FARMERS' CO-OP.

Taranaki Daily News, 28 May 1917, Page 6

FARMERS' CO-OP.

;;, THIRD ANNUAL MEETING. ~,: The third annual meeting of the Farmers* Co-operative Organisation Society of New Zealand, Ltd., was held at the Foresters' Hall, Hawera, on Saturday, when Mr. A. Hunter, chairman of directors, presided over an attendance of about 450 shareholders. Messrs C. Dickie (vice-chairman), M. J. Lynskey (general manager), J. G. Nicholl (secretary), and the remaining directors were also present. The chairman, in opening tli" meeting, expressed his gratification at the.large attendance, which augured well for the Society's future success. The balance-sheet was taken as read. THE CHAIRMAN'S REPORT. In moving the adoption of the report and alancbe-sheet the chairman said, inter alia:—

The number of shareholders has increased by 355, the total being 22?3, and the holdings from SGIB to 7089 shares, an increase of 1471, while the paid-up capital has grown from £20,31(1 to £30,133. These increases indicate a continued confidence in the Society and a belief that it is out to give efficient! service. Much more can yet be done; in fact, we have so far only scratched the surface, but we hope to develop and consolidate the business, to reduce expenses, or secure better returns for the outlay, and to work into such a system that, when things find their level after the war, the Society will be able to conduct business for its shareholders equal, at least, to the best. I would again remind you that this can only be secured by the hearty co-operation and loyal support of the shareholders, and in passing I must say that, so far, there is every reason for satisfaction on that score. It is to be hoped that the steady increase in shares and shareholders will continue, for a big business is being carried on, and it behoves us to build up the financial basis of the Society so that it will be able to meet times of Etress and stringency without fear, and to assist the farmer when he most needs it.

The bank account is in a reasonably healthy condition, and indicates that we are not leaning on that institution to the same extent as in the previous two years of our existence. We actually closed the financial year with a gross credit balance of over £BOOO. Against this there were outstanding cheques to the Amount of £18,678, thus making the liability £10,578, in contrast to the sum of £21,173 as at March 31, 1910. The amount of bills under discount was also reduced by £3542. The total indebtedness to the bank was therefore over £14,000 les3. This account, as I mentioned last year, fluctuates extensively and rapidly, hut during the past year has given no cause for alarm. The amount of these increases, if written off the goodwill, would have reduced it by more than the £3OOO mentioned. The money is, however, well invested, for I think none of you will disagree with the statement that it could not be better applied than in assisting to defeat the scheme of world conquest and enslavement by a- Power which is doing its best—or worst—to prove that it is unfit to rule.

I would again urge upon you the benefits to be derived by placing your orders well ahead for your requirements in seeds, manures, etc., and so enabling the management to buy to better advantage and effect savings in handling, freight, and leakage. £4-16 has been written off preliminary expenses, an item which, with goodwill, we will he glad to see disappear from our statement of assets, while the usual depreciation has been allowed on office furniture and plant. The amount earned through the year's operations was £23,141 10s 9d, which, with £291 5s 5d brought forward from 1915-16, makes a total of £23,433 odd, and after allowing for expenses ; depreciation and writings off a profit of £5245 9s Gd is left to be dealt with as set forth in the directors' report. Taking our average paid-up capital as £25,024, the net profit would be equal to 20.9 per cent.

During the year our operations have been considerably extended. At tho end of June the new yards at Inglewood were opened with an excellent sale, and flie yardings have been well maintained. Later on in the year the new store there was also opened. The old arrangement of opening the stare at Manaia on certain days proved unsatisfactory and wasteful, and it was decided to put in a stock, and Mr. F. W. Stevens was placed in charge. In December we secured the yards at Stratford of Messrs Webster and Dobson, and, after effecting repairs, opened them and an office, and results have fully justified the" venture. At the beginning of the year the directors terminated the contract with the International Harvester Company in connection with the machinery department, and concluded an arrangement with Messrs Booth, Maedonald nd Co. by which we took over their premises in Union Street, Hawera.

It was also arranged that that department should be run on a commission basis, but for many •, reasons this was not found to be satisfactory, so ' has been to resume management on the former system from the opening of the current year.

The importation of meals has been considerably interfered with by the war, and the directors were urged by iocal farmers to undertake the mixing of a calf-meal under our own brand. This we did, and with hardly a full season the output amounted to 14 tons. In accordance with tho expressed wish of a largo number of our shareholders, we eventually deeided to secede from tho Taranaki Auctioneers' Association.

At the very beginning of the year, owing to the breakdown in health of Mr. Holder, it became necessary to appoint a new general manager, and after due consideration the directors selected. Mr. Lynskey, whom most of you will have met before this. Mr. Lynskey received his training in tho N.Z. Farmers' Cooperative Association of Canterbury, having passed through every branch of the business from office bqy to branch manager: This training was considered to beV special value to our society, for a co-operative society differs entirely in its aims and objects from an ordinary commercial concern.

Mr. Lynskey took up his duties at the beginning of September, and thus controlled the business for the last seven months of the year. He had, of courße, to adapt himself to conditions somewhat different to those existing in Canterbury, while the application of his training to our business has produced a marked improvement. I wish to correct an idea that has by some means gained currency to the effect that Mr. Lynskey has plucked the society back from perdition or thereabouts. Mr. Lynskey would, no doubt be. the first to bear me put in this. Since '

its first throes this society has never looked back, and has gradually gained in strength, and after their experience the directors''were of opinion when makinn a,selection that, even in the*fact of indifferent government by its board and management by its executive officer, it would still succeed to a limited extent, They also are confident that under good management tbero are huge possibilities to be attained.

The amount set down to sundry creditor* shows an increase of £14,574, while on the opposite side sundry debtors shows an increase of £10,8(18. When it is mentioned that the turnover has risen to nearly £203,(10(1, it .will be readily understood that these increase are not out of the way. It should be noted, too, that while the amount owing to sundry debtors has increased by £IO,BOB, the bills receivable account for £44-20 and secured accounts for £4980 of the increase, while the increase in unsecured accounts is only £1i462.

It has been rumored that cheques have been held back at times, but I have the assurance of the manager that in no case has this been so, except where enquiry was necessary, or where, through press of work and shortage of staff, it was found impossible to get the cheques out on time. "Rumor is a lying jade." Don't trust her; ask the manager.

The stock on hand of merchandise and machinery shows an increase of £6637, notwithstanding that it has been assessed at bedrock values. This is- a very necessary precaution in these times of inflated war values, which must not be reckoned as permanent. Last year I stated that I hoped the goodwill account would be written down by at least £3OOO. The Finance Act of Ifllfi, however, which was passed after iast annual meeting, increased our income and excess profits tax by £783 more fran; we made provision for, and this had to be paid out of this year's profits, while a sum has to be set aside for taxes on the working of the year under review, so that the taxation for 1916-17 has, to a certain extent, been double-banked. The excess profits tax hits a young and gorwing concern like this rather hard, for a considerable part of our increase is through extension of our business.

This subject must not be pasesd without mention of the excellent work done by Mr. Nichol, who bore the brunt of the responsibility during the first five months of the year, and succeeded in getting a good grip of the business.

To the whole staff our thanks are due for the manner in which the work of the year has been carried through, notwithstanding the many changes necessitated by enlistments arid other causes. During the year a further stride in cooperative" ventures has been made by an amalgamation on a co-operative basis of a number of the leading bacon concerns, and I would extend to the promoters our congratulations, and commend them to your support. We are really only begin-; ning to realise the vast possibilities of co-operation, and the need for it in these times, when capital is masesd or grouped in amounts which the imagination fails to grasp. Co-operation seems to me the best one of the few defences against the pressure exercised by such accumulations of wealth, for their influence is at times far from benign. Some of you have no doubt noticed the reference in the N.Z. Fanner to the purchase by the combined English and Scottish (Jo-operative Wholesale Societies of 10,000 acres in Canada, upon which to grow wheat to supply their cooperative flour mills. Mention is also made that they are increasing the aren of their tea plantations in India and Oeykn, and that they* have also bought SOOO acres of land in England. These startling figures give an idea of what can be accomplished., and indicate that great things may be hoped for from the federation of the Co-operative Societies of New Zealand. I will, however, leave that subject for Mr. Ralph to deal with. Fie has, at no little strain on his already fully occupied time, consented to be present to-day and address you, and when he has done, you will, I think, agree with me that anything Mr. Selph has to say on co-operation is worth listening to. There have been many subjects hinging on the great war which one might touch upon, but time forbids. At a meeting of Taranaki farmers, such a large number of whom are directly interested in dairying, one can hardly leave out some mention of the iniquitous butter-fat levy, which cannot be truly said to be a war tax. The strong protest being raised throughout the country will, it is hoped, bo successful in securing its removal, if not its redress. 'i

The humiliating spectacle of the country's industries being paralysed by a coal strike, <when the Empire and its allies are struggling in a death-grapple for freedom, has fortunately passed, anil incidentally revealed the fact that the majority of the men are Britons still. It would appear that the unions might improve their constitution in such a manner as to make it more ur less impossible for a few firebrands to gain,such power as to decide such serious questions. Other conditions which also suggest humiliation, and which cannot be laid at the door of Labor, are still allowed to continue in this and other parts of the Empire, though the Governments know that the national efficiency is seriously affected thereby. It appeal's to me that wo arc yet a long way off learning our lesson, and that there is no hope of a satisfactory peace until we are willir to make the necessary sacrifices, both as individuals and as a nation. I mala no apology for introducing this subject, for it is, or should be, our first consideration to assist in bringing the war to a close, and to see that the appalling sacrifices that havo been made shall not be in vain. I now conclude by moving the adoption of the report and balance-sheet, and that tho dividend recommended by the directors be paid. Mr. Gray (Lowgarth) seconded. THE DISCUSSION.

There was considerable discussion over the balance-sheet/speakers at times becoming heated, and a good deal of talking across the room being permitted. Mr. J. O. Taylor set the ball rolling. He considered that the B issue of shares had proved a failure, only £43 10s having been invested in these by Moa and Alton Dairy Companies, and he thought this money should be returned. The nctt profits were shown as £7400, but this did not allow for depreciation, which reduced the nett profits to £5245.

The chairman stated that it was difficult to say whether the B issue had been a failure. Unfortunately, the war had completely altered the position. Mr. J. O. Taylor was proceeding to address the meeting when he was interrupted by cries of "Sit down" from the back of tho hall, eliciting the retort, "Oh, you shut up!" He proceeded to address the meeting, but the audience were not disposed to listen, and cries of "Sit down" and "Put him out" were very frequent. Mr. Tajlor replied,

"Oh, . you; I'll stand till 7 o'clock!"

Mr. Petersen rose to a point of order and the chairman ruled that Mr. Taylor could only ask questions. Mr. Taylor then sat down.

The chairman stated that the directors had thought it fair to return the monev subscribed for P. shares, but were tol'd it would be illegal to do so. However they had not made any further calls In any caso most factories had signified their willingness to allow their capital to remain.

Mr. W. H. .Robinson (Tariki) said that some companies had had their money returned.

The chairman said that these were cases in which the shares, though applied for, had not then been allotted Mr. Taylor: If you take money under ialse pretences is it not legal to return lt? I.' In reply to a question-from Mr. "Robinson, the chairman stated that the amount of £987 which had been written off for oad debts consisted really of accumulated accounts since the inception of the company. They included some accounts taken over with the business. A portion might yet be recoverable, but it w • not deemed advisable to include that in the balance-sheet.

_ Mr. Taylor then asked whether the item £18,078 13s 4d unpresented cheques represented the total liability to the bank.

The chairman explained that they .were cheques that had been sei.. out, but not presented to the bank.

Mr. Taylor said this seemed a big amount. The balance-sheet did not elucidate the position, but rather obscured it. He asked whether the chairman did not think the item £20,011 17s 8d (sundry creditors) under the heading liabilities rather largo. The chairman replied in the negative, adding Mat it was owing to persons from whom they had 'bought stock or goods.

'Mr. Taylor held that if these wen paid there would be £38,000 owing to the bank.

The chairman explained that when the balance-sheet was made up their account at the bank was £BIOO in credit. When outstanding cheques were paid their overdraft would be £10,57S lis Id.

After a verbal passage at amis with Mr. Gane, Mr. Taylor drew attention to the amount of £54,811 18s lid standing against unsecured debtors. ThL he considered very large whfeu compared with £6082 secured accounts. Thcj had ]/lost £3OO in had debts last year, £IOOO this year, and goodness knows what they would lose after the war. He considered £54,811 unsecured accounts unsafe on a capital of £70,000.

The chairmna explained that their turnover for the iflonth of March was £BJ,OOO, and it could not 'bo expected that all stock, etc., would be paid for the day after it was purchased. Auction accounts were unsecured. He thought the position was safe. ?

A shareholder: A healthy sign. Mr. Taylor: Very well; I have noth ing more to say. A voice: Thank God for that.

Mr. Taylor, referring to tho amount for travelling expenses (£23(50 IDs Id) thought these did not warrant the increase from £I7OO, last year's amount. Tho chairman pointed out that the business had grown. Saleyards and stores bad been opened in other places, and he did not think the travelling expenses had grown out of proportion. In reply to Mr. Robinson, the chairman said that the profit shown by the machinery department was very small, and'that was the reason for making the change he had mentioned in opening. In reply to Mr. Taylor, the chairman said that the item of £2OO in last year's ljalance-sheet was an initial contribution to the superannuation fund. This year's amount would have to be assessed by the actuarv, and would not be fixed up till July.

Mr. Taylor considered the item' of £l5B 15s was very misleading. The balance-sheet should show the actual interest received and paid. This, he contended, was probably the most prosperous year they would have for 40 years. The chairman: I'm not a prophet.

Mr. Taylor: You ought to be. To a further question the chairman explained that the legal expenses. £402, included a sum of £l3O from the inauguration of the company, which their solicitors had held over.

Mr. Taylor, referring to the stock commisison, £19,281, stated that it was proposed to give tho cattle-d,calers a. rebate of 7 per cent, commission, whereas the farmers only received 1% per cent, on merchandise purchased. Mr. Buckeridge: You don't know what you are talking about. Mr. Taylor maintained that the stock commissions were going to stock dealers. When Mr. Buckeridge w;n ...ing round forming the company he slid that it would cut out the middlemen, whereas it was manufacturing middlemen.

The chairman said that the directors did not feel justified in refusing to sell stock to cattle dealers, who were prepared to pay the highest price and also to pay cash .for the cattle.

Mr. Buckeridge said he could nob allow Mr. Taylor to asperse his good name. Mr. Taylor did not understand the difference between turnover and commission. It was proposed to give shareholders a rebate of i'/i per cent, on goods purchased, and to give a rebate of 7 per cent, on the commission charged in selling cattle. Mr. Taylor had questioned a statement made by the speaker when 'he society was being organised. It had been decided to set aside a B issue of shares to enable dairy companies to come in and secure the benefits. This company's history was not finished yet, and no one could tell what the position of tho B share issue would be. Three years ago, when tho society was formed, no one could foresee that Germany was going to force us into a war that would alter the complexion entirely. Those companies that had taken shares would find that the project was as good to-day as ever it was, and when times warranted it they would find it carried out its purpose. It was a step along the road to co-operation. The few companies that had money in the society would find within tho next few years that it was not badly invested. Mr..Taylor said the land commissions, £1572, were not very large. A live affair should do four or five times as much. He considered that any one-horse show would do as much. The chairman said this was the net profits, not the gross receipts. At present things were very much disturbed. He did not think it a good thing to see changes of land. He would prefer to see very little, save in the direction of cutting up large areas. t Mr. Buckeridge considered it was a good thing to compare their society with tho .hest of similar institutions. He had done so with a view of arriving at their comparative positions. One thing he' ventured to say was that in order to succeed sound finance was essential. He., could not see that their finances were as, strong as the 'business doge warranted/

If they put a load on a man's back tuiil would bend it, .thou the same load 01: a child's back would break it. As far as o-operative companies were concerned, their's was the child's, and they were giving it a man's load to carry. It was for the farmers of Taranaki to put the business on r proper and sound position. He would not say that the position was not sound, but they were asking their directors to branch out in various directions and establish a store here and a saleyard there, b,ut the directors had to cut their coat according to the cloth provided. Tliore were 2273 shareholders in the society, holding "OflO shares, or an average of 31-10 shares each, and having paid up an average of £l2 JO3.

Mr. Taylor here objected that Mr. Buckeridge was making a speech. The chairman said that any gentleman in the room was within his rights in speaking to the question. If he exceeded that, the chairman would stop him.

Mr. Buckeridge: Thanks, Mr. Chairman, ,i

Mr. Taylor: I should think you would thank him.

Mr. Buckeridge was continuing when a voice at the back said: I've got £GO m the society. Don't talk rot. Mr Buckeridge: £l2 10s is the average holding. A voice: let us go on with the business.

Mr. Buckcrklge: This is business. We must put the society on sound financial lines or we will not succeed. On a capital of £20,000 we have a turnover of £703,001), that is, wo turn our capital jver twenty-five times every year, or once every fortnight. He did not know of any other concern that gave their directors such a task, and he asked whether it was right to lo so. They should provide more capital. He then compared their position with that of the N'ew Zealand Farmers' Co-operative As- i soeiation of Canterbury, showing that j that concern had 7500 ■ shareholders, } with an average aid-up capital of £SO, • ind turned its capital over eight times | per annum, as compared with their 2200 shareholders, average paid-up capitr.l £l2 10s, anc' turnover equal to its capital twenty-five times per annum. He asked them to look at the load they were asking their management to carry, and pointed out that it was not a fair thing. Considering that they had passed through the worst year that they had had during the war, and that the management had been hampered by want of'capital, it was a wonder that there was any commission or j/oflts to divide, ', and e considered that !'.' directors and the manager deserved congratulation. A speaker considered that when they were established as long as. the Canterbury concern, they would be in as good a position. Mr. A. Soleman (Te Roti) referred to hiistakes made in connection with accounts. He had been billed several, times for an account for which he held the re eeipt.

Mr. Cray had also heard complaints about the accounts. • , Mr. Astbury said that no business could be conducted without some mistakes. ]f a shareholder held a receipt as a member of the company, he should go to the maiiajror, and, if that failed, to ,the directors. Failing redress there, ht> should ceme before the shareholders and fight the matter for all it was worth. A shareholder: Do you obtain any credentials before giving a non-shareholder credit?

Tlio clitrinan said (hat every application came before the Advances Board. Mr. F. Mills said, that he was satisI fied that tliere were good grounds for ';iot giving a rebate on machinery and motor sales, but he wished to know if rhe directors could disclose any reason why they did not allow a rebate on wool and land commissions. The chairman stated that the directors.had discussed the matter and decided that nsgt would have meant reducing the rebate, further on other tilings and that, under the present circumstances, it*,™* better not to make any alteration."' ll was the intention of the directors to make this rebate when they could do so. ' ' 'A shareholder stated that at one time he used to be charged 21 per cent, commission on the sale of heifers in the paddock, whereas now he was charged 5 per cent. , The chairman said that the commission had not been altered. He pointed out that the society had now seceded from the Auctioneers' Association.

The manager understood the commission was tlie same as had been ruling for years. Five per cert, was the current rate, with the Taranaki Auctioneers' Association. The question of reducing the commission was one for the directors to tackle.

Mr. .1. Cleaver (To Eoti) said that it neemed that the travelling expenses were too high.

The chairman explained that these were made up,as follows:—tanch at sales, where there, was no'place a); which luncheon could be obtained, £l7'3s 2d; gig hire "£982 17s 9d; rail-

•es £1204 lis 7(1; to-tal '.£2300 10s 2d.

The agents' expenses averaged £6 4s per month per agent, including the upkeep of five ears. Regarding the motor Hire, they lield 211.1 sales, so the average was £4 15s per sale, and this did not include private sale work. • Mr. Robinson asked fdr some idea as .. the profits of the bull: stores.

The chairman staled that the profits were as follows: Ilawera store, turn over £29,788, profits 2.02 per cent, net .profit £Ol2 0s Sd; Eltham £10,070 4.01, £Slfl 17s Od; Opiinako £3BBB, 2.73, £102; Inglowood £2837, 7.5, £214 10s; ?u'nnaia (one month), £822 4s Id, 2.2, £18; machinery and motor £39,097 18s Id, 0.1.1, little over £IOO. Including the machine"',) .tite average as 1.88 per cent., aid without the machinery 3.7 per cent. Stock commission totalled £003,804, 3.1!) per cent., £lO2Bl 10s sd. The total turnover was £703,070 4s'7fi, which showed a profit of 3.28 per cent. The cost of production was 70.9 per cent., or including machinery 78.0 per eent. Allowing for £1)400 (profit, bad debts, land and income tax, legal expenses) the cost of production worked out at 67.1 per cent.

To Mr. J. C. O'Rorke: There wore no | preference shareholders. ■j Mr. Astbury asked if it was not possible for the manager to devise some

scheme to get a check on the purchaser at the branch .stores, so as to prevent .any dishonest shareholder from saying that he had not receii*rt his goods. Tho chairman said there had been trouble over branch accounts, owing to ■ettcrs with cheques crossing the letter with the account, or through payments nt branch offices not being known at the head office when the account was sent out, or- being made during the few days that must elapse from the time the books were closed until the account reached the shareholder.

The manager said that while admitting that their system was far from perfect, there had been a big improvement since ho bad taken charge. He had put i in a new set of books, which had minimised the mistakes, only one occurring now where there had previously been four. Shareholders must realise it was difficult not to make mistakes, but they would give great assistance if they would bring any direct to bis notice. He pointed out that owing to the war there hnd , been considerable changes in the *staff, ' and that whereas formerly they had one lady the staff now included eight, who, while doing excellent work, took a little *imc to adapt themselves to the system. Xext year, he ventured to say, thoy would find very little to complain about in this respect.

Mr. Astbury said that what he wanted to arrive at was some check on dishonest shareholders who would say they hart not received the goods. The manager said that this was difficult. Shareholders should realise that the manager was their servant, and would thank them if they brought any mistakes to his notice. A voice: I know a man who did that and you never thanked him. (Laughter). In reply to a shareholder, the chairman said that no non-shareholder participated in the rcbate-s, nor did a shareholder whose calls were not paid up. Tho resolution was then carried. ELECTION OF DIRECTORS. ] For the five vacancies on the director-;

j nte there were seven candidates, viz., the, j five retiring directors and Messsrs E. Mnrfell and <!. Death. Messrs Voullaire j r.nd J, V. Wyborne- were appointed scru- ■ tineers, and the election resulted: Messrs K. I). Dickie J:;k,.\V. Jones 340, E. M>r^ fell 3;55, (,'. Death 333, W. F. Coombrirtge 327 (elected); J Foreman 317, I and D. Todd 200. '.'•■• AUDITORS. Some.discussion took place over tne appointment of auditors, some member* advocating the appointment of local uieu. Messrs Rowley and Gill (Wellington) were finally re-elected unopposed, at : A remuneration of £l5O, in addition to haveiling oxpensen not exceeding. £7O, REMUNERATION OF DIRECTORS. 1 The directors' remuneration at tho same rate, as last -year, Jfijunely, £1 per meeting for thoso who havejto travel to attend meetings and 10» for those who do not. The chairman's honoVarium was again fixed at £IOO per'aw num. , i " ELECTION OF CHAIRMAN. ' At a subsequent meeting of directors Mr. A. Hunter was re-elected chairman, of directors. . * .