FARMERS IN TRADE.

Auckland Star, Volume LVI, Issue 190, 13 August 1925, Page 4

FARMERS IN TRADE.

OTAIHAFE FREEZING CO. HEAVY LOSSES. MOTION FOR LIQUIDATION. The difficulties that have beset many farmers' trading organisations in the Dominion are exemplified in the case of the Otaihape Freezing Works, a co-ope-rative concern doing business at Taihape. Established in the boom period, the company found, when times became less prosperous, that the output of the works diminished to such an extent that operations became unprofitable. The competition of the big freezing corporations was so keen that their own shareholders failed to support the company, and for a number of years past substantial losses have been made. Last season the directors made an arrangement with the Feilding Farmers' Freezing Company whereby its shareholders located convenient to that district could, if they wished, put their business through the Feilding works. It is claimed that the arrangements were in every way satisfactory, but the quantity of business so secured was not up to expectations. The year's operations have resulted in a loss of £1102, which, with depreciation, makes a total of £29"<3 for the year. The paid-up capital of the company is £02,570, and accumulated losses now total i"20,208. At the annual general meeting of shareholders, to be held on September 2, the following resolution will be moved by Mr. Robert Lilburn, a director of the company:—"That, owing to lack of support from many of the shareholders, the time has come when the directors should be asked to take steps to have the company wound up." Dealing generally with the position in a circular to shareholders, the chairman of directors (Mr. D. G. Gordon) says: — The enclosed balance-sheet and notice of motion speak for themselves. Your directors, while in no way committed to support Mr. Lilburn's motion, are unanimously of opinion that they are not justified in further increasing the liability of guarantors by risking a loss on next season's operations. After making all due allowances for seasonal conditions, forward buying, etc., the fact remains that last season many shareholders did not put the whole of their fat stock through their own company, although the prices offered were at least on a par with competitor's prices. This is proved by the fact that our buyers handled the stock of non-shareholders, who are keen sellers, and had_ not previously supported the company. Under these circumstances, your directors desire a candid expression of opinion from shareholders as to whether they wish their company's operations to continue or not, and a definite undertaking on the part of shareholders to supply sufficient stock to warrant the company continuing in business. It is confidently anticipated that during the coming season expenses will be considerably reduced, and a killing of 60,000 i freight carcases would warrant the company continuing operations and show a profit* The alternative is liquidation, in which case the whole of the share capital wguld be lost, and probably a call be made on guarantors as well. ■ "