ANOTHER GOOD YEAR.

Auckland Star, Volume LX, Issue 242, 12 October 1929, Page 13

ANOTHER GOOD YEAR.

[Bstended Keport by Arrangement]

FARMERS' AUCTIONEERING CO. DIVIDEND OF 8 PER CENT. CHAIRMAN'S APPEAL FOR UNITY. The annual meeting of .the Farmers' Co-operative Auctioneering Co., Ltd., was held in Hamilton this morning. . .The chairman, Mr. H. S. Hawkins, in moving the adoption of the ifeport and' balancesheet, said:— The year under review marks a further record in production, and there is reason to expect that each succeeding year.will show a progressive improvement. I am certainly surprised, that it has teen possible for the Old Country—considering their financial obligations,, their number of unemployed, and tjieir increasing difficulty in finding markets against the competition of the world—to place so high a value on our main export? during the last two years. How long it may continue I do not know, but it is obvious that it cannot continue indefinitely, and therefore I still urge you to do all you possibly can, both as farmers and as members of the community, to reduce costs of production in this country to the point at which you can,face a material reduction in our export values. Capital. Account.—This is substantially the fame as last; year, the small increase in the paid'upjcapital/ viz., £108, corresponding with Vihe/ reduction in calls unpaid- Since; the close of- the financial year of the calls unpaid has heen practically'cleared,-,up, and this blemish : >im : our . balance-sheet ■ will, I hope, be'c'oiispicuous by its absence next Tea - r - :. - . " ■■■■•■:':■!. ■ ■'■'■;■''"'. ' Reserv|> Account. —The reserve, account has beenj increased by £3387 .13/1, being the carry-forward-oflast.year's profits, which has-iee'ii transferred. . ■ .... Mortgages owing by the company have teen practically wiped out, the small sum standing under this head being, a Government mortgage which, it would be inadvisable to, interfere with. The overdraft at the Bank of New Zealand shows an increase of £33,454 19/3. '/■■■ Increase in Assets. Our freehold and leasehold properties show an. increase over last year of £1556 9/. The fact that we have erected and paid for a new wool store in Auckland shows a further depreciation of these .properties.-•-. The -.book value today is fbout below- the Government capital?',valuation. '•'*■;. : . .*. Sundry,.-^Debtors.—-The increase, of the amount owing to us by sundry, debtors has been caused by the larger .business done by both the stock and; merchandise departments. This is; responsible for our increased overdraft; - '.• greater,turnover, in the merchandise , department has warranted our carrying a\slightly .fuller range of 6tocks..:■;■.:■;• .. . f , . ; .. . The liabilities, -excluding capital and reserves,', total £141,283 10/, the total assets' i Unmounting. ? .to,. '£693,523 .16/4, ]eavingv.a balance of £552,240:. 6/4. in. favour \)f: our. -shareholders, against a paid up., 'capital/of 10/. , . ~,; • ';'.' On thffjjxpenses side of the-,profit and loss account £97,921. 15/,. .shows '■ jatt f : 'OTeri**last-'year - oT £8451 pft.^Tfie'-grpas^ profit of £148,i99i, being J£18,155 v 3/10 in excess' of last year's ;;earttin"gs, has"" proved tie "additional cost , to; be fully, justified, .particularly as ;'■■&• percentage of .expenses to gross profits works out this «year at 65.7, as': agshst S&5 ;in{: 1,928.• "-.That, profit ,£as 'been^contributed; to by' all; . departments,.- the stock! arid merchandise showing a most'; marked* improvement. When we remember, that the net profit last yearrrwaa. more ■ than double that of 1927?: ti- further" addition -to'those figures of/£ 1.0,0.03; is most satisfacN tory, ariif.,;justifiesi .the belief that the company has-permanently- recovered its earning- power. .':'■■■■'■'■ ■'■'■'■- •■'•*•■ >-• . ; ■ ■ The amountayailablevfor distribution is £51,069 5/, out. of Avhich the interest on preference share capital has already been paid. From 'the balance we propose paying a dividend of 8 per cent on the ordinary "ehare capital, the income tax for the year, and carrying the rest forward. ■ ■ . To briefly summarise:— £ s. a. Paid-up capital .... 479,003 10 0 Turnover ...'..■..... 2,016,161 0 0 Gross: profits 148,991 O O Expenses 97,921 15 0 Net profits 51,069 5 0 Stock Department. The market for'fat and store cattle has been consistently good throughout the year. Local prices were too high for exporters to operate to , any extent, so that very few fat cattle were frozen. The highest price quoted -for beef this winter was 44/ per, 1001b, as against 48/ per 1001b last year. ' However, taking the whole year round, values have .been steadier than the previous year. . There has been a good demand for dairy cattle, : tested cows and good quality heifers being specially sought after. We have held a large number of clearing- sales, and the average • price realised at the majority of them has been exceptionally good. Air the pedigree sales conducted have, been successful, and we are looking forward to increased business in this direction. Sheep-were in- keen demand during the autumn; in fact "the prices of all classes of store sheep at, that time were 'beyond reason. Although fat sheep advanced slightly in the early part of the winter/ store sheep and breeding ewes have shown a decline, and. from the present outlook the coming year, will see values lower all .round; ■. . The inquiry for horses has been very good, especially for medium, and heavy draught, farm horses. At the recent spring fairs practically all the horses yarded have changed hands at satisfactory prices. •-■-•,..>:' Pigs have been yarded at our principal saleyards in increased numbers, and prices throughout the year have been good. The demand, especially for fat pigs, is still keen, and farmers may look with confidence to the future. In the King Country the carrying capacity has considerably increased owing to ' the greater area top-dressed during the year, and much of what was sm-plus stock has been held to cop"e with the feed. Our private sales have increased considerably." The 'bulk "of- the stock business is 'already being done in / this manner,- and if this tendency continues it will be difficult to place a,, value upon any class of stock, in the absence of the competitive basis now obtainable through yard sales. : This growth'of private selling -seriously affects the earning power of the various saleyards established throughout our territory, and it will be well for farmers to consider carefully whether they are acting wisely.in ignoring the facilities provided for obtaining the best current prices for their livestock.

There are indications of a coming world shortage of beef which we as producers would do well to make a note of.' Merchandise Department. The sales for the year just completed show a very substantial increase when compared with the previous period, indicating that the services we render are being, appreciated by clients. The prices of.grocery and hardware still remain on a fairly even and stable basis, and there is every indication that this condition may continue. During the year we have extended our importations, covering a much wider range of glassware and crockery, as well as a more comprehensive and attractive range of hardware. Shareholders and clients can be assured' of securing their every need from any of our.stores at the lowest prices, consistent, of course, with good quality. Fencing Materials. —Sales of wire and fencing materials during the year have been exceptionally heavy. Although we handle Canadian wire as well as English, sales of the former are, very small in comparison. For many years we have confined our attention to a leading English'make, and are satisfied that this brand gives the greatest satisfaction to the user. There are other brands on the market which are slightly cheaper, but these often prove dearer in the long run. We fully realise that farmers- buying wire must bo protected regarding quality. Sales of galvanised iron and wire netting have been well maintained. Grain.—A much better inquiry has been experienced during the past year for Algerian seed oats.- The demand in New Zealand about equals the supply, so naturally toAyards the end of the season prices increase. The -inquiry for wheat is still maintained. The past year is notable for the.first year's working of the Southern wheat pool. Prices during the year have been very reasonable, but as all free wheat is now off the market, the pool has periodically advanced the price to cover the cost of holding, and therefore a higher figure must rule until next h'arvest, unless there be an alteration in . the present duty governing importations. Seeds.—-The sales of grass and clover seeds last autumn were not as great jas the previous season, which was referred to in my last report as being the heaviest for many A years, yet the business done was well above normal. Prices ', were slightly higher than last year,, arid the quality first class. Competition is always, very been with this line,, and in spite of the somewhat serious competition with lower grade seeds, we are still able to maintain our connection through exercising the most scrupulous care in selecting only the very best and highest quality. " We have built up an excellent connection, and every effovt is being put forth to maintain this, as we consider nothing but the best is good enough for our clients. v , .. . Manures.—The demand for manures throughout the year has been exceptionally heavy, as farmers now realise that this requirement of agriculture needs greater attention. Although the, bulk 1 of our orders is for superphosphate and basic slag, it is interesting to note that considerable quantities of nitrogenous manures wefe also in demand. During the off season, December, January and- February—special low quotations; were, offered .by the fertiliser manufacturers, and the farmers did not hesitate.to,take.,advantage of the reduction, and in many anstances booked very substantial quantities, over", and: above their immediate requirements.,' Owing to an exceptionally severe winter in Europe, during which canals and harbours were "frozen over,' the loading of basic slag was interfered "with.- ;: In; consequence, -the' car-iying vessels reaching Auckland,. causing... venience. 'African phosphate has also -demand, and- from- reports received is showing satisfactory results. Garage.—The company's garage in Barton .Street has an , equipment., for par serjvice equal to anything in. this country, .'and all renovations and repairs can.be executed on the premises. '• , ' •; : Saddlery.—The saddlery' Workshop has been thoroughly overhauled and is turning out work which is appreciated all over the. North Island. . , Wool Department. , The wool department, shows a further satisfactory increase, the total offering for. the season amounting to 10,260 bales. Unfortunately, a drop in the price of 3d per lb after the first sale in November reduced the gross value very considerably. At the second sale in February 5931 bales were catalogued, the largest quantity we have ever handled at one time, and our new floor, whieli was commented on most favourably by buyers,' was fully occupied. This new , floor, providing as it does the most up-to-date lighting and facilities for the economical handling of wool," will undoubtedly be a great, asset to the company in the future. The quantity of wool reclassed by the company is increasing every year —2621 bales having been so dealt with last season. This work entaih considerable strain on the company's expert at a busy time, but the results obtained show how much it is appreciated by the buyers. The alteration in the date of the second Auckland wool sale' to January 21 should result in a considerable increase in the quantity of wool from the Kino - Country district for next season. Our annual wool canvass of North Auckland clients resulted in a further increase from that district. Shipping Department. Shipowners in the Australasian trade have experienced a normal year, and Australian waterfront conditions have "been inore settled. Exporters during the past year have enjoyed ample space to lift all their requirements. The extra tonnage required during the peak of the New Zealand season was transferred from across the Tasman at regular intervals. General cargo and the exportable surplus of meat and dairy produce were in excess of the previous- year. The export of apples fell short of last season's figures, however, owing, to the unfavourable season. In my last report I remarked on the increased meat and dairy produce shipments to America. This trade has been well maintained throughout the year, especially butter to Canada, and from what I can gather from forward sales, this year's figures should eclipse last year's exports to that country. With regard to meat and butter exports to the United States of America it is impossible to forecast how this trade will be ■affected owing.to the proposed increased tariffs. Shippers are no doubt gratified at the further reduction in freight rates of 5 per cent, which applied to refrigerated cargo as from September 1 last. The activities of this department in Auckland have been increased and its scope enlarged in developing the tourist agency and booking business. We have been appointed provincial representatives for the Mount Cook Motor Company and Hermitage, Tongariro National Park, Aard Motor Services throughout New Zealand, and the New Zealand Deep Sea Angling, Ltd., and we look forward to , this department proving a profitable I section of the business.

Insurance Department. This department continues to show a very satisfactory return, although there is room for even more support than is already accorded. As chiei agents in this district for the New Zealand Insurance Company, Ltd., we keep abreast of what is required to protect clients against loss, and farmers should make a careful survey of their neeas m this direction. I feel certain that shareholders would be well satisfied if they allowed us to handle, this business tor them. Land Department. . Although this department is of considerable service to the company in many ways, of late years it has not helped much from an earning point of view. Mr Young having left us, Mr. W. M. Hume was. offered and accepted the appointment in his place. Financial Outlook. Interest-rates in the Dominion are about i per cent lower, than m Australia, and as the Government has not been able to borrow at a rate which could reduce interest charges there appears to be no prospect of any reduction for some time to come. On the other hand, I have it on good authority that they are not likely to be increased, notwithstanding the fact that any reduction in selling value of our primary products means less money available for investment and development. Banks and other lending institutions, including the Government, are for the most part well supplied with funds. Mortgages on freehold improved farm lands are readily obtainable at 6 per cent, but lenders at that figure require a substantial margin of security. The heavy burden of. local taxation is more generally allowed for in making valuations. Traders on the wliale are not securing an adequate return on their capital,' due mainly to the excessive competition which prevails in most lines of business. The financial position of the majority of farmere to-day,is sound—the exception being those' who paid extravagant prices for their land. "■ '■■ If we can rely on increased production to minimise the reduction in value of our exports, there is no occasion for any anxiety. As this will be my last opportunity of addressing you may I say something about Co-opefatioh. : The object of farmers' co-operative companies is to stand between their members and the exploitation of proprietary interests, and in their struggle to that end they have many handicaps. The first is their want of capital, as compared with that at the command of the companies working in opposition. The second is the necessity for restricted profits, otherwise the object could not be carried out. Thirdly, the expectation of members of rebates as well as dividends. A verylarge proportion of ordinary shareholders in this company have only a few pounds each invested iti share capital. As a consequence, rebates paid in the- past have been in many cases considerably in excess of the shareholding of the recipient. This means : that his contribution to the capital of the company ie quite inadequate to finance the business he is doing, and that his rebates "arc only possible ;by the employment of capital belonging toother members. The company is expected to pay, out of its restricted profits, not only interest on the capital employed in tlie form of dividends, but also, a bqniis, in; the .f prni "of .rebates, on: the' business 'done to'earn those profits. " ; \: '"': ,'v■"•' ; This creates the next handicap, which is -the great difficulty of putting aside reserves to enable them to carry on in bad times. .... ■ . .■• •■ A further handicap, common of course to. all companies, is the enormous and unjust burden; Sunder, the present incidence of company taxation—by which the man with a few pounds invested is taxed on the .earning power of .'those few pounds on the same scale ae another with an income of £10,000 a year.. The graduated land'tax is as unjust a drain on,our profits as the income tax. Aβ a war measure any form of taxation may be,justifiable- to provide the means to save civilisation, but to perpetuate an injustice long after the necessity has disappeared, either because they are afraid to place the taxation justly, or because they dare not ask their servants for a certain amount of extra work, is a disgrace to.every Government that might have applied the remedy. These are some of the handicaps we have to contend with, and we have only one weapon with which to overcome them —that is unity among ourselves. A co-operative company is democratically governed, and with all the units pulling together, their power might be irresistible. If they are pulling in different directions they can make no .headV way. ; Appeal for Unity. The conclusion I have arrived at after nearly a quarter of a century in the service of co-operation ie as lorig as farmers' co-operation rests on a purely voluntary basis it cannot get very far. Combined action, controlled and skilfully guided, is irresistible—uncontrolled, i.e., left to the whim of" the individual whether he support or not, all effective power is dissipated and lost. The strength of the labour unions lies in their power of compulsion. The executive can require from every individual member a very substantial sacrifice for the good of the whole. There are very few shareholders in a farmers' co-opera-tive company who will make any sort of sacrifice for the good of the whole. There are no members of i a farmers' co-operative federation who will do it. After many years of service the co-oper-ative company and the co-operative 'federation can. only ask their members to do business with them if ,they cannot do better elsewhere. Under euch conditions you will not be much nearer the point you want to be at in fifty years' £Tme than you are to-day. - Co-operation, means mutual help and entails mutual sacrifice. . There need be no compulsion in the first instance on any individual to join up with co-operation, or to keep him there against his! will, but while he is a, member there should be sufficient compulsion to make and keep him 100 per cent loyal. The prospects before this company were never brighter than they are today. We have a sounder financial position and a greater capacity for service than we have had in our history.. It liee with us by unity among ourselves and loyalty to the company to make that service as effective.as we want it to be.