STRONG POSITION.

Auckland Star, Volume LXIV, Issue 237, 7 October 1933, Page 11

STRONG POSITION.

(Intended peport.—By Arrangement.)

IN DIFFICULT YEAR.

FARMERS' AUCTIONEERING CO.

MR. SEAVTLL'S REVIEW. The 20th annual meeting was held to-day of the Farmers' Co-operative Auctioneering Co., Ltd. Mr. Walter Seavill, chairman of the board of directors, presided over a large meeting of shareholders. Mr. Seavill said: — "In moving the adoption of the balance-sheet and report, I would like to refer briefly to the operations of the various departments which comprise the activities in which our company is engaged. It goes without saying that the past year has been a very difficult one, and 1 venture the opinion that the shareholders have cause for satisfaction in the results of the past twelve months' working, which are practically unparalleled in New Zealand to-day amongst companies engaged in similar business.

"Subscribed capital shows no variation, and remains at £058,207, the calledup capital being £470,953, which is all paid up. The reserve account remains at £20,000; £10,175 represents the fixed deposits with the company, and £3370 is the .sum total at credit of current accounts. Sundry creditors, £23,254, show a decrease of £3405 on the previous year's figures. This liability has since been paid. The liabilities, excluding capital and reserves, total £43,227, whilst the assets amount to £554,338, revealing a percentage qf liabilities to assets of 7.79.

"The yalue of the company's properties stands at: Freehold £102,728, leasehold £2411, totalling £105,139, last year's figures having been depreciated by £3301. Maintenance renewals and repairs have as usual been charged against current expenses. The sum of £8412 covers the whole of the working plant, machinery, office furniture and fittings engaged in the business, a reduction on last year's figures of £1011. Sundry debtors, less reserves and bills receivable, aggregate £192,004, a decrease of £52,181. •

•■lnvestments total £41,001. Of this sum £Jf0,055 is invested in New Zealand (.Jovernment inscribed stock, from which lias been deducted a reserve of £1500 for any possible fluctuation in value. The balance in the investments is represented by mortgages and other securities held by the company. It is gratifying that under existing conditions we had not to lean upon our banker.?, find that a credit existed in NewZealand of £59,320. Stocks of merchandise have been valued by competent valuers at £87.700, a reduction of '£2417 on last year's figures.

"The percentage of expenses to gross profits is 82.-13. You will lie pleased to learn that further economies have been found possible in the management, a saving of £4300 having been effected on top of the reductions during, the last two years. .Briefly (summarised, the position is as follows: Paid-up capita], £470,953; total liabilities, £43.227; total assets, £554,338; turnover, £1,048,100; gross profit, £95,043; expenses, £78,558; net profit, £17,087. Merchandise Department. "Trading conditions for the year just completed have been somewhat difficult, and competition antl price-cutting have been intensive. Political expedients have affected trade, and considerably restricted importations, brought about bv the adverse exchange rate and the imposition of the sales tax. Importers to-day are inclined "to refrain from placing overseas orders owing to a feeling of insecurity. The curtailment of importations may ultimately have a beneficial effect, as experience has taught that stocks of imported goods" under normal conditions are far in excess of the country's needs.

"It is pleasing for me to be able to advise that in face of thcoß difficulties we have successfully maintained our high standard of quality, and the turnover Tll this scction indicates that the services the company renders has been appreciated by clients. Shareholders and clients can rest assured of being able to secure their needs from the company's stores at the lowest price consistent of course, with good quality. Stock Market.

"Stock market conditions during the year have proved as difficult as for the preceding one, and almost throughout prices have shown little or 110 stability. With low rates ruling in the store cattle section, operations were not 011 as large a scale as in previous years. For about a fortnight in the spring stole cattle showed a sharp rise in value, and back country fanners carrying this class of stock were encouraged to look forward to a good season. However, beef, which had ruled extremely low during the previous winter, showed no improvement, so that the rise in store cattle was shortlived. Large numbers of fat cattle were sold from £5 to £6 each, whereas the same cattle in 1931 would have realised from £9 to £10 each, and in 1929 from £15 to £10 each.

"During the year the company has done considerable business with boner cows, drives of these culls being organised from all parts of the Waikato. The cattle were sent direct to the Horotiu Freezing Works, where they were killed on thfe owner's account, and by this, method the farmer received the full market value. We conducted an average number of clearing sales, but, generally speaking, prices for dairy stock have been disappointing. Cows with good butterfat records realised satisfactory prices, but the market has been oversupplied with dairy heifers. It is many years since farmers have been able to make replacements in their herds with the best of dairy heifers at from £6 to £7 a head. During the season large numbers of springing heifers were sold at prices very little in advance of what was paid for them as yearlings. Satisfactory business has been done in pedigree stock, and the prices realised compare favourably with those ruling elsewhere in the Dominion.

"Prices for fat sheep showed an improvement during the winter, but with the unfavourable conditions ruling last year few farmers held a sufficient number of sheep to receive the benefit of the rise. There seems to be a distinct shortage of store sheep in the Waikato, Last year very few wethers came in from outside districts, and as most of the hoggets held locally were killed for export, this class of sheep at the present time is difficult to secure. Although we handled the greater number of breeding ewes which arrived from the East Coast districts, there were not sufficient to fill requirements, and additional numbers came from the North Auckland district late in the season. The value

of breeding ewes having advanced since the sheep fairs, a number of farmers, who anticipated buying when the ewes had lambs at foot, have been disappointed, practically no suitable sheep being on offer.

"At the smaller horse fairs held in various parts of the district good prices were realised, but the outstanding sales were undoubtedly the Cambridge Winter and Spring Fairs. The spring fair was the most successful sale we have conducted for nearly a decade. Nine hundred and sixty-four horses were offered, and S3<> were sold, the top price hcinr £s(i, while prices ranging from £40 to £50 were fairly common. Tt was predicted a few years ago that the tractor would replace the horse, but such has not proved to be the case. The keen demand fo' - useful farm sorts that exists to-day suggests that the horse is still indispensable.

"The greatest improvement during the v.ear lias been in the pig section. Not only have prices been consistently good, but a large increase in numbers handled has been shown. A most pleasing feature of the year's operations is the increased volume of business, showing that the service of the company still stands high in the estimation of the farming community. Although there was a slight decrease in the number of sheep sold, due to some extent to smaller arrivals of breeding ewes from the East Coai t districts, the number of cattle handled, compared with last year, showed an increase of over 10,000 head, pigs over 15,000 head, wnilst the total of horses increased by 574.

Wool Season. "The result of the 1032-33 wool season proved evpn more disappointing to growers than its predecessor, and all associated with the trade will have reason to remember the low range of prices and the tremendous setback to the industry. The first sale of tlie season took place at Aucklr ncl on December 2, 1932, the average price realised being 3.(5 d per lb, £5 11/1 per bale; the second sale was held on January 20, 1933, the average price per lb being 4.40 d, and per bale £6 14/7; the third and last sale was held on March 17, 1933, the price per lb averaging 3-54(1, and per bale £5 7/4; from which it will be seen that although the opening sale was rn a low level, a slight improvement too'.c place in January, but in March was not maintained, and, in fact, the prices realised were slightly lower than at the opening sale.

'•A keen demand wae imieh in evidence for well-got-up and efficientlyclassed wools, and it is pleasing to note that each year more growers are availing themselves of the excellent service provided by the company for the clausing, binning ;,nd pooling of clips. Tho quality and condition of the wool offered showed 110 improvement upon the standard of tjie previous season, but it js hoped that the recent firming of prices will arouse growers' interest, and that they will pay more attention to the get-up and classing of their clips.

"For the coming reason sales have been scheduled for Auckland: —First (sale, Monday, November 27, 1933; second (idle, Mqn<:l;;y. January 15, 1034; third sale, Tuesday, March 27, 1934. Although under existing world-wide conditions it is difficult to forecast, I aji| inclined to the view that for the coming season prices will show an advance 011 last years realisations, and I think I can venture to. say the indications are that there will be a strong and keen demand for all attractive wools. Shipping Facilities, "Through the increased rate of ex.-. change, and consequent restricted importations from the United Kingdom and American points, one way cargoes have been more evident this year, shipping companies having again to' send ships out in ballast to lift New land produce. A striking feature was the increase in pork shipments, these being about CO per cent more than the previous year's exports, Peef increased by 30 per cent, and there was a slight excess over last year's shipments of lamb, but approximately a 3Q per cent decrease in the export of mutton.

"Shipowners are feeling the restrict tion 011 beef shipments. A number of vessels have already cleared New Zealand coasts with vacant refrigerated space, and this will continue until butter conies along more freely. With rep.ard to dairy produce, the exportable surplus of butter shows an increase of 2S per cent, whilst cheese shows an increase of 19 per cent. General cargo has come forward regularly, and an improvement in wool prices has caused the shipment of a large quantity of old wool. Canadian trade has shown an improvement since the adjustment of the trade agreement between Canada and New Zealand, and large shipments of hideti and sheepskins have been going forward.

"Jn connection with Eastern trade, ,a pleasing feature in regard to this trade has been the increase in wool shipments to Japan, which last year approximated 30,00) bales, and the coding (season should see, this total considerably increased. A large quantity of scrap metal has also gone forward to Japan, and in smaller parcels other commodities, such as butter, casein, sheepskins, tallow, pelts, condensed and dried milk.

"Coastal shipping lias not been satisfactory, but as sopu as importations are increased an improvement will be shown. Our agencies, as you are doubtless aware, comprise the Cunard Line (Australasian service), Commonwealth and Dominion Line, Osaka Sliosen Kaislia (Japan and China), and Gisborne Sheepfarmers' Service, East Coast ports. Insurance Results. "Notwithstanding continued adjustments of insurable property to present--1 day values, I am pleased to say that the results shown by this department have been well up to the standard of former years. No effort lias been spared to secure new business to meet the lower level of commission earnings due to depreciated values, and. a good measure of success has been met. Shareholders and customers alike are once more rei minded that it is in their own interests to see that all risks are guarded , against, and that as chief agents in ' the Waikato for the New Zealand 111- ' surance Co., Ltd., we are in a position to give prompt attention to all inquiries. The Hfe insurance agency of the Producers and Citizens' Co-opera-I tive Assurance Co., Ltd., a compara- ' tively new departure, is proving a use- | ful adjunct to our activities.

1 "One of the chief dimcurties the directorate and management have had •to face has been to deal sympathetically with our farmer clients, and at the same time to conserve the best interests of our shareholders. ' No' is one of the most difficult words to say, and the utmost consideration is given to the merits of every proposition before arriving at a decision whether further accommodation is warranted, or if the piling up of further debt by the client will not merely stave off temporarily an inevitable disaster. It has been the policy of the directorate and management to give the utmost assistance consistent with prudence to clients' needs.

"I regret that the hopes I expressed at our anjmal meetjijg last year regarding prices for dairy produce were not fulfilled to the extent one could have wished, and what prices will rule during the season now entered on is beyond my powers to forecast. The only sound course for farmers to follow, whether it be dairy produce or meat or wool which is under consideration, is to try and produce the best their various farms are capable of doing, content in the face of worldwide competition, to rely on the merit of the articles to obtain for them the best price rather than look for help from tariffs, exchange, or artificial props of any kind, which can only lie implemented at the consumers' expense. "The very encouraging reports of the condition, on its arrival in London, of a consignment of beef from New Zealand under the novel conditions of an atmosphere of carbon dioxide combined with a modified freezing temperature, surely justify us in looking forward to our being able to land chilled meat in the Old Country in as good a condition as that shipped from South America. Menace of Quota. "The chief menace to the primary producers in New Zealand is the possibility of a quota being established to enable the British home-grown farm produce to be sold at a higher rate. I am sure we all have a warm spot in our hearts for the English countryside, and deplore the straits to which farmers at Home are reduced; but at the same time, two classes are going to be penalised if a quota be imposed: (I) the consumer in the Old Country, by having (a) his cost of living raised, or (b) his standard of living lowered; and (2) the meat producers and dairy farmers in New Zealand, and indirectly everyone else in the Dominion, to whom it will be a most serious blow.

"Those in authority at Home are no doubt considering the pros and cons, and we farmers in New Zealand are certainly not in a position to throw stones, and for two reasons: (1) We have not reciprocated with Great Britain by trading with her to as full an extent as we might have; and (2) we would do exactly what the British farmers are doing and make a great outcry if meat and dairy produce >vere imported into New Zealand and undersold ours. However, whatever the outcome may be. it is just as well we should realise how serious the possibilities are.

''There is a matter to which I feel I must refer, which affects, not only companies such as ours, but a great number of farmers. It is claimed in certain quarters that legislative action should be taken to compel the holders of stock securities to share with the mortgagee of the land the proceeds of the farm. At the present time, in a number of cases, the stock mortgagee shares with the mortgagor these propeeds, and, at first glance, it might appear equitable that the land mortgagee also should get a proportion. It is argued that if it were not for the land, the stock could not be grazed, and con* Sequently could not be appreciated and got ready for sale, or, in the case of dairy stock, produce any milk.

"There are several arguments I can advance in reply. The security in a stock mortgage is extremely hazardous, owing (a) to mortality risks; (h) to its being readily removable; (c) to its being ppusumed as food; and (d) the possibility of the stock having to be realised on at an unadvantagepus time, owing to the gftle of the farm by the land mortgagee. None of these risks have to be considered by the mortgagee of t}ie land, and it is suggested now that apother unattractive feature should lie added. Why should the land mortgagee be entitled to collateral security at the expenoe of the holder of the bill of sale over the stock, and none be available in return for the last named, who is expected to find all cash advances necessary for the carrying on of the farm and fertilising of the pastures, to take all risk of further loss, hut is expected to share any surplus with the land mortgagee ?

"Tlicmgh, admittedly, stock cannot be held without the land on which to graze it, if no stock were carried the value of the land mortgagee's security would rapidly decline, owing tq deterioration, so these two considerations cancel one another. This particularly applies tq second-class hill country. Sales of stock' in periods of low values often do not produce more than enough to keep the farmer going, and perhaps reduce his indebtedness to the holder of tile bill of sale. Further, out of these proceeds, this company, at any rate, often allocates a portion for topdressing, which benefits the land mortgagee as well as the farmer and itself.

"A fact that is frequently lost sight of is that in cases where the present value of the stock is less than the amount of the advance, any proceeds from the sale of such stock represent realisation of capital-r-not increment — and should not, surely, be made available to meet interest charges due to other creditors. As I pointed out a minute ago, no provision is apparently contemplated to be made whereby a stock mortgagee would participate in the realisation —in part or whole —of the land mortgagee's security. The final argument I have to submit is that if the security of the bill of sale holder is interfered with it will be extremely difficult for many farmers to arrange stock finance unless, of course, the mortgagee of the land is prepared to give the accommodation. New mortgages on land are almost a thing of the past, and Government interference in stock securities would automatically add to the difficulties of farmers in making arrangements for stocking their properties, and further, would largely curtail the functions of companies such as ours with a consequent diminution of income for ourselves and income tax for the Government, Socialistic Leanings. "I very much regret that the socialistic leanings of all political parties in New Zealand to day appear to vary only in degree. However, as long as the majority of those with the best brains in the country shirk public service and remain inarticulate, or do . not realise whither things are drifting, one cannot be surprised if a Government takes advantage of this apathy, and tacit acquiescence in its questionable activities. Legislation in recent years has been in the direction of making it easy for citizens to sidestep their obligations, which action cannot fail to sap the morale of the nation.

"ln this connection let me quote from an article which appeared a short while ago in the 'London Times,' written by Sir A. M. Samuel. He said: 'No nation, even in conditions of profound peace, can continue as a trading community, or, indeed, exist as a political entity if it fails to observe faithfully all contractual obligations. The decay of common honesty, evident everywhere in recent years, is a major cause contributing to the world's malaise. An international rise in prices is not worth the paper on which the prices are to be printed, unless nations and men maintain and enlarge good faith between one another. With disrespect for the sanctity of contract, self-respect is abolished, prices become meaningless, commercial intercourse ceases, and the very structure of society, is dissolved.' '

I "I think we should take tlie fore-

; oing statement very much to heart, and ask ourselves whether we are not allowing material considerations to obscure moral values. Notwithstanding protestations to the contrary, most nations to-<lay would appear to be striving to score at each other's expense; as are also —-among themselves —the various sections and classes comprising thoee nations. "It surely must 'be conceded that a principle is not aft'ected merely because a large number of people may be concerned in its application. Can we not in New Zealand, even now, revert to the okl-time fashion of being governed by principle, and honour our contracts among ourselves, and with Great Britain? It is undeniable that we have laid ourselves open to grave reproach in this connection.

"A long time ago someone made the statement that it was expedient that one man should die for the nation. It is quite obvious that many people to-day echo that sentiment, the sacrificial victim, in their minds, being either the land or the stock mortgagee. In New Zealand to-day the trouble in rural matters is a triangular one, the position up to date being that the land mortgagee has had his rights in his contract with the farmer cancelled, and he is now trying to halve his losses by transferring some of them on to the stock mortgagee, and the Government appears to be lending a sympathetic ear. It is a good illustration of how, if you tell an economic lie, you have to tell another, and probably some more later on, and en. perpetuate something which should never have been begun.

"Ignoring a principle, and resorting to an expedient, is the adoption of an apparent remedy, the efficacy of which is not borne out by subsequent experience. It is an attempt, by means of taking a short cut, to remove the ill-effect, not the cause, of an evil, or of a hardship, and can only be implemented by transferring the burden to someone else's shoulders. Tribute to Staff. "I cannot speak too highly of the manner in which the whole staff has responded to the calls made upon it, and has risen to the occasion. No one lias relaxed for a minute in the search for new business, profitable investment, endeavouring to satisfy the company's customers and at the same time safeguarding its interests.

"In conclusion, may I once more urge you to forward the interests of your company to the utmost. The results of the year's working as a whole, and some of the details I have given yoij, surely speak for themselves, and proclaim that this company enjoys the confidence of a very large number of farmers. It possesses an enviable reputation, and its prestige is growing daily. I do ask you to give us the first opportunity to servq you when you have any buying or selling to do, and thereby draw nearer the day when we can once again make sufficient profits to pay a dividend on ordinary shares. I now formally, move the adoption of the report and balancesheet."