FARMERS' CO-OPERATIVE ASSOCIATION.

Press, Volume XLVI, Issue 7356, 8 July 1889, Page 5

FARMERS' CO-OPERATIVE ASSOCIATION.

ANNUAL MEETTNGV

The eighth annual meeting' of Shasw. holders In the New Zealand Farmers' Co- ! operative Association was held at LSD p.m. on Saturday in their offices, Cashel street. There was a very large attendance, and the chair was occupied byMiC. Ensor, Chairman of Directors. The report and balance-sheet were taken as read. The Chairman, said—Gentlemen, it falls to my lot once more to move the adoption of the annual report and balance-sheet* and in doing so 1 have great pleasure in saying that our anticipations ot last year, concerning the expansion of the business, have been more than realised. Our business has increased very materially in every department, the value of merchandise sold during the year amounting to, in, round numbers, £05,500 as compared with £45,000 lor the preceding year, or an increase of nearly 50 per cent., and. our produce business shows a still larger growth. The amount dealt with as advances to shareholders during the year against their produce, is no less a sum than £90,60-1, and this amount I . shall refer to again later on. Our working expenses havo beeu £3700 as against £3000 for the year ending ISS7-8, proving that :is our business increases the percentage of expenses in working it, is reduced. Tho total net profits for the year amount to £7150, to which is to 00 added the amount brought forward from last year £1103, giving us a total of £525 l with which we have to deal to-day. The first question with regard to our profits which shareholders may well ask is—Have we been unduly taxed in any department to realise them ? First of all, let us take merchandise, on which we make a gross profit of £6074 on our sales of £04,537, or a fraction under 9 per cent. This is the lowest percentage of profit evet made by the Association In any one year, the average profit for previous years being about 11 per cent. Your Directors now propose out of this gross profit of 9 per cent, to return shareholders a 4 per ceiljt, bonus on their purchases, thus leaving only 5 per cent, for payment of interest, rent, and all other working expenses, which it must be admitted is a very bare margin. It may again be said that but produce departments are too heavily taxed to arrive at this result. The best proof that these departments are not overi weighted i? the fact that they show tn'6 largest Increase. I do not think that at present it is advisable to reduce onr rates for commissions, interest, storage, &c, below those at present ruling; in fact, such a course, to my mind, would prove § suicidal policy. If we are to rest content to act merely as local brokers, i.e., as a medium between our shareholders and Christchurch produce merchants, W4 might well reduce our commissions, but we aim at exercising some voice pa growers' behalf in maintaining the locaj. rates for grain and other produce. If. we are to do this, we must necessarily be in a position to advance funds to farmers to enable them to hold their grain When necessary ; we must be prepared to charter vessels to carry our produce to the markets of the world; we must open agencies and correspondents, and keep ourselves in telegraphic communication with these centres, aud a business such as this cannot be conducted without risk, and it requires a strong capital to work It successfully. To reduce our commissions would mean a very small fraction 'i!io| bushel to the farmers, while on the ptpo? hand, by being in a position to inflnenCe the local markets ana rates of freight,: are frequently able to establish a marked difference per bushel in favor of the growers. Our business has been worked a( a much lower percentage of cost than in former years, and has been conducted safely and successfully, proof being afforded of this by the fact that our bad debts account amounts to only £18. are thp reasons we are able to* come before yon to-day and propose substantial bonuses for distribution. Your Directors propose to divide 4 per cent, on the amount oi shareholders purchases during the yeafc and in accordance with our articles pi association a bonus of equal amount -dust be paid on our called up capital, in addition to the usual dividend of 7 per cent. I may point ont that the 4 per cent, bonus on purchases will amount to £2580, and the bonus on capital to £009. Now let us consider how our share capital is earning this- high rate of ..interest—v_s.. tl per cent. The first thing we have to take into consideration Is the fact that in addition to their paid up capital of £22,72"?, shareholders have a further stake in the Association by the amount of their liability, viz., £38,381, and again we have a reserve fund of £2-50, and onr balance from last year to work upon of £1100. On the security of this uncalled capital and reserve fund, farmers who have money deposit. with the Association, and these deposits are lent to other farmers who require advances to assist them. Those who lend and those who borrow are thus mutually benefitted by co-operating together through the medium of this Association. The bonus we declared on capital is earned, and more than earned, by the advantages we possess, which I have indicated. A further direct profit earned during the year by our uncalled capital is the auiouht at credit of interest for the year, vl?r ft £410, as this represents the profit on our deposit tey3tem. Add to these profits tha great expansion and safety'of our business, and shareholders will at once see the wisdom of allowing those whoinveat and risk their capital with us to participate in onr success at an equiil ' pep eentage with those who give us'theft custom but who run no risk whatever* I may mention here that the average profit on the paid-up capital of aU tne Cooperative Societies trading m the Utdtetl Kingdom last year amounted^t9{ MP per cent. The next question we hnyb to consider is tbe recommendation of tbe Directors to place a new issue of 3000 shares on the market./ I think abate* holders will admit, in view of the rapid" increase in the business, that it is mogt desirable, in fact, I consider it ah, absolute necessity, that we should have sufficiept capital to work entirely within ouraeivetf, and at all times to be independent; Of any outside control. To do this we must either ■raise additional capital by isstiing/raose shares, or we must alter Article No.'TaV'in the direction of giving greater, borrowing powers; - Under this article your have n&vr power to borrpwi whichi" Of course, covers deposits received, fin amount equal of the siibscrrbea. capital, and it is apparent this power*;» Insufficient to carry on a more extended business than we are doing at present. Ybnr Directors, are of opinion that ftlfs more to your interest to increase the sfiatß capital, rather than appry for extended borrowing powers, and therefore? recommend the issue of 8000 new sl-artes. UI Tffe premium on these shares theyreeotnmend should be 2s 6d each. This nrerm|pm is undoubtedly low when we take Into consideration that alter this meeting Onr Reserve Eund will stand at £3955, or slightly over 6s per share. Bnt, gentlemen, the Directors, after carefully stiMxT- . ing the matter, are convinced that it ialn the interest of the Association to fix a low premium. The object of doing- so is to Induce farmers who do a large business witb us, but who hold a few shares only, to increase their holdings, and we also-winn to encourage new shareholders to join. During the year the Ashbnrton farmers requested year Directors to open a larannh at Ashburton. The Directors are almost unanimously of opinion that this Institution should not develop branches. Wse can supply our goods.' to Aahbarton equally as well as we can to WaikarL, Oxford, or Amberley, and to open.branchea : would not conduce either to economy:© working or to safety. It may be yet shami that the Ashburton farmer* are -arapng enough themselves to establish »Mari ls f Institution to ours. This; would certainly be a satisfactory solution of &SH**to*gs* we shall be very pleased to federate with suchan Association in a manner similar to that now in force with the Canterbury Association. I think It will be.admitted that to work together satisfactorily Farmers' Co-operative .Association whereeverthej may be. should not be financially connected. I have alluded to the rapid growth of our advance and deposit business, and I am sure shareholders will approve the action taken by your Directors, who appointed "two of their number to specially supervise and* report; half-yearly lon the advances made and the securities I held by the Association. The gentlemen ! who acted to that capacity for the past year are Messrs Boag and Herrick, and ' they may have sometfcSmz to say to you in respect of their duties. The next matter I have to refer to ts the question of Auditors, their duties aud their fee*. The Doctors were of opinion that &. more exhausWye and eißcleot audit off should take place than was /Mmeri? ■*£**?££. and therefore requested 'the.Auditors for the past year to t make their examination In the direction boated. The Auditors themaelvea that m order to keep converaant with the db»» nSfthey should In future examta* «*J SwontsTmonthto *£

oa increased to SO guineas each. I will now say a few words in connection with the opening of our woollen goods and dothmg departments. These departments are devempTng into far larger proportions than we at first intended or anticipated. The Directors were largely influenced in -Tt-t-ri'-fl the bosiness in this direction by their desire to induce a more extended consumption of onr wooL Arrangements were made with onr local woollen factory tor the supply of their goods, and an order totheextentof £500 was givenand accepted by the factory. Onr premises were altered to suit the trade, and notices sent to the shareholders. But, after all, our arrangements were completed we received a communication from the factory refusing to do business with us. Every factory in the South Island and Wellington treated ns fn the same manner. The orders sent to these factories were no retail orders, but such as are executed by manufacturers in every part of the world. It is not very difficult for us to find the reason for this treatment. We are a" small community In New Zealand, and already our protective duties are of such a nature that retailers and middlemen are able to form rings strong enough to dictate to the colonial factories, and compel them to supply j only such firms as they may approve, i While the Association, combining the growers, who supply the raw material, are boycotted. Such, gentlemen, is the story oi the woollen factories of New Zealand boycotting tbe Farmers* Association, and I think we must all admit that it shows a most deplorable state of things for our woollen industries to have been forced into taking such a stand; for these highly protected industries to be compelled to refuse to supply country people, the very people who supply them with the taw materia], unless they choose to submit CO whatever excessive taxation and profit the retailers and middlemen choose to exact. We were by actions such as these reluctantly compelled to import goods which we have a right to expect should be manufactured in the colonies. Our first order from England amounted to £1000, and has been followed by others of equal amount from time to time as occasion reBaired;8 aired; and thus a trade which should aye resulted in Christchurch has been diverted into other channels. In connection with our clothing department, the Directors have taken a course which cannot fail to have a most important bearing on the future of the Association. I allude to the establishment of a department for the manufacture of clothing, &c, and as an outcome of this, we are becoming large employers of labor, and already find we must seek elsewhere for additional accommodation in order to enable us to cope with the trade. I would like shareholders to clearly understand that the reductions we have made in prices of clothing, Ac., have not been made at the cost of the labor, but have been obtained by reducing tho cost and course of distribution. The cry for cheapness has been blamed in many quarters for the wretched sweating system we nave recently heard so much about in connection with this trade; but it seems to mc that this cry for cheapness is but too often the cry of the poor against exorbitant taxation and trade rings, which, together have enhanced the cost of the necessaries of life beyond what they can reasonably bear. The Directors found that this wretched sweating system was undeniably becoming a prominent feature in Christchurch, and they determined to take a position assailing it as far as lay in their Ewer. As a result I am pleased to say _t the rates which we aie paying for manufacturing labor establish a marked advance in favor of the workers, without Increasing the cost, as the middleman's Eroflt is avoided. In my opinion co-opera-lon in the future will equitably hold and maintain the balance between labor and capital, and solve one of the greatest problems of the age. Before sitting down I shoold like to say a few words regarding the prices of New Zealand wheat. Shareholders may well ask the Directors of an Association mnch as ours, how it is that year after year prices of wheat in New Zealand rule somewhat like a shilling a bushel lower than in any other colony of Australasia, while the values in England closely approximate, and they naturally ask an explanation. The cause, I think, must be attributed to .the expense and difficulty of ■hipping our surplus stocks to the markets of the world. It is in the facilities they possess in cheap freights and competition that the Australians are beating us. In New Zealand the volume of our exports is much beyond onr imports. The balk of oar trade is done by steamers, which are unsuitable for carrying freight at reasonable rates, and will hardly carry a bushel of grain because the light freights offering are more remunerative. A possible remedy which the wheat growers would be justified in asking would be an export bonus on our wheats. We find the Government subsidising heavily tbe two Companies running the direct steamers, and these two Companies holding a monopoly of the carrying trade, establish a uniform tariff, which the shipper is compelled to submit to. WenndtheGovernmentalso subsidisingan alternative passenger route via San Francisco. It was reasonably supposed this year that New South Wales would absorb our surplus stock, but on taking up the last market report I find that in one week 39,030 bags of Calif ornian wheat were received in Sydney as against 3606 sacks of NeW Zealand wheat. The Americans avail themselves of our subsidised service to oust as from Australian markets. At the present time the Victorian farmer sells his wheat at two shillings per bushel higher than the New Zealand grower can obtain, and all other farm produce in pro portion. The Victorian farmer may be content to submit to taxation for the purpose of fostering town industries, but he shrewdly insists at the same time on having similar protection for his country industries. How long the New Zealand burners will stand the drain of a oneaided protective policy has yet to be proved, and also how long they will permit subsidised steamers to take their markets from them. Tuesi« ore questions which tanners must settle, not with the Directors of the Association, but with their representatives in Parliament. lam pleased to see that a movement is being made in our Parliament in the direction Of reciprocity of trade. This is a very large question, and one in which every farmer in New Zealand is directly and vitally interested. I hope, gentlemen, we •hall live to see the day when England and her colonies will trade amongst themselves without protective restrictions. Then, and not till then, will Imperial federation become a reality and consolidate a grand nation. In conclusion, the Directors thank shareholders for the support they have accorded the Association during the past year. Thinking men m ust •Rive at the conclusion, after watching th* progress of this Association and of the kindred one in South Canterbury, that co-operation in the near future will have an Important bearing on the internal economy of New Zealand. I now move the adoption of the report and balancesheet.

The Chairman was frequently applauded daring the delivery of his address.

Mr Marmadukb Dixon seconded the motion. It had given them a great deal of eeasure to hear the Chairman's address, r it showed how carefully the Directors had worked oat the various matters. There was one point he wished to refer to, and that was to the large profits which the Chairman had said other Cooperative Associations had made. His opinion was that they should not seek to make large profits, but to try and bring the producer and consumer together. The Association was for the benefit of not only of the farmers, bat of the whole community of Canterbury, and by conducting theirbusiness on a safe and careful basis they w ere doing much to restore confidence In tne colony. The starting of branch linen of business had been forced upon them by tbose who sought to obstruct them. (Applause.)

Mr A. McLaughxan objected to the amount of profit made, and added to the reserve fond, which was simply adding it to capital, and making the business one of speculation instead of co-operation. Large profits tended to extravagance, and small profits to economy. (Applause.)

Mr J. S. White agreed with Mr McLanghlan, that they should put on the smallest profit that would enable them to meet all expenses. Be expressed the opinion that some -f the goods sold by the Association were of inferior quality, and objected to the commission of 2_ per cent, charged l_3___K* ""* *— ~ *&*£ said they wen chatxine only five per cent, profit on mercbi_sS£ ** TO wtonptaK four shareholders. (Apiuause). „? Teply to the Chairman, Mr McLaoghxan said he had only one •*%_• fe- the Association. * i* £2KS? I, t? it was no use trying 2„S % the _ Association without 6 * B V» Directors had found S_v- I _ili_ y _!_ otu A *%** been unable to

' Mr F. Graham said that for the amount I of work the Directors went through, their fees were small enough. {Applause.) Mr Howland explained that the Directors of manufacturing companies were willing to do business with the Association, bat it was their customers who objected. . _ The Chazrman said that no reason had been given, The state of aSairs showed the danger of protectionist rings. The motion for the adoption of the report and balance-sheet was put and carried unanimously. In reply to Mr J. Osborne, The Chairman said that in the event of arrangements being made to obtain telegrams from London they would be published in the newspapers. The retiring_Directors, and Messrs J. o. Jameson, J. ttaydon, and C. J. Harper, were nominated for the vacant positions. After a show of' hands had been taken, a poll was demanded on behalf of Mr Haydon. The poll resulted in the return of Messrs S. Bailey, W. Boag, Jas. Gammack, B, L. Higgins, J. K. Johnston, J. Bennie, and J. J. Herrick. The recommendation of the Directors, that the Auditors' fee be thirty guineas each, was adopted. Messrs A. A. McKellar, W. Jameson, A. M. Ollivier and F. Waymouth were nominated as Auditors. A poll was demanded on behalf of Mr Waymouth, and it was fixed to take place between 10 and 2 on Saturday next. A vote of thanks was passed to the Chairman, Directors, and staff. The Chairman, in replyine, said he was very pleased with the way the staff had worked. They had always been both civil and hard working. He complimented the manager on the efficient manner in which he had discharged his duties.

Mr S. Garforth moved, as a recommendation to the incoming Directors — " That the remuneration of the Executive be increased."

The motion was agreed to. Mr W. Boag, as one of those who had been appointed to examine the securities for money advanced by the Association, reported that they found them exceedingly satisfactory, and they were unable to make any suggestions. They were highly pleased with the state of things as they found them. He concluded his remarks by complimenting the staff and the Chairman.

Mr J. J. Herrick corroborated the statements made by Mr Boag in connection with the securities.

Mr A. H. TuRNBtTLX., Secretary to the Association, returned thanks on behalf oi himself and the staff for the hearty vote of thanks accorded them. He could assure them that everyone tried to do his duty. This concluded the business, and the meeting then adjourned till Saturday.