PROGRESSIVE COMPANY.

New Zealand Herald, Volume LXIII, Issue 19454, 9 October 1926, Page 8

PROGRESSIVE COMPANY.

FARMERS' AUCTIONEERING. OPERATIONS IN WAIKATO. CHAIRMAN'S REVIEW OF WORK. (Extended Report by Arrangement) [by TEIiKOR.VPH.—OWN CORRESPONDENT.] HAMILTON, Friday. The annual meeting of the Farmers' Cooperative Auctioneering Co.. Ltd., was held I in Hamilton to-day. the. chairman of directors, Mr. H. iS. Hawkins, presiding. Mr. Hawkinß, in moving the adoption of the report and balance-sheet, which has been published, said:— " I wish to express the sense of loss wo have experienced in the death of Mr. Thomas Paterson. Most ol us knew him—many were his personal friends. Mr. Pateraon was one of the few directors who have «>raipied that position since the inceptjori of the company, and although failing health prevented his regular attendance at our meetings during the latter part of his life his service to the company has been consistent and valuable. His judgment could always be relied on and he was always a strong advocate of the best interests of the farmers. His loss is felt not, only by the company, but by the whole district. "It is my pleasing duty to submit the balance-sheet and report concerning which wo have met her© to-day. and in doing bo I feel justified in congratulating shareholders on a satisfactory showing for tho year's work. The financial position, as dis- • closed by the balance-sheet, is undoubtedly sound and must appeal to you all. and your directors are fortunate in beintf able to submit recommendations dealing with the allocation of accrued profits. Capital Account.—The total subscribed capital at July 31 was £658,267, of which has been paid up, leaving £178,314 uncalled and £IOB2 unpaid. " Reserve Account.—The reserve account is unaltered and remains the same as at July 31, 1925, viz., £26,376 ss, which is equal to a premium of 6s 6d per share on the ordinary share capital issued. " IJeserve for Income Tax.—The sum of £3796 15s 3d appears in the balance-sheet as a reservß for income tax. Last year, as you are aware, the' balance-sheet covered a period of 18 months owing to changing th» date of the company's annual balance, consequently it was necessary to allocate out of last year's profits the income tax on the total earnings, although tax upon only 13 months' earnings became due in February lust. The sum referred to. however, is "a liability and is payable at next income tax period, and according to custom fe charged against the year during which the earnings we re made and upon which the tax is levied. " Mortgages.—This item stands at £23.828 4s Id, showing a decrease on last year's figures of £753 17s 9d, which is brought about, by an adjustment of mortgages. Sinco the clcfsing date of tho company's books, viz.. July 31. this sum has been further reduced by repayment of a mortgage of £13.000. Other Details of Finances. " Deposits.—Fixed deposits with the company amount to £34,239 4s lOd, a decrease on the previous year's figures of £'2940. The whole of this liability is fixed with the company for varying periods with maturing dates evenly spread over these periods. " Shareholders' Current Accounts.—The sum total at credit of current accounts is £14,054 10s 3d, an increase of £1419 4s 10d on last year's total. This amount is mado up by the aggregation of a number of current accounts operating at Hamilton and branches. No large liability exists as far as call money is concerned, and this fact will doubtless be appreciated by share-' holders. " Sundry Creditors.—The amount of £65,778 28 lOd appears in the balance-sheet at the credit of sundry creditors, which is £5034 10s 3d more than the previous year. It jepresents proceeds credited to accounts for stock sales for which payment did not become due until after July 31. as well as sundry purchases of merchandise made during July.* The whole ol" this liability has since been paid. " London Office.- Tho sum of £3586 Is 2d appears ip the- balance-sheet as a liability to London office at July 31. This is the balanco of account at that date, and on realisation of consignments will automatically bo liquidated. Bank of New _ Zealand.-—The overdraft at the Bank of New Zealand at July 31 amounted to £9335 4s lid. This item is necessarily a fluctuating one aud should bo regarded in its relation to our other liabilities. It shows a reduction of £22,610 5s 4d- on last year's fieur©3. " Bills.—Agair\ I have to congratulate | shareholders on tho absence of any bills \ payable or bills under discount. | " Total Liabilities.—Our total liabilities at ] July 31 amounted to £155,384 10s 2d. while l the assets. excluding uncalled capital, amounted to £694,169 10s Od. Thus our assets cover our liabilities nearly 41 times and show a percentago of. liabilities to assets of only 22.38 per cent., "which is the lowest in tho history of the company. Tho figures" show that the assets are sufficient to pay all liabilities, all capital paid up by shareholders, and then leave £59,914 as a surplus, equalling 12.5 per cent, on tho paid-up capital. These figures manifest a sound financial position, and I venture to assert aro eminently satisfactory. .Assets of the Company. " Properties.—The value of our properties in Hamilton and tho various districts in which the company operates now stands at; Freehold, £158,295 18s sd; leasehold, £3999 17s lid; totalling £162,295 16s 4d. Maintenance. renewals and repairs have been charged against current expenses. "Machinery. Working Plant. Office Furniture and Fittings,—£l7,s9l 14s 5d covers the whole of the working plant, machinery, oflics furniture and fittings engaged in the business. Considerable depreciation has been provided for. and these items are more than covered by capital values. " Sundry debtors, bills receivable and advances against consignments total £377.489 0s Id, an increase of £13,743 3s Id on last year's figures. This sum represents many thousands of accounts operating at Hamilton and all branches, advances to farmers against stock, debit balances of those operating on the company's finances through thencurrent accounts, as well as debit balances for goods, etc., and outstanding accounts due for stock purchases, also advances against consignments afloat. Every care has been exercised in the watching of ac. counts, and the figures disclosed show that no unduo restrictions have been made in advances.

" War Loan and Investments.—lnvestments total £45,3!>2 7s. Of this sum £29,250 is invested in War Loan Inscribed Stock and New Zealand Government debentures. An examination of the balance-sheet will dinclgso that provision has been made by way of reserve for any depreciation in the value of this stock. On to-day's quotations a good margin is shown in our favour. The balance in the investments, namely, £16,102 Ts, is represented by mortal pes and other securities held by the company, as well as shares in several co-operative concerns and saleya rda. "Stocks of General Merchandise.—The stocks of merchandise have been valued by competent valuers at £91.<40 12s Bd. and have been carefully checked. As against last year's figures a decrease of £'25,390 Ds !0d is shown. This is mainly attributable to ihe loss by fire of the company's premises and stock at Cambridge on the night of .Jul? 1. The ficure ot which these stocks aopear in the balance-sheet is well within the market value. "Profit and Loss Account.—The net profit for the year amounted to £37.938 15s. to which has to be added an amount of £173:1 17s Id brought forward from last year, making a total of £39.071 12s Id. Your directors have already paid interest at the rate of 0 per cent, pef annum on the preference shara capital, and now propose to pay a dividend at the rate of 0-per cent, on ordinary share capital, to make the necessary provision for income tax, and to carry the balance forward. "Expense*!.--The total expenses for the year were ;!93.t34 7s Sd, against £96,541 4s 5d for the year ending July 31, 1925, being b, reduction of £3109 16s 9d. "Percentage of Exponaes.—-The percentage of expenses to gross profits equals 71.12 per cent. '"The various sets of earnings, items of expenditure anc) expenses to which I have made reference represent the aTcrepato results of the entire business. With the exception of two branches the various branches and departments have contributed their quota to the general earnings, and our thanks arc due to the various managers, departmental heads and staff for the result achieved. One of the non-successful branches referred to, namely Tokoroa, has already been closed, and unless better results can he obtained from the other branch a like procedure may have to be adopted. The Stock Market,. "The market for fat cattle and stores has been steady throughout the year, and although beef has not readied within 15s to 20s per 1001b of last year, yet prices during the past few months have approximated £2 per 1001b. During the drought experienced in Poverty Bay and Hawke's Bay last summer thousands of store cattle were railed and driven to the Waikato district, and with its abundance of feed t,hf>se were placed at satisfactory prices without seriously affecting our markets.

"Dairy Cattle.—There has been a keen inquiry for good cows and heifers, due, no doubt, to the number of cows culled out through .herd-testing, and prices were on on equality with those ruling last year. With the continued slaughter of heifer calves, tb" problem will soon arise of finding sumciont heifers to build up future herds to keep pace with the advancement of the dairying industry. The inevitable shortage will undoubtedly be reflected in enhanced prices .a* dairy stock of good quality. "Many pedigree sales were held bsr u» throughout the Waikato and King Country districts, and although prices jvere eas l ®* than last season, they were fully equal to those realised in othor parts of the Dominion. "Sheep. -The market was good for all classes throughout the summer months, but prices dropped considerably during tii» winter, being fully 10s to 15s per head lower than at the corresponding period last year. Contrary to the usual upward trend experienced from June onwards rates have continued into the spring at the same low level. No announcement has yet been made an regards mutton and lamb for export, but i» is not anticipated that prices will be on » parity with those of last season. •"'Horses.—With the enormous increase in motor traction the demand for horses steadily declining and prices rule accordingly. We held onr usual spring and autumn fairs at Cambridge, and while prices wer* lo'wer nil round than at previous fixtures, the majority of entries changed hands. "Pigs.—The yarding* of pics at our sales have increased, farmers having realised that this class of livfc stock is a profitable venture at the prices which obtained throughout the season. With the present favourable prospects of the export market, farmers would be well advised to give due consideration to a branch of dairying that undoubtedly jields remunerative returns Position of Wool. "In last year's address under this headinß it was stated thai although it was 1 o foretell the future it was considered that the wool position was statistically sound, and that prices were likely to remain on a pavable level for some time to come. These remarks were made with the demoralisation of the 1924-25 season m mind, when tn« last two months of that season, as you know saw a paralysis in the market, and with the continuous fall in values buyers had to face enormous losses in the realisation ol their purchases made in the earlier part ot the season. It was. therefore, gratifying to all concerned when the first sale of the 1025-19% season opened in Wellington on November 10. 1925. and it became apparent that confidence was returning and that buyers were operating fairly freely and would absorb normal offerings. The first Bale in Auckland opened on November .7. 1925. and prices reahsed at Wellington. Napier and Wanganui were maintained, and throughout the whole season it may be said that there was leas fluctuation m the market than usually obtains. "For some Tears the Auckland market was adversely criticised by buyers, owing to the lack of care in the get-up of the clips offered The last two or three years a steady and marked improvement has taken place, the eeneral get up, condition and character ot the wool offered in the early part of last reason exceeded any previous display far as attractiveness went, and well merited the commendation received from all quarters. Thero are still a number of growers, however, who would be well advised to exercise more care in the get-up of their cups. *' Our offerings last season totalled 8280 bales, and these were practically all mutted at satisfactory prices. I am hopeful that these figures will be exceeded during the forthcoming season. " The quantity and quality of the coming clip should be well up to average, and it is a matter of satisfaction that the general outlook is healthy and that prosnects are encouraging. Shipping. " Shipowners during the past year have not had an enviable time. As you are all awaie. this time la.st October we were in the throes of a seamen's strike, which I am thankful to say was eventually settled on a satisfactory basis. New Zealand steamers, however, had hardly picked up their time-table running when the English coal strike took place, which has hit all' shipping companies very heavily, as they have to pay considerably more for their coal and suffer delay in obtaining it. Notwithstanding these disadvantages, the associated lines trading to New Zealand have azain reduced freights on refrigerated cargo equal to 75 per cent. " Although there are naturally many physical difficulties in serving a country with so manv scattered ports and so many diverse interests in escorts as New Zealand. the service has been very satisfactory, ind has shown continual improvement. There ha 3 been an amnle supply of tonnage throughout the past season to meet the requirements of exporters, and effect has been given to the policy of the Meat and Dairy Produce Boards in ihe regulation of shii>ment3. At present ample tonnage. is in sight to meet any seasonal rush of dairy produce, and in the coming season as in the nast I feel confident the overseas lines can be relied npon to meet the requirements of the trade. "Wn took up the Auckland agency for the Cunard and Commonwealth and Dominion Line in 1922. and this department has proved a valuable adjunct to onr business. increasing in value every year. " I am pleased to sar that a number of passengers have availed themselves of our services in booking trans-Atlantic voyages by the Cunard liners, thus making a savins of five dollars American tourist tax. " No little interest was created in Auckland in December last, when the magnificent Cuniirder Carinthia vi«ited_ this port with American tourists. She is due again towards the end of December with another full passenger list of tourists, and will be followed by the Frnnconi.-i in February. Merchandise. " During the period just closed we lia,Ye been enabled to trade with a greater degree of confidence than for softie seasons past. Prices have remained on a more stable basis, and while fluctuations have been apparent these were of a much less violent nature than hitherto. " The bulk of our lines are indented, and shipping facilities having now become more dependable we are able to arrange for more frequent arrivals. This obviates the necessity of carrying stocks in excess of our current needs, and in consequence reduces the trading risk to a minimum. " While the financial resources of our farmers have remained :k> uncertain it has proved a difficult task to gauge the demand j for commodities, but I am* pleased to say that sound judgmment has been exercised in buying, with the result that our stocks do not exceed our normal requirements. "We have been able from past experiences t.o improve and build up our serI vice iu the various departments, and a ; system lias been introduced whereby both I the buying and selling organisations have ; reached a high level of efficiency. ! "Manures.—There has been a phenomenal demand for fertilisers during the past season. and the necessity for top-dressing has become fully recognised in this territory. " Your directors have ever been alive to the necessity of providing farmers with manures at reasonable prices, and have always used their influence in this direction. I can claim without fear of contraj diction that the company's efforts have been no small factor in bringing about reduced prices. For the purpose of comparison I give the ruline prices for 44-40 per cent., suner since 1922 both for cash and credit „ol«..

Booked. Cash. 30/5/22 £7 5 0 £6 15 0 1/11/22 7 0 0' 6 10 0 19/2/23 fi 15 0 (15 0 3/9/23 6 12 6 6 2 6 *l/5/24 6 7 fi 5 17 6 27/4/25 fi . 2 6 5 12 6 12/7/26 • 5 17 fi 5 12 6 30/8/20 5 16 0 # 5 11 0 " As agiiinst list year's figures there is a reduction of 6s 6d per ton on the booked price and Is 6d per ton on the cash price, while a considerable concession in railago has been made by the Government. Taking as a basis that the railage charge for the \\ aikato is 100 miles, the reduced rate gives a saving of 5s 4d per ton on truck lots and over. Therefore, on booked prices, the farmers are making a saving iwrainst last year's prices of 6s Gd plus 5s Id. totalling lis lOd. "In pre-war days 36-38 per cent, super was sold at' £4 cash. To-day the higher grade, viz., 44-46 per ce«.it., is practically the only super sold, and costs £5 lis. On a unit value the higher grade on prewar prices would lie £4 183, therefore, today's prices on the basis of cash show an increnso of 13a per ton. which I venture to say is not as proportionately higher as the increased wages and other charpes would lead one to expect. "Farm produce is t ho bedrock of this country's existence. In the long run it pays for everything. The only thing in sight above all others to materially increase that produce is low-priced manure. Our friends the dairy companies are in an exceptional position to provide ur with this. They pay no income tax, nq interest on share capital—although these have to be provided from some source or other—they make no bad debts, nor are they at the expense of travellers, continually running round soliciting business. No ordinary trading company, having to do all these things can hope to compete with them in cost of , service. If thev jvill provide all farmers with low-priced manure. although they may deprive companies such as ours of a legitimate source of revenue, yet; from a national point of view they will earn the gratitude of us all. The Dairy Industry. "The following figures show that the duirv' industry received somewhat of a check during the past season. The output, particularly of butter, was considerably restricted by the adverse climatic conditions. The butter and cheese exported for the 1024-25 season were as follows : Butter 71.063 tons. Cheese 72,016 tons. For the 1925-26 season the figures arc:— Butter 61.195 tons, Cheese . . . . - . 71,682 tons. "It is therefore apparent that, while cheese declined a few hundred tons, there was a decrease in butter exports of uarly 10.000 tons. The figures for the piißt, season for the Auckland Province were:— Butter 37,9*' tons. Cheese .10,785 tons. 'The production in our own territory showed an increase in cheese and a decrease in butter, the total butter-fat, produced being approximately the same. There is there-

fore some gratification in the knowledge that our district has not shared, with other' parts of New Zealand, this marked drop in production in the dairying industry. There is reason to believe that, if the climatic conditions are favourable in the coming dairying season, there will again be recorded an increase in production in tb '"'lt f difficult, at the present time, to form any idea of the probable return to dairyfarmers for the 1926-27 season It looks as if moderate prices only will be received. A great deal will depend on th'e production in the Southern Hemisphere If Australia should have a large surplus of butter for • export during the flush months of the season, it is likely that values on the London market will rule fairly low during the early months of the new year. "It is becoming more and more evident that it is essential for the dairy fanner, not only to grow more feed where possible and increase hia carrying capacity so as to increase hia income, but also to go in for a better class of stock. The increased use of the tester as applied to individual cows is undoubtedly putting money into the pockets of hundreds of dairy farmers in our district, and 1 should like to stress the importance to dairy farmers of herdtesting carried out on proper lines. Insurance. "This department has maintained its usefulness, and as chief agents in this teiritory for the New Zealand Insurance Company, Limited, no effort on the part of our organisation has been spared to achieve even greater success than that already attained. 1 would suggest to those clients who place their risks elsewhere that they consider further supporting the company with their business. I feel confident that they will have every reason to be satisfied with the results. Those who have not taken steps to fully protect themselves should get into touch with our department. Finance. "Although it can be claimed that the general business of the Dominion is healthier, we have still a long way 1o travel before we reach a solid basis of trading. "Readjustment of land values is Blowly (skins place, but farmers are still, experiencing difficulty in rearranging mortgages, as investors continue to look with disfavour on mortgages on country land. In the larger towns shopkeepers are feeling the pinch of high rents and heavy rates, and until land values, both urban and rural, are reduced we shall not be on a solid basi3 either in town or country. . "Not only farmers are having a lean time, but many of our important industrial and wholesale trading concerns are having a like experience. "The prospects for meat are anything but encouraging. Meat exporters have lost money during the last two years, and it is safe to say tliev will not be over eager to repeat their experience, consequently prices are likely to rule low, and a consigning policy may prove to be a wise one this year. "In regard to butter it is anticipated thers will be heavy leclamatiojas in respect of the large quantities of New Zealand butter which have been stored in London for some months in anticipation of a better market, which is not likely to materialise. The present season's output, owing to increased competition of foreign countries and the diminished purchasing power- of Britain, may not equal last season's figures. "It would therefore seem that for the present at any rate we must make up our minds to be satisfied with lower prices for nearly all our primary products than we have enjoyed during recent years. "The banking returns for the quarter ending June reveal anything but a satisfactory economic condition—a large inciease in advances and a, considerable deciease in deposits. Under normal conditions an increase in advances should snow a corresponding expansion 111 deposits. The increase in the banks' advances totals £•1.564,784, while the duciease in deposits totals £1,955,688, and these two items aggregate £6,520,472. Where this money has gone is explained by the return of imports for the year ended May 31, which amounted to £52,236,015. and exports £45,764,578, showing an excess of imports over exports of £6,471,437. "Expenditure by the Government and local bodies has been, and is likely to be for some time, on a fairly liberal scale, but in the near future there will have 10 ba a considerable tapering off. Wages' aru still high, and continue on the up-grade. "There is no occasion for alarm as lo the condition of the people as a whole, but there is urgent need for people of limited means to exercise the strictest economy. "The long term mortgage scheme inaugurated by the Bank of New Zealand should be put into operation within the next two months. It should be a boon to those who want 'security for tenure' for their borrowings, hut will be of no help to those who cannot offer perfectly safe security. Details have not yet been published, but in all probability loans will be made for periods ranging from 10 to 36; years. Amortization payments will no doubt have to be made in every case, though for loans with a currency of 10 to 15 years -the payments will ba on a scale to considerably reduce, though not to repay, the loan at expiry date. No doubt the bank s policy will be to meet the desire of. borrowers as far as possible consistent with the principle that there mußt be an annual payment off the amount of tha debt. Outlook. "The outlook. I regret to say. is uot hopeful. As long ago as last July the Chane British Exchequer said tha coal strike was having serious effects on the national wealth; the basic industries, wMch employ the largest proportion of manual workers, were rapidly coming to a standstill. This reacted on the railways and other forms of transport, and on manv dependent industries. Tho result was the impoverishment of industrial Britain, and a steady breaking down of the basic industries on which its life depended. "We have read in round millions the cost of the general strike, the cost, of importing coal, the unemployed dole, and the enormous amount of money paid to America every year on account of war debt. To add to their difficulties in meeting Ihcse payments comes this tremendous loss in earning power. "We must admit that the outlook for the next few year-, is full of anxiety both for them and for us. For us. because their earning power in lelation to their known commitments determines their spending power and their spending power fixes the price of all—or nearly all—our exportable produce. "We kuow they have a sound constitution, we know they are level-headed and determined. because we have inherited all these characteristics, vand therefore we are sure once they get to real grips with their troubles they will overcome them. But they are slow moving. It will take considerable time for these industries to resuscitate themselves ana regain their lost markets, and the effect of their collapse will be felt here for some time after their recovery. In the meantime wo must wait and economise and carry on. Optimists -and Pessimists. "Much has been said and written iatetj about optimists and pessimists, generally with the object of showing that while we . welcome the former we have 110 time for the latter. In m r opinion both are doing good work, provided it is not merely confined to words. The optimist is the man who hopes for the best; if he does everything he can to bring about what he hopes for and persuades his neighbours to do the same ha is doing valuable work for the community. On the other hund. the pessimist is tho man who fears the worst; if he, instead of merely saying so, does all he can to provide against what he fears and his neighbours in that direction, he, too. is coing good work. If it happens, he and they are prepared to meet it. If it docs not happen, they are the stronger for having made the effort. There is n« need for anyone to be discouraged. We all have to face our difficulties as they arise, and forewarned is forearmed. Lei us hero to-day face the possibility of both wool and butter falling to Is per lb. If we can make the provision necessary to enable us to pay our way under those conditions we shall be very much stronger, very much more independent in two or three years' time, whether it happens or not. Many of us remember when wool realised only 4d' per lb. We are still alive, and so will you be. "Whether the battle of life is harder toi dav than it, was to the earlier settlers. I, being an old ib&n, am inclined to doubt. But if it be harder, then you of the present generation must prove yourselves the stronger men by facing it with the same courage and the same success a,s they did"You see by the report that the directors recommend a dividend of- 6 per cent, on the ordinary capital. That recommendation is justified by the results of the last year s working, but whether it can he repeated next year depends on jyou. It has been effected—not by any increase iu the gross profits, which are less this year than lastbut by strict supervision and economies in administration. That is a process that cannot he carried beyond a certain point without seriously impairing our usefulness and service. , "Shareholders cannot expect dividends from this company if they do their business elsewhere—neither do they deserve it. 1> the farmers generally gave us all the business they could ; —not only would your dividends he safe." hut wo could give you rebates on purchases as well. The future, then, depends on you. . "I now formally move the adoption of the report and balance-sheet." Mr. J S. Browne. 111 seconding tho adoption of the report, congratulated the directors on the excellent position the company now occupied. He said that in view of the parlous situation of tho company three years ago. when it was engaged in a life and death struggle, it was amazing how it had been rehabilitated in so short a time. Mr. Browne compared the company's position to the erperiences of other similar concerns in New Zealand, and .ho paid a tribute to the efficient management of the directors and staff. Mr. D. Hay said that if the business of the country was managed on the same principles which dictated the policy of the company, *ht. country would be in a much better position than it was to-day. Messrs. J. S. Fisher and A. W. Blatiehnrd also spoke in appreciative terms of tho management of the company. The report and balance-sheet were adopted. . * Messrs. H. S. Hawkins and A. H. Storey were re-elected to the board of directors, and Messrs. C. W. Armstrong and U, P. Hazard were appointed auditors. T'••• fee was fixed at £SOO a year. Mr. D. Hay was elected shareholders •crntineer.