FARMERS IN CO-OPERATION.

Taranaki Daily News, 21 June 1920, Page 6

FARMERS IN CO-OPERATION.

ANNUAL MEETING OF ORGANISATION SOCIETY. NEED FOR ADDITIONAL CAPITAL. The annual meeting o! the Farmers' Cooperative Organisation Society of New Zealand, Limited, was held at Hawera on Saturday, when Mr. A. Hunter (chairman of directors) presided over an attendance of about 150 shareholders CHAIRMAN'S REPORT. In the moving the adoption of the annual report and balance-sheet already published, the chairman said: — We have now concluded the sixth year of the Society's operations, and I think that, on the whole, shareholders may be very well satisfied with the results attained. The volume of business has gone well over the million mark, and again indicates that, althougu we are constantly being urged to use the spurs, the curb Is imore necessary, especially taking Into consideration the very limited supply of oats available. We could have wished that the increase in capital, both subscribed and paid up, had been greater, only 1U92 shares having been allotted during the year, while the increase in paid up capital has been £10,149. Among those to whom shares were issued were 291 new shareholders, and presuming that these ! averaged two shares each and that former shareholders who took up fresh shares also averaged two shares, a simple computation will show that nearly 2500 of the former shareholders had not sufficient interest in the Society to subscribe auother share. For the amount of business that is being transacted a further £IOO,OOO of paid up capital is urgently needed. It will be noted with satisfaction that a sum of £2OOO has been placed to general reserve account. The amount on fixed deposit Is comparatively hijh, but as the maturing dates are well spread and a fair proportion of it Is deposited by directors, no great uneasiness need be felt regarding it. During the year premises were purchased in New Plymouth for £4OOO, of which £ISOO was paid in cash, leaving £2500 on mortgage. Existing mortgages were reduced by £I7OO, so that the total has been increased by £BOO. Moneys owing to sundry creditors have increased by £19,498, and of the total of £44,842, £9,058 represents trade accounts incurred during the month of March. The balance is composed of sums standing to the credit of clients' accounts and mainly represents proceeds credited to accounts for sales of stock for which payment did not become due until after the close of the financial year. The increase in business, not having been •met by a proportional increase in paid up capital, necessitated our leaning on the bank to the extent of £10,199. Among our assets properties hare increased by £BOO7, mainly accounted for by the New Plymouth purchase—£4ooo, and the cost to date of the Eltham premises—£34so. Independent valuations of the larger of our properties were made in January last, and the large increase in values Justified our writing off goodwill account (£7500) and adding the amount to property account. The value of our property Js still well on the rijiht side of the amount shown in the balance sheet. All the buildings and yards are in good order, and their maintenance expenses are paid out of current earnings. The plant account show 9 nn increase of £G4OO. It was found necessary during the year to remount almost the whole of the outside staff on new cars. At the date' of the balance-sheet the old cars were still on band. Some have since been sold as they stood, while the others will be repaired and sold. The plant account has been written down year by year, and the value shown is a conservative one. Stocks of merchandise show an increase of £23,795. The turnover has increased so much that we have had to carry heavier stocks, but prices are so high that a much greater amount would bo required for even the same stocks. The aimount Is well within the present market values, and stocks are quite clean. During the /past year difficulty was often experienced in obtaining supplies, manufacturers being unable to guarantee delivery within a stipulated period. This difficulty and the ever Increasing turnover caused the management much anxiety, but every endeavor war, made to supply shareholders' requirements with as little delay as possible. The increase of £:-tf>,r>32 in amounts owing by sundry debtors is consistent with the growth of the business. The figures represent debit balances owing by clients for the purchase of stock and merchandise. These accounts are carefully watched and are considered safe. Many clients purchase stock without consulting the management, and feel aggrieved when asked to pay within a stipulated time. This hRs caused much anxiety to the management, and clients must understand that unless they apply for accommodation they will be required to pay not later than fourteen days after purchase. The practice of making calls on our funds without notice must for the sake of the stability of the business bo discontinued. Our profits show an increase of £5,841, nearly 100 per cent as compared with last year, and represent 19.6 per cent on our average paid up capital. If we add the amount paid out during the year in bonuses and rebates, viz, £3,493, Ihe percentage works out at 25.4, a very satisfactory result. A comparison of our turnover with that of the previous year is rather interesting:— 1919 1920 Increase £ £ Auction 603,875 727.85G 123,981 Machinery 12,100 26,949 14,849 Motor 14,620 31,723 17,103 Produce 72.050 134,174 62,124 Wool, skins, etc. .. 59.628 102,006 42,378 £76,273 1,022,708 260,435 I would again stress to shareholders the advantages to themselves and the Society which may be obtained by ordering in advance tho main bulk lines, such us manure, seeds, fodder, etc. This not only helps to avoid disappointment through late or non-delivery, but a'so means better buying. This is a matter of economy, a consideration which, in times of boom prices, demands greater attention even than in tiunes of low values. If the ; people of this Dominion set themselves to inI crease the production and practise economywe need not fear the financial future. The philosophy of Wllkins Mlcawber is not a safe guide as regards mortgages. So much has of late been said regarding high land values and cost of living that I will not bore you with any remarks on those subjects. I would, however, urge on farmers the need for using and, breeding better stock. Farm stock are machines for turning grass and other fodders into food and clothing for the people, or into energy to produce food, etc., and if these machines are to be efficient we must study that part of our business much more than we have done In the-past. \ It has been estimated by & member of the Department of Agriculture, I believe, that about 7 per cent of the dairy cattle of New Zealand aro bred on up-to-date lines. That means that 93 per cent are more x>r less inferior. What a national loss is Tevealed by such figures I A like state of affairs, though to a lesser degree, exists among other classes of stock. The prosperity of X.Z. of course depends on shipipng facilities, and the outlook Is not too bright in this direction. Wo are too much at the mercy of outside shipping and other rings and combines, and it is to 'be hoped that when our Government next considers the matter they will uot accept as final the expression of those whose interests ere at variance with our own.

In conclusion, I wish to express the thanks of the Society to tho staff who have loyally carried on the work during the year, the results shown being satisfactory evidence of their efforts. No matter what policy Is laid down, the success or otherwise of the Society depends on the staff. The work of the year has again been seriously Interfered with by a great number of changes in personnel. There Is a general restlessness in the air, and while one cannot say that this is altogether bad, yet it has its drawbacks. Our genem! manager has kept up his end very well indeed. He does not lose sight of the maxim that success depends not so much on what v.e earn as on what we save, and he has succeeded in cutting down expenses and leakages in many directions. I have to thank him for most of the material for this report, which he has supplied in a clear and brief form.

Mr. L. E. Jackson, in second, said that ho was surprised to hear that after the many appeals there was still an insufficiency of rapltal. It should be to the Interest of the farming community to support their own concern. The last sir years had been prosperous ones for the farmers, who should support their own concern with finance. He congratulated the directors on the excellent bu!ance-sheet they had able to forward in the face of such difficulty.

In Teply to a question, the manager said that the depreciation (£702 on plant) was mostly on motor curs used by the staff.

Mr. Tosland asked what was the minimum capital the directors considered was required. He thought that if the directors visited the various centres and had a heart to heart talk with the farmers the capital would be quickly forthcoming. The chairman said that it was difficult to estimate what each shareholder should contribute in share capital, as a man's business varied over a number of years.

Mr. Buckerldge agreed it was a good idea for the directors to meet the shareholders,, and they tried to do so in certain cent?es, but the shareholders had not attended. He considered it was necessary that a sharebolder should tftke enough capital to carry

the load of his business. It-was estimated I that a cmu'evn ?hou:d turnover its capital' from lines during the year, so that a shareholder should take up shares equal to onequarter of the annual business he did with the company.

The chairman said that the company required a capital of £250,000. Mr. Cocker said that the meetings at Eltliam had been called ai an Inconvenient hour. He agreed thai more capital was required, unit he had decided'to Uk« up more shares, and hoped that during the afternoon other con- ; cerns would do so. lie guve an illustration ! of the way the Farmers' Organisation iuut | kept prices down. People had the idea that • the Farmers' were really at the same price as the other people, whereas the position was that the other people were selling at the same yrlce as the Farmers'. He considered that it was wrong for them as shareholders to supply capital to give new shareholders the benefit they wore getting now, The rebate to shareholders should be increased from o*4 per cent, to ft per cent , and he considered it should be a recommendation to the director.-} that when there was a shortage of any commodity new shareholders should not be supplied. The chairman said that the policy of the company was to supply shareholders. Mr. W. D. Powdrell, M.P., said that everything that had been said showed how undercapitalised the company was. it wanted at least £200,000 capital, and if they had £500,001) they could do much better. owing to want of capital the directors had to form a subsidiary loan company, almost the whole of the capital had to be utilised m stores and goods, etc, which was not the most profitable part of their business. Financing fanners was the moro profitable, and It would hfive been better to have retained that business and kept out of the stores. Had the shareholders provided the £90,000 that tiie Subsidiary Company had lent on stock, they could have shown double the profit. Shareholders should stride to put the company in a position to finance farmers. Every man in the room could put at least £IOO in the Organisation. Even if they had to go to the bank they would only have to pay 6 per cent., and would get 8 per cent., thus advancing the interest of the company and themselves. It was impossible to keep stock to serve the whole of Taranakl unless shareholders provided the money. It was no use railing against the directors, who were doing the best they could. It was cooperation In every branch that had put Tirana kl ahead of the rest of New Zealand. Not one of the co-opetatlve concerns throughout New Zealand paid 5 per cent, interest; in fact, he knew of no more profitable business, so 'that no one need have any hesi- : tation in taking up shares. At present the I average holding was £35 per shareholder, half ! of which was paid up. Mr. Cocker said he wanted to emphasise j the point that the Farmers' kept the prices i down, and he urged farmers to take up more i capital. He himself intended to double his i holding. Mr. Connett congratulated the company on having opened a branch in New Plymouth, because ho was of opinion that New Plymouth had a big future and would have to be taken into consideration as an important centre of the Organisation before long. New Ply. mouth had a fine harbor in the making, capable of taking boats of 22ft draught, and In the last few weeks had been promised the second-class of boats. This would enable dairy produce to be shipplug at regular intervals, and would mean regular imports. Therein lay its importance to the Organisation. Since starting in New Plymouth, he understood thnt the business had been larger than was anticipated, and word had been received from headquarters to restrict business. He would like to know how many shares were held in North Tarnnaki, and also how •many shares would be required to be taken up to enable it to compare with South Taranakl. Capital, he felt, would be forthcoming. They in North Tamnakl were earnest in having the organisation up there, and he be* lieved the time would c.-mw wnen New Plymouth would be the headquarters, as It was going to bo an important centre. If canvassed energetically the capital would be forthcoming. He was personally prepared to do what he could. The chairman said that he could not tell ofThand the share capital in North Taranaki, hut to make the branch thoroughly effective, it would require about 201)0 shares: ■ They had secured the property at New Plymouth, as th*y recognised thnt It would be advantageous to Import through New Plymouth. This had been difficult during the war, but already they had imported some shipments. Mr. .Tames (Klthara) said that it should be easy for a number of wealth famiers to raise their average holding to Id share* They should be ashamed to lean on the backs of their fellow shareholders. The chairman said that the average holding was 3*6 shares, of which half was paid up Mr. Jennings thought that it should be possible now to assess the amount of business a client did, and compel a shareholder to take shares in proportion. This was done by dairy factories in connection with but-ter-fat. The chairman said that a clause wa3 being introduced at the speolal meeting which would have a tendency In that direction. A dairy company's business was much more simple. It was a monopoly, as it were, and would hold back moneys, whereas in this' case the company had to get the money from the purchaser. Sir. Owen expressed pleasure at the better feeling among the shareholders, wlio were now beginning to realise that they were wrong themselves in not providing sufficient finance. They were a wealthy cnmmiuuiy* I and if they were wise would pour some of that wealth into the company. By doing so they would be loyal to themselves. Everv 1 shareholder, should be a. canvasser. Mr. Belton (Waveriey) said that thefre was a demand for further expansion, and if this 1 was .to be met the capital must be very greatly increased. j Mr. .T. It. Corrigan held that the company wanted to inspire confidence In the shareholders before asking for further support, and he considered that more detail in the balance-sheet would help a great deal In that direction. The balance-sheet gave no indication as to which department made the profit. The chairman said that shareholders had negatived a motion that more Information should be given in the balance-sheets Anv shareholder could go to the office and obtain information. On resuming after lunch, the chairman gave a statement showing the percentage of profits made by the various branches and departments. Mr. Pryday congratulated the directors on the balance-sheet. Mr. Corrigan held that stores and produce should be sold for spot cash. The chairman agreed. Mr. Bremer said that one of the Inducements held out to him to join was that the company could buy in a big way, and if this was so why could they not sell cheaper or show a greater profit? Mr. Powdrell saJd that the trouble was the company had not sufficient capital. If they could have confined their business to one centre they might have bought largely. They however, had been pressed by farmers in the district extending from Urenui to Wanganut to start in their centres, and if they started saleyards and stores in various centres with the available capital, he thought they were doing remarkably well. In view of the expansion much more capital should be provided. The chairman also pointed out that the war had intervened, and that things were not yet normal, making the question of buying dlfficult. It was not fair criticism to quote any one artkjte that another firm could sell cheaper. Mr. Buckeridge said if they had a sufficient amount of capital they would be able to buy in large quantities and pay .cash, and this would put them in a position to compete successfully with their strongest competitors He then compared the operations of the company with other concerns operating in the . Waikato and Canterbury, showing that the business was totally inadequately capitalised to carry on the turn over. The directors had done wonders with the capital that had been given them. The Hamilton Company had six times the capital and two and a half times the business, whilst the New Zealand Farmers' had ten times the canital and only four times the business. This concern had the whole of the war period during its short existence, yet was the most profitable concern of its kind in I*2 Dominion It was up to the shareholders to provide more capital. At present the shareholders had practically provided a postag,. stamp to .make a suit of clothes. Shareholders should subscribe the capital to carry the load of their business, and .13 It was a profitable concern paying 8 per cent, free of income tax lie thought he was asking them to help themselves. He pointed out the backing the concern got from the Federated Society 'of Co operative Concerns. The directors iiad been asked to eipand, hut their difficulty was to keep the ship back, and shareholders should at once get behind the directors, and then if the directors did not do their business nro perty they could fire them out

In reply to a question, Mr. Buckeridge said that an average holding of 15 shares would be sufficient.

Mr. Powdrell, in appenllnc for more eanltal said thnt th<* Organisation would bo the most successful concern In the Dominion, as It was operating In the most closely settled district in the Dominion. Mr. Fitzgerald considered the company was going too fust. Mr- J. H. Lyon thought that the company should have sufficient capital so as to finance its shareholders without their having to m to a subsidiary company. g After further discussion, the report and balance-sheet was adopted. ELECTION OP DIRECTORS. Of the five retiring directors, Messrs. Geo Looney and A. E. Death did not seek rejection, Hesatß. A. E. Syra«s, Wm, Joins

and E. Marfell were re-eleeled, and Mr. .1. H. Lyon, being the only additional nominee, was declared elected. The chairman's honorarium was fixed a.t £l5O, and the directors were also voted the same honorarium as last year. Messrs Rowley and Gill (Wellington) were re-elected auditors. An amendment that a local firm he appointed, was lost. ARTICLES OF ASSOCIATION. In accordance tvKh notice of motion, steps were takeu tc alter the Articles of Association. An amendment was made providing that no employer of the Society shall be appointed as. or act r.s, n proxy. An amendment that tho qualification for a seat In the directors should be Increased from £3O to £2511, caused considerable discussion, some shareholders holding that itwould have the effect of penalising the small man, and be against the best interests of the company. Other Members held that the idea was to get strong men on the directorate, and to induce some of the present directors to increase their holding. There was no intention to push the little man out. Members generally were in favor of Increasing the qualification, and after an amendment that it he increased to £IOO had been lost, an amendment was carried Increasing thft qualification to £2OO. An amendment was also passed providing that a director shall vacate office if requested in writing by the unanimous vote of his codirectors, to resign. In regard to the election of* directors, provision was also made for receiving nominations in the room on the morning of the annual meeting. Other amendments were made in reference to differentiating between different members in proportion to the shares held, or otherwise as to the rate of rebates on bonuses, also regarding the payment of Tebates or bonuses by the issue of paid-up shares. GENERAL. During the afternoon shares to the value of over £3OOO were taken up In the room. It was resolved to place on record the Society's appreciation of the services of Messrs. A. E. Death and Geo. Looncy, retiring directors, the former having been a member of the directorate since the inception of the company. Votes of thanks were also accorded the staff. DIRECTORS' MEETING. At a subsequent meeting of directors, Mr. A. Hunter was re-elected chairman of directors.