CO-OPERATIVE BACON INDUSTRY.

Hawera & Normanby Star, Volume LXXII, Issue LXXII, 11 July 1917, Page 5

CO-OPERATIVE BACON INDUSTRY.

AIMS OF THE FARMERS' CO-OP. BACON CO. EXPLAINED.

A complimentary dinner was tendered by the directors of the new Farmers' Co-op. Bacon Company on Friday evening last, when St. Mary's Hall, Ha. wera, Avas well filled, thera. beinj: between 200 and 300 representative farmers present.

His Worship the Mayor occupied the chair, and after a very nice menu had received due attention, introduced Mr Baron, general manager of the company, to those \present. Mr Baron expressed his pleasure at having the opportunity of addressing an assemblage of Taranaki farmers," because, in this district, they Had a great many ciairy farmers who were connected with the bacon company, and to mem it was only proper that he should report progress and explain fully the aims and objects of the concern. There were a great many farmers, too, who did not belong to the company, and in whose minds there was a great deal of misconception as to what the company stood for. Doubt, too, had been, expressed as to whether tie company was a truly co-operative concern, and one farmer remarked that he had no sympathy with it Because it was not a farmers' institution, but merely a town monopoly. Another farmer North had no sympathy with it because of the huge burdens that would be imposed on farmers for generations to come in consequence of the heavy interest till they would have to pay on the £70,000 that Dimocks obtained for their goodwill. It took a long time to explain, said Mr Baron, that Dimocks' £70,000 represented golden sovereigns put into the business, and that note one | penny of goodwill had been paid to i them. Throughout the country ho had heard it said that the Bacon Company was not a co-operative concern, but he could only conclude thait such rumors had emanated from those who were opposed to co-operation or from those who had seen the writing on the wall, and 1 realised that the day was not far distant when farmers would market the whole of their produce through cooperative channels. (Applause.) It had been suggested, also, tharb this company was an ingenious attempt by the American Meat Trust to link up theproducers of this Dominion to that; concern. Such a suggestion was obviously absurd: the three men who represented Taranaki on the directorate of the Bacon Company were Messrs Powdrell, Marx and Forsyth, and if anyone believed that they would be parties to linking up this company to the AmerL I can Meat Trust—if they would be parties to selling the farmers' interests to the trusts they must come to the conclusion t.hat these men were sneaks and traitors to the cause of co-operation that they had been fighting for so long. And no one who knew them would for one moment believe that of them. (Applause). Anyone who had had any experience with the bacon business knew only too well that it was, .at least, a, very troublesome one. Right from the time that the pig went on the scales till it eventually found its way on to the breakfast table, it was losing weight, and many people would not, or could not, understand the enormous shrinkage that took place. How to minimise this shrinkage to the greatest degree, was constantly before them, and when they realised that 1 per cent shrinkage represented £9000 they would understand how important tliis aspect of their business was. Then, too, up to the present there had been virtual lv no export trade to speak of, and the selling of bacon presented a ireal diffi- , culty. Pigs were only available for I some seven or eight months of the year, and it became necessary to hold and conserve stocks during those months. In order (that the trade could be supplied during the off season. That necessitated th over of stocks for a considerable period, and in some instances they were only turned over once a vea<r. and hams bought in February, March and April, were not soi-J until December, and the money received in .January or February. On tho wholo. conditions have obtained in the bacon industry which have not ex-ide for its achievement. Indeed, conditions have pioved a positive hindrance. Jt was only to be expected that those engaged in the industry should look ' around and seek for forae measure of relief. There were two elements contending for the business—the proprietary and cooperative. It was due to those gentlemen who were running the industry—it was due to the farmer— it was due to ithe industry as a whole, that some improvement should be brought about, and he said that it was greatly to the credit of those? directors of the co-operative companies who conceived the idea of solving the difficulty by amalgamation. They met the directors of Dimock and Co.. m Wellington, and after discussing the industry, it was agreed thafc the only solution was the formation of the various companies into one. At first blush this looked well-nigh impossible. If it had been five or six proprietary companies anxious to obtain that end, the difficulty would not have been a. great one. Had five or six co-operative companies wished to join together, it may have been a comparatively simple matter, but here they had two contending elements—the proprietary peo_ pie had built up a latrge business at considerable- expense, and they were not likely -to let the. business go without a. struggle. The cooperative com'pani«s," on the other hand, with the interests of the farmers at heart, could not sell out their concerns Tio a proprietary company like Dimock and Co. But the position hod to be met. The directors of Dimock and Co. Mere men who had kept well abreast of the times. In Wellington they had built a factory which was second to none in point of equipment in Australasia. They had waiteh-xT the growth of the dairy industry. They had been interested in the growth of i the Farmers' Freezing Co. in Auckland, and the considerable advancementthat had been made on the part of the ■ Farmers' Auctioneering Co. in HamiL i ton was brought before them, and they • said tin.*: That as the farmer has made a success of his butter and cheese In- , dustry, his freezing industry and ins , auctioneering business, and other kiri- ► dred institutions, it will not be lon^ , l>eforo ho wants to run the bacon busi- , ness on co-operative lines, so they said , to .tho directors of the co-operative com- - panics: "AYe. are willing to sell out our bacon business to you. We are willing to hand the whole thing over." Now, ffc is generally recognised that a very considerable sum of money is required r to a-uii a bacon business. At that da to j Dimock and C'o.'s shareholders held !■ £90,000 subscribed capital in the enms pany, the AYaikato company something - like £12.000, the Tanmaki company an- * proxim.-ttelv £19,000. so that theyTroukl s see that- Dimock and Co.'? people liel.l - by far the largest share of the capital, - pnd they said (to the representative of t the co-operative (companies: "Sr^eln^ .« that yui cannot find the capital, i\t aro - willing to hand the concern ove^- to - you. "VW are wi"'n« to sink our iden- - j tity. We are wiTiinsc to hand the"\vh<-!e '. show look, siiock and barrel to you, an-! = . j leave our money in the business.'prod . vided we can make sure of receiving nt ■-' least a b.™k rate of interest' on "or.v- - money. We are willing to surror.-iop the co:t:-o! and give yoiTa majority ojs

the board of directors. A\e only ask n>r j a small representation on the boar:}, in ord^r tha.t we may see how the dusu ness is going, and to give you the benefib of jur txperk-nce ' It was therefore agreed that a boam of ten. directors oe set vp —six of wiv should represent the farmers, to ie yoted <n PT fAnn,er shareholders only. *Tii f6ft for -the Auckland district, ana , three for the Taranaki, snd in.'regain | o tW&e directors the shareholders "*f ,0imocl: and Co. fcave no vote whatever. 'Tneff, provision was made, in the memorandum of association, that upon the business extending and other districts coming into the venture, the Board could *be extended to fifteen, but such extension would comprise farmer direc tors oiily, so that in course of time they would see thiti the Board would con- | sist of fifteen —eleven of whom would be farmers. That virtually placed the control of the company and its affairs in the hands of the farming community. A sood deal had been said about the dry shareholder, and whether provision had been made to buy him out. When n^ fanners had. the chance of buying 'him out \hey" did not oome forward, but when they were prepared to oome forward with £90,GG0 for Dimock and Co.'s shares they would see whether the, dry shareholder was pr.epared to sell but or not. It was a settled axiom that farmers desired to run their affairs and market their produce through co-opersttive channels, but it was a general experience thai* cooperative concerns lacked capital. They had three ways of raising this capital; the one was to put "their hands into their pockets and put, Hi© golden sovereigns on the cq,<auer> another was to go to the bank, and boriow it, and he. would guarantee that when they put a bacon proposition to the bank that they would be met wits a cold and fishy eye. (Laughter). But if they were successful, after giving good security ar..d a joint and several, they were always at this disadvantage that th« bank could step in at any time and say '"we want our money." Did they ever know a "drier" shareholder tnau the bank? (Laughter). The third method of raising money was to go to an outsider, and that was virtually the position of Dimocks in relation to the Bacon Company. They had kept ail their capital in the concern, and further, it could rot be drawn out at a moment's notice. In regard to the payment of dividends on capital invested, there was another difficulty to contend with. It might well b.e that with the farmers controMing the company, the progress payment made for pigs would be such that there would be no surplus available at the end of the year. Therefore it was agreed, and provision was made in the memorandum of association^ that \ the capital of Dimock *>nd Co. would be converted into shares bearing interest at tho rate of 6 per cent, per annum. The sp.me applied to the capital of £Te "Waikato company, and the same to the Taranaki people. 'I hat uas to say, when the surplus of -;he company was declared at the end of .the year the first call will be the paying out of 6 per cent, preference interest on preference shares, and then interest on ordinary shares. Then, provision was made that if the profits were such as to warrant the directors in paying up to 7 or 8 per cent. , such extra 1 or 2 pea- cent, cannot be paid until the shareholding suppliers of stock have received a bonus equivalent to the 1 or 2 per cent., as the case might be. Thajt marked the iirst step in the negotiations towards amalgamation. The second was in regard to the value -of the tangible assets of the variouscompanies. It was agreed to accept' these at their balance-sheet values, provided such could be sustained upon an investigation being made. To that end a committee was set up, consisting of directors of the various companies, and together with the assistance of an engineer and contractor, they made v thorough investigation of the premises, and it was found that in value the various companies had, approximately, £15,0u<) more than was shown in th-s balance-sheets. That position was arrived ut by reason of the generous depreciations which had been made. That completed the second step. The third and last was in regard to the transfer of share?. So that there would be no differentiation and so that it could not be said tliat any one company go+ any advantage, it was agreed "that the holders of shares of the nominal value of £1 each in the "Wafkato. TaratiEiki, and Dimock Co., should be given share per share in the new concern to what they held in the old. The holder of ten £1 shares in the Waikato, Taranaki or Dimock and Co., would bo given ten £1 shares in the new company at the same value. That practically completed the negotiations and the amalgamation was approved of. The }e?,a\ machinery was then set in motion and the company started off on "October Ist. He was pleased to say that since that date spproximately 14,000 shares hail been applied for by farmers and dairy companies, and they had 26 dairy companies attaohed to it. Now. i'fc might well be asked, in wiSat_ par^cular was the dairy farmer going to benefit by joining the company? Was he going to be one bra.ss farthing better off? Was the company going to lie advantageous or otherwise? He would just briefly give a few reasons why the company would be of considerable advantage to every dairy farmer, and why he should join it. In tho first place it was the best attempt that had ever been made in New Zealand to place the bacon industry on a proper footing. Hitherto the industry I had been one, more or less, of an ir- ' regular nature, and in consequence the producer had suffered. In the next place, they said when they commenced that this merging of interests Mould mean a considerable saving in the buying.end of the business, and they were pleased to say that such had been the case. In Taranaki, for example, they had had four or five buyers running around after each other, and the expenses of these m.en had to be paid by the producer ultimately. Now they had only one man doing the same work. Their present organisation enabled them to effect great savings, too, in railage charges, because the pigs could always bo sen'fc to the most convenient works. But the greatest economies were effected in the selling, and last season there were, something like five or six sellers in the field, .each with its own establishment, each with its own salesman, local manager, carriers, .etc. All that has been done away with, and to-day tho various amalgamating companies were selling through one channel. ° The insane competition on the part of the sellers had been done away with. This competition had in sonic cases meant a loss of no less than a penny a pound to the industry, and that would have been available to tho producer had they had the present organisation. If fanners pulled together and worked loyally they could soon own their own works, .as they did in their dairy business, and in sonic instances in the beef and mutton business. In the latter they had not much control over the sale of their produce, but in the bacon business they would be in the i:u;qius position of having the market entirely in their own hands because 90 per cent, of the bacon was sold in Xew Zealand. The speaker then went on to refer to Jin advertisement that he had seen in -an Auckland paper. It was an address

jto farmers, to this effect: Why sell your stock to the dealer who sells to the exporter, who jsbUs to the London man, who sells to Smitkneld, who sells Ito the butcher, and who" itf turn sells to the British public, jvhen we i?an take it direct and sell it ourselves? f Tne j framer of the advertisement had giVeii ! most excellent advice to the farmers, [ but it did not go far enough. There was j only one thing wrong with this advertis^ffient—it should have been carried. jto its logical conclusion., and should ' have read in regard to the pork indus. try at all events: Why sell to us When you have your own organisation, or why | sell to any proprietary concern when ' you have your own organisation? Another reason why farmers should, come into this organisation was the menace of the American Meat Trust. Our legislators talked about how they would throttle it the moment it put its foot in New Zealand, and how they would pass legislation which would effectually grapple with the menace, while all the time we were blind to the fact thatt agents of the Trust \vers here, and had prepared for extensive operations in New Zealand. He, gave names and related business incidents in support of this statement. The danger of the £reafc meat trusk was a very real on<^ an £ the only w^y! to combat it w^ by whole-hearted cooperation. t waa saia that they conw>r> a SBrB®aS?B <»Pital of £100,Ou^JJjO, and it was hopeless to. attempt ta m\&b the overwhelming advantages t>f such, imvivalted financial resources with capital ia New Zealand. But there was an effective weapon .greater than capital, a weapon, that money could not buy, and that was loyalty —loyalty in whole-hearted co-operation. Some people put a very tmiall value on the loyalty of the New Zealand farmer, and unfortunately had been more or less justified in the past. A little while ago a gentleman connected with one of the great meat trusts was passing through New Zealand, and in conversa. tion with' the speaker, the subject of co-operation was mentioned. "Co-opera-tion! 1' he said, "A farthing a pound will break it at any /time." That was this man's estimate of the value of the New Zealand farmer's loyalty. He (Mr Baron) believed that the day was not far distant when the farmer would wake up; when he would not be sidetracked by a bait of that description, and when he would own his own business, run his own business, and mind his own business. The Manawatu Daily Times, in an article published recently, headed: "Let the Fanners Beware," said that the capture of the Argentine was effected by the usual Beef Trust methods, namely, the steady forcing up of prices unsil all competitors are eliminated, and then when the market is cornered prices are dropped and the producer is forced to take whatever the Trust will give him, oil' have his stock remain on his hands without a market." It then went on to give an interesting illustration of a New Zealander who had gone to the States. H.e had purchased land at what appeared to him to be a cheaper figure J compared with New Zealand standards, but he said, "I found it was impossible for me to raise cattle for profit, because the local markets were closed against me. The Meat Trusts have full control, and they would only buy stock at ttheir own pa-ices." He would remind them of the warning that Lord Roberts gave to the people of England prior to this great war. The people were indifferent and took no notice, and the crisis came and found them unprepared. A warning of a very gre^t and real danger waa, now being given to farmers. Were they going to be indifferent to it? Were they going to bo deluded by the farthing a pound bait that really amounted to no more than 'the smell of an oil rag? lie trusced not. On the contrary, ho beheved that they would now stick loyally together and work whole-heartedly together on co-operative lines to make f'che Ne-v Zealand Farmers' Bacon Company a great success. (Applause). Mr W. D. Fowdreil remarked that he had always been an advocate of coi operation, and co-operation was responsible for ths high, values of land on this coast to-day. The Farmers' Co-op. Bacon Co., unlike most coj operative concerns, was fortunately not hampered for capital. The bank'had offered them advances up to £100,000, and they had at command capital amounting to over a quarter of a million, so that want of eaoital was not going to be one of their difficulties. Another great advantage of amalgamation was that it enabled the present concern to keep its finger on the pulse of the market. Throe months before amalgamation took place the three companies took stock, and it was ascertained that they had enormously big stocks. Instead of pushing the goods on to the market and causing a glut they decided that Dimocks should do all the celling, and by so doing they obtained satisfactory prices for all their stocks. New Zealand was the only market for bacon ; they now knew just how many pigs were lequired for that market, and the others could be shipped home green. In the past this was not practicable bc-cfiuse the one company was not going to ship pigs home to'make a local market for the other competing companies. As farmers they might ho successful, but they did not know much about the bacon business, and this was where the new company would gain so enormously; they had the advantage of the business" organisation of Dimocks, and in their general manager they had one of the ablest business men in New Zealand, with a thorough knowledge of all the latest and best methods. This amalgamation would effect biV savings in railage; itwould cut out all unnecessary overlapping, and the requirements "of each city and town would be supplied from the nearest depot. He also referred to the last occasion when he addressed the shareholders of the Hawera. Dairy Co. urging that that company should come into the new Bacon Co. as ; a contributing dairy company. The meeting turned his proposal down, but he would like now" to tell them that on their 3200 pigs that had since gone over the Hawera scales they had I lost between 3s and 9s on each pig. I flic non-shareholders of the several j factories who sent pigs to the Hawera yards had lost £1280 in nine months. The Bacon Co. had made it much more oasy for dairy factory companies to become shareholders than for private individuals. On the estimate that the Hawera Dairy Co. made 2000 tons of i cheese in the season they were «sked to take 2000 shares, on" which there would be 2s to pay on application and 2s on allotment, and it was not anticipated that any further calls than these would be made. The Hawera Co. would on that basis have had to find £400 by increasing its overdraft, on which it would have paid 5-£ per cent. It would have received 6 per cent dividend from the Bacon Co. —in itself a profitable iovestment —but its pig supplying; shareholders would have received £1280 extra. That would have meant a profit of over 300 per cent in the first nine months. He asked farmers to work for their own factories and take up shares in the Bacon Co. and make it the huge success it warranted. He challenged any man to point out one weakness m the Farmers' Co-op. Bacon Co. (Applause.) Mr Forsyth also spoke at some length explaining the points made by the other speakers, and he was followed by Messrs Greville. Banks (Waikato) and Dimock. In movintr a vot» of thanks to the directors of the Bacon Company for the way they had entertained their visitors

that evening and for the information given, Mr F. Mills said that he now felt that he stood in the proud position, ' after carefully listening to the facts placed before them by Mr Baron and Mr Powdrell, of being the most intelligent member of the Hawera Dairy Com. pany's board of directors. When Mr p<j\vdrell addressed the suppliers of the HaweTii Dairy Company, urging them to join in «'it'll- the Bacon Company, he (Mr Mills) was, he" belied, the only director who then spoke in SiHiport- or .Ma- Powdrdl, He had noticed in the hall that ovening ftt least two of %ho> directors who had strongly opposed M* Powdrell on the occasion referred to t 4 and it was to be regretted thart t.S' o g e ; two director had not liow accepted the invitation s5 the directors of the Bacon Company to come forward and ask for information on any point that they were not dlear about or about which they were not satisfied. The. rtttftion was canned amidst applause, line] U successful function was Johen feiNought to & conclusion.

i