(Published by Arrangement.) N.Z. CO-OPERATIVE DAIRY COMPANY.

Hauraki Plains Gazette, Volume XXXII, Issue 4307, 22 August 1921, Page 2

(Published by Arrangement.) N.Z. CO-OPERATIVE DAIRY COMPANY.

—o - ANNUAL MEETING. CHAIRMAN’S ADDRESS. The following report was submitted to the annual meeting of the N.Z. Cooperative Dairy Co., Ltd., on Friday by the chairman of directors, Mr W. Claud Motion :— In formally moving the adoption cf the Annual' Report and Balance-sheet I do so with considerable pleasure. The Dairy Industry has never passed through a more important season than the one just ended, and I am glad to report that as a result of the Company’s operations our suppliers have shared in the general prosperity. The position attained by our Company in the Dairy Industry during the past season may be gauged by the fact that our butter output of 12,688 tons represented- approximately one-third of all the butter manufactured in the Dominion during the past season. The total quantity of produce made by us during the past season was as follows :—: Tons Butter — — 12,688 Cheese — 5,498 Casein — — 468 Dried Mi Ik — 598 Our turnover of 4 J /2 millions place 1 us in the position Of the largest cooperative dairy organisation in the world. This position has been achieved by the amalgamation with the Thames Valley Co-op. Dairying Co., Ltd., and it is a matter for congratulation on both sides that we have been able to combine forces with the dairy farmers in the Thames Valley district, which contains •some of the best dairying country in New Zealand.

A poll for the election o£ thre.e Directors to.represent the new Thames Valley Ward has just been taken, resulting as follows George Buchanan 72,892 JfY. O. Cooper 25,309 F, C.. Hansen 60,619 C. Parfitt 37,139 F. W. Walters • 70,871 Informal 3,698

I therefore declare the following gentlemen duly elected to represent the Thames Valley Ward : — George Buchanan Francis William Walters Frederick Christian Hansen

All these gentlemen have had a fairly lengthy experience of the dairy industry, and we gladly welcome them to our Board of Directors, feeling sure that their experience and .counsel will be of great value to '.the Company. In the othei' three Wai.ds no poll has taken place this year, as the retiring Directors have been re-elected unopposed, as follows :— Northern Ward. Dynes Fulton, Tuakau.

South-western Ward, R. M. Somerville, Te Kuiti. South-easterp Ward, J. T. Bryant, Matangi. BUTTER, The prices received for- our pro? diice have been offset to a large extent by the great increase of the cost of production on the farm and the cost of manufacture in our factories. It is fortunate that the butter producers were able to put up a united front at the beginning of this season and obtain a fair and equitable price from the Food Ministry in London. Those who have followed the negotiations know that we do nbt take too much on ourselves when we state that it was largely owing to the strength of pur own Company, under the able guidance of our Managing Director (Mr W-m. Goodfellow), that the satisfactory price of 280 s per cwt., f.0.b., was obtained for our exportable butter up to March 31 last. The price of butter on the local market created difficulties during the past season. At a matter of right, the primary producers will always insist on export parity prices for produce consumed in the Dominion, We have never approved of the Government’s scheme of subsidising Butter by a levy from the Consolidated Revenue Fund, and we congratulate the Minister of Agriculture (Mr Nosworthy) on his decision to remove all restrictions on butter ’after the end of this monte. The prosperity of this country depends on our three great primary industries —wool, meat, and dairy produce. Of these, dairying alone has an assured future at the moment, and on the dairy farmer the responsibility will rest, to a great extent, of meeting the burdens imposed upon our Government as a result cf the war. It is, therefore, in the best interests of every section of the community that artificial methods of price-fixing should cease and .that the ordinary laws of supply, and demand should again operate.

CHEESE.

Owing to the depression in the cheese market at Home the prices realised by our cheese suppliers during the last year were much Lower than was anticipated when the season opened up. The fall ,was due partly to the general trade depression at Home as a result of the coal strike, and partly to .the unfortunate shipping strike which occurred in New Zealand at the most critical period er the export season, which delayed shipments of a considerable portion of our cheese and brought it into competition with the new season’s make on the Home market. Your Directors foresaw the difficulty, and early in February recommended our cheese, factories to switch over to butter wherever possible.

SELLING VERSUS CONSIGNING

The experience of the past year has revived the long-standing controversy of the respective merits of selling, versus consigning. Undoubtedly the factories which consign consistently over a period of years will gain by this method. During the past year the greater portion of the cheese sold forward was resold in Britain ro wholesale and retail firms, who lost heavily on the transaction when the slump came. As a result very little forward buying has taken place this season, and it is doubtful if any attractive offers will be made.

IMPROVED QUALITY.

I am pleased to report a further improvement in the quality of pur produce during this year. We canno.t emphasise too strongly the importance of marketing only the highest grade dairy produce, especially now that we are returning to normal tiade conditions. The grading of milk and cream at our factories is in the hands of fully qualified men, and in conjunction our outside instructors are furnishing valuable assistance on the farms. The marketing of eur produce in London this season will be under the personal supervision '>i Mr Goodfellow, and we must standardise bn the highest quality.

ADVANCE PAYMENTS.

A further distribution amounting to B%d for the period July to March,, and 4%d for July to May .will be made. Of this amount 4%d (July to March) and %d (April to May) v. ill be distributed in the course of the next few days, 'less deductions for •shares. A further payment will be made about October. The price was reduced ,ir. April and May because butter made during these two months was retain-

ed for the local market, and it will be remembered that as from April 1 the Government subsidy on butter was reduced from 6d to 2d per pound. During the following advance prices were paid for cheese :— July, 1/9 ; August-December, 2/2 ; January, 1/8 ; February-March, 1/4. The published. profit and loss accounts for the various cheese factories do not represent the final results of the season’s working. As is exploited in the Directors’ report, at the time of closing .. the books several' shipments were unsold, and it was therefore decided to allow unsold cheese on the basis of lOd per pound f.o.b. New Zealand ports. As later shipments arc selling better than those shipped early in the season the final results should be considerably' betted than indicated in the accounts. A portion of the cheese bonu-s will be distributed on August 31, and th? balance at a later date, when all ship-, ments have been realised. Throughout the season casein suppliers have received an advance of 2d per pound. Owing to the large stocks of casein still in hand the re- z suit of the season’s workirg will not be known for some time. UNITED COALFIELDS. The development work at. the Company’s coalfields continues to be carried on under the supervision of Mr N. D. Cochrane, mining engineer. Mr Peter Hunter, late Government ’-Inspector of Mines, has been appointed as the Company’s Mine Manager, and all development work will be done : so that the coal from our own coal- 1 fields may be available for factories, 1 and also lor sale to suppliers, as soon as it is possible to get it away from the mine by Government railway. The i Public Works Department -has for < some time been at work on this’ i branch railway,* and good work is ' being done by that department at the < present time. As the development 1 work proceeds, we are more than sat- < isfied that our decision to go in for i this large venture will prove to be J .one of the best steps taken by our ( Company. ’. < BUTTER 'BOXES. AND CHEESE J CRATES, j At tiie last Annual Meeting reference was made to the very high cost , c of butter boxes and cheese crates.. During the past season the Company used nearly half a million butter box- ( es, as well as a large number of , cheese crates and milk powder boxes. After lengthy investigations it was ( decided by your Directors • that the * saving which could he made In .he . manufacture of -boxes was ■so great that it- warranted the erection of a Box Factory. The factory is now heing equiped on the Company’s pro- £ perty at Frankton Junction, and it is ‘ expected that in about two months we shall be able to manufacture our own requirements in this direction at a cost considerably, below current t prices. In connection .with the requirements of the Milk Powder business a plant has alrady been sec up f,r the purpose of making the necessary tins. Referring to the Balanec-sh'eet, it ® will be at once noticed th?/ the fig- 1 ures are coo.iim'rably atlered by t e addition of the Thames Valley Assets v and Liabilities. The assets transferred from the Thames Valley Company include the amount -pent to 1! May 31 in connection with the Wai- a toa Dried Milk Factory, upon w.hicn ® no capital has as yet been collected s from the suppliers. However, when 0 r this factory comes into operation durf. ihg the coming season the capital will be rapidly paid up. Of course it will be clearly understood by sharehold- v ers that in the case of milk-powder factories supplied-guar.antors are liable for the cost, having signed the ® • n supply agreement binding themselves c to jtake shares covering the cost of the factory, and also having signed a v Joint and Several guarantee to the banks for the amount of the over- c draft. In connection with the amount g spent on coalfields development, this € will be covered by a call of %d per pound butter-fat on a special issue of ‘Coal and Timber” shares. OPERATING COSTS? An examination of the Balance- 0] sheet shows that we have been faced with greatly increased cost of pro- 0. duction in our factories. This is nost "noticeable in oonncc'ion with ’uel,'wages, freight, and cartages. r( Phe question oi depreciation also is if vital importance to us, and it is a , •egrettable that the allowance made' i 0 iy the Government (5 per cent, on plant, 3 per cent, on wooden buildings, and 2 per cent, on brick and concrete structure) is entirely inadejuate. Any amount in excess of this a] s taxable. COMPANY TAXATION. • of I wish to take this opportunity of p( irotesjting strongly against the recent (Iteration in our legislation making pi Jo-operative Dairy Companies liable w or income tax. The majority of our mppliers are men in a small way, it itruggling on small holdings, an 1 ps hould not bo liabA for income tax th n any way. A‘compat'.sun with the st nethods of levying income <ax in the cc Jnited Kingdom and other parts of in he British Dominions does not make th

a favourable showing for New Zealand, and some .legislative -revision is necessary, not only because its unfair incidence on the cp-dperative companies, but also because the present rate of income tar is n.ow a serious embarrassment to many commercial institutions. TRADING DEPARTMENT. Our trading /department shows a considerably increased turnover for the past year, although trade' conditions have been extremely difficult during- the past six months. A rebate of 2% per cent, will be..allowed on purchases for the past season. Suppliers must bear in mind .that our Trading Department is only a side line in our business, and that our main object is the manufacture and marketing of dairy produce. Nevertheless, your Directors ' feel: that by specialising in a few bulk lines which oui* suppliers are accustomed to buy in fairly large quantities we can effect a considerable saving. The Increase- in the stocks in hand at the end of the year i-s due to .the fact that with the return of normal trading conditions we have decided to indent certain leading lines, and this course necessitates the carrying 'of stocks. HEAD OFFICE BUILDING. Frpm January 1 last the head office staff have occupied the first flood of the new building, which is now practically completed.- The portion which is not required at present has been let on good terms, and the staff are now working under excellent conditions. Suppliers will! be pleased -do know . that when the rent received frpm the leases is taken into consideration the overhead expenses for. office accommodation .are considerably less in the new building than when rent was being, paid formerly. The Paeroa office will be continued during the current season under the super,vision of Mi* W. H. B'lakeway, lace secretary of the Thames Valley Company. MILK FOODS AMALGAMATION. By agreement with the Zea'landia Milk-foods, Ltd., pur Company had the right to take over the dried milk factories of that organisation after two years. The whole position has been carefully reviewed by ,the Directors of both concerns, and they decided that it is in the best interes's if ah'l parties to effect an amalgamation now. The advantage from our joint of view is that the whole of ;he business comes, directly under our >wn control, while the milk-foods suniliers will, reap the benefit of our Marketing organisation. PROSPECTS. I am glad to report that the prospects fpr this season are brighter to lay than they have been for some ime, The trade depression' at Home, ibal) strike, and European difficulties i,av,e all had an unsettling effect on he Home market. The serious Irpugh.t in the Old Country has made t practically certain, however, that >ur butter and cheese will reach a ;omp,aratively bare market, during th) iJnglish winter, and the present- indim'tions are that good -values will be maintained for some time to come. Reports indicate that the quality of mr butter is good, and that the speial brand made by our Company rom superfine cream is td-tday the >est in the world. The visit pt our lanaging Director (Mr Wm., Goodellow) to London has taken place at , most opportune time, and the Diectors feel that their. action in this flatter will meet with the approval f the shareholders and suppliers, beause we could net possibly be better eprsented in London at this very ritical period. Suppliers should ear in m’nd, however, that the sellng of our produce on consignment ecessitates a considerable amount of aiition so far as advance prices are oncerned. We must take the rise nd fall of the market as it comes, nd in order to guard against market uctuations it may be necessary for s to adopt a prudent course and lake advances on a fairly conservaive basis until the season, opens up. CONCLUSION. In conclusion I wish to urge the i real necessity for suppliers consoliating their financial positions and ' cting with prudence during the.comig season. The general opinion is lat the moratorium in connection ith mortgages has remained in force . io long, and some suppliers who have lettered themselves behind this leg- , Nation may yet find themselves in . difficult position. I urge every supHer to conserve his' financial, rcmrces in order to be independent of itside assistance as far. as possible. ' nly by doing this will the dairy , irmer reap the full reward for his ibour in the somewhat difficult time . hich our Dominion must pass trough. i Possibilities for dairying in the ( outh Auckland province are imtense. Our output has dcubled in a ] jmparatively short time. I am con- j inced ‘that if every effort is made i raise the butter-fat standard of ou-’ t iws, we shall see stilli greater priress in the near future, and we now t iter on our new season with the j •ightest prospects.

DISCUSSION ON REPORT.

The annual meeting of the N.Z, Cooperative Dairy Co., tLd., was held it. •the King’s Theatre, Hamilton, on Friday, the chairman, Mr W. Claud Motion, presiding.

Mr Horn paid a tribute to directors for-.work of the past year. The chairman said that the percentage written off for depreciation, as allowed by the Government, was altogether too small.

Mr G. P. Ewing asked why the statement was for eleven months.

The chairman replied that at last annual meeting it had been decided that the books should close at the end of May. Next year the twelve'-months period would be resumed. Mr Ewing asked what the advance price, as alluded to in the report, would be.

The chairman replied thatfiast year it had been Is 6d, and then a second payment, making it up to 2s. He thojight this was the method that should be adopted this year, as the company coulid then pay cut according to the market price. Ry so doing there would be stability of uniformity.

Mr Ewing appreciated the explanation ; its caution appealed to him. Mr Jasper Smith complained that the cream was not taken delivery : I from the farms daily. • _ The chairman replied 'that it would not pay at present to have the daily service, but this would be instituted as soon as the cupply warranted it. Mr Smith said there wore a 'lot o f lazy fellows who did not want to cart daily. (Laughter.) A voice : What about a man like* myself who has ;to cart for fifteen miles ? (Hear, hear I) Mr Hugh Poland queried whether the large sum of £900,000 proposed to be paid out in bonuses should not be retained until the end of the season. The chairman replied that the quantity of butter stored, against which 2s per lb was advanced, represented the amount necessary for local

consumption. Mr Jasper Smith wanted to know why the Government subsidy was not paid up. * Mr Motion replied that it was only last month that the company was paid for the previous season’s supply. T had no means of forcing the Govern-

ment to pay up. Unfortunately, owing to the shipping strike, it had'not been possible to get casein away early, and then the coal strikP and other factors caused a slump in casein prices. Mr S. H. Baggerly .thought dried milk factories should carry their own burdens.

Mr -G. Buchanan said the whole of the South Auckland.would be grateful that the dried milk patents had been acquired. The Glaxo Company were giving 2d per lb more than the butterfat producing factories, and the suppliers were" going over to Messrs' Nathan and Co. The acquisition of the patent rights for dried milk meant the saving from perishing of co-operative dairying - in the South Auckland province. (Loud applause.) Mr Hames, secretary, pointed out that the amalgamation of the two interests was certainly in the interests of all parties.. It would prevent rivalry and the splitting up cf interests that were, rightly one. Mr Goodfellow would be investigating markets for dried milk and all parties. Last year the pact of the dairying interests had resulted in being able to demand and secure an extra 4d per lb. The report and ‘ balance-sheet was adopted unanimously. Mr Motion said the Thames Valley cheese suppliers, it was proposed, would be paid up to 2s per lb for cheese at the 21st of. this mpnth, with the exception of Huirau Road, which would be Is 11 %d. Butter suppliers would receive up to about the 25th

Mr Furniss (Huntly) queried as to the prospects of finding European markets for dairy produce. The chairman erplied that no effort was being spared to exploit the American and United Kingdom markets, which would absorb all the produce we could produce. The auditors were re-appointed at £5OO per annum. • DIRECTORS ADDRESSES. Mr G. Buchanan 'thanked, the suppliers who assisted to put. him at the head of the poll. He would do his best for the company as a whole,. as he had done in .the past. e Reverting to the glaxo, he'said R at one time appeared as though the proprietary concern was going to wipe up the whole of the supply in. the South Auckland province. At one time the suppliers asked to request Messrs Nathan and Co. to address the suppliers on the glaxo business. The Thames Valley Co. decided it would be wise to obtain patents and manufacture dried' milk foods themselves. The company, therefore, bought the patent rights lor the latest and best patents for the manufacture of dried milk. Samples of the product by .the new process were secured from America and found to be of 100 pec cent, solubility. The suppliers .were then told-that they could have dried milk, provided they shouldered the financial responsibility. These suppliers were absolutely tied up in regard to the financial responsibility, with joint and several and even promissory notes on demand. The dried milk was absolutely secured, and could not be a burden on other suppliers. ’ ’ Mr- F, W. Walters also returned thanks, and endorsed Mr Buchanan’: Remarks in reference to the liability of the dried milk shareholders and guarantors. Thanks to Mr Buchanan insisting on each .supplier, great and small, the bank could not call.on a few rnen to pay up. If there is anything better in tw,o' years’ time, said Mr Walters, I will-

shout drinks all ground —(Laughter) The dried milk was becoming ex tremely popular in the United States

Mr 'Walters said that he was a director of the first co-operative factory in the North Island. Mr Hansen ret urned thanks. He regretted, however, that his election meant that Hauraki Plains was practically unrepresented. He hoped the board would have power to rectify the matter by the appointment of another director. Mr Hansen said - that the advancement of testing herds was one of the most important things the dairy farmer could consider. There were 6500 shareholders, most of them/taking no register whatever as to what their individual cows were producing. It was. not a businesslike proceeding. Mr W. Heaven, of Maramarua, endorsed Mr Hansen’s remarks in reference to herd-testing. All cows should be tested, and those which did not come up to the test (the culls) should be branded and disposed of at the end of the season. The chairman expressed his appreciation of the large attendance, and hoped that the season would' be a highly successful one. Mr Goodfellow would come back with full information in respect to 'the marketing of produce.

A vote of thanks was passed to the directors.

Mr Chas. Hiron made especial reference to Mr Goodfellow,- managing director. His marvellous energy had been a tremendous asset to the company. Also to Mr A. J. Sinclair. The latter had addressed 135 meetings, and the energy he had displayed. No

matter how good the pastures, the cows, and the markets were, success could not be secured without efficient directors and staff. *

Mr Hames replied on. behalf of the staff. •