CHELTENHAM DAIRY CO.

Manawatu Standard, Volume L, Issue 231, 26 August 1930, Page 8

CHELTENHAM DAIRY CO.

ANNUAL MEETING. chairman’s ADDRESS. (Special to “Standard.”) FEILDING, Aug. 26. The 37th annual general meeting of shareholders and suppliers of the Cheltenham Co-operative Dairy Coy., Ltd., was held at Feilding to-day, Mr N. C. Jensen, acting-chairman, presiding over a fair attendance. Prior to commencing the ordinary business of the meeting the acting chairman apologised for the absence of Mr C. G. C. Dormer, chairman of directors, who is at present in England with the touring party of New Zealand farmers. In moving the adoption of the report and balance-sheet (previously published" in the “Standard”) Mr Jensen stated that, iri common with other parts of tho Dominion, tho suppliers in the Cheltenham Coy.’s area had enjoyed a good producing season, an increase of 194 tons being shown in the company’s output. The seasonal conditions had been particularly favourable for dairying purposes, especially during the summer months. Continuing, tho speaker went on to review tho operations of the company during tho past season. “The average grade of our butter was 93.962.” stated tho speaker, “showing that the butter still ranks among the highest grading factories. The average grade is slightly higher than in the previous year and there was a gradual improvement in the grade of butter during the past three seasons, the figures being as folloiv: 1927-28, 93.66 points; 1928-29, 93,738 points; 1929-30. 93.962 points. CREAM CRADES. “The quality of cream showed a slight improvement on tho previous season, the percentage of each class being as follow: —Finest, 1929-30, 85.17 per cent; 1928-29, 82.39 per cent.; first, 14.54 per cent., 16.43 per cent.; second, .277 per cent., 1.13 per cent. It will be seen that the percentage of finest increased by 2.7 per cent., whilst there was 1.94 per cent, less of first and .853 less of second. It is hoped that this steady progress in the right direction will be maintained, as we must keep up tho quality of our product. With up-to-date methods, such ns herd testing, farm instruction, top-dressing and scientific fanning, increased production will automatically follow, but the benefit of increased production will be lost unless quantity is supported by quality. Suppliers will therefore appreciate liow important it is to supply nothing but a high grade article. Whilst on tho subject of cream grades, I would mention that the dairy regulations requiring cream to bo graded into two grades, first and second, during June, July and August, have been amended, and such cream is in future to be graded by using three grades, finest, first and second, according to quality throughout the twelve months of the year. PRICES. “Shareholders are fully aware of the exceptionally low prices which wero ruling for the past season. The market opened in late September at the favourable figure of 184 s per cwt, London; the average quotation for October was 181 s, but from there onwards a continual fall in values took placo until the market eventually reached the record low level in recent years of 120 s per cwt. In the past season tho highest price we received for our butter was 184 s per cwt and the lowest was 1245, making a difference of 60s per cwt or 6d per lb. In the previous season the difference between the highest and lowest prices was only 22s 6d cwt or 2Jd per lb. “An examination of this season’s market quotations shows a drop of 60s per cwt from 184 s per cwt on Ist October, 1929, to 120 s on 11th April, 1930, extending over a period of 27 weeks, thereby making ail average drop in that period of a little more than 2s per cwt each week. The average of tho monthly quotations will show the regular fall more clearly;—Month of October, average 181 s per cwt; November, 172 s Id, a drop of 8s lid on October; December, 1625, a drop of 10s Id on November; January, 155 s sd, a drop c.f 6s 7d on December; February, 148 s 4d, a drop of 7s Id on January; March, 135 s Sd, a drop of 12s 7d on February; April, 126 s Id, a drop of 9s 8d on March. Thus it will be seen how very difficult it was for anyono to gauge tho future of the market accurately and it has been sheer good fortune if a factory was lucky enough to have made forward sales which have this season beaten consignment prices. Tho London agents themselves were unable to forecast the market, as their advances against shipments (which arc based on 90 per cent, of the estimated realisations) were higher than tho actual nett returns on practically every shipment, with the consequence that factories were owing for considerable amounts to the London agents for the deficiencies on tho season’s shipments. Tho prices from April until the balance of the season ranged from 124 s up to 140 s per cwt. LONDON PATTED TRADE. “During the year the company's agents, developed the patted trade in England and consequently a large proportion of our butter was sold in pound pats. Tho account sales to hand show that tho butter sold through this channel has returned a nett premium over bulk sales on tho same shipment of approximately a halfpenny per lb. This method of sale is preferable to the system of selling in bulk, as tho butter is sold under our own brand and does not lose its identity. It also helps to create a demand from the grocers for our bulk butter Several shareholders availed themselves of the opportunity of sending parcels of gift butter to their friends in England which all helps to advertise tho brand. PAY-OUT. “It will be noted from tho balance-sheet that there is a balance of £19,138 5s lid lor distribution. The directors have decided to divide this amount by paying a bonus of 2d por lb on the second six months of tho season and also a further id per lb on March supplv, making 2(,d on March and 2d on January, February, April, May and June. A dividend of 5 per cent, on share capital is recommended. After providing for the dividend and the bonus to suppliers, there is a small balance left of £l2l 14s Id, out of which the. directors recommend that a bonus be paid to the company’s general employees. “The pay-out of Is 5 0-5 d is, under the circumstances, much better than was expected, and if an equal return can be obtained for our butterfat next season I think we will all be satishcd. Ihe pay-out this season is threepence per b butverfat below tho total payment tor last- season; this of course, is the result of the lowei market values for our produce. It may be some consolation to know that wo dairy farmers have not suffered to the samo extent by lower values as the less fortunate sheep larmcrs, who have had to accept lor their wool a drop in value of over 50^ per cent, as compared with tho drop in return for our product of only 16 per cent. COSTS OF MANUFACTURE.

“Following on such a season of low prices for our butter, it is particularly gratifying to report that the cost of nianutacture has again shown a reduction over the previous season of practically 10s per ton of butter. This is the equiva enfc on the season’s output of £1125. To illustrate the value derived from the reduction in manufacturing costs, it is only necessary to take the comparison back to two seasons a [r o. For the 1927-28 season the cost from farm to f.o.b. was £ls 17s 2d per ton of butter; this season's costs were i 14 5s 7d thus making reduction of £1 11s 7d per ton. This represents a direct saving to the company’s suppliers ot £OO4B os, and 'money saved is money earned.’ BUILDINGS AND PLANT. “Deference has been made in our annual report to the raising of the roof of the front portion of the iactory buildings and to the installation of new plant. This was commenced at the beginning of the past season and it was found necessary to hold over portion of the work until this winter This is now being carried out and when completed will improve the manufacturing conditions considerably. COW -TESTING. “It will be noted from the directors’ report that the question of the cost of the company’s cow testing association at per cow is increasing on account of the decline in the number of cows tested with the association. The point has been reached when the increasing cost per cow must be curtailed. The directors have considered tho matter and it is their opinion that the company, instead of as hitherto bear-

ing the total cost of the association, should subsidise tho samo amount of Is per cow to the company’s association as is done to tho group system, tho members who test with the company’s association to pay the balance of the cost of the testing, but the directors undertake to seo that the gross cost will not. exceed 2s 3d per cow. That means to say that the supplier who tests with the company’s association would not be called upon to pay more, than Is 3d per cow for a season. EXCHANGE RATES.. “Exchange on London drafts has helped tho price considerably. Whereas in tho previous season we paid £1624 15s Id, last season we received £1516 15s 3d, a difference of £3141 10s 4d. The present exchange rates are in our favour to tho extent of £3 10s per £IOO, and the premium on London excliango is worth jd per lb. on butter at the present time. PIG FARM. “It is gratifying to report, the profit of £555 on tho operations of the pig farm for last season. As stated in tho report, new farrowing styes have been built and these facilities for rearing more weaners will further help and should make tills a profitable department for tho company. FUTURE PROSPECTS. “One hesitates in these times to attempt to give a forecast of the future prospects. A disturbing feature to the primary producers of this Dominion is the tact of other countries erecting tariff walls against our produce immediately we develop ail export trade of any dimensions to those countries. In this connection we had at one time a fair trade for butter with America and Australia, but both of these countries have banged, bolted and barred their doors against us. America’s import duty on butter is 15 cents, or 7£d per pound, yet in faco of this New Zealand buys 9i millions annually of American goods and they buy only 5i millions worth from us. Australia has imposed a duty of 6d per pound on our butter, now Canada follows by imposing a restrictive duty on our butter of 2d per pound. As 17,000 tons of butter were imported by Canada last year, their action in imposing this higher tariff is a serious blow to New Zealand producers. The directors considered tho possibility of such a development and they accordingly submitted a remit on the matter to tho National Dairy Conference at Hamilton in June. The remit dealt with the necessity of New Zealand producers curtailing buying goods of American and Canadian production, and it was carried unanimously by the conference. It is gratifying that retaliatory methods against Canadian goods have been adopted by our Government, and it is to be hoped that negotiations for tho removal of these trade barriers will be successful. In view of the fact that other countries are placing an embargo on our produce it will be forceably driven home to us all that as England .s the only market where our produce is accepted freely and without duty, it is therefore in our own interests to support her trade and to buy less from the others. It is somewhat reassuring to note that . the supplies of butter from Russia continue small, and it now seems certain that production in Siberia, owing to economic conditions, has declined very considerably since last year. Although the total imports of butter into Great Britain from all sources during the seven months ended 31st July, 1930, wore no greater than tho corresponding" period of the previous year (the actual quantities being 207,524 tons as against 207,299 tons) yet the ruling price twelve months ago was a full 3£d per pound moro than present day values. This is a sure indication of the hard times which England is experiencing, and it appears that consumers are at present unable to pay more than the present current prices for our produce. It appears evident that, owing tu world-wide economic conditions, lower values must prevail for all commodities. In face of these circumstances we will have to meet the position by supplementing the returns of our primary products and develop other sources of income, such as tho side-lines of boneless veal and-the poik and bacon industries. COST OF PRODUCTION.

“Another feature which requires consideration is tho cost of production to the farmers. Our farm-costs arc 70 per cent, greater than in pre-war days, yet we have to accept tho world’s parity for our goods and this is receding to pre-war levels. Ihe increasing cost of living has been made tho excuse for raising the wage standard for secondary industries in tho past, and these industries arc protected by high tariffs against world commodities. Ihe prosperity of New Zealanders depends on tho values received by farmers for (heir produce, but we are unable to produce goods and sell on tho world s parity at a payable price on the present high cost of production. It is therefore in the interest of all concerned, not only to farmers, but to everyone, that the cost of production be reduced, otherwiso our Dominion cannot hope to prosper. If there was loss spent on amusements, ancl moro work done, 1 think New Zealand would bo in a more prosperous condition.’" (Applause.) The motion for the adoption of the report was seconded by Mr N. Blundcn. QUESTIONS.

In reply to a question from Mr XV. Thovenard, Kimbolton, as to what steps were being taken to prevent overlapping in cream collection by dairy companies, the chairman stated that, at a conference held in Palmerston North to discuss tho problem, a committee had been set up to go into tho matter. Mr P B. Desmond, secretary of the company, stated that tho committee had since met and arranged for the collection of data as to tho routes taken by the companies lorries in the district, and other stops relative to meeting tho problem wore being pursued. A suggestion had boon made to have a block system of collection, but this had opened up another held of difficulty in that factories were not of a similar size, and many of them were either too large or too small to make this proposal suitable. It would be obviously uneconomic to have a large factory working in a small block and vice versa. Mr T. S. Mason: How about an ajiialgamation of tho factories ? Voices: Hear, hoar. Mr J E. Jonkinson spoko on matters in connection with the balanco-shcet and thought it a grave reflection on New Zealand administration, that over four million sterling should be paid by the country for hydro-clectric service, and yet tho company had to provide its own power and could do it at a price cheaper than it could get the hydro-electric supply. Mr Jenkinson went onto refer to several other points mentioned in tho balance-sheet and fn concluding stated that he had every admiration for tho manner m which the directors and staff of the company bad carried out their duties. Tho secretary replied to tho various matters raised by Mr Jenkinson explaining as regards the two auditors that a daily exporting firm, while holding mortgage debentures on the Mak.no factory, had the right to appoint a director and an audi tor to the company. The sum of £531 paid to the Dairy Beard was a levy payablo at per pound by every dairy company in Now Z Tn a rcga o rd to the matter of power costs, tho factorv manager, Mr J. M. McDonald stated that as the result of the • ompany putting in its own plant, it had saved £6OO for the suppliers. (Applause.) Ihcic was still a dispute between the company and the Power Board, and this had been subjected to arbitration and the issue of tho case was being await eel. In rcplv to Mr J. G. Eliott, tho chairman said that tho company s butter all went forward by rail. , (Left sitting.)