SHAREHOLDERS MEET.

Press, Volume LXVI, Issue 20045, 29 September 1930, Page 17

SHAREHOLDERS MEET.

FARMERS' CO-OPERA-TIVE ASSOCIATION. DIRECTORS* FEES NOT INCREASED. . REASONS FOR REDUCED PROFIT. About 300 shareholders attended # the 49th annual general meeting of the (New Zealand Farmers' Co-operative Association of Canterbury, Limited, held ",oa Saturday morning in the Association's tearooms. Mr James Stevenson, chairman of directors, presided. Beference was made by the chairman »to the decline in the price for the •Dominion's primary products, which Jiad adversely affected the Association's .clients.

Mr Stevenson, moving the adoption , »of the directors' report and statement - (of accounts, said:— "The accounts of the Association r» ,which are presented to you to-day do mot' make such satisfactory reading as ' those to which we have become accustomed during the past three years, k "It must, however, be obvious to everyone that in a' year such as the . jrpast one, in its disastrous effect on the ,V financial returns to all sheepfarmers, an r institution like ours, whose fortunes are |f m closely linked with those of primary t* producers, could not have had an en- £ <tirely successful year's business, while [f iits clients in the main were suffering I* 'from greatly diminished incomes.

p* A Beserve of £20,000. . "On its merits, therefore, I suggest It ffchat the net profit of £19,031 shown I |by the profit and loss account, while re(i igrettably smaller than the profit for v , several years past, is not unexpected nor entirely unsatisfactory, especially sb it is finally arrived at after we fi - Ji&ve made a special provision for bad .gad doubtful accounts of a little over £20,000, which your directors have f deemed it prudent to deduct from the > jear's profits before presenting the J figures to you. "Our commissions earned on the sales b' <ot wool, live stock, and land have suf- " jfered enormously, not only because the i mrices on which they are calculated .dropped considerably (as you all know, " the price received for wool fell from P mearly £22 per bale in the previous year (to £l2 per bale, on the average, last J , (season), but because much wool was •withdrawn from sale and is still un- ' *old, and much live stock was earned lover, and land sales have been very 1 fflW. •' "Our stocks of merchandise have been , adequately discounted. They are fresh and of good selection, and are not larger ' 'in amount than we find necessary for L i our business at the present time.

El Stocks Lower In Value. lifi, "A reference to the balance-sheet will liSrthow that we are holding stocks which IBlaze shown it £45,000 less in value than HHrjwe held a year ago. This is notwith--87" standing the fact that our carry-over r'i i„f cornsacks is much higher owing to a f i (decreased Wheat crop last season. This i {decrease in stocks is partly due to our S' ianticipation of smaller requirements $ (through economies on the part of our klipeustomers, to decreasing prices of and also to our policy of ' j IrtOeking increased proportions of New 'Zealand-made goods which can be ob- | ;tained and turned oyer more rapidly ■J-'than imported goods. *V % "Our motor-cars and similar plant, -X". !#hlch depreciate rapidly, have been -adequately written down as usual, and buildings are maintained in good Klw«mdition by necessary repairs and re- | <«0or contribution. to the staff superannuation. fund, although slightly smaller thdn usual, Has been calculated on the usual basis. The fund has recently been overhauled by a leading actuary, a*d placed.on a sounder but more constirvative IjaAis. Our staff to-day is J6rifty of every consideration we can ;e*t*nd to . Its members, and we hope to J&inOre for it in the years to come. | V." * ■ itatiibtttlon of Profit®. . <" <i The question of the distribution of ;the profits' available has given your some concern. They consider thkt their primary responsibility is to teiforee the structure of the business Against any future loss or weakness, phey do.ltot know how long present 'trices for-wool may continue, nor what .will be y the future value of wheat and Mother products of the land. "The* recognise the rigid and ins'V elastic,character of the overhead ex- & • penses carried by all producers, and r * that it these continue, either the land :'' most', product much more and marKets j, ' be found for the increased products, or ■'else land' must decrease in value and < f&imers must suffer, with a correspond- ■ ■ ing detriment to concerns like our AsM soctikon. - | - "therefore, at the present time we gtt * eoitlider that our policy must be to en|p, ,eoutaJi<f increased production by every fe'-partible means; to assist producers in :®*;-jn4Tketlag their produce to better ad|®ferantagei to assist in all possible reof the overhead expenses which the farmer; and prudently to the resources of the Associa©sSflfcl to meet any contingencies of tne iJffi»toiiwrn future. , . • *With this in view, it is recomjugged that the balance to the credit profit and loss account, amount- ® 38,164, be dealt 'with as fola sum of £20,000 be added special reserve account, which ■Hy ftfls itt'ftncmrfttna two years ago, whicn |k * VwilTilien stand at £40,000. ■p ' tffoit a sum of £SOOO be transjf . ttrtet to' the reserves against altera- » tions plant account, which will f c then stand at £IO,OOO. That'a sum of £9OOO bo appropn- » rated-for payment of a dividend for ?oae year of 6 per cent, on the first . 1 pMffirenee shares. „ ' . TlUkt, the balance of £4164 be carIi ried forward. . "This 1 Association's 'advances to cUefcts have increased during the year "by ■£ 100,000. This is due to our ■ policy of taking up small and moder-atCly-tlzed farming accounts of a sound elbarketer, which is-one of the main purrees for which the Association exists; aild also to many of our clients having to lean on us a little more heavily <jfcring the year through some holding •*»ol, many being still out of their batlntes -of wheat payments for botn JS2B-9 and 1929-30, and some holding met surplus stock. Our main reserves (iainst bad and doubtful advancesi acffronts have been increased from £lO. ,- ;«8 last year to £123,534, through tho provision, made out of the year's proifasati' 1 "

fits t'o which I have previously referred. "It may interest our shareholders to receive the deliberate statement that we have no actual nor prospective losses whatever in connexion with any advance accounts which your directors have taken up during the last four years. « "Taking our primary products in review, there are most encouraging evidences of greater, production by our clients, through top-dressing and pasture management, more intensive feeding of stock, and better farming procedure generally.

. Wool. "The present prices ruling are lower and more depressing than they have been- (with one temporary exception) for many years before the war. The average of all wholesale prices is about 16 per cent, in Great Britain above immediate pre-war prices, and yet New Zealand wool averages this year nearly 20 per cent, below 1913-14 values; while the cost of production is About 60 per cent, above the pre-war cost. The British Wool Federation has published a statement that although the world's production of wool has risen during the last ten years from eight million to nine million bales per annum, it has all been consumed, and the three and a half million bales left on hand after the war has also been consumed, and the stocks of wool in England are lower than usual. It is also reported .that the stocks of wool tops on the Continent of Europe are much lower than usual. This one of those anomalous cases in which the position on paper is strong and the market is weak, and there are evidently other factors which govern the position which we hope will soon alter.

Frozen Meat. "Lamb has remained fairly stable in price on the London market since February last, and the demand has been good in spite of larger supplies. This is encouraging when it might have been expected that the rapidly-falling price of raw materials and foods would have brought down lamb also. It is a P*ty that our mutton prices have not been so good. All meats and meat products are comparatively dear in Great Britain. English lambs have realised 50s tr 60s on their feet during the past summer, and wethers have realised up to 75s a head. The price per stone of homekilled lamb and mutton has been double that of our New Zealand supplies; therefore it appears as if the comparatively reasonable values in our meat can be maintained or exceeded, even with larger supplies. "I am aware that . Great Britain is receiving increased supplies of frozen and chilled meat from other countries, and it is thorcfore imperative for us to n-aintain our high quality. While discussing the subject of our exports meat I think we must give pig-meat a larger importance than it has haa hitherto. The British Ministry for Agriculture states that Great Britain now consumes annually nearly one, million* tons of pig products of an aggregate value of Sea,* 5100,000,000 to the La., concerned- S sty this huge quantity is imported from overseas, but only about 8 g.- cent u from British exporting countries. N Zealand's growing exports have been as followsl9Bs, £ 169,000; 1926, 000; 1927, 00 °-

Wheat. "Wheat is fairly secure for the coming harvest through the promise of the Government to maintain the sliding scale of duties. It would be a great misfortune if these duties were removed or. tampered with, as the large natural employment which wheat-growing a s?numerous related trades give is well .worth the indirect cost of the duties to -jfcKe' Pomjitipn, *«nd ; tj2g the Action given to 'the laraer_ against the very large and wideprotection given to manufacturing -industries, to which he contributes. ' ' . Dairy Propose.. "The- season for dairy produce opened at firm an< from a fair amount of f.o.b. buying tor Canada and a limited amount for-thQ United Kingdom, prospects for the season looked sound. Kowever early in December the price level, which had been about 170s, fall nntil it reached the low level or 124s in April. During the past three or four months the market has fluctuated between this low level and 138s, and I regret to say that the price level^ 8 now receded to 1255, which isascompared with 180s twelve months ago. "On to-day's market butter-fat, is worth slightly over Is per lb, and) meaent high costs, is Wonbtedj.beproanftlon «o»t. The position does not encourage onetolook for substantial advances in price, but it is a reasonable expectation that mar kets may stabilise at. . to* rotum between Is 2d and is sa per iu butter-fat. With this figure to'make a profit the dairy-farmer m " st Fewer overhead charges and reduction -in taxation, if he is to be ableto conduct his business upon profitable lines.

Land. "He is a wise man who can valueiland tn-dav There are wiseacres who say that land is over-valued, and y they are right in certain cases. But these are days when all the standards upon which land valuations should bo baaed are rapidly altering. Should be assessed at its productive say, during the last five years; or its produc five value this year; or last year, or on what we may imagine next year s prices will be? Take the wool-producing value of land at last year's average price of £22 per bale, as against this year's fvtrase price of £l2 per bale, and cloitalise this difference in revenue, vlu will find yourself arriving at o & land of *per ° c're—more than "alf the accepted val £ oof much detaina land values is the rigidity of overhead charges. As P^eJeasing^ falSe o/the land used in primary production. .

Reduction in Taxation. «I think the remedy will have to be • Auction of direct taxation, in V 1 t^ ;nstead of increased protccSSft' bo,b tod " year mt «•»«[»' of tie Bnglandj mainly o reorgan i ße a 'our Association. He tnanv arrange* London office and the ments which future During the Association in the *»££ h V OVLT |ifec!ast month he was J conaented tor, Mr A. F. temporarily eat advantage. We London to organisation have been able to got ou e iaßt few Into good .tape g a> we ssf &«■£«<*> V» mM thn orcscnt economic situation. «We have all seen previous depressiorts in trade and industry, and shall

most probably see them again; with the equally inevitable periods of prosperity intervening. Our care, however, must be to see that we do not adopt such high and rigid standards of overhead, expenditure, and consumption, during the good times, as are impossible or difficult of control and reduction when we are menaced by the cold winds of adversity. Stronger Finances. Mr Arnuud McKellar seconded the motion. I hough the Association had been unabie, ho said, to show the profit' of the previous year, he was sure that the finances of the Association were much stionger than they were twelve months ago. Mr L. Watson drew attention to what he considered an omission in the bal-ance-sheet. Certain items which formerly had been individualised were now grouped together under the heading of sundries, where an increase on last year was shown. Mr W. Machin (general manager) replied that the items referred to were not grouped under the heading of sundries, but of salaries, wages, general expenses, etc. The figures in round numbers under this head for the past five years were:—l 926, £178,000; 1927, £157,000; 1928, £140,000; 1929, £145,000; 1930, £147,000. The rise this year over that of last was, he said, only apparent because it was due to an alteration in the method of book-keeping. In salaries alone the figures for the past five* years were:—l 926, £141,000; 1927, £127,000; 1928, £116,000; 1929, £115,000; 1930, £114,000. This year there was an increase of £I6OO, due to the opening of new branches, which had been quite profitable to the Association. Mr Watson: The item of £147,000 is a big thing to look at. It would be advisable if the various items were individualised in the future. (Applause,)

Bank Overdraft. Mr H. Buttle drew attention to the bank overdraft. A year ago it was £3492, and to-day it was £83,000. Gould the general manager explain? Mr Machin replied that the proceeds from the various accounts were much less than in the past. For example, the proceeds from wool were £150,000 to £200,000 less, and in consequence clients had been compelled to lean a little more heavily on the Association. The same thing applied,' to a less extent, to wheat. Less money had been coming into the accounts, and more had been going out, and this accounted for the increased overdraft!. He would ask shareholders to call to mind the bank overdraft of five years ago; it was enormous by comparison. In reply to another question Mr Machin- said each member of the staif paid into the Superannuation Fund 3} per cont. of his salary. He explained the operation of the fund, Which, he said, was a good and happy provision. Mr J. Butterfield said business and profits were less than in the previous year, yet wages were higher. The London staff was splendid, and if the business at this end was managed as well, it would be better for the shareholders, who had been waiting for twenty years for a return on their money. None was in sight yet. Mr F. Smith said it was strange that the value of the stock was less. Was severe writing down responsible! Mr Machin said that it was on the giDds that were sold that the profits won; made, not on those on the shelves. Thcro was no reason why the turnover should not be maintained with smaller stocks. Last year the turnover had not decreased. Mr R. Brown said that in spite of the balance-sheet the loss on the year's working was £12,000. Mr Machin said the . total commitments of the company otfer its London oaßc3 did not exceed iiJOO per yvar.

Doubtful of Securities. Mr O: .15. Saunders said it was very bad iusfiiews to lend the company's rosourcea out on what were not good securities. Mr Machin said the securities were perfectly good. Business had to go on, and the Association had to carry along some of. its customers. The directors had taken the prudent course of making provision against the contingency arising of the securities becoming less valuable. Mr A. D. Hassall said the answers the general manager had given were quite satisfactory. The chairman's statement would have been more interesting if the people who had put money into . the company, for years received something in return. It would be a good thing if the number of directors was returned. He always regarded the directors as a Bleek body of prosperous business men, who found it difficult to understand the viewpoint of- the small shareholder. (Applause.) However, they had done their best for the company. It would ber a disaster if the Association ceased to function for the benefit of the class of people who had started it. "I suppose we shall have to swallow the balance-sheet like a bitter pill," concluded Mr Hassall. One shareholder asked what proportion of the shareholders put their business through the Association. Could any of them, by their patronage, strengthen the Association! Mr Machin: Yes, a great dear. I cannot say what proportion do business with us,, but our business has been improved by the issue of a catalogue during the past year or two. The staff is always instructed to press shareholders for more custom. Mr F. P. Smith, alluding to the loyalty of shareholders to the Association, said that he had sent in for a small grocery order, and had received a reply that the Association was not prepared to' help him in his business. He then went to another firm, and since then had spent over £IOO with them. Today he owed them nothing. The general manager promisod an explanation before the close of the meeting. After investigation, Mr Machin said that the action had been taken during his absence In England, but he would only say that he endorsed it. Directors Re-elected. The chairman announced that Messrs W. J.- Anderson, H. H. Holland, H. H. Knight, G. Mangels, and the Hon. D. Buddo, M.L.C., had been re-elected directors unopposed., . Messrs W. E. Best and Wilkinson were re-elected auditors at the same remuneration as last year.

Directors' Fees. Mr T. N. Gibbs moved the following motion: "That the remuneration of the directors be increased to £ISOO per annum." "Judging by the comment tins morning and the correspondence in the newspapers, this motion is likely to be unpopular," he remarked. "I ask you to hear me out, however." In many cases, he said, the directors were men who had no financial stake in the Association. They were appointed trustees for £2,000,000 worth of assets. These men gave infinite pains and considerable time to tho affairs of the Association, and it seemed that it was not appreciated. What they got oaid was no more than a general labourer's Arbitration Court wage. (Cries of dissent ) Many of the directors would be glad'to be relieved of their duties. (Cries of '' They look like itw'') He had pledged himself to see that the directors were paid adequately. He compared the position of the Timaru Farmers' Co-operative Association,

which paid over £ISOO a year for its nine directors. A voice: Are you a shareholder in our concern? Mr Gibbs: Yes, I have over one hundred and ' .venty ordinary shares and stand to lose something like £3OO if the Association fails, so I am better qualified to speak than many of those who have been writing under moms-de-plume to the newspapers. Mr Butt seconded the motion pro forma. A shareholder said that if the directors were reduced to nine and they shared the remuneration, it would be better for the Association. An Amendment. Mr M. J. Barnett moved an amendment that " a special general meeting of shareholders be called to consider and, if thought fit, to pass the following resolution: That the number of directors be nine, and that all the present directors, except the sitting chairman and vice-chairman, shall retire at the next annual general meeting."

Mr Barnett said the directorate was getting like the City Council, and nobody would like the City Council to manage his business. Directors' fees should be for directors alone. If (Mr Carey was entitled to anything he should be put on the staff or paid an honorarium on his return. "I do not think Mr Carey's assistance in England would be worth a row of pins," said Mr Barnett. The local buyers were in the best position to do the business. Mr H. C. D. van Asch, solicitor to the Association, said that the motion was out of order. "Put the motion to the shareholders," urged a shareholder, Mr Hassall said Mr Gibbs's would not have got any prisoner at the bar a reprieve. The motion had been brought forward at a most inopportune time; conditions were vastly different from what they were a year ago. It had not the support of the general body of shaieholders, and the motion had the effect of irritating them. When public spirit died it would be a bad thing for the country. If the motion was lost he hoped the directors would not regard it as a reflection on them.

Mr Buttle said he hoped that the motion would not be put to the vote. He would move an amendment that the matter be deferred for twelve months. Mr J. Mulholland said that he had been forty years connected with the Association, and no director had ever approached him to give the Association his business. Local agents were tho men who made tho business. This motion had almost "soured" him against the Association.

Mr McKellar, as one of the town directors, assured the meeting that they were not there to be jeered or laughed at. "If you think we are a joke, then we will get out and you can get along without us," added Mr McKellar. "That is straight so far as the five directors who have came to the rescue of this Association are concerned. With the personal influence of the Ave gentlemen we induced Mr Machin to come forward, and he stands or falls with us." Members: That's a threat.

Tie Time of Difficulty. Mr McKellar: No, it's a plain statement. We came in and kept • the Association out of financial difficulties and re-established its position. Some of us spent five nights a week to see that the affairs of this Association were right. What did we getf £,150 each. Wo give every Monday to the business. Shareholders: What, all the directorsf Mr McKellar: No, the executive. Shareholders: They do all the work. Mr McKellar: The appointment of Mr Carey in London iB costing less" than an ordinary manager. The Hon. D. Buddo said he could not but feel disappointed at the attitude of some of the shareholders present. He asked them to consider seriously the work the directors had done in the last few years. During the whole of the fifty years he had been a shareholder* he had had no assistance from the Association. If the directors were reduced to nine the saving would be about £IOO per annum. The members of the Board should be cleared of any ulterior motive. Mr W. T. Lill said the great mass of the shareholders were opposed to the motion. The farmers were agaiinst it. The directors should have said the time was not opporturo for the increase. He was more than sorry that the directors had to come before them as a mutual admiration society. "Some of us are working day and night to keep the thing going," said Mr Lill. Mr F.- H. Bowler said evory shareholder present felt gratitude to the directors for their work, but the fooling was that the motion had been proposed at an inopportune time. Mr Gibbs said the things that Mr McKellar had said could not be ignored, and he could not withdraw the motion. Only about a dozen shareholders voted for the motion, and a forest of hands was raised against it. Mr Gibbs suggested a ballot, but the meeting was plainly against it. Mr Watson said they were all partners in the business, and he appealed to all to support the Association. He moved a hearty vote of thanks to the directors. This was carried unanimously. A similar motion thanking the manager and staff for their services was also carried.' [Extended report published by Arrangement.]