Time come for reappraisal, says chairman

Press, Volume CXIV, Issue 33665, 15 October 1974, Page 24

Time come for reappraisal, says chairman

(N.Z. Preus Association) AUCKLAND. New Zealand has been living beyond its means for a considerable time, and does not have the reserves to maintain an artificial level of internal prosperity for very much longer, the chairman of Allied Farmers Co-operative, Ltd (Mr D. L. Hazard) says in his annual review with the accounts.

■I “Common sense tells us,” 11 Mr Hazard says, “that there i[is little likelihood of the sort : I of recovery in earnings that I is needed to cover our balance of payments deficit, that I quite strong action to reduce internal demand is therefore inevitable, and that it cannot be delayed much longer, in

(spite of the obvious reluctiance on political grounds to (take unpopular decisions. "Whatever steps are taken, they will be unpalatable, and (must result in a hardening of 'business. “The time has come for 'New Zealand to make a i thoroughly honest reappraisal of its economic aims. If , we do so 1 am sure we will " admit that we can afford to ' live within our income and 1(still be one of the prosperous nations of the world," Mr Hazard said. s Market turnaround . “The first half of the , 197.3-74 year saw a continuaa tion of the buoyant condi'itions which had brought record earnings to the industry in the 1972-73 year. There (was an apparent world-wide ri shortage of good protein ' foods, and particularly red ' meats. ’ “Prices were still rising. J- Experienced people both in--0 side and outside the industry, s !as well as in government,

were making optimistic predictions. ■ “Whether housewives (around the world just woke (up one morning and said (‘enough,’ or whether there (were colossal miscalculations as to the quantities in store (or the consumer demand, or (whether a market reaction to unduly high prices was given (impetus by world-wide inflationary trends and the oil (crises, will give analysts (food for thought for a long (time. : “The fact was that there (was a market turnaround (such as has not been seen; since pre-war years. In retrospect, of course, the prices went too high. “But nobody expected the

-(Present situation, and in the 3 prevailing atmosphere of super-confidence too many i. people — both farmers and :i city folk — went for shortf term gains at the expense of a consistent long-term pror gramme. more often than not i financing out of short-term -borrowings,” Mr Hazard f said. 1! “Your board had planned 3, late last year to make a new i issue of shares in 1974 to -'finance further development. ’; “However. the rapid change in climate has obliged its to give our farmer clients a very substantial measure 8 of support, and we feel we -(must maintain a tight finan■icial policy until the level •(of clients’ advances is back -(in line. 21 “Moreover, there is some-! e!thing of a scramble for new 11 issue and debenture monev at Lpresent. and we feel there! (is sufficient call on the pub- . lie for funds. - “We propose to reappraise ,|the situation in the new year. , I because there are so many -(opportunities to expand our ■business which can only be s! beneficial to the New Zealand sjeconomy as well as to our , i | company. ,< ,i rmai div. i p.c. < ; ! “For the first time in many ■ I years, we have to report a >| reduced consolidated net '(profit: $807,179 against last ' •(year’s $998,741 — which was J 1 an exceptional year for the < • I industry. < !' “The reduction in profit is almost wholly attributable to ‘ the meat export subsidiary, ’ I ( which made a small loss of ‘ '(515,150, compared with aver- < • age tax-paid earnings over < > the last five years of $128,368.” “ Total group income for the ' year ended June 30 was { $6,083,412, compared with < ($5,522,808 last year. < Depreciation for the year; (was set at $206,431 (last year, ($187,828), and provision for; ' taxation was $648,795 ($764,356). 1 i A final ordinary dividend ( (of 7 per cent has been re-( [Commended, making 12 per, (cent for the year (un-i ■changed); this is covered 3.2 [times by profit. ( I The earning rate on share- J [holders’ funds was 12.7 per j cent (19 per cent), and on, ordinary share capital, was 12 (38.1 per cent (57.9 per cent).;