LINEN FLAX CORPORATION OF NEW ZEALAND (SECOND ANNUAL REPORT OF THE)

Appendix to the Journals of the House of Representatives, 1948 Session I, H-44b

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1948 NEW ZEALAND

LINEN FLAX CORPORATION OF NEW ZEALAND (SECOND ANNUAL REPORT OF THE)

Presented to both Houses of the General Assembly by Act

Your Excellency,— Wellington, 13th July, 1948. I have the honour to submit for your Excellency's information the second report of the Linen Flax Corporation of New Zealand for the period ended 31st December, 1947. I have, &c, A. H. Nordmeyer, Minister of Industries and Commerce. His Excellency the Governor-General of the Dominion of New Zealand.

Sir,— Wellington, 13th July, 1948. I have the honour to submit the second annual report of the Linen Flax Corporation. This report deals with the principal operations of the Corporation for the period ended 31st December, 1947. I have, &c, F. Johnson, Chairman of Directors, Linen Flax Corporation. The Hon. A. H. Nordmeyer, Minister of Industries and Commerce.

REPORT

INTRODUCTION The 1947-48 season, which opened most favourably, proved ultimately to be one of the most disappointing experienced by the industry. This was due to an attack of flax-rust (Melampsora lini) of greater severity than ever before experienced or considered possible. Only in the Winton district of Southland did the crop escape, and here the yields were slightly above the average. In Canterbury, however, yields were reduced from a previous average of 2 tons per acre to one of 1-2 tons per acre, accompanied by a serious depreciation in fibre-quality. The only redeeming feature lay in

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the fact that, although severely attacked by rust, the fibre content was maintained at a reasonabby high level, and, since the crop is valued and purchased on a basis of fibre content and quality, growers received a satisfactory price per ton of crop. The area sown amounted to 4,536 acres, of which 3,954 acres, or 87 per cent., was harvested for fibre. This proportion is somewhat lower than usual, occasioned by the fact that only 61 per cent, of the crop in the Methven district proved suitable for fibre production, the balance failing to attain the requisite height. The area harvested for fibre yielded 5,387 tons of crop, or 1-36 tons per acre overall factories, a marked reduction below the average of previous seasons, which has exceeded 2 tons per acre. The crop was purchased on a fibre-percentage basis of 10-47 as against that of 11-06 for the 1946-47 crop. Since the 1947-48 crop will be processed during 1948-49 it will have no influence on the financial results for 1947 presented in this report. FACTORY PRODUCTION, 1947 During the year 8,534 tons of crop was processed, and this yielded 623 tons of fibre equivalent to 7-3 per cent, on crop weight. In the following table is recorded the tonnage of various products : Production, 1947 Tons. Scutched fibre .. .. .. .. 623 Rescutched tow .. .. .. .. 367 Upholsterer's tow .. .. .. . . 130 Seed .. .. .. .. .. .. 801 Meal .. .. .. .. ... .. 526 Total .. .. .. .. 2,447 Employment The Corporation employed 267 workers at the six factories, and paid wages amounting to £92,466. Administrative staff at factories and Head Office, Christchurch, numbered 36, and salaries paid were £17,140. Sales Arising out of a wartime agreement, extended after the cessation of hostilities with Germany, the Corporation shipped to the British Government in the period under review 347 tons fibre and 285 tons of tow. Sales to Donaghy's Rope and Twine Co., Ltd., accounted for 271 tons of fibre and 141 tons of tow. Nine hundred and eleven tons of seed were sold, including 116 tons shipped to the Commonwealth of Australia for resowing purposes. Five hundred and eighty-three tons of linmeal were disposed of in New Zealand, used as an ingredient in stock-foods. Total value of all sales amounted to £226,168. Financial Result The 1947 financial year opened with work in progress comprising crops grown for the British Government, and closed with straw stocks of the 1946-47 crop, the exclusive property of the Corporation. Thus during 1947 approximately 50 per cent, of the straw processed was the property of the British Government, the other 50 per cent, was processed by the Corporation, and from it has derived its first source of revenue.

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After providing interest at 4 per cent, on loan capital, representing a payment of £6,092, the accounts show a net profit of £329. This small profit is due to the conservative policy of the Directors in having work in progress valued at the lowest possible "figure. Liquidation of Capital Assets The liquidation of factories other than those retained by the Corporation (six) is nearing completion. The agreement with the British Government is that the capital Joss will be shared in the relation of total fibre sold to local spinners and the value exported to the United Kingdom. The ratio will be approximately 85 per cent, to 15 per cent., the latter being the liability of the New Zealand Government. Selling-price The average selling-price fixed by the British Board of Trade for the supply of fibre is approximately £247 10s., and a small quantity of 15 tons will complete the agreement with the British Government. Irish growers are receiving £(N.Z.)324 12s. for their 1948 crop. The average selling-price of fibre by the Corporation to the local spinners is £294 6s. At this price the local company can supply seaming-twine, ham cords. &c, at prices lower than can be imported for similar grades. Sales Overseas The Corporation has appointed Messrs. Malcolm and Co. as selling agents in the United Kingdom and the Continent of Europe, and various parcels of tow have been disposed of at satisfactory prices. In addition, the Corporation recently shipped 50 tons of machine-scutched tow to Oregon (U.S.A.) Flax Textiles, Inc. The following is an extract of a letter recentlv received from Oregon Textiles (Inc.), U.S.A. : This shipment (50 tons of tow) finally reached our hands and we found it very satisfactory. We are deeply interested in your product and hope to be able to purchase more of it in successive crops. The growing and processing of linen-flax fibre in New Zealand can be described as a " natural " industry as it combines a primary with a secondary industry and is providing an essential requirement for primary industries at lower prices than can be obtained under present conditions from overseas. The establishment of the industry in New Zealand in 1940 on behalf of the British 'Government has demonstrated the possibility of this industry being carried on on a permanent basis. Of the sixteen factories which were erected during the war period, six have been retained to supply New Zealand's requirements of fibre for the production of spun products, such as seaming-twine, ham cords and heavier type of sewing threads, &c. All these products are being produced by Messrs. Donaghy's Hope and Twine Co., Ltd., who have met the position by the installation of further spinning machinery at a substantial capital cost, and the company is now able to meet all the requirements of the Dominion in the above products, which are, in the main, used by the farming community. A further development of the industry lies along the lines of weaving suitable yarn into canvas, fire hose, and other woven products, and the Directors propose to give this further development careful consideration in the future as an extension of the present spinning activities. F. Johnson, Chairman of Directors. J. W. Hadfield, General Manager.

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THE LINEN FLAX CORPOKATION OF NEW ZEALAND Straw Purchase Account, Year ended 31st December, 1947 (Figures to the nearest pound) Dr. £ Gr - £ Crop purchases 73,978 Cartage in (recoveries) .. .. .. .. .. 818 Pulling . . .. .. . . . • • ■ ■ • 1,689 Cost of Production Account (prime cost transferred) .. hi, 387 Labour supplied to grower . . .. . . • • 109 Expenses of fibre determination .. .. .. •■ 1,328 Interest to growers . . . . . . .. • • 104 Stacking .. .. .. • • •• •• 4 > 782 Minimum payments on reject crops .. .. •• 1,215 £83,205 ' £83,205 Cost of Production Account, Year ended 31st December, 1947 Dr £ Gr - £ Purchases of straw (prime cost transferred) .. .. 82,387 Work in progress (31st December, 1947) 44,319 Work in progress (Ist January, 1947) .. .. .". 44,575 Stocks of tow, seed, and meal ~ .. .. .. 11,77b Stocks of tow, seed, and meal. (Ist January, 1947) .. .. 10,807 Sales of— Factory salaries •■ 11,780 Seed Wm% Power 'and light .. •■ 3,195 Tow •• 27,0*6 Cartage .. .. .. •• •■ 7,251 Meal ~ .. .. .. .1 .. •• 4,562 Rents! rates, and taxes 817 Rents received and sundry revenue .. .. .. i J : »JJ3 Compensation and workers accident insurance .. .. 1,708 Trading Account (cost. of production transferred) .. .. li>A,d4> Processing .. . . . ■ . . • . . , 74,339 Maintenance .. .. .. .. •• •• 17,944 Fire insurance reserve . . . . . . . . • • 2,481 Depreciation .. .. .. .. •■ •■ 0,992 Factory, office, and travelling expenses ~ .. .. 1,275 Interest on loan capita] .. ~ ~ .. .. 6,092 £271,043

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Trading Account, Year ended 31st December, 1947 Cost of Production Account .. 152 , 3 25 Sales of fibre 16 A 38 Stocks of fibre (Ist January, 1947} 2,698 Stocks of fibre .. .. " 2 636 Export charges and fibre store insurance .. ~ .. 1883 " " VD^ Profit and Loss Account (gross profit transferred) .. .. 10,368 £l67 > 274 j £167,2.74 Profit and Loss Account, Year ended 31st December, 1947 £ ala ™ s . •• •• •• 6,353 Trading Account .. .„ 10 oar Travelling-expenses .. ~ .. .. 1 126 ** "° .. iu,<H>a Directors' fees and expenses ~ .. ~ , # ' 582 Audit fees .. .. ~ # # ][ 244 General expenses, telephones, and postages, stationery, Head Office rent, heat and light, exchange, discount .. .. 1,734 Profit and Loss Appropriation Account (net profit transferred) .. '329 £lO^ 68 £10T368 Profit and Loss Appropriation Account, Year ended 31st December, 1947 Dr. $ ri Balance (net loss on United Kingdom crops processed, 1946) .. 1,536 Claims Account (United Kingdom share, 1946 trading loss after 4,839 charging 3 per cent, interest on capital) .. .. 6,046 Profit and Loss Account (net profit transferred) .. .„ ' 329 £6 ' 375 £6.375

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