIN POSITION. A well-attended meeting of suppliers to the N.Z. Dairy Co. was held in the Patumahoe Hall on Saturday evening last, the convener., Mr J. Henry, presiding. In opening the meeting the chairman said — Gentlemen,—As you know there has been considerable dissatisfaction among;); suppliers throughout the N.Z. Dairy Co’s territory since the reduction to Srtd of the) advance payments for butter-fat. We know that low wages and liow t payments are a universal cause of discontent, but as reasonable men, or unreasonable ones for that matter, we are obliged to accept the inevitable. What we are reasonably concerned about is whether the low prices we have been receiving should have been inevitable, or if they afe conduced to by mistakes *.n management. We feel as the owners of the concern that we are entitled at all times, to the fullest information our management can give with regard to these matters, and all other matters of vital interest to the shareholding suppliers, whose servants the managers and directors are. For a considerable time we have been dissatisfied with the various and contradictory statements made by directors and management, with reward to advance payments, shipments of butter sold at low prices and time and, amounts of deferred bonus payments. So unreliable have these statements been that a feeling of uncertainty has been created and want of confidence in the men we have conducting pur business. It is generally known that the company has large overdrafts with their bankers, no doubt securities safeguarding these advances are good, and ample, but in times like the present, when financial stringency is world-wide, the fact that we are carrying such large indebtedness, coupled with the fact that the company cannot find funds to make reasonable advances to their shareholding suppliers, suggests rather careless financial management or want of financial foresight. That we should have been compelled to sacrifice 5 or 6 shipments of butter at 10 lb owing to our inability to hold it on account of advances made, is one case where, no doubt, our indebtedness acted to our detriment. Again, had the company been carrying less overdraft during the last three or four months, it would have been in a position to obtain funds to tide {its shareholders over the lean time when butter feli so low in the home markets, by making them higher advanced payments during the last three of .four months, to be recouped from the better prices that were evidently ahead. It has been stated that the securities of the company have been pledged to the banks to finance dried milk, hence the shortage. We should, on this head, obtain the following information from the directors.

At the end of December how much of the overdraft represented payments to suppliers for unsold butter ? How much for unsold casein, and how much for dried milk, factories, box making’ plant, and unsold milk powder ?

He would advise the dicussion of the following points 1. Low advance payments made for last three months for butter-fat. The necessity for such low advances. What amoun t of butterwas sold during these three months at low prices and what were these prices. 2. Advisabi’ity of making additional advance payments on butter manufactured duiing these three months —December, January, and February —which butter has been valued at from 150 s to 190 s on the London market.

3. Payment of balance, bonus, various and differing statements in connection with same. 4. Prices and values Is present advance payment of ljed lb all that the market warrants ? How much of present and last season’s supplies still held and prices realised for quantities sold.

5. Has the Milk Foods Subsidary Co. and interets been amalgamated with the butter, cheese and casein part of the business for purpose of financing the high costs of erecting and fitting up dried, skim and milk factories.

6. Advisability of the shareholding suppliers having a thorough understanding of the articles of association and making such amendment thereto.

At th's stage Mi - Fulton, a director, rrived. and was invited un to the

f root. The ‘chairman said he wanted to point out to Mr Fulton that the time had come for the directors to out all the cards on the table.

At this point, Mr H. Dell said that the meeting should decide whether to approve or not of the stand taken by suppliers at Rama Rama, and whether they agreed with Mr Goodfellow's wire about smashing a combination. In his opinion this wire was not in the interests of dairymen.

Mr Dell proposed, and Mr Needham seconded “ that the company be requested to make an additional! payment to the advance payments made for January and February if the sales of butter-fat during those months warrant it.—Carried unanimously.

Mr Fulton, speaking on advisability of making advance payments on but-ter-fat 'for the past three months, said that after Imperial control cease: 1 after last March, the English mar- 1 ket was reported to be good The London houses advanced 2s lb on all butter we could send Home. One of the boats was five or six weeks being unloaded, and during that time the price of butter fell badly. The Food Ministry got scared and unlocked their big stores. Mr Goodfellow started to handle the position and at a meeting of merchants decided to find half the money to purchase the Imperial stocks. The merchants had to find the other half. A local conference was also held, and agreed to adopt the scheme as outlined by Mr Goodfellow at Home. Any profit made was to be cut up between the London distributors and the suppliers. The losses to be sha'red the same, and the whole transaction to be backed up by the New Zealand Government. The result of the conference was cabled home and reached there at 5 pan., on Friday; by Monday the whole lot had been bought up by outside merchants and thus £50,000 was lost to the suppliers in New Zealand,, and the same thing occurred to the merchants, who were prepared to stand in for a fair deal. The market was manipulated to the detriment of the suppliers. When our butter arrived a' lot was sold at Advances of 2s had been paid out on this. What was .the company to do. Other companies had not been able to pay out more than BHd. One had paid out Skod. The big slump hit the company very hard.

Question : The chairman asked why the company had not held the butter that sold at KD/ad until the market steadied. Other business men saw that the market was going to steady. Reply: How many of your men could go fto the banks and get accommodation to do this. The company could only ’ arrange a small amount and thus could not manage it. The overdraft of the com-

pany was necessary as working capi-

Question : Then was not the overdraft far too- large at the present tiriie ?

Answer : The company was workingcoal mines and a box factory, and the overdraft was necessary to finance thesd as well as finance payments.

Coming to advance payout being made, he said that full information was not available until Monday. If the company could do it, it would. It would depend on the reclamations. Balance of Bonus He was sorry the' bonus nad not been paid out during March. The bonus was 2 and 1-Sth up to end of March arid 11 3-sths for April and May. The cheques were posted today. The Government had not paid up amount yet. As far as he knew it was not paid three days ago. There was a less of £34.000 during April and May on butter sent Home. Only those that supplied during those two months will have to stand that loss. The Thames Valley was the place that supplied during those months. Gasein. Mr Fuliton stated that since dealing with Germany the market had been very eratic. The cost of manufacturing and selling of this product was from £35 to £4O. The price had been as lowj as £45. Now it was somewhere about sixty. The outlook was very much better at present, and there was every possibility of better times ahead. The payout had been small but should be better. None of this year’s output was sold.

fflilk Food Company

And i‘s position in regard to the dairy side of the business. Mr Fulton outlined the arrangements made to form the subsidiary' company. The bank found the money and suppliers signed a joint and several. When the Daily Company' decided to make a standard brand of milk this wag after amalgamation, the other intei’ests of the company were collateral security, though it stood on its own feet. He really did not think the other interests of the company were needed to stand at the back of it. In reply to the chairman, Mr Fulton did not think the banks would take into consideration the other interests of the company if the r.ecessitv aose.

In conclusion M* Fulton said he was sorry indeed to see s<7 much dissatisfaction. He would like suppliers to take the directors more in their trust and not put their grievances in the papers and make the position more difficult.

Mr Motion was cailied upon to explain why the company was selling, butter on the local market at Is 2d when other concerns were selling at. Is Bd. He said the local market had been a very sore question. When Mr Goodfellow was away he tried to. get pther concerns to form a <spmmittee and fix prices without frier tiom Some of the main concerns did not think it would work. However, a committee was formed and fixed the price of butter from week to week. Some of the[ crafty gentlemen, however, put first-grade butter in second grade wrappers and sold at 2d cheaper. In Januai he got hold of a circular from Ackin, who was breaking the rules of the committee. Therefore they had had .to. take action. He could say that the position had been regained as far as they -were concerned and probably not much, more would be heard about it. A good many thought the N.Z. Company was out to smash another cooperative concern. This* was not so. All the co-operative concerns should form a pool to handle the local market.

The chairman said the explanation Was satisfactory, but it was a pity this explanation had not been given earlier. It would have saved a lot of dissatisfaction. They had to thank Mr Fulton and Mr Motion, for coming here. He thought the management should make the suppliers cognisant of the procedure of the management." 1 This would save a lot of the discontent which was rampant just now. The meeting then closed-