"HEMPLAND BONDS"

NZ Truth, Issue 1174, 31 May 1928, Page 16

"HEMPLAND BONDS"

.*.'. sir,— My attention lias been drawn to a criticism of the above-mentioned Bond Issue, which appeared m your. columns recently, and I deem it expedient on behalfc.'of my Company to make emphatic protest against the suggestions made by the writer m regard to estimated profit and over- capitalization and especially to the headline which was not warranted by the criticism. Shoi-tly I would lik> to /.mention that the "N.Z. Truth" of 6th May, 1926, m referring to' a Flax Company known as Fred. Seifert Company Limited, stated:— "When Fred W. Seifert puts his name, reputation and energy behind a flaxrfarming venture, it is not likely that the investing public will hesitate jn following his lead." ' For the benefit of your readers let me explain that "Miranui" la a large flax mill, milling wild growing flax m the Manawatu and. owned by A. ana L. Seifert Ltd; Mr,. Fred. Seifert was for many years managing this.mill and . Is now cultivating flax in' Morrinsville alongside the area owned by "Hempland Bonds." '.■■ • ■'. •• ■■■■■•■■• ; ' ' „, ■" '.' Now I have-much pleasure m quoting hereunder a letter from Mr. Fred. Seifert which- includes his, estimated cost of production from cultivated Flax, which if correct (as we. are, certain it will prove to be) will give a complete answer to the ci-lticism levelled against the Company of which I have the honour to represent. , , ' '■' '. ' . Morrinsville, . ' i . ... 28th November, 1927. Dear Sirs, — I have given an estimate of the cost of production for the Fred. Seifert Company Limited, m comparison (m confidence) with the cost j . of production from two established mills, milling wild grown flax. .12 tons is a moderate estimate for the yearly production from cultivated flax per acre. This means a profit of £15 an acre per year. This profit is more likely to be greater than less. It is a fact if we fall to make a pi'oflt ' of at least £15 an acre many mills that are working, to-day could not make any profit, as their costs are from £10 to £12 greater than yours will be. A mill working m the Waikato is paying £13/i5/ T for flax delivered m the mill for each ton of fibre. As we can. deliver the flax m the mill for £4/2/6 our costs on this one item alone is £9/12/6 cheaper. . The taxation for. the Fred. . Self ert Co., for Council and drainage is only '£305/7/6 and £179 of this is for drainage rate. We have a great advantage m the rates over Manawatu millers whose costs 'm Taxation and drainage j rates are m some cases as high as £2/7/- per ton of fibre. ';• I have never known the time that a good flax field was not worth a lot of money. There have always been buyers for good flax fields at big prices. The royalties from a- flax field, where the flax was m a condition ready to cut, would be from £35 to £40 an acre; plenty of Millers would pay that figure to-day. This gives some idea of the value of flax where it is so situated that Milling costs will be reasonable. Many improvements will be made m the flax-milling industry m the near future, first there will be the cutting of the flax by machinery. Fibre will be bleached and dried without the costly process of paddocking as at present. A much better flax will be grown, which is only possible by cultivation. By having a tietter quality of flax to mill the fibre will be of better quality and • higher prices will be obtained. . lam confident there is a great future ahead of the Flax Industry. ~Hfi.r. Seifert here gives details of cost of producing 1 ton of Hemp from 7% tons -fibre— £lß/7/6. . Estimated receipts for Hemp and Tow and slips ....... 80 10 0 Cost of production .......,.........' •. ....._,. .: ; 18 7 ,6 Margin for net profit per ton of 'fibre : .................. 12 2 6 The above costs are made' up on the present system of working, and I am confident that there will be no difficulty for the. Fr,ed. Seifert Co., to produce their Hemp at the "above' figure. Cultivated Flax has a very great advantage over flaixinv the wild state. The advantages with the .cultivated flax are— Flax cUi cheaper, and delivered to mill at a ■ much lower cost, for the simple reason thai it is easier to work an£ cut and- no tram tracks are required. . A better iquftlity. fibre qan be made from Planted, flax, as flax under cultivation produces- a. better flax'; every, trial has proved this. The .upkeep on the Tlax Fiel<&; with'ipltated fla± is : less than witli, the main wild flax, fieldsV My ! experience: ihwUd^6wing v areas is' that the upkeep costs about 35/- on a ton of fibre. T-hfe t ; I ;li|i&h.eißt^bdsJ;\-fe'er ; ton-'-with ;cultiyated flax will be 15./-; per ton. The cost for; rirevbreaikSr.and^ destruction i of weeds is much greater with the wild flax. (A'a^cultiyated.flax.ls clean arid no growth. on the land, it- is almost Impossible to hayei'the'iflax burned.y : .'•'■' : - . ' •• , 6ultivated flax belngr m fows can be cut by machinery-— lt Is impossible to cut wild flax by machinery. The cutting of flax by machinery will reduce theVcosts I have given above by £2/10/- a. ton, •Fibre will ultimately be produced from cultivated flax under £16 a ton — ' I am,, and others' m the business are, satisfied that cultivated flax will prove to ibe worth £40 an acre more than good wild growing areas. Being able to cut'flax by machinery and ot'h.er advantages would more than make vp 1 the extra £40. •' ■ ••.■■":■■■. - ■ ; , Z v (Sgd.) FRED. W .SEIFERT. :Mr. Seifert estimates a profit of £12/2/6 per ton with. "the selling price of hemp with tow, etc., at £30/10/-. per ton. (The average for the past 10 years for. Good Fair is £31/11/-.) '.'Mr. Geo. Craw, another Manawatu Miller of long experience who is also cultivating flax m Hauraki furnishes the following figures, as his estimate of what Hemp will cost to produce .from cultivated flax. ftOn'7. tons of leaf to 1 ton of fibre .;>; £17 10 0 tons of leaf 'to 1 ton of fibre £21 0 0 "ZNote the saving m cost of £3/10/- on better quality leaf. A saving of £1 per|;tQ'n on 1% tons of fibre per acre a year is equal to a capital value increase of ;£ 15 per acre or a 10 percent, basis. ■'There is ample evidence that wild growing areas of average good quality an average of 1% tons of fibre per acre per year and it only stands to reason that cultivated flax from selected varieties will produce greater yields. Taking the above figures and basing the return on only 1% tons of fibre we have a net re turn, of £18/-/- per acre per year. I am, personally acquainted with an area of cultivated flax, not yet at full maturity, -that by side leaf cutting gave a net profit of £17/10/-. The details of wnich,. however, are strictly the owner's own business. The " Hempland Bonds ' ' are gelling at £64/10/- per acre which. -with the. cost of mills at date of cutting flax will not exceed £7(fper acre. £18/-/- net 'return on £70 is over 25% per cent. The figures of export between 1921-1926 do show a steady increase up to 100. per cent, Why, as your .writer does, go back 39 years m a progressive > country to draw comparisons? The past fluctuations only go to prove why the industry has not gone ahead. The world's demand for hard fibre Is 400;000 per year and Is increasing at the rate of 5 per cent, per annum (less than N.Zl's export figures). What big buyers would be interested m a market where the fibre production is bo unstable as to from 21,000 to 1800 ; and back to 28,547 then down to 9500 tons? :\JPiie pnly remedy for this. ls scientific and business application to the Industry, ; in the growing, milling and. marketing. With a stable output of a better" quality fibre there is no reason why the export tonnage should, not . rise to 100,000 tons per year, t Referring to the quality of my Company's land, it adjoins the Fred.-Sei-fert Company's "Splendid property." v If Fred. Seifert's land is a "Splendid property," as your writer says, so is that of the Australian and New Zealand Investments, Ltd M for it is exactly the Bame land. A visit to Fred Seifert Company's plantation of cultivated flax will settle all doubts and arguments , as to the value and suitability of this land for flax cultivation. No bettergrowth of flax can be shown m New Zealand no matter at what price the land is valued for other purposes. • Tour writer referring to the Northern property (Kaingaroa) as "way back" displays a lack of knowledge of ,New , Zealand's geography. . Hemp can be landed m Auckland from Kaingaroa at about half the cost of Herijp from Miranui to Wellington. This property has an area of wild growing, flax that cut 50 tons of leaf (6 tons of fibre) to the acre and m 12 months has, regrown 8 and 9 feet almost ready to cut again. This is because of the semi-tropical climate of the Far North. .... Taking everything Into consideration, including the lack of knowledge your writer confesses as, to the capabilities of Flax under cultivation, I consider the "Head Lines" to his criticism a gross injustice to this Company. •Space does not, permit all that can be written m favor of Flax cultivation and its future prospects. , Apart from the benefits to be derived from cultivation there are.developments m other directions. , \ One mill m the South has installed machinery that turns out a better fibre, ready' for the market m two hours. Hitherto It took a week to prepare. Other millers are installing the sam ©machinery. ' . . . A Dunedin man advises that' as a result of experimenting he was now able to produce a spinhable fibre from tow which should be of considerable commercial value. . ' . Sir Amos Nelson, "a large English Cotton and Wool Manufacturer, Was found the. hemp suitable for the production of Artificial silk. In experimenting m this direction Sir Amos has dissolved and made it into a new kind of which Dr. Marsden has a sample. In appearance 1t looks like high grade wool, except that it has a beautiful lustre. . • • \ Sir Amos, m writing about this material, said that his mills, if tests proved satisfactory, and he saw no reason why they should not, could use the whole of New Zealand's supplies of hemp for the next five years Dr.Marsflen says m reference to local research by the Industrial and Research Council: "I am personally prepared to stake my reputation and the reputation of the Board, that research work would prove successful." Mr. A. Seifert, m endorsing Dr. Marsden's remarks said: N "I have done a little flax breeding, and as a result been able to produce 48 tons of flax to the acre under 3 years." . This is equal to 6 tons of hemp exclusive of tow. In terms of £ s. d. (basing prices on the average of. those obtained during the past 20 years) means a net profit of £20 per acre per year on- £60 riroflt for the three years' growth. "-; .< ; On only a. one ton per acre output, the export value of my Company's •hemp would approximated 120,000 per year and the workers and tradesmen '■:> would get about £ 80,00.0 of it. . . " Are not those who are enterprising enough to create this national asset from nothing worthy of support?., .. . :.. .',,.,■', Should anyone be^sufficiently Interested, our Company's office is m Huddart, Parker Building, Wellington, where .we will welcome them and prove every, statement, m our Prospectus, and show that our Bondholders are getting a fair and profitable deal. , . . ■: ; O£ "° " :^ : -..':: , Tours faithfully, ~ , •' ■■■ '';•■:•■"■' •■'. v /.\ ■:.-'>■,< •■:.■■■'-.'■. ■'.■■' (Sgd>) •Fi'J.-.y. Wilson, . : .' SJT.Z. Manager, 1 Australian and New Zealand Investments Limited . ( .;",:.'i (#Published by arrangement.)