DAIRY EXPANSION.

Auckland Star, Volume LIX, Issue 198, 23 August 1928, Page 12

DAIRY EXPANSION.

(Extended Report by Arrangement.)

NFW ZEALAND CO-OPERATIVE

BRIGHT OUTLOOK FOR SHAREHOLDERS.

PAID-UP CAPITAL INCREASED.

SOUND FINANCIAL POSITION.

The annual meeting of the New Zealand Dairy Co., Ltd., was held in the Theatre Royal, Hamilton, yesterday. Mr. Dynes Fulton, chairman of directors, presided, and there were 400 shareholders present. Also on the platform were Mr W. Goodfellow, managingdirector, Mr. H. H. Sterling, general manager, Mr. G. W. G. Thomson, and the members of the board of directors. Moving the adoption of the report and balance-sheet, Mr. Fulton said:— The past season's output was very disappointing from the producers' point of view. The pastures never got that sward of grass that prevailed for several previous seasons. The Finance Company which was formed in the 1925-26 season has continued to render great service to many of our suppliers. This company is a subsidiary one and is run entirely by the dairy company for the benefit of its suppliers who may require financial assistance. An indication of the extent to which assistance has been extended is given by the following figures:—The advances in the 1925-26 season were £25,000; in 1926-27, £67,000; in 1927-28, £83,000. The amount repaid is £115,000, and the total amount outstanding is £60,000. The total number of suppliers assisted to date is approximately 900, and the average amount advanced is approximately £200.

The final figures in the Finance Company's balance-sheet show that its operations were very satisfactory, and this department has been the means of helping many hundreds of dairy farmers during periods of financial strain. In 1923-24 there were 31,003 cows tested, in 1924-25 there were 58,308; 1925-26, 57,756; 1926-27 , 68,732; 1927,28, 76,697; and for the incoming year the indications are for a very substantial increase. These figures show that testing under the group system is recognised by dairy farmers as essential to successful farming. Tho company had continued to afford suppliers facilities for testing their cows through the factories, said Mr. Sterling, and in this connection 14,054 cows had been tested last season, as compared with 13,074 for the previous season. During the year 100,667 copies of the "Dairy Farmer" had been distributed to suppliers. Valuable service had been rendered by the company's insurance department and suppliers' policies were automatically renewed.

"The indications for the present season are very bright, insomuch as the prices are good for dairy produce and the stocks at Home are small, in comparison with other years. In reviewing the position generally it will be seen by the balance-sheet that your company is in an exceedingly strong financial position, having added this year to our capital an additional .£•">•),000, which brings our paid-no capii il to £1.0.iti.041 3/10."'

Items in the balance-sheet were explained by Mr. Sterling, who stated that the nominal capital of the company remained unchanged thi* year. Unallotted shares accounted for £151.47.1, as

against £19t>,101 for the previous year. The subscribed capital bad accordingly increased by £44.(>2ti. The paid-up capital stood at £1,05(>.041, as against £1.000.039 fur 192(5-27, an increase of £.><>.oo2.

During the last year the amount placed to the reserve account had increased from £25..">8"( to £.">4.087, a difference of £2.1.801. Mr. Sterling said the insurance reserve had been unchanged since i in- a-nab-a Mixtion. Anrt'ints had been set aside by the Dairy Association for insurance. Debentures stood at £30,000. the same as last year. These were held by Joseph Nathan and Company, Limited, and represented partpayment for the Te Aroha factory. Mr. Sterling said these debentures matured in 1920. The total number of debentures issued to Nathans was fio of £1000 each, 35 of which had been surrendered on the Dairy Company taking over the Matamata factory.

Referring to the -'mount distributed to suppliers on the May butterfat Mr. Sterli'ia said the decrease of £20.000 was due to a smaller supply compared with the same month for the previous year. The average bonus on butterfat for butterfat making was 2.121 d, compared with 2.548 d for 192(5-27, a total of £426,951, as compared with £504,679 for the previous season. The bonus on butterfat for cheese-making was distributed to cheese groups in accordance with their manufacturing results. Confidence in Organisation. Continuing, Mr. Sterling said the contra accounts of suppliers had increased from £38,014 to £5G,23.">, which was almost entirely due to the heavy increase in slag and other fertiliser business. Amounts due to sundry creditors had decreased from £124,463 to £96,899. The sum of £42,782 was due on suppliers' orders, and £26,521 was due on goods supplied.

Confidence in the company's organisation, said Mr. Sterling, was shown in the fact that sundry deposits had increased from £61,588 to £90,528. A saving of interest had been effected in this increase. Arrangements for more prompt shipments of produce, leaving smaller stocks on hand, had accounted for a decrease of £470,288 on the ordinary current back accounts during the year. The milk powder account had shown a decrease of £25,147 since the last annual meeting. The amount standing at the Canadian Bank of Commerce Was now £3869, as compared with £3155 last year. Increase in Investments. Mr. Sterling said that the milk powder development account had been cleared off during the year. A decrease of £164,277 was shown in the sundry debtors account, which now stood at £231,900. Loans to suppliers and sundry advances showed an increase of £16,386, which was due practically wholly to the dry spell. Investments had increased by £12,485, and stood at £107,529. The main items were £10,000 advanced to the New Zealand Dairy Finance Co., Ltd., and £2000 lent to Amalgamated Dairies, Ltd. Goods paid for and in transit represented £642, as against £539 last year.

The value of stocks had dwi\:a>c.l from £601,636 to £302,262, due to the prompt shipments of produce. Stores had increased by £7830. Dealing with the butter profit and loss account, Mr. Sterling said purchases had increased from £2,778,547 to £3,170,459, a difference of £301,912. These purchases included: Milk, £3,070,548

(£2,679,407 last year); whey cream, £11,185 (£10,434); manufacturing requisites, £4717 (£4862); packages £84,009 (£83,844). Railage had increased by £420, and cartage by £3382. These increases were due to the fact that 594,2971b more butterfat was carried. Greater Use of Trading Department. Greater use had been made by suppliers of the facilities offered by the company's trading department. the last three seasons the Finance Company had advanced £175,000 to suppliers and of this suin £115,000 had been repaid. About 900 suppliers had been assisted, the average amount advanced being £200. The gross turnover of the company, said Mr. Sterling, for the year totalled £6,333,849, as compared with £5,067.241 for the previous season. Butter showed an increase of £1,203,864 and manures an increase of £59,275. Amalgamated Dairies, Ltd. Reference to Amalgamated Dairies, Ltd., was made by Mr. Sterling, who said that there had been a goo'd deal of surreptitious propaganda attacking this concern, and portions of the articles of association had been used in a manner which did not give a fair representation of the object of the organisation. Amalgamated Dairies, Ltd., was established with a view to regulating supplies of dairy produce on the London market, and to selling produce at tjie best available prices against organised buying. Compulsory dairy control having failed the company set up Amalgamated Dairies, Ltd., with a view to bringing about a practical realisation of ordinary marketing as far as the produce of the New Zealand Co-operative Dairy Company, Ltd., and the produce of any other dairy company that cared to come in were concerned. Mr. Sterling said it had been suggested that Amalgamated Dairies, Ltd., had made £20,000 out of the company's produce. This suggestion was not true, for it simply could not be done. It was further suggested that Mr. Goodfellow had an all-powerful in-1 fiuence in connection with the operation of the new company. Mr. Sterling said that this suggestion was also false. The arrangement between the two concerns was simply a service agreement having for its object the furtherance of the interests of the producers. Amalgamated Dairies, Limited, said the general manager, had been set up in support of a vital principle in connection with the marketing of New Zealand produce. A new system of share issue to be adopted was mentioned by Mr. Sterling, who said the company had now grown to such a position of financial strength that the directors considered that new shares could be allotted on the fully paid-up basis. Lnder the new scheme the new supplier would enter as a fully paid-up shareholder. The directors believed this would go a long way toward attracting new suppliers. Mr. Sterling said the saving the suppliers had effected on fertilisers should be taken into account when estimating the company's payout. The report and balance-sheet were adopted. '

Marketing Position Explained. Tlic marketing position was fully explained by Mr. Goodfellow, who said' that ■ a his experience, extending over 17 yeurs. he had proved that a consistent consignment policy returned a better price than any other selling system. It sometimes happened that the' consignment policy did not produce the best returns, but over a period of years that system was undoubtedly the best. It was proposed to further increase this business by opening a depot in London. Mr. Goodfellow stated that f.o.b. selling was one of the biggest bugbears of the dairy business. There were 27 merchants in Poolcv Street doing business in New Zealand produce and there was a considerable amount of speculation in New Zealand produce, which was to the disadvantage of producers. The speculators bought oil the f.o.b. basis ami were certain of their profit. If the market was satisfactory they got their profit in the ordinary way. if it was unsatisfactory they had the power to depress the market by buying in largely and forcing up the prices. Messrs. Chambers, Worth and Chambers were reappointed auditors of the company. Notes of thanks were passed to Mr. I. L. Haines, the retir.ng secretary, and to Mr. Sterling, who is leaving the services of the company. Mr. Dynes Fulton was unanimously re-elected chairman of directors for the ensuing year. A hearty vote of thanks to the chairman concluded the meeting.