HAWERA DAIRY CO.

Hawera Star, Volume XLVIII, 28 July 1924, Page 8

HAWERA DAIRY CO.

ANNUAL MEETING. There was a large attendance of suppliers at the annual general meeting of the company held to-day. Mi* J. R. Corrigan, M.P., chairman of directors, presiding. in moving the adoption of the annual report the chairman said: In moving the adoption of the twenty-ninth annual report and balance-sheet I wish briefly to review the year’s working and to make some observations on matters in connection with the dairy industry which may be of interest to shareholders of the company. From a production point of view the season iust closed has been abnormal. In the month of January it looked as if we were in for a poor season, but the situation was saved by the phenomenal autumn, and it will be observed that the output for the season is only slightly lower than for the previous season. Directors of dairy companies have had a difficult task in deciding what policy to adopt in connection with the disposal of their produce, and there wifi be considerable difference in the pay-out of the various companies in consequence. Taking a view of the whole season I consider it has been a sellers year and a butter year. Your directors gave the disposal of the season’s produce the most careful consideration, and secured all possible information which was likely to assist in making the right decisions from time to time. Cheese was made to the end of December, and was shipped Home on open consignment, the average price realised being 95s 6d per cwt. In September buyers were offering up to lOd per lb f.o.b. for cheese, September, October, November make, and these offers were better than consignments ultimately realised. From January 1 butter was made, also casein. January make of butter was sold at Is 7d per lb f.0.b., and a portion of February make at Is 7ld f.o.b. These sales proved much better than the realisation for cheese of same make. Of the vest of the butter 8600 boxes were sold at prices from Is 4d to Is 5d per lb f.0.b., and 6400 boxes sent Home on consignment. Casein has paid to the suppliers l£d per lb butter-fat clear after allowing for cost of manufacture. A feature of this season’s marketing has been the holding of cheese with the idea of feeding the market and steadying the price. This experiment, which previously has been successful when tried in a small wav, proved disastrous this season, as the market continued to fall, and buyers being aware of quantities held only bought actual requirements, and finally this cheese had to be released/ the release in some cases being a necessity on account of damage to cheese allegedly through faulty storing. I understand that in this district only one factory has profited by holding cheese, a few consignments having missed the 82s market by being held for a few weeks and released at about 925. It should lie noted that most of the holders of cheese held when the market was between 92s and 100 s. As has already been stated, directors of dairy companies have had a trying time during the past year, and suppliers should not be unmindful of these difficulties when they are comparing results and are prompted to harshly criticise. I think it can he truly said that the New Zealand co-operative <iairy company system, with all its faults, has provided for the producers from amongst their own number boards of directors to control their business whose decisions and actions are free from self-interest, and whether they prove light or wrong are made entirely for the good of their particular company and its suppliers. The percentage of supermen amongst dairy farmers is no higher than in any other walk of life, and I sometimes think suppliers in their judgments forget this important fact. Thei'e is undoubtedly a spirit of competition regarding payout amongst dairy companies which has gone beyond the stage of being healthy. This competition is , stimulated by the demand of the suppliers for the top payout, regardless of the special conditions which should govern the operations of each company. It is to be hoped there "’ill be a revival of the true co-operative spirit which has had a set-back during the last decade. Your directors have decided that the time has arrived when the company should handle home separated cream for farmers. During recent years there has been phenomenal growth of the home separation business, and owing to the difficulties which arise when it is proposed to handle milk and cream at a co-operative factory, the business has been left mainly to the ‘-..proprietary dairy companies. The difficulties mentioned, however, can lie overcome, and as has been intimated, we are now handling home separated cream lor suppliers on a co-operative basis, and as a separate branch of the company s business. The terms upon which die home separated cream is handled arenas foliovs(.1) Suppliers need not t.e shai cdioldei s; (2; ( lie cream is handled uii a tu-operafiw das/s. the suppliers being paiil ike proceeds of the suU* of butter less all charges, and iu addition the sum of fo per lb bulter-iat which they pay foi thei use or the sharehe.ders’" buildings and plant lor the manufacture of then, butter. Itns per lb butter-fat wi.l. be pLaeed to reserve account, and will automatically become the property ol the shareholders. (J) if shaieholders of the. company desiie to supply cream they may do so, and tliev will "get the cream pay-out. Their share (if any; will continue us usual, and they will he given fully paid interest-hearing shai os ior the f d levy. It is the opinion of your directors’ t.-iat the co-oper-ative dairy companies should combat the inrdads being name bv proprietary companies whose operations usually only extend to home sepal a ted cream*. In some <1 istriots ,sma;i co-operative dairy companies win have to clost. down or have got iuen difficulties owing to a few of their suppliers leaving them to supply proprietary companics! Proprietary companies, by sidling the most of their output f.o.b. are able to make a higher monthly payment than the advance payment of co-operative companies who have consigned their produce. ’The fact that 'the Co-opera-tive company makes further payments which almost invaiiablv bring the fin a 1 payment higher than the proprietary payout, is frequently lost sight of. lii addition, the propiretary company is paying on a cieam supply and co-oper-ative factories in this district pay on a milk supply, which is a very different proposition. To indicate just what the difference between paying on a ereiam supply and oil a milk supply amounts to, i will give some figures which can be taken as approximately correct. We will take the example of two neighbouiing lactories, one paying on cream and the other on milk supply, and we will say that butter is worth 18d per lb f.o.b. In the case of tlie cream company the payout should be. Uniter at 18d add overrun, say, 22 per cent., 3.96 d; less cost of manufacture and all charges, say 2.50; 19.46 d per lb butterfat. In the case of the milk company the payout should be: Butter at 18d, add overrun say 18 per cent 3.24 d. total 21.24 d ; less cost of inanulactuiei and all charges, sav, 3.00, equalling 18.24 d per lb butter-fat. Thus we see that to equal tlie payout of the milk company to its snpoliers the cream company should pay out 1.22 d per lb butter-i'at more.

The directors feel that dairy farmers who stick to milk supply will come out the best during the next few years. It is well known that the world’s increase in butfer-fat is going into butter-mak-ing, owing to the increase in home separation, and the prospects for New Zealand cheese look very good. Our suppliers are therefore' urged to stick to milk supply, even though on the face of it. the pay-out to cream suppliers will look better than the advance payment to milk suppliers for cheese making. The company has been able to go iy for the home separation business without any additional capital outlay, and it will be obvious that the increased supply will reduce the manufacturing and running expenses of the company. The company’s plant and buildings have been maintained in good repair, and the policy of making renewals where possible in concrete continued. ’The biggest capital outlay during the year was the ■expenditure of about £1<J()0 on a sewerage plant to deal with the factory drainage at Glover Road, which could no longer he allowed to run straight into the Waihi stream. The sewerage plant is working satisfactorily. and wilL reach its full efficiencv in about two months. The d irectoirs have every confidence in its fulfilling the claims of the contractors to deal with the factory drainage without any nuisapee whatsoever. The company’s financial position .has improved bv iust, over £2OOO during the vear. and it is the policy of the directors to continue this steady improvement year by year. Prospects fcir the coming season look good at present, but it is impossible to forecast, and flic only sound advice is to keep all estimates low. Cheese will be made at all factories from August 1. I have pleasure, gentlemen, in moving the adoption of the 29th annual report and balance-sheet.