GREAT DAIRY OUTPUT.

New Zealand Herald, Volume LXVIII, Issue 20961, 26 August 1931, Page 12

GREAT DAIRY OUTPUT.

INEW ZEALAND COMPANY.

REVIEW of past season.

PRODUCTION AND RETURNS.

CONCESSIONS TO SUPPLIERS

/fritOM OUU OWN CORRESPONDENT.] HAMILTON, Tuesday.

'A turnover of £5,329,958 was disclosed in the balance-sheet of the New Zealand Co-operativ& Dairy Company, Limited, which held its 11th annual meeting to-day. The chairman of directors, Mr. Dynes Fulton, presided over an attendance of several hundred suppliers. Ir/ moving the adoption of the annual freport and balance-sheet, the chairman dealt with the many difficulties encountered during the past season, owing to the drastic changes which had taken place in market prices foi? dairy produce, in common with other New Zealand exports. He said that, in view of these difficulties, it was pleasing to record the fact that again the company had put up record production figures, the total manufacture last year amounting to 46,754 tons, an increase of 2157 tons over the previous year.

A feature of the past season's production was the heavy increase in the cheese output, which totalled 8389 tons, thus exceeding the previous season's figure by almost 2000 tons, and was due to the fact that at the commencement of the past season indications were more favourable for cheese than for butter, and many suppliers who were conveniently situated decided to transfer , their supply from Jbutter to cheese. Phenomenal Growth of Company. Mr. Fulton referred to the phenomenal growth of the company since the amalgamation in 1919-20, and supplied the following' figures, comparing the/butter and cheese manufactured in thatjj-year with the season just concluded : 1919-20. 1930-31. Butter . i 8,717 tons. 32,259 tons. Cheese .. 2,519 tons. 5.389 tons.

'Such rapid progress plainly showed approval by suppliers of the company's policy of assured financial stability coupled with the greatest service to suppliers, and such approval is responsible for the company's prominent place in the dairying world to-day. Farm Methods.—Mr. Fulton said that in spite of less favourable climatic conditions the improvement in farm methods and the wide use of fertiliser had resulted in the pastures shoeing a general improvement, with better results per cow. The wisdom of securing ample supplies of ensilage and hay had been abundantly proved during the last season,, but it was evident that more attention could be given to the planting of shelter trees as a protection to both stock and pastures. Past experience was that long, wet winters were frequently followed by lengthy dry spells, and it might be wise to prepare for supplementary crops, which, if not required in summer, could always be carlied forward to the following winter. Reducing Cost ol Fertilisers.

Fertilisers. —Mr. Fulton referred to the efforts of the board of directors to obtain a further reduction in fertiliser prices and said the manufacturers had now reduced the price by 2s 6d per ton. It should not be forgotten that the high overhead costs incidental to the fertiliser business and the lower output made it difficult for manufacturers to do more, and it was a matter for regret that the Government could not see its way to subsidise the tost of the raw material. The directors and management would Continue to exert every effort toward a reduction in the cost of manufacture, and, in addition, would.assist suppliers purchasing manures through the New Zealand Dairy Company by granting credit spread over six months at ordinary bank rate of interest. Ihis was free of booking charge of any description or of compound interest, and such favourable terms should result in many more suppliers placing orders through the •company, thus' assisting in reducing the manufacturing cost. Herd-testing.—The national importance of her#testing was very plainly indicated by comparing the production per cow throughout the Dominion, which showed as 1751b. in 1922 and 2251b. in 1931. It would readily be seen just what that increase meant to dairyfarmers and to tho Dominion as a whole. Mr. Fulton outlined negotiations with the Government and the Dairy Produce Control Board in relation to subsidising the cost of testing, and said that the sums of £BOOO and £6OOO from those quarters, respectively, would enable the central executive to rebate a sum of Is per cow to suppliers testing under the group system. Lower Herd-testing Fees.

In their own territory the New Zealand Herd-testing Association, by careful and economical, working, had reduced' expenditure to the extent that a further 6d per cow would be added to the Is rebate mentioned, thus reducing the herd-testing charges by 33 1-3 per cent., compared with the previous year Mr. Fulton appealed to farmers to take advantage of testing, and so increase production, with a consequent ■decrease in cost.

New Zealand Dairy Finance Company. Mr. Fulton said that the value of this subsidiary company to suppliers had been amply demonstrated during the past year, particularly owing to the curtailment of credit, by banks, stock and station agents, etc. Since the 1925-26 season no less than £440.000 had been loaned to suppliers, and at the end of May, 1931, £390,000 had been repaid. The total number of suppliers who had taken advantage of the Finance" Company's lending facilities was 2100. the average loan being epproximatelv £2OO. During the flush of last seasoT it was' considered advisable to cease lending for a few months, in order to build up funds for autumn and winter requirements, and this proved a "wise policy, which will probably be repeated this year. Finance for Producers.

Rural Intermediate Credit Board.—The acceptance of the New Zealand Co-opera-tive Dairy Company, Limited, as a guarantor company for loans to suppliers'through the Rural Intermediate Credit Board bad resulted in the sum of £224.559 3s 5d being advanced, the company's contingent liability to the board being £111,838 2s'4chat May 31 last. Mr. Fulton paid a tribute to the efforts made by sup pliers in endeavouring to meet their commitments for financial assistance, and stated that the splendid co-ordination of effort between the shareholders and the management in this respect had made it possible to give assistant" l to others requiring it. Management.—Th,- exacting nature of the duties of the general manager, Mr. C. <f. Parlane, were specially referred to by Mr. Fulton, who added that the magnitude of the business to-day necessitated the closest personal attention of the general manager. Notwithstanding the assistance received from executive officers, his duties required bis working both day and night, and Mr. Fulton said it gave him great pleasure to state that Mr. Parlane was filling the position of general manager with dignity and. with credit to himself and to the shareholders. He /also referred to the appointment of Mr. Harold Davey (o the position of assistant to the general manager. Mr. Davey had successfully handled practically all the annual' district meetings, an 4' it was pleasing., to report that it was not necessary to go outside the company's •ojwn; st£jj| jtp ..find, a, young man capable •cf taking and"carrying OUfc' sab"sfactbrily important position.

Future Prospects.—While it was impossible at the moment to foresee what the future had in store, Mr. Fulton said that one thing was certain, and that was that producers must expect a period of lower prices. The high cost of .production and high cost of jiving would have lo come down to a basis in keeping with the lower range of prices. It would be well, to conserve resources in every possible way. Marketing conditions were most unsatisfactory, and it was obvious that some better methods must bo evolved before the best retjrns could be obtained. There was no doubt that the lack of cohesion, and, indeed, the active competition between co-operative dairy companies, was definitely responsible for that state of affairs, and it was to be hoped that the present serious financial depression would have the effect of unifying the efforts of co-operative companies. Company's Sound Position.

In conclusion, Mr. Fulton drew particular attention to the company's capital position, the paid-up capital of the company now being £1,180,211, this figure exceeding the capital cost by approximately £122,973. These figures, together with the fact that a very large sum indeed was paid out annually in cash resumption of shares demonstrated that the financial position of the company was beyond all doubt. Suppliers could rest assured that the company would continuo to follow the policy of the fullest measure of service to suppliers, coupled with the best returns that can bo obtained from a prudent and efficient consigning policy of their produce. " We are in the happy position of being again able to report a substantial increase in production," said Mr. 0-. J. Parlaue, general manager of the company, in his address to the shareholders. The company's total output of dairy produce for the season had reached 46,754 tons, which he had no hesitation in saying was a world's record for a farmer-owned and controlled organisation. The Consignment Policy.

Owing, no doubt, to the economic position, and the large quantity of dairy produce available for the British market, satisfactory f.o.b. sales were not generally available to competitors in the same manner as in previous years, the result being that practically all companies had to ship their outputs on consignment. This was the policy that his company had always adopted, the result being that for the first time for several years practically all companies had been selling on the same basis. In view of this, the fact that his company had made a higher butter-fat payment to suppliers than its competitors, gave definite evidence of the efficiency of their organisation. While the prices paid would not be pleasing to suppliers for the reason that they were over 25 per cent, lower than the previous year, and while production costs had not been re; duced in sympathy, on a comparative basis they woidd no doubt be regarded as very satisfactory indeed. Including the cartage and railage subsidy, the price paid for finest quality butter-fat for butter-making was 12.569 d., and for cheese-making from 10.943 d to 12.696 d at cheese factories, the average price paid to all suppliers to the company's 18 cheese factories being 11.469 d per lb. butter-fat. Importance of Quality.

Speaking of quality, Mr. Parlane said that since the inception of the company every effort had been made to manufacture" only high quality products, and it was essential that there should be no easing up in this very important matter. Competing countries were not only increasing their production, but were also raising their standard of quality. It was essential that New Zealand producers should keep ahead of. competitors in the matter of quality, and he would urge suppliers to the company's cheese and butter factories to use their best endeavours to send in the highest quality of milk and cream.

It was also essential, in the interests of the cheese industry particularly, that milk grading should bo made compulsory, and payment made according to grade. Mr. Parlane expressed the opinion that the Government should take a firm stand in this matter as a first toward improving the quality of New Zealand cheese. Ban on Standardised Cheese. Cheese Manufacture.—ln referring to standardised milk cheese., Mr. Parlane said that owing to bad management within the industry itself the increased price of butter-fat, due to standardisation, had been lost to cheese suppliers, and what was known as "full cream cheese" would be made during this current season. He said the first mistake was branding the fat content of the cheese on the crates, which gave the impression to people in Britain that the cheese was something different to what they had been used to, and, secondly, the uncalledfor criticism of New Zealand cheese from the public platform _ by men prominently connected with the industry. These factors, no doubt, had assisted very materially in prejudicing the sale of the standardised article.

Mr. Parians said the contention of the company had been that the quality of standardised cheese, properly made, was quite equal to the full-cream article, and he was very pleased to be able to say that numerous tests which had been carried out had proved this to be the case. He said that while there was undoubtedly room for improvement in the quality of New Zealand cheese* the larger percentage of it was, in his opinion, not as faulty as it had been represented to be. Assistance for Suppliers. Dealing with policy matters, Mr. Pari an e said that owing to the strong financial position of the company, the directors decided as from the commenoement of the 1929-30 seasin. to reduce the share deduction for butter shares-from fd to id per lb. butterfat, thus making more money immediately available to suppliers each year on butter-fat not covered by shares. The shares issued under this arrangement were terms "C" shares, and owing to the decrease in. the deduction, it was decided that the id per lb. shareholders' bonus on butter-fat covered by this issue, would not be available to the supplier until the whole of. his butter-fat was covered by fully paid shares. However, as tbe directors desired to assist suppliers to the Utmost limit during the difficult times they, were experiencing, tliey had given further consideration to the share policy, and had decided, subject to the consent of the suppliers concerned, to convert the "G" shares that had been issued to "P>" shares, and still continue the deduction of -|d per lb., while paid-up shares only would Lie issued. This alteration would provide for the shareholders' bonus being paid in cash each year on the total amount of fat covered by fully paid shares. Cream Cartage Service. The directors had also recently decided to alter the policy in regard to cream cartage, this being made practicable by the fact that many of the ontlying districts in which the company operated, were now becoming more closely settled, while loading conditions had improved in recent years, thus lowering considerably the cost of cream cartage in these areas. In view of this, it had been decided that as from June 1, 1931, the company would pay the cost of cream cartage in all. districts, up to but not exceeding scl per lb. butter-fat. This would mean that with the exception of about 15 per cent, of the cartage services operated l>y tjlio company, no deduction would be made direct from suppliers' cheques. As the alteration in the cartage policy woold. increase the amount payable by the fjerteral account, it had been necessary to make provision for a'direct delivery payment of l-8d per lb. butter-fat to suppliers whose cream was delivered, into auff of the company's butter factories wftßiout cost to the company, this payment' also to be retrospective to June 1, 1931.

The neb amount due to suppliers' of butter-fab supplied in May, after alio.-cuing for .orders on cheques, »,vas £?2;590 -16s 4d. Last year the* amount was £86,374 19s .lid, the difference being accounted for by the

lower advance price and the reduced supply of butter-fat. For the May supply lid was advanced for butter and 8d for cheese, as against Is for butter and;ls 2d for cheese the year before. The butterfat received for butter making in May amounted to 2,732,9071b., as against 2,825,713i1b. in May, 1930. The amount due to suppliers as bonus money, after allowing for share deductions, totalled £439.873 15s 2d. Last year the amount- was £347,238 13s Id, so there was an increase of £92,635 2s Id. Ihc amount payable on butter-fat for butter making was 1.762(1, which, added to the average amount advanced for the year of 10.601 d and the subsidy for cartage and .railage -on cream of .206(1, made a total pay-out for the season of 12.569 d Last year the, payment was 16.292 d, made up of 1.186 d bonus, 14.872 d average advance payment, and .234(1 for cartage and railage. Assets of the Company.

Referring to the assets of the company, Mr. Parlane said property and plant was valued at £1,070,328 2s 4<l. Last year the figure was £1,104,626 3s 2d. There was a decrease in accordance with depreciation written off of £51,988 Is 7d. as against £52,435 Is 2d last year. Additions to the value of £38,898 2s 3d had been made, an increase of £20,761 Is lid for the year. * Stocks of produce were assessed at £473,548 14s 4d, a decrease of £46,384 lis lid.

The sales of butter for the past season realised £3,519.162 Os 7d, as against £4,368.142 10s 7d' for 1929-30, a decrease of £848,980 10s. The decrease in the amount was due to the lower range of prices. The cost of manufacturing butter and placing it f.o.b. was £l2 os_ 3d per ton, as against £l2 9s 9d for the previous year's supply. Marketing Conditions Reviewed.

A comprehensive review of marketing conditions during the past season was given by Mr. W. Goodfellow,- managing director, who was received with prolonged applause. The season had, be said, from a marketing point of view, been extremely difficult. This had been firstly due to the drop in the general world price level of all commodities, and, secondly, owing to the increasing supplies of dairy produce imported into the United Kingdom. Few people, ho said, realised the magnitude of the imports of butter and cheese into the United Kingdom. There was an unlimited market in the United Kingdom for all the butter New Zealand could produce, provided it could bo sold at a figure that would compete with margarine. Dealing with the sale of the company's produce, the speaker stated that during the past season 73 per cent, had been exported to the United Kingdom, 2.8 to Vancouver, and the balance had been disposed of in the Tacific and the Orient. Shipments of cheese were confined almost entirely to exports to the United Kingdom. Milk powder was exported mainly to the United Kingdom, but substantial quantities were also sold in Australia. Germany and. Japan were the principal buyers of the company's casein. Amalgamated Dairies ;

During the past season butter and cheese had been sold almost immediately on arrival in the United Kingdom, and at no time had produce been withheld from the market other than by the regnlation of shipments by the Control Board. He estimated that all butter produced by April 14 bad been disposed of. In view of the uncertainty of the outlook the policy of the past season had been to stocks down to the lowest possible figure. This policy would be continued during the coming year. Speaking of bis recent visit to England, Mr. Goodfellow said he went there for the purpose of conferring with Mr. J. B. Wright, the company's London representative, regarding the present and future policy of Amalgamated Dairies, and to investigate the forward position regarding supplies from other countries and probable prices. Referring to tho changed policy of Amalgamated Dairies, Mr. Goodfellow said that group marketing had been adopted by practically every other dairy country, and New Zealand would continue to make very heavy losses in London until the co-operative factories got together and marketed their produce in a businesslike way.

.The company had been self-supporting and in future would aim to develop marketing groups, and would continue its active association with Empire Dairies. As a matter of fact the establishment of Empire Dairies had been an unqualified success, and was being heartily supported by other co-operative interests in Australia, South Africa and Canada. The Future Prospecta.

Mr. Good fellow said that in his opinion Canada would buy very little butter from New Zealand so long as wheat prices remained at the present low level. _ It was anticipated, however, that limited exports would bo made to Vancouver between October and January, but the total business would bo comparatively small, and as quotations would have to be on a London parity' Canadian business was, as a matter of fact, now of little value to the New Zealand producer. Dealing with f.o.b. and c.i.f. sales, Mr. Good fellow said that during the » past season this class of business had been decidedly limited, owing to ample supplies of produce being continuously available in the United Kingdom. During the past three years buyers had lost heavily on this class of business, and in consequence it was very unlikely that c.i.f. sales would continue to be profitable to New Zealand factories.

Speaking of the future, Mr. Goodfellow expressed the opinion that the coming year would see the worst of the slump. While conditions in the Dominion were becoming increasingly difficult, New Zealand had an .ideal dairying climate, and if all 'Sections of the community lived within their means the country would rapidly got into a sound financial position. Resolutions by Shareholders. Keen interest was taken by the shareholders in the balance-sheet, which was discussed for two hours. The report and balance-sheet were adopted without dissent.

A long scries of remits passed at a conference of conveners of suppliers' committees yesterday was submitted and passed. A motion moved by Mr. W. Boyd advocating a reduction of tariffs on the materials and tools of production with a view to their ultimate abolition was carried.

Empire free trade was advocated in another motion proposed by Mr. Boyd. Tho motion was carried.

The meeting passed a resolution in which those present pledged themselves to support Parliamentary candidates who wero in favour of the motions proposed by Mr. Bovd. Four firms were nominated for tho position of tho company's auditors, and after a ballot it was announced that Messrs. Hutchison, Klliffo and Cameron, of Auckland, had been elected by a large majority. "Votes of thanks were passed to the directors and staff, to Mr. Wright, the company's London manager, and to Mr. Goodfellow.

ELECTION OF DIRECTORS.

SITTING MEMBERS RETURNED

[from our own correspondent.]

HAMILTON, Tuesday

The following is the result of the election of two members of the board of directors of the New Zealand Co-operative Dairy Company, Limited:—Northern district: Mr. R. 11. McKenzie, 69,817 votes; Mr. J. B. Blanc, 6528; majority for Mr. McKenzie, 63,289. Thames Valley district: Mr. W, E. Hale, 28,829 votes; Mr. F. Kneebonc, 16.469; majority for Mr. Hale, 12,360. Messrs. McKenzie and Hale were the retiring members.

Messrs. J. T. Young and J. T. Bryant were returned unopposed for tho south western district and for the south-eastern district respectively.