WELLINGTON NEWS

Hokitika Guardian, 8 October 1927, Page 1

WELLINGTON NEWS

FARMERS’ TRADING COMPANIES. (Special to “ Guardian ”.) WELLINGTON, Oct. 5. The balance sheets of several farmers' co-operative trading companies have been circulated recently for most of them closed their balancing periods on July 31, and it is disappointing to have to say that the experience of many of them has been anything but satisfactory. It is true that profits have been earned, hut the results have not been more than sufficient to pay the interest or dividend on preference shares where such% exist. The Canterbury Farmers’ Co-operative Association has had the worst experience, for the hankers of the Association. the Union Bank of Australia. have appointed the general manager of the Association a receiver, which means that financial affairs of the Association must now he reviewed, and perhaps a scheme of reconstruction submitted. The trouble with this concern, as with most other similar concerns, is that it is waterlogged with debt. Fixed and free deposits, sundry creditors and hank overdraft make up the staggering total of debt. The Canterbury Farmers’ Co-operative Association, according to the balance shoot for the year ended July 31, 1927. held fixed deposits totalling £207,032. current account balances amounting to £133.200, bank overdraft £208.019 and sundry creditors £15.100. or a total of 0504,520. while the paid-up capital is only £300.090. Vet the balance sheet shows better results than were obtained in any year since 1920. This year’s profit was 1'11.251 as compared with (.'.>803 last year and £OOOO in 192.>. H'c preference shareholders have received their regular dividend of 0 per cent, but the ordinary shareholders have received no dividend since 1921 when tliev received 0 per cent. A net profit of £11.202 with funds amounting to £871.210 seems ridiculous. I he debt of the Association is larger, hut it- was considerably larger last year. There has been a reduction during the past twelve months ol £59.045 in the amount of the fixed deposits and £15,421 in flu- current account balances, but the hank overdraft has increased by £17.749. What is to hapl H ' n nmv ? , ■ • . At the annual meeting ol shaielioklers the chairman staled that during the past there years the deposits had been reduced by £106,000, and he complained that this money had largely gone into local hotly and power board loans, and Post Office debentures, and said that this persistent transfer of large amounts of money to other channels is detrimental to the best interests of the farming community. This is incorrect. but it is not n matter for complaint hut a matter for investigation. Those with money to invest have the perfect right of investing in such securities they think proper, and those depositors who secured their money from the Assoeiaton and re-invested it in 1 local body loans did very well for themselves. What is going to happen to those who have still deposits with the Association. The chairman stated at the meeting that the directors in close consultation with the hankers had decided to move for n moratorium on deposits, which had been put into lorce. The ultimate result of all this must mean loss and heavy loss to shareholders and depositors. There is still some uncalled capital, and this im doubt will have to lie called up, and it is possible ton that there must 1 some heavy writing down. - The lesson to he learned from the troubles of farmers’ co-operative concerns is Hint farmers are in a general way incompetent business men. It is quite plausible to talk about co-operation, and for farmers to control their own produce, and similar fascinating slogans, hut the fact remains that this is an ago of speculation and the farmer cannot specialise in farming and also in trade and commerce and expect to he efficient in both. Business affairs should he left to trained business men, and few if any farmers can claim to be trained business men. ibis Association required almost a whole football team to manage, for there are twelve directors. But one of the worst features of those farmers’ co-operative concerns is the easy and whole-hearted manner in which they contract debts, and this is where legislation is necessary for tlie

protection of depositors. There should he a limit to the deposits that can be held by a company and there should he some reserve in gilt-edged secuiities.