Year of Progress

Sun (Auckland), Volume III, Issue 792, 12 October 1929, Page 6

Year of Progress

Farmers’ Co-op. Auctioneering Coy. Big Spread of Interests A NOTE of caution was struck by the chairman, Mr. H. S. Hawkins, at the annual meeting of the Farmers’ . Co-operative Auctioneering Coy., Ltd., at Hamilton today. Although indications were that production would show steady improvement, it was obvious that the comparatively high prices of the past two years could not continue indefinitely. The annual meeting today had a particular significance, for it marked the retirement from the directorate of two of the founders, Messrs. H. S. Hawkins and Barugh.

“The year under review marks a further record in production, and there ia reason to expect that each succeeding year will show a progressive improvement,’’ stated the chairman in moving the adoption of the report and balance sheet.

"I am certainly surprised that it has been possible for the Old Country —considering its financial obligations, its number of unemployed and its increasing difficulty in finding markets against the competition of the world—to place so high a value ou our main exports during the last two years. How long it may continue I do not know, but it is obvious that it cannot continue indefinitely, and therefore I still urge you to do all you possibly cau, both as farmers and as members of the community, to reduce costs of production in this country to the point at which you can face a material reduction in our export values. STRONG FINANCIAL. POSITION

“The capital account is substantially the same as last year, the small increase in the paid-up capital, viz., £IOB, corresponding with the reduction in calls unpaid. Since the close of the financial year the balance of the calls unpaid have been practically cleared up, and this blemish on our balance sheet will, X hope, be conspicuous by its absence next year.

The reserve account has been increased by £3,387 13s Id, being the carry forward of last year’s profits, which has been transferred. “Mortgages owing by the company have been practically wiped out, the small stun standing under this head being a Government mortgage which it would be inadvisable to interfere with.

“The overdraft at the Bank of New Zealand shows an iner< of £33,454 19s 3d, but this is largely accounted for by an increase of £40,345 in the amount owing to us by sundry debtors due to increased business done by both stock and merchandise departments.

“Our freehold and leasehold properties show an increase over last year of £1.556 9s. The fact that we have erected and paid for a new wool store in Auckland shows a further depreciation of these properties. The hook

value today is about £IO,OOO below the Government ca.pital valuation. “The greater turnover in the merchandise department has warranted our carrying a slightly fuller range of stocks. The liabilities, excluding capital and reserves, total £141,283 10s, the total assets amounting to £693,523 16s 4d, leaving a balance of £552,240 6s 4d in favour of our shareholders, against a paid-up capital of £479,003 10s. PROFIT AND LOSS ACCOUNT On the expenses side of the profit and loss account, the amount £97,921 15s shows an increase over last year of £8,451 6s 9d. The gross profit of £148,991, being £18,455 3s lOd in excess of last year’s earnings, has proved the additional cost to be fully justified, particularly as the percentage of expenses to gross profits works out this year at 65.7, as against 65.5 in 1928. That profit has been contributed by all departments, the stock and merchandise showing a most marked improvement. “When we remember that the net profit last year was more than double that of 1927, the further addition to those figures of £10,003 17s 1d is most satisfactory, and justifies the belief that the company has permanently recovered its earning power. “The amount available for distribution is £51,096 ss, out of which the interest o:a preference share capital has already been paid. Prom the balance we propose paying a dividend of 8 per cent, on the ordinary share capital, the income tax for the year, and carrying the rest forward.” “To summarise, briefly:—

STOCK DEPARTMENT The market for fat and store cattle has been consistently good throughout the year. Local prices were too higjr for exporters to operate to any extent, so that very few fat cattle were frozen. The highest price quoted for beef this winter was 44s a 1001 b, as

against 4Ss a 1001 b last year. However, taking the whole year round, values have been steadier than the previous year.

“There has been a good demand for dairy cattle, tested cows and goodquality heifers being especially sought after. We have held a large number of clearing sales, and the average price realised at the majority of them has been exceptionally good. All the pedigree sales conducted have been successful, and we are looking forward to increased business in this direction.

“Sheep were in keen demand during the autumn. In fact, the prices of all classes of store sheep at that time were beyond reason. Although fat sheep advanced slightly in the early part of the winter, store sheep and breeding ewes have shown a decline, and from the present outlook the coming year will see values lower all round.

“The inquiry for horses has been very good, especially for medium and heavy draught farm horses. At the recent spring fairs, practically all the horses yarded have changed hands at satisfactory prices.

“Pigs have been yarded at our principal saleyards in increased numbers, and prices throughout the year Lave been good. The demand, especially for fat pigs, is still keen, and farmers may look with confidence to the future.”

In the King Country the carrying capacity has considerably increased owing to the greater area top-dressed during the year, and much of what was surplus stock has been held to Our private sales have increased considerably. The bulk of the stock cope with the feed, business is already being done in this manner, and if this tendency continues it will be difficult to place a, value upon any class of stock, in the absence of the competitive basis ndw obtainable through yard sales. This growth of private selling seriously affects the earning power of the various saleyards established throughout our territory, and it will be well for farmers to consider carefully -whether they are acting wisely in ignoring the facilities provided for obtaining the best current prices for their livestock. There are indications of a coming world shortage of beef, which we as producers would do well to make a note of. MERCHANDISE DEPARTMENT

The sales for the year just completed show a very substantial increase when compared with the previous period, indicating that the services we render are being appreciated by clients. The prices of grocery and hardware still remain on a fairly even and stable basis, and there is every indication that this condition may continue. During the year we have extended our importations, covering a much wider range of glassware and crockery, as well as a more comprehensive and attractive range of hardware. Shareholders and clients can be assured of securing their every need from any of our stores at the lowest prices, consistent, of course, with good quality. Sales of wire and fencing materials during the year have been exceptionally heavy. Although we handle Canadian wire as well as English, sales of the former are very small in comparison. For many years we have confined our attention to a leading

English make, and are satisfied that this brand gives the greatest satisfaction to the user. There are other brands on the market which are slightly cheaper, but these often prove dearer in the long run. We fully realise that farmers buying wire must be protected regarding quality. Sales of galvanised iron and wire netting have been well maintained. GRAIN AND SEED DEPARTMENT A much better inquiry has been experienced during the past year for Algerian seed oats. The demand in New Zealand about equals the supply, so naturally toward the end of the season prices increase. The inquiry for wheat is still maintained. The past year is notable for the first year’s working of the Southern wheat pool. Prices during the year have been very reasonable, but as all free wheat is now off the market, the pool has periodically advanced the price to cover the cost of holding, and therefore a higher figure must rule until next harvest, unless there be an alteration in the present duty governing importations. The sales of grass and clover seeds last autumn were not as great as the previous season, which was referred to in my last report as being the heaviest for many years, yet the business done was well above normal. Prices were slightly higher than last year, and the quality first-class. Competition is always very keen with this line, and in spite of the somewhat serious competition with lower-grade seeds, we are still able to maintain our connection through exercising the most scrupulous care in selecting only the very best and highest quality. We have built up an excellent connection, and every effort is being put forth to maintain this, as we consider nothing but the best is good enough for our clients.

HEAVY TRADING IN MANURES The demand for manures throughout the year has been exceptionally heavy, as farmers now. realise that this requirement of agriculture needs greater attention. Although the bulk of our orders is for superphosphate and basic slag, it is interesting to note that considerable quantities of nitrogenous manures were also in demand. During the off season- —December, January and February—special low quotations were offered by the fertiliser manufacturers, and the farmers did not hesitate to take advantage of the reduction, and in many instances booked very substantial quantities over and above their immediate requirements. Owing to an exceptionally severe winter in Europe, during which canals and harbours were frozen over, the loading of basic slag was interfered with. In consequence, the carrying vessels were very late in reaching Auckland, causing much inconvenience. African phosphate has also been in demand, and from reports received is showing satisfactory results. The company’s garage in Barton Street has an equipment for car service equal to anything in this country, and all renovations and repairs can be executed on the premises. The saddlery workshop has been tborougbly overhauled and is turning out work which is appreciated all over the North island. WOOL DEPARTMENT

The wool department shows a further satisfactory increase, the total

offering for the season amounting to 10,260 bales. Unfortunately a drop in the price of 3d a lb. after the first sale in November reduced the gross value very considerably. At the second sale in February, 5,931 bales were catalogued, the largest quantity we have ever handled at one time, and our new floor, which was commented on most favourably by buyers, was fully occupied. This new floor, providing as it does the most up-to-date lighting ‘and facilities for the economical handling of wool, will undoubtedly be a great asset to the company in the future. The quantity of -\fcOol reclassed by the company is increasing every year —2,621 bales having ’'been so dealt with last season. This work entails considerable strain on the company’s expert at a busy time, but the results obtained show bow much it is appreciated by the buyers. The alteration in the date ot the second Auckland .wool sale to January 21 should result in a considerable increase in the quantity of wool from the King Country . district for next season. Our annual wool canvass of North Auckland clients resulted in a further increase from that district. SHIPPING DEPARTMENT Shipowners in the Australasian trade have experienced a normal year, and Australian waterfront conditions have been more settled. Exporters during the past year have enjoyed ample space to lift. all their requirements. The extra .tonnage required during the peak of the New Zealand season was transferred from across the Tasman at regular intervals. General cargo, and the exportable surplus of meat and dairy produce, was in excess of the previous year. The export of apples . fell short of last season’s figures, however, owing to the unfavourable season. In my last report I remarked on the increased meat and dairy produce shipments to America. This trade has been well maintained throughout the year, especially butter to Canada, and from what I can gather from forward sales, this year’s figures should eclipse last year’s exports to that country. With regard to meat and butter exports to the United States of America, it is impossible to forecast how this trade will be affected owing to the proposed increased tariffs.

Shippers are no doubt gratified at the' further reduction in freight rates of 5 per cent., which applies to refrigerated cargo as from September 1 last. The activities of this department in Auckland have been increased, and its scope enlarged in developing the tourist agency and booking business. We have been appointed provincial representatives for the Mount Cook Motor Company and Hermitage, Toiigariro National Park, Aard Motor services throughout New Zealand, and the New Zealand Deep Sea Angling, Ltd., and we look forward to this department proving a profitable section of the business. INSURANCE DEPARTMENT This department continues to show a very satisfactory return, although there is room for even more support than is already accorded. As chief agents in this district for the New Zealand Insurance Co., Ltd., we keep abreast of what is required to protect clients against loss, and farmers should make a careful survey of their needs in this direction. I feel certain that shareholders would be well satisfied if they allowed us to handle this business for them. LAND DEPARTMENT Although this department is of considerable service to the company in many ways, of late years it has not helped much from an earning point of view. Mr. Young having left us, Mr. W. H. Hume was offered and accepted the appointment in his place. THE FINANCIAL OUTLOOK Interest rates in the Dominion are about ii per cent, lower than in Australia, and as the Government has not been able to borrow at a rate which could reduce interest charges, there appears to be no prospect of any reduction for some time to come. On the other' hand, I have it on good authority, that they are not likely to be increased, notwithstanding the fact that any reduction in selling value of our primary products means less money available for investment and development. Banks and other lending institutions. including the Government, are for the most part well supplied with funds. Mortgages on freehold improved farm lands are readily obtainable at 6 per cent., but lenders at that figure require a substantial margin of security. The. heavy burden of local taxation is more generally allowed for in making valuations. Traders on the whole are not securing an adequate return on their capital, due mainly to the excessive competition which prevails in most lines of business. The financial position of the majority of farmers today is sound —the exceptions being those who paid extravagant prices for their land. “If we can rely on increased production to minimise the reduction in value of our exports, there is- no occasion for any anxiety.” GREATER CO-OPERATION NEEDED “As this is the last opportunity I will have of addressing you, I would like to say something about cooperation. The object of farmers’ cooperative companies is to stand between their members and the exploitation of proprietary interests, and in their struggle to that end they have many handicaps. The first is their want of capital as compared with that at the command of the companies working in opposition. The second is the necessity for restricted profits, otherwise the object could not be carried ont. Thirdly, the expectation of members of rebates as well as dividends. A very large proportion of ordinary shareholders in this company have only a few pounds each invested in share capital. As a consequence, rebates paid in the past have been in many cases considerably in excess of the shareholding of tlie recipient. This means that his contribution to the capital of the company is quite inadequate to finance the busines he is doing, and that his rebates are only possible by the employment of capital belonging to other members. The company is expected to pay out of Us restricted profits not only interest on the capital employed in the form of dividends, but also a bonus, in the form of rebates, on the business done to earn those profits. This creates the next handicap, which is the great difficulty of putting a.side reserves to enable them to carry on in bad times.

A further handicap, common of course to all companies, is the enor-

mous and unjust burden under the present incidence of company taxation, by which the man with a few pounds invested is taxed on the earning power of those few pounds on the same scale as another with an income of £IO,OOO a year. The graduated land tax is as unjust a drain on our profits as the income tax. As a war measure any form of taxation may be justifiable to provide the means to save civilisation, hut to perpetuate an injustice long after the necessity has disappeared, either because they are afraid to place the taxation justly, or because they dare not ask their servants for a certain amount of extra work, is a disgrace to every Government that might have applied the remedy. These are some of the handicaps we have to contend with, and we have only one weapon with which to overcome them—that is unity among ourselves. A co-operative company is democratically governed, and with all the units pulling together, their power might be irresistible. If they are pulling in different directions they can make no headway. The conclusion X have arrived at after nearly a quarter of a century in the service of co-operation is that as long as farmers’ co-operation rests on a purely voluntary basis it cannot get very far. Combined action controlled and skilfully guided is irresistible — uncontrolled, i.e., left to the whim of the individual whether he support or not, all effective power is dissipated and lost. Co-operation means mutual help and entails mutual sacrifice. There need be no compulsion in the first instance on any individual to join up with co-operation or to keep him there against his will, but while he is a member there should be sufficient compulsion to make and keep him 100 per cent, loyal. The prospects before this company were never brighter than they are today. We have a sounder financial position and a greater capacity for service than we have had in our history. It lies with us by unity among ourselves and loyalty to the company to make that service as effective as we want it to be. The report was adopted. Further particulars of the meeting will be found on page 16.

£ s. d. Paid-up capital .. 479,003 10 0 Turnover .. . . 0 0 Gross profits .. .. 148,991 0 0 Expenses .. .. 15 0 Net profits .. 51,069 5 0