WELLINGTON NEWS

Hokitika Guardian, 9 December 1925, Page 1

WELLINGTON NEWS

LOSSES OF MEAT COMPANIES. (Special to “Guardiftn”.} WELLINGTON. Dec. 7. It is positively painful to examine the balance sheets of freezing companies. for they all disclose reduced earnings, some show losses of moderate dimensions while others disclose huge losses. This is not confined to small farmers’ companies, but is the experience of even the larger concerns. The meat trade lias presented many difficulties during the last three years, and the setting up of the A feat Control Board lias proved no solution of the matter. The Wellington AI eat Export Coy. lias been in existence for about 37 years, and for a number of years was controlled hy farmers, the late Sir Walter Buchanan being Chairman of ilie Company for quite a time. The experience of this Company, which is generally conceded to he a well-man-aged concerii. during the past three years gives n good idea of the difficulties experienced hy file meat companies. In the twelve months to Sept. 30th. 1023. the Company made, a loss of £4300. and to provide ordinary and special depreciation £30,000 from tiio reserve fund was required. The profits from freezing, sales, manufactures etc., that year was £20,490. In the following year the Company did a little hotter. The profits from freezing, sales, manufacture, etc., amounted to £39,473, as compared with £20.400 in Hie preceding year, and after allowing £10.003 for depreciation. Micro was a credit balance, of £7127. Again the reserves were drawn upon, the insurance reserve for £25,000, which was applied in .full to special depreciation and £IO.OOO was taken from (lie dividend equalisation fund, which added to the year's profit and deducting the previous year’s debit, left a credit balance of £42.331 out of which a dividend of 3 per cent, absorbing 1'11.3,80 was paid, leaving £1134 to Ik* carried forward. The year just closed lias been a disastrous one. There was a loss oil freezing sales, manufactures, etc. of £37,211 against a profit of £30.473 in tlie previous year. To ibis debit bad lo be added interest. discount and exchange £31,280. and overhead charge's £0323. The only income wa.s £3 from transfer fees. *o that the loss for the year mounted up to the huge sum of £78.140. lint this has been reduced to £'33.030 hv writing off the balance of the reserve funds and £ll3l brought forward. The position now is that the whole of Hie reserve funds vbieh prior lo 1023 amounted to £103.000 have vanished : the overdraft which in 1024 had been reduced from over £140,000 to £77.434 now stands at £232.303. Fori iinaiely there is a substantial uncalled capital, amounting to £72.403 13s. which the directors have c alled up. and a scheme of capital readjustment and the issue of new shares is to be submitted to the shareholders. The East- Coast Co-op. Freezing Coy. (AYliakatane) is a small eoiiooiu so far as operations are con(crued. hut the capital appeals to he huge, for in addition to .shareholders’ funds amounting to £39.932 there are two debenture issues aggregating £109,010. This Company has operated for three years. In the first year. 1023. ii. made a loss of £2338. in the second year 111*' loss mounted lip to £OOBB. and for (lie year iust eb-ed tinloss was £0309. making the total loss for three years £18,383. Ihe directors of this Company have' decided not to reopen the works this season, and in that they are acting very wisely. The c ireiimst aiicC' of oilier freezing Companies could be cited to show that the adverse experience has been general some have fared worse than others. What is ilie cause of this? It is stated !,v those directly interested that the' prices paid for fat stock' last season were excessive. The same thing happened in respect to wool, from which it would appear that occasionally there is exhibit ion of mass commercial insaniiv. Why were 111*' prices excessive.-' It must he remembered that it was- the exporters. Unit is those *lllO buy the fat stock and export the carcase.s on their own account who practically fixed ill*' excessive prices. Why did they do ii ? What induced them to do it? These are questions that require to be answered and it is up to the Coverninonl to appoint a Royal Commission to probe the matter. Such a ennimissioii could inquire into the economic

M S pcf.| of the I r:i«To. whether the number of freezing works B in excess of i < r|niroiJK'iif s. which il any should ho closed. and wli.ut measure of compenfiil ion should he Riven those eliminnt.ril. and whnt proportion of tin' compensation should fc paid bv Iho otnip.iuics allowed to carry on. The commission could also ini|uiro into tho values of the statistical infonurition now provided hv the Afcal: Board, and vital, further information it: is desirable to secure, fail'll a commission could perform a very useful service il the rich! men were selected.