CO-OPERATIVE TRADING.

New Zealand Herald, Volume LXIV, Issue 19762, 8 October 1927, Page 15

CO-OPERATIVE TRADING.

[FARMERS' AUCTIONEERING. DIFFICULT. YEAR REVIEWED. SOUND FINANCIAL POSITION. (Extended Report by Arrangement.) [BY TELEGRAPH. —OWN CORRESPONDENT. ] HAMILTON, Friday. The annual meeting of the Farmers' Co-operative Auctioneering Company, Ltd., of Hamilton, was held,to-day. The chairman of directors, Mr. H. S. Hawkins, presided over an attendance of 45 shareholders. The report and balancesheet, which were published in the Herald on September 24, were taken as read. The chairman in moving the adoption of the report and balance-sheet, said:— Gentlemen, With my fellow directors I very much regret being unable to recommend an ordinary dividend. It is true, and I think generally recognised, that this being entirely a farmers' company, the farmers' income for the time being must be reflected in'our own. The balance-sheet shows that we have been able to maintain a sound financial position —have slightly improved it, in fact, from last year. The weak point is shown m the profit and loss account, which gives our gross and nett earnings for the twelve* months. These results are most disappointing. That we are a farmers' company—established for the purpose of safeguarding farmers' interests—belonging to farmers in that 70 per cent, of our share capital -was provided by them—counts for little when it comes to attracting their business. We have to spend just as much time and money in running round soliciting that business as though we were not a farmers' company at ail. If our shareholders gave us all tha business they could give we could show much better results even in a bad year like the last. Every pound spent outside affects our earning power and consequently your dividends. Balance-sheet in Detail. Taking the balance-sheet in detail: Capital account. —The total subscribed caDital at Julv 31st was £658,267, of which £478,894 10s has been paid up, leaving £178,314 uncalled and £IOSB 10s unpaid. Reserve account.—The reserve account is unaltered, and remains the same as at July 31st 1926, viz. £26,376 ss. Mortgages. —This item stands at' £7271 lis 9d, showing a decrease on last year's figures of £16,556 12s 4d, which is brought about by an adjustment- of , mortgages. • . Deposits.—Fixed deposits with the company amount to £27,944 3s lOd, a decrease on the previous year s figures of £6295. The whole of this liability is fixed with the company for varying periods witt maturing dates evenly spread over thoso periods - Shareholders' current accounts. —The sum total at credit of current accounts is 1 £7835 0s lOd, a decrease of £6219 9s lid on last year's total. Sundrv creditors.—The amount of £41.683 'ss lOd appears in the balancesheet at/? the credit of sundry creditors, which is £24.094 17s less than the previous year. The whole of this liability has since been paid.London office. —The sum of £lslO 14s 9d appears in the balance-sheet' as a liability to London Office at July 31st. This is the balance of account at that date, and on realisation of consignments will automatically be liquidated. Bank of New Zealand.—The overdraft at the Bank of New Zealand at July 31st amounted to £19,555 15s. This item is necessarily a fluctuating one, and. should be regarded in relation to our other liabilities. 'lt shows an increase of £10,220 10s Id on last year's figures. Statement of Assets, Properties.—The value of our properties in Hamilton and the various districts in j which the company operates now stands at freehold £171,519 2s, leasehold £3356 12s 6d, totalling £174,875 14s 6d. Maintenance, renewals and repairs have been charged ' against current expenses. Machinery, working plant, office furniture and fittings.—£l6,6B3 6s 4d covers the whole "of the working plant, machinery, office 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 £303,283 7s '2d, a contraction on last year's figures. War loan and investments. —Investments total £44,318 4s 3d. Of this sum £23.200 is invested in war loan inscribed stock and bonds, from which has been deducted the reserve for depreciated value, viz. £1333 2s 9d, leaving a net balance of £27,866 17s 3d, which shows a good margin on to-day's quotations. The balance in the investments, namely £16,451 7s, is represented by mortgages and other securities held by the company, as well as shares in several co-operative concerns and saleyards. Stocks of general merchandise.—The stocks of merchandise have been valued by competent valuers at £85,140 8s Id, and hsve been carefully checked. As against last year's figures a decrease of £6300 4s 7d is shown. The figure at which these stocks appear in the balancesheet is' well within market value. Company's Total Liabilities. Total liabilities. —Our total liabilities at July 31st amounted to £106,055 13s 9d, while the assets, excluding uncalled capital, amounted to £624,301 0s 4d. Thus our assets cover our liabilities nearly six times, and show a percentage of liabilities to assets of barely 17 per cent. Profit and Loss Account. —The net profit for the year amounted to £18,294 3s 6d, to which has to be added an amount of £2276 14s lOd brought forward from last year, making a total of £20,570 18s 4d. Your directors have already paid interest at the rate of six per cent, per annum on the preference share capital, and now propose to make the necessary provision for income tax and to carry the balance forward. Expenses.—The total expenses for the vear were £89,588 0s sd, against £93,434 , 7s 8d for the year ending July 31, 1926, being a reduction of £3846 7s 3d. The percentage of expenses to gross profit equals 83 per cent. The various sets of earnings, items of expenditure and expenses to which I have made reference represent the aggregato results of the entire ousiness. Prices for Livestock. •Prices* for fat cattle and stores have fluctuated considerably throughout the vear, and averaged lower thaD the year before During the summer months, owing to the low rates ruling for export, prices did not reach the usual level and these conditions maintained throughout the winter months. The highest price for beef—32s—for prime ox—was reached during July. Dairy Cattle.—There has been a strong demand for all classes of dairy stock, good dairy herds and choice heifers jjeing eagerly sought after, hundreds of the latter class—principally Jerseys being brought into the markets from Taranaki. The continued slaughter of heifer calves referred to last year has resulted m a serious shortage of heifers to replace cows thrown out from herds through _ disease and other causes. Farmers who had the foresight to realise the situation, and who had reared their heifer calves from tested herds, were adequately recompensed. The position "does not seem likely to improve, and with the prospects of a market for veal, may become even worse. Farmers would therefore be well advised to hold their heifer calves for future dairying purposes*

We held a number of important pedigree sales during the year, at which a Targe number of farmer-buyers were present—as distinct from pedigree breeders—showing that the advantage of improving herds with pedigree animals is being fully recognised. Sheep.—ln the spring of last year prices which wera then good receded, and during the summer months reached a very low level. During the autumn and early winter there was a distinct rise for both fat and store sheep, prices being considerably higher than at the corresppnding period of the preceding year. Horses.—We held our usual spring and autumn fairs at Cambridge, and while prices continue to recede the majority of entries changed hands. The class of horse mostly in demand is the medium draught suitable for farm purposes, for which there is always likely to be a good enquiry. This type is not likely to be ■ superseded for some considerable time to come, tractors even where suitable being beyond the means of the average farmer to-day. Pigs.—An increasing number of farmers have taken, up pigs as a sideline, with the result that there have been very large yardings throughout the year. Prices generally ruled much lower than last year, values obtaining for fats during the winter months being no higher , than for summer export sales. Merchandise Department. In this department, as in other trading concerns similar to our own, we have experienced a trying time during the year just closed, and our turnover shows a marked decline on last year's figures, j This is largely due to the curtailed spending power of farmer and town dweller alike, causing each to restrict his purchases to the barest necessities. The retail prices of many commodities show a reduction on the previous year's figures, and this is particularly noticeable in connection with manures. On a basis of tonnage our sales of manure have increased considerably, showing that farmers have quickly responded to the reductions in prices which have taken place since January last. Much benefit should , accrue from this heavy top-dressing, and there is no doubt that the outlay will prove a profitable one. While the practice of top-dressing existing pastures continues, a comparatively small area of land is being put under the plough, and consequently the demand for seeds, and many farm implements, has fallen away in a marked degree. Increasing motor transport has also affected sales of oats and chaff, lines which in past years have materially assisted our turnover. If shareholders only realise how important it is to place all the business they possibly can with the company, we shall be able to show a corresponding increase in our turnover, with more satisfactory results. Steady Demand for Wool. In last year's address satisfaction was expressed at the general outlook, and the opinion voiced that prospects were encouraging. It was therefore gratifying at the opening of the season to find a steady demand, which demand was sustained throughout the season. The first Auckland sale was held on November 26, 1926, prices being at a satisfactory level. Values, however, appreciated at each successive sale, and it is pleasing to report that the prices realised at the final sale on March 17, 1927, were the highest of the season. Competition was keen and animated throughout the season, and fully 93 per cent, of the offerings were cleared. We offered 8791 bales; at the November sale 94 per cent, were sold, December sale, 99 per cent., March sale 100 per cent. Growers generally are paying more attention to the get-up of their clips, and with better pastures and more care being given to breeding of recent years, the Auckland wools have improved considerably and have merited the favourable comments of the buyers during the past two years. I express the hope that the quantity and quality of the coming clip will be well above the average. The woo! position remains statistically sound, and the outlook should be healthy and prospects favourable. For some years Auckland has had reason to protest at the sale dates allotted. Farmers have had good grounds for complaining at the length of time between the first and second sales, practically three months. This matter has been brought before both the New Zealand Association and the New Zealand Brokers Association, and the opinion expressed that Auckland is entitled to more equitable treatment, and from the negotiations that have passed I am hopeful that the buyers will be able to remedy this state of affairs for the 1928-1929 seasonConditions in Shipping World. In contrast to last year, conditions in the shipping world have been uneventful. It is satisfactory to record a freedom from strikes affecting this form of transport at both ends of the world. Although at times it is difficult during the height of the season to accommodate the different' exporting interests, it can be claimed that a satisfactory service has been given and that an ample supply of tonnage has been available to lift exports. It is recognised that speedy delivery on the London, market is of paramount im- | portance. New and fast motor vessels j are alreadv in the service of the C. and D. Line, and each of the associated lines trading to New Zealand has others in course of construction, so in the near future we can look forward to an improved and faster service, which will bring New Zealand correspondingly closer to her markets and shorten the link between us and the Mother Country. This improved service, however, cannot be brought about without extra expense, and it is idle to look for lower freights on the one hand and a faster service on the other. The shipping companies are alive to the needs of the producers and are anxious where possible to bring about an improved service as long as they are not expected to shoulder any loss in bringing about such improvement. Our Auckland agency of the Cunard and Commonwealth and Dominion Line has proved a valuable adjunct to our business, and passengers are availing themselves of our services to book trans-Atlantic voyages by Cunard Liners. Good Insurance Business. This department continues to give > good results, and has given general satisfaction to our many clients over a long period of years. As chief agents of the New Zealand Insurance Co., Ltd., in this territory, we look for even greater support, particularly t from those who, while placing their other i business with us, have not so far given thought to allowing us to handle their insurance risks- 1 feel sure that they . would have every reason to feel satisfied with the service rendered by this important branch of our business. 1 The gloomy view of the Dominion's prospects that has been existent for the past twelve months is gradually abating, but farmers wishing to rearrange their mortgages are having the greatest difficulty. For some years investors have looked with disfavour on mortgages on country lands, and if anything this feeling is more pronounced to-day. The Rural Intermediate Credit Bill now before Parliament is a well-meant attempt to assist the needy farmer, though it is doubtful if much success will attend the scheme. The experience of institutions such as ours in supporting needy farmers has been anything but a happv one. The £250,000 which the Government proposes to lend under this scheme free of interest for ten years (at the expense of other financial institutions who are assisting the farmer and paying heavy income and land tax) might be well employed in other ways for the farmer's benefit —for instance, in making mortgages on farm lands more popular by reducing the income tax on these investments, and removing anomalies such as the mortgagee being responsible for the payment of land tax and local rates. The land tax, in my opinion, should be abolished, and the income tax applied. If relief were given in these directions I feel certain that moneys at present flowing in'other directions could be diverted

for mortgage purposes-on country lands, and at a rate of interest more attractive to the, farmer. The quarterly banking returns at June 30. indicate the heavy calls made upon the banks, advances being increased by £2,259,165, while deposits show a substantial contraction. Fixed deposits have increased, but the aggregate of fixed, free and Government deposits has declined by £2,822,218. These two items aggregate £5,081,383. Balance of Trade.—Exports are down by £1,140,665. The excess of imports over exports for the year amounts to £613,805, which shows a considerable improvement on last year's figures. Future prospects for dairy produce, meat and wool appear to be favourable, so we look forward to our exports once again being in excess of imports. This matter was referred to at our last annual meeting, and 1 mention it again because I see a statement in the budget speech to the effect that the Government? cannot give effect to recommendations of two Itoyal Commissions which sat with a Government mandate to enquire into this matter. The first commission sat in 1922 and the majority report, after enumerating detailed and exhaustive reasons against the present system, recommended: — " That companies should be taxed on their undivided profits only." The second commission sat in 1924, and were unanimous in recommending:— " That the. fiscal policy of tho Dominion should be shaped so as to secure the abolition as soon as reasonably practicable of the present system of company taxation." " Recognition of Injustice." You will observe that both these commissions, after a very careful enquiry, recognised the injustice of the present system, and in quite plain terms recommended the removal of that injustice. The second commission, realising that to abolish this tax suddenly might embarrass the Government, suggested that i certain data should be obtained for the purpose of ascertaining. how the change might be made with the least possible injury to the revenue, but they never contemplated the " non possumus" of the budget statement. The present system of company taxation is a definite recognised injustice, not tn operation in any other country in the world. No self-respecting Government should tolerate the word " cannot" in looking for the remedy. | The prices realised to-day for our farm I produce do not allow a sufficient margin of profit over the cost of production to enable the farmer to pay his way. f I do not think we can expect any material increase in these prices in the visible future against the competition of the rest of the world. Our only alternative, therefore, is to reduce our cost of production, and that cannot be done by the farmer alone. The farmers of this country are trying to realise Mr. Baldwin s idea of "The Englishman's way." He defines it in terms of self-confidence, hard work, and the self-reliance which does not run to the Government to help them out of every little hole they get into. "Farmer Must Have Pair Run." But the farmer must have a fair run. To-day he is doing his best to stand up under an impossible load. That load is made ap of, among other things. Government and local body expenditure, wages fixed by the Arbitration Couit without any reference to the results obtainable in return, customs tariff, and in many instances the excessive cost of the land from which he makes his living. This load-affects his cost of production, and the whole country headed by the Government must do its share of reducing it. Unless the farmer can stand up the rest of the community sooner or later will come to its knees. We are trying to continue a standard of' living made possible bv the war, which, to-day.- we cannot afford. Unless we , economise, now" we shall not be able to ensure a reasonable standard in the future. I now formally move the adoption ot tne report and balance sheet. Mr. J. S. Fisher said he could not congratulate the directors on their balancesheet. There seemed to be something wrong with the company, which did not appear to be at all popular. Shareholders, he said, appeared to have difficulty in arranging for accommodation, and although it had not been his experience, manv members stated they could do business'on better terms elsewhere. He believed the prospects for this year were bright and he hoped the company would do well. Another shareholder strongly criticised the business -methods of the staff, and suggested that these methods should be '"The chairman said he would have the complaints inquired into, and he asked the shareholders to assist him to get at the root of the trouble. The report and balance-sheet were a< The retiring directors, Messrs. H. J. Gill and W. Carr Rollett, were re-elected. Messrs. C. W. Armstrong and R.l. Hazard were reappointed auditors at £SOO. Mr. D. Hay was re-elected scrutineer. Votes of thanks were passed to the directors and the staff.