"SOME CAUSE FOR ANXIETY "

Press, Volume LXXIII, Issue 22274, 13 December 1937, Page 11

"SOME CAUSE FOR ANXIETY "

COSTS IN NEW ZEALAND OPINION OF CHAIRMAN OF DALGETY’S (7BOM OCR OW COBEESPniTDEIfT.) LONDON, November 20. The outlook in New Zealand was described as “giving cause for some anxiety” at the fifty-third annual meeting of Dalgety and Company, Ltd., held at the company’s head office, Leadenhall street. London, this week. The chairman of directors, the Hon. E. W. Parker, presided. In his annual report the chairman first reviewed Australian conditions, stating that the last year had been exceedingly prosperous, and that the outlook for the future was satisfactory. The Federal elections indicated that one might look forward to a further period of settled Government. Turning his attention to New Zealand, he said that the Dominion had enjoyed a prosperous year. “Farmers generally, with the improvement that has taken place in the price of their products and despite a considerable increase in production costs,' have made good profits,” he added. “The rise in production costs has been mostly caused by legislation passed by the present Government, and this increased burden is likely to be recurring, so that provision should be made in these good times to meet any setback which may happen in the future. High Expense “The guaranteed price fixed for dairy produce, as far as can be gathered, will result in a loss for the last season of some £500,000, and this money presumably will have to come out of the pocket of the taxpayer. Wages have been increased, and there has been no relief in taxation, so that our expenses have been heavily affected for the worse, and large provisions have had to be made to cover future taxation. The outlook, therefore, in the Dominion, gives cause for some anxiety. Had it not been for these heavy provisions the New Zealand results would have shown an improvement on those of last year. However, our branches in Australia did much better, and it is owing to the better results achieved there that I am able to place before you such satisfactory figures to-day. "The New Zealand exchange rate, like that of the Commonwealth, remains unchanged, and I notice recently that the Minister for Industries and Commerce stated he could not see much chance of any alteration in the exchange rate for the time being, so that evidently we cannot look for any relief at present.” In East Africa sisal tonnage and prices were satisfactory, but in spite of an increase in coffee values, prices must advance a good deal further before growers as a whole became prosperous. Burden of Taxation “The price of wool was well maintained during the period covered by the accounts,” the chairman continued, “apd this is reflected in the figures we are able to place before you to-day. as, 'although we have other irons in the fire, wool is our main product, and the market price of it affects us more than anything else. Taxation in the Commonwealth and the Dominion is still a very heavy burden, and I see little prospect of relief in this direction. In fact, as I have already mentioned. the burden is an increasing one in New Zealand, and at the present rate of progress, if you can call it progress, the Dominion bids fair to become one of the most heavily taxed countries in the world per capita of its population.” The record of the 1936-37 wool-sell-ing season added one of the brightest chapters to wool history. It witnessed the culmination of the recovery from the effects of the depression, and the demand was so widely distributed that it ultimately embraced almost every description of the staple. It had seldom, if ever, been keener or more sustained, being fostered by a combination of circumstances rarely equalled. The company, as usual, held the premier position as the largest wool-sell-ing house in the world. In 1936-37 it sold in Australia. New Zealand, and London. 594,032 bales, against 608,175 the previous season. Dominion Wool Outlook “I am afraid that New Zealand growers will have to reconcile themselves to rather lower values than the substantially high ones which were prevailing last season,” he said. “The average a bale in 1936-37 was £22 6s Bd, or nearly £2 higher than the Australian average. This shows the keen demand which was ruling for halfbreds and crossbreds, and although we look forward to fair competition for these at the coming sales, values are likely to be considerably down. “Japan may buy some crossbreds, as she is doing at present in Melbourne, but a doubtful section is the American one, the position in the United States being at the moment extremely nervous. Stocks and shares have been tumbling down rapidly, and all commodity prices have fallen sharply. It must be remembered, too, that last year the demand for Coronation decorations and the like was to an appreciable extent responsible for the level to which crossbreds were raised. Japan also was a keen buyer in the Dominion, and is not expected to operate so freely this season. “The wool market to-day is in a very unstable position. At the London wool sales, which opened on Tuesday last, prices all round fell heavily, and. as compared with the close of the September sales, greasy merinos are from 15 to 20 per cent, down, scoured merinos from 20 to 25 per cent., and crossbreds from 20 to 25 per cent. We are not sure yet if the limit of the fall has been reached, but the general opinion seems to be that early in the New Year orders will be put out, and the market should recover somewhat, although it is not expected that last year’s high prices will be reached.” Reviewing the wheat position, the chairman said that although the area planted for the 1936-37 season was an increase of about 11 per cent, on the previous one, it was still 500,000 acre's less than the world average for the last 10 years. The statistical outlook continued to strengthen and the world carry-over had been reduced to reasonable proportions.

Dividend Raised Australian and New Zealand butter had last month been quoted at 1525. the highest for seven years, but high retail prices had recently curtailed the demand, bringing about a sharp decline. The annual report and accounts, details of which have already been published, were adopted. The recommended final dividend of 4i per cent, on the ordinary shares, was approved, making a total of 8 per cen*. (less British income tax) payable on November 25. The chairman said that in view of increasing tax burdens, it was all the more gratifying that a slightly larger distribution could be made than in the previous year.

Dealing with staffing arrangements, he referred to the very severe loss suffered by the death of the company’s New Zealand superintendent, Mr G. Black, and said they were confident of the ability of his successor, Mr T. A. Moodie. He expressed regret that Mr H. S. Barns, of New Zealand, who had been appointed to the charge of the company’s business at Nairobi. East Africa, had found the climate unsuited to his health, and had had to return to the Dominion.