Page 9 Advertisements Column 1

Franklin Times, Volume 9, Issue 775, 13 October 1922, Page 9

THE REAL TRUTH Statement to N.Z, Gross mis-statements cnocegning the New Zealand Cooperative Dairy Company. Limited. are contained in an article in the New Zealand Truth of September 30th .last. Copies. Ojf this paper have been industriously circulated, free of charge, by enemies of the co-operative move,meat amongst .the Company’s suppliers. These statements call for reply, not only in defence of Company!s interests, but also in defence of the whole principle of (Co-operation. The. prosperity and progress of the dairy farmers of New Zealsmijjfor the past twenty years have gone hand in hand witijLthe development of the Co-operative movement. To.-U2ry, a larger field of success is opening before dairy-farming co-operators by a proposal designed to carry co-operation to its logical conclusion —the marketing control of dairy products overseas. The prospect c,f this success has roused opposition in London as well as in New Zealand to its keenest pitch and a grim and concerted fight is now being waged., both openly' and secretly, against co-operation. This light concerns the city as well as the country. The city man prospers only as *the farmer flourishes : thus the national welfare is bound r»p in the successful outcome of 'the producer’s effort to market bis goods to the best advantage and without the undue intervention cf the speculator. #"The Dairy industry 7 is now at the parting of the ways. JTwo issues lie before the 'farmer : Co-operative Success or Proprietary Domination. He can follow the lead of and pass cn to perfected production, improvement Cn quality, unified market control, and the full re--OJXO. Suppliers ward' of labour ; or he can sink back to the condition to America where unorganised dairy-farmers must accept the dictation of proprietary interests where quality is not maintained and where the producer receives an inadequate reward l . These attacks —of which this is the latest expression —upon the New Zealand Co-operative Dairy Company. Ltd.-, have been inspired apparently by 7 two main ideas1. To discredit Co-operation in the Auckland Province, and sew the seed of dissension and discord. 2. To influence adversely prdoucers elsewhere throughout New Zealand, and weaken their enthusiasm for the establishment of the Dairy Produce Export Control Board. But undoubtedly farmers are shrewd enough to see through this design and will carry on in unwavering loyalty to their purpose, which aims at promoting the welfare of the whole country. Co-poeration in New Zealand has perfected the manufacture of the highest quality dairy produce in the world But to secure the due reward of that triumph some effective control cjf the export marketing end of the business must be achieved;., Farmers now realise that it is imperative to fallow co-operation in manufacture by cooperation ino marketing. It is only by such means that theyHvill secure the full profit *to which they are entitled WM. GOODFELLOW. Managing Director, New Zealand Co-opepative Daii'y Company, Ltd. Allegation and Answer.

8. Debentures of £65.000 “ may be left to the splendid optimists-who sank tljflr cash in these ‘securities.’ ” . # Answer. These debentures represent part payment for the purchase of one of the three Glaxo factories, owned by the New Zealand .'t3o-operative Dairy Company, and representing a total j&luo of £216,000. These factories are leased to the- Glaxd; interests, and the payments made to the Dairy Company under that agreement will enable the capital cost of the three factories to be paid off in fourteen years’ time. 9. The JJfaounl due to suppliers, including bonus, is stated at £s3B,943 J£whcrons, adding up the totals 1 ran? furred to bonus accoiiiit irojjfi the Butter, Cheese, and Aiilk Powder Departments gives a iqpl of £592.287 4s lOd. “ Will shareholders, sup pliers, aulf' ordinary creditoHs please keep asking where is the £53,343 s>u(' to V’ (?■ Answer. Mt is true that the total bonuses duo to suppliers on the year’s working amounted to £5*'2.287 Is lOd, as at , Jfflty 31, 1922, whereas the Company’ shows on the liability doe of the Balance Sheet, that it owes suppliers only £333,943 8s 6d, a difference of £53,343 16s 4d. But, as result of the slump, many suppliers obtained cash advances j?or procured goods against the bonus. This sum was thereof fora no longer a liability on the Company —it had already | “ gone to ” suppliers. f: 10. Tint, because the Company finished up the year with* Jsundry creditors amounting to £68,903. and sundry deposits #£27.847, this shows that “ things are done on the ‘tick’ prin- §■ ciple, which arc better done for rash on the nail.” Answer. (a) The Company, since its inception, has adopted the policy of paying cash monthly for all purchases and-secur-ing all discounts. The item of £88,903 is quite reasonable , in view of the Company's annual turnover of £3,500,000. \ (b) The item sundry deposits, represents money placed \ with the Company mostly by suppliers on fixed deposit. \ 11. That the amount due to the Hanks and “any other forni of bankrupt debt ii could manage to pile up upon an inadequate paid-up capital, amounted to £667,784, or say, £131,000 more than the uncalled capital for which the suffering shareholders are liable.” Answer, Tq stress liabilities and ignore assets is the easv but unfair metpod taken here. As an offset against the liabilities, the Company’s assets total over a million pounds; sundry: debtors o\yed it £4O-5,000, and stock in hand amounted to £321,000. ’..These items are conveniently ignored. 12. ” Numbers of small dairy-farmers who were deluded into purchasing lira!)-priced Waikato and Thames Valley lands have had to walk their farms penniless owing to the low price of butter-fat failing to supply the means of paying interest on their mortgages. Had these men been free of the monopoly caused bfkbohtenng up this alleged co-operative, they might have held %ju longer and made good by honest hard work and thrift.” \ XjAnswer. To blame this Dairy Company—or any other —for the unfortunj failure some farmers is absurd; the slump in price&was world-wide, and all sections of the community were equally its victims. As a matter of fact, higher prices were pfcid for land in Taranaki and Manawatu than in the "Waikata. The final measure of this Co-operative Company’s responsibility is: Have its payments per lb. butter-fat been low compared with other dairy companies in New Zealand? No; they compare more than favourably. the past critical year payments reached Is 4.46 d per lbf butter-fat for direct delivery superfine cream, with an 'dyer-run of 20.09 per cent. This figure has not been exceeded by any company in New Zealand operating under sifhilar conditions. For the previous year the N.Z. Co-operative Dairy Company paid approximately 2/9 per lb. butter-fat—a consummation that would not have been possible without the strength given by amalgamation. x 13. On the asset side of the Balance-sheet, “ the only item ” which he “ will trouble to notice is the stock on band in New Zealand. £321,213.” He points out that this sum exceeds the totals of the Butter, Cheese. Casein, and Trading Accounts liv £64.459; and states shareholders must speculate as to how much “ powdery stuff ” (presumably milk powder) is included in these figures. Answer. Stocks of engineering material, timber, coal, and other commodities necessary for the conduct of the business account for the difference mentioned. It would be obviously incorrect to show these amounts in either butter, cheese, casein, or trading accounts. 14. ” The Trading Department shows sales amounting to £266.005. but the ‘ profit ’ is only £6 5s 8d for the year.” Answer. Our Trading Department was not organised for profit, but for service. We had a surplus amounting to several thousand pounds on the season’s* trading, and this was all handed back to our suppliers in the form of a rebate to those who purchased goods. 15. That the existence and values of the various stocks are certified to by the Company’s responsible officers and not by the auditors. Answer. It is the recognised practice in New Zealand for stocks to be certified to by responsible officers. Auditors do not undertake this work. Shareholders are amply safeguarded, because no purpose could be served by managers of our butter factories inflating stock in order to make a good showing for their factory. All butter, factories are grouped and a flat rate paid out to the whole suppliers. An additional safeguard is that the stock at the end of the year becomes a charge on the following season’s operations. As a matter of fact, owing to declining prices, stocks have been valued on a very conservative basis, in many instances below present replacement cost.

,es which into the Stripped of characteristic language, Truth makes the following, allegations against the New Zealand Co-operative Dairy Company. Ltd. We reply to each charge seriatim. 1 1. There is not a single feature of true co-operation about anything connected with the concern.” Answer. \- The whole of the share capital is contributed by suppliers on the basis oi actual butter-fat .supplied; no person ' other than a supplier can become a 'shareholder. The Company is, therefore, Co-operative in th\ fullest sense. 2. The Company is a -huge r..raalg;tnuitiob of strictly pnconcerns will) some of the ortimiary dairy comphniS, which before the amalgamation were d«iiur fa inly well on their own account.” Ansv/or. The fallowing is a complete list of the have amalgamated, and which have become mer New Zealand Co-operative Dairy Company, New Zealand Daily Association, Ltd. Waikato Co-operative Dairy Co., Ltd. Waikato Co-operative Cheese Co., Ltd. Thames Valley Co-operative Dairying Co., Ltd. Manawani. Co-operative Sutter and Cheese Cc., Waihbu Valley Dairy Co., Ltd. Te Kniti District Co-operative Dairy Co., Ltd. \ Te Aroha District Co-operative Dairy Co., Ltd. \ Eiifekx Co-operative'Dairy Co., Ltd. Not one private concern has amalgamated with the Company, aor are an y shares hold by any private concerns. 3. ♦‘'The whole of the dairying industry throughout Urn Waikato and other dis!riels has been thrown bark in the course of natural dot ehinmjc’Ut by ve.isen of the monopolistic tactics imposed upon th.m ilnvngl! ibis attempt ;t the iorinatjon oi <i combine whit h c ..did,' only l cue tit those .responsible for its inception, conduct, end control. j Answer. '(?.) Since the Amalgamation the output ox butter alone in the Company's territory has increased from 3717 tons * • 13,-213 tens." Had it not been for the complete organi provided by this Co-operative- Company, this abno" increase could not have been dealt with efficiently. (b) These responsible for the Amalgamation were directors- of the above-mentioned co-operative comp?, and "hot one of them benefited to the extent or a vApmnv xj urometers of the Air algametioxi. The Amal_ tion reduced the cost ox manufacture enormously by the elimination ox overlapping and the concentration • plies. H-r.iher, the quality oi all the produce man |>7 the Company lis.s shown a remarkable improvem } 4. “ My ci.. Mends on the money sunk in the coat no money with which to repay she bunks . ’ 1:1 of even ilia market price tor ■'!>,!tcr-tat Answer. fa) A co-operative company is not organised*! to pay dividends on share capital. All moneys are paid to suppliers by way oi payments on butter-fat. i \) Snnpuers know that the banks do not! advance money without adequate security. (c) There is no such thing as a market price ipi bufcter- ' The;; is a market price for butter and cheefe. These nrices vary week by week, and are never included in an annual rebort; they are published regularly inf the press and in the Company's monthly journal. ;le tiuii; record 1 5. “ The ‘ report.’ with a grin, flutes that price advanced for all blitter-fat ihrouubjait tin was 12.00 pen;-.-.’ W lint the Mippliei ild • average -t season know is : What the Will there be any more?” - Answer. Jive weeks before this article appeared suppliers received a payment, beyond the 12.00 d reierred o, totalling W- £215,699. On the very day it appeared a further payment, totalling £139,134, was in their hands. Immediately the balance°ox the season’s produce is sold a final adjustment will be made. These facts were within the rea?h of Truth, had it cared to inquire. 6. The allotted capltul of the Company is £99p.525. of which only £457.414 is paid up: and every penny of the uncalled capital is “ required in only partly pay for the principal assets employed in the business. ’ Answer, It is true that the uncoiled capital oi the Company at Mav 31 was £536,110 11s 6d. This critic, however, ignores the somewhat important fact that the Company has assets in property and plant (including colliery and box factory) to the value of £1,110,945 13s Id. The great weakness of co-operative enterprise in New Zealand is, and always has been,‘under capitalisation; shareholders have not sufficient of their own money in their own concerns. This fact has been made clear to suppliers repeatedly, and the Company’s policy of endeavouring to rectify this by curtailing capital expenditure until the revenue from share calls somewhat approximates the expendihas brought it into disfavour in certain districts, 'jsphich are clamouring for new factories, that have been refused. 7. TheCßeserve Fund of £36.574 sntry. ’ ’ Answer. This reserve has been built up over a series of years, and has all been carried forward since beftre the Amalgamation. It is invested in the business, thereby reducing" bank overdraft. Recent legislation has not encouraged companies to build reserves, as such moneys are liable for income *ax» “ only a book-keepim

What “Truth” Really Thinks of the Farmer. After reading the following extracts from Truth-—published at the time of the slump, when thousands of dairy-annex's were faced with nuin—suppliers will be able to smile at spurious sympathy now expressed on their behalf T Truth” January 14. 1922). “Taken as a class the farming comxnu.nl vy is easily the most unthinking and feckless lot of ginKs extant. . When the farmer gets his lesson it may do him a lot of good, . . • A good sloid bump is certainly needed to drive a little sense into the think pot of the man cn the land. N HAMILTON (“Truth,” March 4, 1922). “Just now the alleged farmers of this country are howling because they have been ‘caught napping’ in their motor cats h/tcad of on their farms. Lower prices have reduced the extravagances of living and speculation to vvh'i'h rhese newly rich people were hardly accustomed.” (“Truth ” February 18.. 192 L,) Commenting on another Dairy Company’s balance-sheet ’.his newspaper states :—“ln sucii a picture we learn somewhat of the meanness which too often makes the man on the land an objec.-; of contempt and loathing to the city worker.” Co-Operative COMPANY, LIMITED. HAMILTON