Mergers mooted of co-operatives

Press, 13 January 1982, Page 19

Mergers mooted of co-operatives

In an era of mergers and take-overs there may also have to be mergers of cooperatives, according to the 50th annual report of the New Zealand Co-operative Wool Marketing Association, Ltd.

In the report for the year ending August 31, the chairman of directors (Mr H. W. Upton) says that the directors take a serious view of the large commercial mergers and take-overs, which are now the “in-thing." “Few would dispute that monopoly control is the ultimate, and this is definitely not in growers’ interests. We sincerely hope that present efforts to encourage co-operatives to 'get together’ maintain their momentum. In order to meet fire with fire there will probably have to be mergers of the co-operatives also if they are to retain their place in the sun.”

The company was originally registered in 1931. It was at first proposed to found a scouring and carbonising company" to treat wool for growers who. at that time, were concerned with seed and biddy-biddy, which wer rife in pastures. The New Zealand Scouring and Carbonising Company, Ltd, was formed and capital raised by agents selling shares on a commission basis throughout the North Island and Marlborough Sounds. The amount of capital raised was not, however, sufficient to import the expensive plant needed and in the meantime pastures were becoming cleaner and shearing ws being done earlier, so that some doubts were raised as to whether a carbonising plant would obtain sufficient output to make it a paying proposition. So late in 1932, by special resolution of members, the name of the company was changed to New Zealand Cooperative Wool Marketing Association, Ltd, and the preparing and marketing of growers' clips in the grease was undertaken as the company's main operation.

In 1939, although the turnover stood at just over 3000 bales, the company was sufficiently well established to proceed with the building of its first store at Onehunga. Mr Upton says that in spite of the changes that have occurred and appear inevitable in the future, the prime objective of the company still remains to utilise all its resources in the prime interests of growers. In the most recent year the company’s turnover rose slightly by $1,301,237 to $55,492,366. The profit rose $51,297 to $159,893, but Mr Upton said that the directors were concerned that a higher rate had not been achieved. Further action had been taken to cut costs and improve efficiency and a more acceptable profit should be earned in the current season. Steps approved at the 1980 annual meeting to improve liquidity had resulted in smaller interest payments, but the anticipated savings had been largely negated by an increase of one-sixth over the previous year's effective interest rates.

The directors had approved a rebate of $2 per bale on wool supplied during the season.

During the year the company scoured 101,858 bales, which was 5 per cent down on the previous year, because of the lack of facilities at Mosgiel for the first half year, when the company was obliged to scour with competitors. The total wool handled amounted to 117,000 bales, of which 70 per cent was received direct from growers.

“Our profit for the year would have been substantially enhanced if we had been able to fully utilise the gains available to exporters from the slow devaluation of the New Zealand dollar. Unfortunately. under the arrangements we have for our export finance, such gains could not be fully exploited, although it is pleasing to report that this has now been remedied. It is important to

realise that primary producers db not benefit immediately, if at all. from devaluation, as the actual exporters reap the rewards." said Mr Upton. Referring to the company's wool scouring plants, Mr Upton said that the joint venture at Onehunga (with Mair and Company) was now operating quite profitably and a worthwhile contribution was expected in the current season. The new scour at Mosgiel (now fully grower-owned) was operating profitably and the company was negotiating with major exporters with a view to a partnership. To counter the advantage enjoyed by other major scourers/exporters. who were processing in one or two complexes the same weight of wool as the company scoured in four works, they were actively seeking partners for all plants to maximise production. “The key to success in any business operation is throughput." said Mr Upton, "and wool scouring exporting is no exception. Positive steps have already been taken to affect economies in

all aspects of W.M.A.'s activities and we now seek increased grower support. Without this, in today’s commercial climate, it could be that further rationalisation will be required to return an acceptable profit. "Possibly, in providing a national coverage. W.M.A. may have been a bit too ambitious, but the meagre co-operative involvement in the wool industry — about 12‘z per cent — makes it essential that present operations be maintained." The company recently had 10.206 shareholders (all growers), of which 1078 are in the area of the Blenheim branch and 1323 in the area of the Timaru branch.