DAIRY COMPANIES

Northern Advocate, 7 August 1934, Page 3

DAIRY COMPANIES

NORTHERN MEETINGS

. F. 0.8. OR CONSIGNMENT? DISCUSSION AT KAITAIA. The 33rd annual meting of the Kaitaia Co-operative Dairy Company was held in the A. & P. Hall, Kaitaia, on Friday. Mr C. B. Michie, chairman of directors, presided over, an attendance of about, 200 suppliers. The balance sheet, as already published, was taken as road. The chairman referred to the death during the .year of Mr IT. B. Matthews, who had assisted in the formation of the company, had been one of their first chairmen, and had given signal service over a number of .years. Dealing with, the balance sheet, Mr Michie said the company was in a sound financial position. Depreciation had been carefully computed. Sufficient reserves had been made and the position at the bank was enviable. The season had been a very trying one. The supply up to December exceeded that for the same period the previous year by 100 tons and, had this improvement continued till the end of the season, the output would have increased by about 1900 tons, but owing to a drought, the supply fell away, and the total output w r as 22 tons behind that of the previous year.

In the past it had been found that in the flush of the season prices depreciated, and towards the end of the season improved. Usually with the later seasons in the North there was a good deal of produce to put upon the market at the higher prices, but last season, when prices improved, their own company, owing to the falling, away in production, had little to sell, and that was reflected in the pay-out. The directors had maintained a consignment policy after giving the matter very careful consideration, Regulations were being introduced which would stop a groat deal of speculation by means of f.p.b. purchases, and a better tone in the marketing of dairy produce was expected in the future. Mr Miehie congratulated the factory manager (Mr McCarthy) and his staff on the excellent work they had done during the year. The first place in the home separator class and champion of champions were gained at the. Hamilton Show, with a grade of 94.8 points. For the Weddel Cup, the Kaitaia factory’s butter gained second place with a grade of 93.769 points

High Standard Butter. It had been found that butter made at the company’s factory maintained its standard in storage better than any other butter. After two months’ storage, Kaitaia butter had only gone back half a point, and after four months’ Storage only one point. That spoke well for the careful treatment given in manufacture, and for the quality of the cream. Of all the butter manufactured in Northland, that of Kaitaia approached most closely to the Manawatu standard. There had been one or two trying experiences last year. There had been a breakdown at the factory for which no one was to blame, and serious trouble had been narrowly averted. The engineer had been overcome with ammonia fumes, and only the courage and activity of the staff saved a good deal of loss. At great risk, they had stopped the ammonia from escaping. The next trouble arose in connection with the engine, which would be the cause of anxiety for the next two or three months. It was not capable of carrying the load for the season, and arrangements had been made for putting in another engine. They hoped to get a sec-ond-hand engine, using the one they already had as a stand-by.

Dealing with the capacity, of the factory, the chairman said they were on the brink of the limit the plant could deal with,- unless the hours were lengthened, and this was undesirable. The cream should be dealt with as soon as possible. With the new engine, it would be possible to carry on for several years, but it was proposed to proceed with structural alterations, allowing more space for churning and other work. The proposed expenditure during the season was about £6OOO, including the engine. The big scheme they had in view would be deferred for future consideration, but, if they. continued much further along the present road, there would have to be a lot of scrapping later, on. The Amalgamation Scheme. Speaking of the relationship with the Oruru factory, Mr Miehie said that the % Kaitaia directors had made a fair offer, but Oruru had made certain demands on which agreement could not be reached. By Oruru building a new factory, the dairy industry would be £4OOO a year poorer than it might have been. The of amalgamation to Kaitaia were practically nil, but Oruru had rfiuch to gain. The Kaitaia company wanted to help a sister company, but was not prepared to acofpt terms which meant a loss of £2OOO a year.

During the year, said Mr Miehie, the directors had endeavoured tn uphold the policy recommended by the Dairy Board, and had unanimously supported the consignment system of marketing. The Kaitain company had been to the fore in the movement 1o prevent the misuse of orders on dairy companies. Under the new regulations, every dairy company would have to be licensed, and other drastic? changes were to be expected in the near future. He belieyed that there would be drastic cuts

in rates' and in interest -which would mean a good deal of,relict to farmers. An important feature during the year was the unanimity of those in the industry. It was not true, as had been ; stated, that the Government was tak- ! ing over because the dairy farmers could not settle their own differences. .They had never Viocii more unanimous, j and the industry had men of equal lability with any in the Government. Farmers were only now waking up to the value of the co-operative movement, which was going to progress at a rate never known before. Restriction Fought. The directors had fought, Air Michie proceeded, any restrictions on dairy produce exports. Generaly speaking, there was a world shortage of butter, and there was no need for restriction. On this matter, Nmv Zealand as part of the Commonwealth" of Nations, had a right to be considered, and it had a right to preference over foreign coun-| tries like Denmark and Russia. Thej amount of butter Britain could absorb, 1 I not what her people could afford to: l)U3 r , was what should count. Mr Michie j said he favoured a full and free interchange of goods between Britain’ and New Zealand. Replying next to the exchange rate, Mr Michie quoted from the Hon, Downic Stewart in support of his own opposition to the increase. Tariffs against Great Britain should, Mr Michie said> be reduced, or entirely wiped out. World conditions were very unsettling at present, and there was no room for confidence. International difficulties were becoming increasingly to the fore, and he was afraid the present conditions would not pass away very readily. When the remedy did come, he believed it would be from some unexpected quarter. Mr Michie then moved the adoption of the report and balance sheet. Mr Lamb seconded.

Increase in Honorariums,

Mr Sturmfels said the increase in the chairman’s honorarium and directors’ fees from £l5O in 1930 to £453 last year was out of proportion to the increase in output. Mr Morrison; ‘Why has the Dairy Board’s levy gone up £200.” The chairman: “To help meet the cost of extending the advertising scheme in Great Britain.” Mr F. Holder said the Dairy Board had outlived its usefulness. At one time it gave good service with the shipping and marketing of butter and in cutting down freights and insurances, but today supply and demand had the biggest say. A sum of £702 was an excessive levy on the Kaitaia company. Mr Pettitt asked if the object if the advertising w,as to increase consumption or prices. The chairman: “There is no suggestion of increasing prices. We don’t want to increase our purchasing power by preying on *the British working man.” Mr Pettitt: “Britain can take as much as you like to send at a price.” Mr Parker said he did not regard the high exchange ns detrimental to the country. Mr T, Kenny: “We know what wo are gaining, but we don’t know what wo lose.” Answering a question, the chairman said there was no prospect of the quota being imposed on New Zealand dairy produce after the expiration of the Ottawa agreement, Mr Dynes Fulton had this from two advisors to the British Government. A supplier pointed out that the prices for butter had dropped when the exchange rate went up.

The F.o.b.' Dispute. Mr D. Archibald asked whether iu view of the better prices obtained by other companies which sold f.0.b., the directors considered they had acted in the interests of the suppliers by adhering to consignment. The chairman: “It is easy to be wise after the event. The directors wore unanimous in the policy pursued. Largo f.o.b. sales led to a depressed market.” Mr Archibald: “Butter sold f.o.b. and shipped in the same boat as butter dealt with on consignment brought an average of 11/- per ewt, more than the latter, F.o.b. purchases were not made for the purpose of depressing the market, but to meet requirements existing at the time.” The chairman: “I don’t say that all f.o.b. purchases were for the purpose of depressing the market.” * Mr Archibald: “Factories which sold f.o.b, for six or seven years have beaten us by Id or 2d per lb. ” The chairman; “They make their gains at the expense of the rest of the industry.’ ’ He hoped the Kaitaia company would take a longer viewpoint and endeavour to establish the future. Mr Miehie explained that last season, owing to tho drought, the Kaitaia company had little produce to sell when prices rose towards the close of the season. Hokianga and Oruru were similarly affected, j Mr Marsh said f.o.b. sellers were cutting the throats of others in the industry and lie did not doubt that if these sales were stopped prices would appreciate 10 per cent. Air Archibald’s figures were misleading, because some of tho companies he referred to had largo trading departments. Their own payout was about the same as that by companies on tho same footing,' The chairman: “It is the same as Morrinsville’s.” The report and balance sheet were , adopted.

Ballot was Secret. After announcing tho result of the postal ballot for tho election of two directors, the chairman gave assurances that the ballot was secret, the directors

having no means of knowing how any- | one voted. I Ho had heard that one of the candidates had boon trying to got possession of voting papers, on the pretext, that ho would show suppliers how to vote. Any irregularity of that kind : should be immediately reported to the board. He had also heard of attempts to pledge the company’s credit so as to get support. j Mr Shirley Masters said a native with a car had been out collecting votes for | one candidate. I Mr Parker: “Is the name of any |candidate who did this known?” The chairman: “I heard of one case ! in which a man had been approached. ” ! When the time came for appointing lan auditor it was decided on the moition of Mr Lewis to take a vote of the •suppliers by postal ballot. The fee was j fixed at 20 guineas, including travelling I expenses. Trading Scheme. Mr Gossan moved and Mr Marsh seconded: “That in the matter of trading in goods permitted by the agreement iwith the shipping interests the principle should be that the goods be charged at cost plus administration and that efforts be made to increase the turnover in order to reduce the cost of administration per unit. Mr Gossan said there was, he had been informed by the chairman, a gentleman’s agreement with the business people preventing the company from dealing in household requisites. The chairman: “Your motion must be in the form of a recommendation.” Mr Cossou agreed to that, but said it had come before the directors previously as a recommendation and nothing had come of it. The chairman said a committee had recommended a programme which had been accepted by the full board. This provided for their store, benzine pumps, and case benzine being grouped together. It was proposed to build a store, at which farm requisites would be sold, and the manager was to have an office in the building. So as to place the trading department on a sound footing, it was proposed that the profits from last .year’s trading be used for building the store, and for the next year or two the profits would go to a reserve fund. When this fund reached £SOO they would begin to make rebates to suppliers according to the amount of business done with the company. After a great deal of discussion the motion was carried. « There was a keen discussion on the question of. whether the chairman s honorarium and directors’ fees should be reduced, but it was finally decided to leave them as they were.

Cut Restored On the motion of Mr, Lewis, the directors were recommended ~.to restore a cut of £9O made in the factory manager’s salary. The basis ,on which any bonus shall be paid in future was considered. There was a suggestion before the meeting that the bonus be on a flat rate, and that it he paid on the quantity of butter-fat over the season, without regard to the price realised on the market for butter produced at any particular season of the year. On the motion of Mr Parker, the matter was referred back to the directors, who are to call an extraordinary general meeting of suppliers during the 'current season, at which it will be further considered. Mr Marsh said a proposal had been approved at two general meetings of suppliers that the election of directors I should take place after the annual meeting. The chairman said this would be given effect to.

ORURU GATHERING DAILY COLLECTION VALUE. QUESTIONS OE COST.

The annual meeting of suppliers of the Oruru Dairy Company attracted a good attendance of suppliers to the Peria Hall on Friday morning. Mr J. W. Hoskin, chairman of directors, presided. Prior to the commencement of .business Mr Gardiner complained of not having received a balance sheet and mentioned that he knew of six other shareholders who had suffered likewise. The secretary explained that every shareholder was posted a copy of the report and balance sheet and it was unexplainable how Mr Gardiner and the other shareholders had not received their copies. In moving the adoption of the report and balance sheet, the chairman said how gratified he was with the attendance. Reviewing the operations of the past season, Mr Hoskin said that at the opening of the year prospects were bright and it was hoped to reach 500 tons, but, unfortunately, bad weather conditions caused the supply [to slump. The conditions were general throughout the North but the Oruru factory was one of the few factories in the North to show an increase for the season. 'Touching upon the marketing, Mr Hoskin said the past year was one of g: eat difficulties, as all boards were in doubt as to the best course to adopt. In Ins opinion, it was desirable to make a certain amount of f.o.b, sales. During the past season it was impossible to sell all the output f.o.b. The position was rather uncertain under the new regulations brought in by tin* Conlrol Board, but they should help f.o.b, sales within a reasonable figure. The daily collection inaugurated 1 daring the past season had proved very i satisfactory, as an increase of over 40 i per cent in superfine butter was shown.

There was still room for improvement, said Mr Hoskin, and he urged the necessity for maintaining the quality 1 of the cream even on the daily delivi cry as it was impossible to make a superfine butter out of an inferior cream. The grading regulations were to be stiffened up and in these days, when competition was so keen,.it was of vital necessity to ship the best article to England. I The New Factory. The chairman then dealt with the ; construction af the now factory. In recalling the meeting of suppliers held ; ini the purpose of discussing the erection of a new factory,-he said he told the meeting the directors favoured either a concrete and wood building or else one of concrete. Considering the difference in price was only £2OO, the directors had decided to build in concrete. On account of the low upkeep and depreciation, the directors were satisfied that a concrete structure was the best proposition. The total cost will be in the region of £OSOO and the suppliers would have a factory that was a credit to themselves and one that would servo the needs of the district for many years to come. The directors, said Mr Hoskin, had jleeidcd to install a new boiler costing £3OO, as the present boiler was too small and would require to be replaced within a very short time. Before installation in the new factory, the whole plant would bo overhauled and a new vat installed. In future the repairs would bo negligible. In conclusion Mr Hoskin thanked his board for its co-operation during a very trying year, especially Mr D. Tracey, the retiring member, for his assistance in canvassing for the signing of promissory notes. A discussion took place on several items in the balance sheet.

Mr Maria, asked why the cost of fuel for the Omni factory was over double that for the Ivaitaia Company. Mr Rawlc, the new manager, pointed out how power was lost by the conditions existing in the old factory and stressed the necessity for the installation of roller bearings. Mr [Maria questioned the advisability of putting in a new boiler. Mr Rawlc said the diesel engine would not carry the load, and, as a new boiler would be needed in three years, it was advisable to. install one immediately while the new factory was in course of construction. Mr Maria said wages were £122 higher than the previous season and only IS tons more butter was made. The chairman said the manager had said it was impossible to carry on with less expenditure, owing to the conditions ruling in the old factory. There would be a drastic revision once the now building was taken over. The motion was them, put and carried unanimously,

Two nominations for the position of auditor wore before the meeting, and, rn the motion of Mr Maria, Mr W. H. Atkina was re-elected by ?>3 votes to G. The other nominee was Messrs’ Pinker and Boyd. Amendments To Articles. On the resumption after lunch, the chairman moved the adoption of several amendments to the articles of association. Mr Hoskin explained that in the drafting of the old articles certain clauses were inadvertently omitted. The additions Would bring the Or urn factory in line with all the ether factories in New Zealand, The continual alterations in the Company Act made it imperative to amend the articles from tinle to time to keep the company in line with other concerns in New Zealand, After a further short discussion the amendments were adopted unanimously. Mr Larkins suggested the articles of association be amended to allow a Maori member, elected by Maori suppliers, to sit on the board.

The chairman said the request jvvas j quite reasonable and, as it. was tool late to do anything this year, advised | Mr Larkins to bring the 'matter up j next year. j In regard to the daily delivery service, Mr Maria said the directors had slated they would inaugurate a daily delivery from November to March. The service, however, started in August. Mr Maria went on to say that the directors had installed a deodoriser contrary to their expressed intention. Mr Hoskin said the directors Avere anxious to improve the grade of butter and so started the daily delivery sooner. With regard to the deodoriser the directors found that factories which had one Avere getting more superfine blitter, and, that, under those conditions, it Avonld soon pay for itself. .Ml the companies at the top of the j Weddell Cup competition had deodorisers installed, Mr King, on behalf of the Whati-Avhi-Avhi native suppliers, said they jivere anxious to get a daily delivery, but that as the Oruru Company could not see their way to inaugurate it, the suppliers Avere thinking of supplying the Kaitaia factory. The suppliers in the settlement Avere Avilling to pay 13d per lb for a daily service. The chairman said the cost of a dailv run Avould be prohibitive and the directors had received no offer of a. 13d 1 per lb. cartage fee. The WhatiAvhivhi natives wore in a difficult position, but arrangements wore being made to endeavour to meet their request and, although he could not say anything at the present juncture, matters would be finalised within a few days. Daily Collection Cost. Mr Maria asked Avhat Avas the extra cost of the daily delivery. The chairman said. Avould cover the extra outlay, but that it had provI ed a good proposition, as, on a coni servative estimate, the factory Avould * recoiA-e £SOO from the additional

amount of superfine butter manufactured. A discussion took place on the advisability of conducting a competition lor the best average giade of cream supplied for the season. Last year the prizes had been on a cash basis. A motion moved by Mr Adamson that the directors be recommended to donate a cup for future contests, the cup to become the property of the winner if won three times in succession, was lost by 12 votes to 0. Mr Maria said he was against the holding of an annual picnic, as the cost last year was £35. The chairman said he was in favour of a. picnic, but thought that the cost should be charged up t against the suppliers who attended. After a further discussion the motion to hold a picnic as usual was carried. Mr D. Foster said ho could not see bow the services of the dairy instructoi were required with a daily delivei y. Air Hoskin said Air Anderson had been of great service to the company and to lose his services now would be a retrograde step. It would soon be compulsory to have an instructor in every factory, he thought. After several shareholders had spoken the discussion lapsed. A vote of thanks to the chair concluded the meeting.