FARM NOTES

Putaruru Press, Volume VII, Issue 273, 31 January 1929, Page 6

FARM NOTES

Mr. Sinclair expressed pleasure in attending the meeting in answer to a request received from a committee set up by Walton settlers. The position, as he understood it, was that a number of local dairymen felt that the time had gone when the resources of Walton should be used in the building up of other centres. He expressed the opinion that, where the supply was sufficient to justify the erection of a factory, such a course was beneficial to the whole district, because it created a community of interest; it concentrated the resources

of the district in' one centre instead of having these diffused through a i number of channels; and it establish- j ed a tangible asset which added to i the prestige pf the district, and contributed t<j>) the prosperity of the, township. The great danger to be J avoided, he said, was for a district i to undertake prematurely a liability of this kind, but his knowledge of Walton district assured him that the Walton settlers were on the right lines. | Local Company Point. I Having decided that Walton should have a cheese factory, the local dairy farmers, he said, were now debating which was the more beneficial course to adopt—to link up with the New Zealand Co-op. Dairy Co. in the erection of the factory, or to embark upon a locally-owned and loc-ally-controlled co-ojjerative venture. He had no doubt that the advantages' offered by the New Zealand Dairy Company had been fully and ably expounded by the company’s representatives and he had neither the right r.or the inclination to deal with that aspect. He felt constrained, how£ ever, to point out that those advantages were weighty, and should receive the fullest consideration of local dairy farmers. He had no doubt that the suppliers who are interested in the proposed cheese factory, and who held shares in the butter branch of the New Zealand Dairy Co., would be permitted to transfer the paid-up capital into the cheese group. In addition, he said that the New Zealand Dairy Co.’s proposition had other special advantages which would not be possessed by a local concern —

namely, cheap fuel, cheap manufacturing requisites, and an established system of marketing. He said that a spirit of fairness prompted him to point out that any settler who was not prepared to weigh these advantages carefully, putting on one side all feeling of bias and partiality, was not acting in the interests of the district. Mr. Sinclair proceeded to state that the local committee who forwarded him the invitation had requested information on a number of other aspects, and had submitted to him an “ Order of Reference ” which more or less determined the lines of his address. The information required was: (1) What disadvantages would confront the Walton settlers if they accepted the New Zealand Dairy Co.’s proposition? (2) What special advantages would accrue to the Walton settlers if they erected a cooperative Actory independent of the New Zealand Dairy Co.? (3) What ! methods have been adopted in the j financing, building and administration of the small co-operative factor- ! ies which have been so successful in | South Auckland of late years ? Method of Financing.

Dealing with the first question, Mr. Sinclair explained in detail the difference between a milk supply agreement and a joint-and-several guarantee, and stated that the fact that the New Zealand Dairy Co. was asking only for a milk-supply agreement was a point in their favour. He explained the procedure under which the Walton cheese group would ultimately become financial if the settlers linked up with the New Zealand Dairy Co., and pointed out that, in the course of a few years, the time would arrive when the suppliers to Walton cheese factory would have repaid the New Zealand Dairy Co. the total cost incurred in the erection of the factory and the installation of plant.

Ultimate Ownership. He emphasised, however, that they

did not own the factory, and that they never would own it, even if they paid its cost several times

over. He said that the reason for this was that the Walton cheese factory would be part and parcel of the general assets of the New Zealand Co-op. Dairy Co., and would belong to the shareholders of the company as a whole, and not to any particular group, even though that group had found the total capital cost. Freedom of Sales Policy.

Mr. Sinclair stated that another serious disadvantage w'hich would confront Walton suppliers if they linked up with the New Zealand Dairy Co. would be their inability to take quick advantage of f.o.b. offers. His experience had been that, when offers were good, a company seldom went wrong by adopting a fifty-fifty basis as between Consignment and selling; but he doubted if any board of directors were justified in exceeding that limit. The speaker then dealt in detail with the special advantages possessed by small self-contained factories, and gave a number of illustrations in connection with the ''company for which he was secretary at Te Awamutu which was showing one of the highest percentage increases in output this season of any dairy companies in New Zealand.

After dealing with the requirements of the Associated Banks in relation to the financing of new dairy companies, Mr. Sinclair concluded by expressing the hope that the information which he had furnished would clear away some of the difficulties in the minds of Walton suppliers and enable them to come to a decision which would be beneficial to the whole district. The speaker answered a number of questions.

Prepared to “ Box On.” It was mentioned by one speaker that the majority of the big company’s suppliers were prepared to “ hox-on ” with the New Zealand Dairy Co., which intended to erect a cheese factory and already had the requisite number of cows signed up. Mr. Soutliee: Then if that is so, this meeting is all for nought. The chairman called for a motion, but as none was forthcoming a hearty vote of thanks was accorded Mr. Sinclair for his address.