THE FARMERS' CO-OPERATIVE ASSOCIATION

NZ Truth, Issue 538, 9 October 1915, Page 8

THE FARMERS' CO-OPERATIVE ASSOCIATION

OF CANTERBURY, LTD.

CHAIRMAN'S REVIEW OF THE YEAR'S TRANSACTIONS

IMPORTANT STATEMENTS ON FOOD SUPPLIES AND MARKET PRICES

. At the £jnnuar general meeting of! shareholders m the New Zealand Far- , infers' Cooperative Association of Canterbury, held on the 25th ult, alt. C. A. Pannett, the chairman of directors, ttie following in^ teresttng address, a perusal of which Hot only will show the steady progress of, the N.Z. Farmers' Co-op., but also includes, some very important statements on the staple industries of the Dominion. ' • ' -f CHAIRMAN'S ADDRESS. , m moyingithe adoption of the directors' report, and balance-sheet* -which were •■ reviewed by "Cambist" ?in our last issue,? Mr. Pannett said: - It is* a matter of more than ordinary pleasure tome, to be m a position to again meet shareholders on the completion of a most satisfactory year's operations, and I heartily congratulate shareholders on the splendid position of* the Association's business, as exhibited by the balance-sheet. 'Although the net earnings are £3853 less than the showing of the previous period, when certain special items and contingencies are' considered (which I will explain) it will be shown that the p«Mod just closed really constitutes a record, A cash discount system was brpught into operation at the commencement of the year, which accounts for no less a sum than £7164 paid to shareholders during the year, on their cash purchases and monthly settlements. This item alone is sufficient to place the figures ahead of last year, and we can confidently say that our stock commission earnings would have btfen fully £8000 more if there had been no disorganisation m our insulated steamer services.' I think, there* fofre, that I am quite within Uhe mark In saying that, had normal conditions obtained throughout, the year, our net earnings would halve been at least £^10,000 mpre than the amount now ■Mown. ; GENERAL MERCHANDISE. The volume of trade m the several retail departments m Christchurch and the branches, 'notwithstanding the war, was well maintained. The total' sales lor the 12 months were £563,268, against £536,250 for the previous year, an increase of £27,018, and the returns of the agricultural departments of the business, which are not included m the above figures, such as fertilisers, bin-der-twine, jute goods, harvesting and other farm machinery, and motors, considering the season, were also very satisfactory. The total turnover for all operations for the year amounted to £3,257,795, against £3,389,426 last year, a drop of £131,631, which is entirely due to the falling off m our fat stock business, consequent upon the dry season experienced and the dislocation of our steamer services already referred to. The balance.-sheot, as usual, is drawn up m full detail, but no doubt a little further explanation from me, of the principal items, will be of interest to you. CAPITAL APCOU.NT. During the year 691 ordinary shares were allotted to 507 persons, upon a basis of £ 2 paid up, thus adding £1332 to the ordinary paid-up capital, and £2073 to the uncalled capital reserve. There were also 331 "B" preference shares (the printed report of the balance-sheet describes these as "A" preference shares, which is a mistake) allotted, of £5 each, to 118 persons, representing a further £19,655 to the working capital of the Association. When dealing with this most important subject last year, many of you •will doubtless remember that f pointed out how very disproportionate were shareholders' average holdings of our ordinary stock, when compared with the needs of the business. Our authorised capital, as you will see from the balance-sheet, is £1,250,000, of which 1647,210 is subscribed, £405,011 is paid up, leaving ££42,199 uncalled. The 207 allotments of ordinary shares made during the year average 3 l-3rd shares each member — during the previous, year there were 206 allotments made, which average only 2% shares each. Although the period under review was a slight improvement m this connection, lam sure' lt must be patent to all that even an average of t l-3rd is quite inadequate for the purposes of carrying on and the development of the .business. I told you last year. that there were upwards of (000 persons upon our registers, holding only two shares each. The present position is, I am shren to understand, tfcat there are fully 6000 members Whoso joint holdings would not average three shares each. The larger

The Benefits of Co-operation

subscriptions of capital, as I have stated on former occasions, were mostly taken up during the earlier stages of the Association. It must be obvious, therefore, to those who study the position, that since subscriptions to our ordinary capital have been, so consistently small the directors have had to make the necessary capital provision ! through the medium of preference shares and other means. ' [ The manager, m his letter to shareholders, which accompanied the bal-ance-sheet, has also referred to this subject; and I trust his appeal will meet with the ready response it deserves. The preference shares are a | very popular investment, , and we -experience no. trouble whatever m aug- j menting the finances of the Association by sales of these shares, but, at the same time, your board would like to see the ordinary shares receiving a little more attention from many of our j smaller shareholders, as well as from those seeking investments. The Association has stood the test of tliine. A consistent and substantial dividend has been paid, and the shares are being regularly appreciated m value by large additions to the reserve fund, I which will stand at £131,743, if the | board's present recommendations are I agreed to. .This amount represents a premium of £1 12s 3d per share on the ordinary shares issued to date, [ which I think more than justifies the 10s per share premium which has been imposed for a number of years past. DEPOSITS. Shareholders' deposits with the Association amount to £299,182, being an increase during the year of £ 40,582. The greater part of! this. liability Is fixed, as the balance-sheet shows, for periods ranging from two to five years, and the whole is carefully spread with proportionate maturing dates. Amount to Credit of Shareholders' Current Accounts, £299,182.— This is the aggregation of a very large number of current accounts m operation with the Association at head office and the several branches, and it is perhaps the most important part of the business, as it represents the source from which the commission and interest earnings are derived. This item, together with shareholders' deposits, practically covers the whole of the Association's liabilities, every penny of which is m the hands of our own shareholders, Which is a very satisfactory position. . Tho increase m these figures, as well as m the deposits, can be taken as an indication of the satis-factory-financial conditions that have obtained throughout the Dominion during the greater part of the year. Our total liabilities, including deposits, amounts at credit of current accounts, etc., on July 31 were £"674,541, and the assets, including the uncalled capital, were £1,507,118, which means that the assets o£ the Association were sufficient to pay all liability claims m full and leave a balance of £832,647; or, to put the position m another way, m the case of a winding-up, the assets are sufficient to meet the liabilities twice over, and then leave a surplus [ of £158,106, which, m my opinion, is a remarkably sound and satisfactory position for any company to be m. London Office, £40,102.— This represents the balance due to London, being the difference between the value of shipments and remittances from the Dominion and sundry disbursements for goods, etc., at Home, on the Association's account. Sundry Creditors, £34,725.— 8eing curent purchases of general merchandise during the month of July, chiefly within the Dominion, all of which have since been paid for. ASSETS. Properties, £144,292. — The increase m this account during the year represents cost of remodelling the building known as the "Kaiapol Factory," at the corner of Cashel and Madrasstreets, and converting the same into the new hardware department, which occupies the ground flpor. There are also new tea rooms, and china and ' glass departments, which occupy the middle floor, the upper flat being used for hardware bulk stocks. Considerable alterations and improvements to the. other general departmental premises have also been effected. The expenditure also include^ a substantial addition to our wool store, as well as some improvements to the branch premises. I should like to repeat what I have stated on other occasions with respect to our properties, that all maintenance expenses are paid Tor out of profits, and the property values have never been written up, although

some of them have been m the occupation of the Association for many years. Machinery and Plant, £25,783. — The constant writing- down of 10 per cent, each year is considered ample safeguard for the Association's ordinary machinery and plant, but as we are gradually employing quite a number of j motor vehicles m connection with the business^ your directors have deemed it advisable to recommend that a special amount of £1000 be written off this part of our plant, to meet all possible depreciation. Stocks of Merchandise, £239,393.— An increase of £29,454 on the amount held last year. This is partly due to heavier quantities being secured m some lines where ! it was thought the war might interfere with supplfes,and our grain stocks are also heavier, but a great deal of this latter stock has been worked off m the ordinary course since closing of the period at July 31 last. As usual, the whole of the stocks were carefully taken, and valued by I competent experts, whose reports are quite satisfactory. Sundry Advances, £459,450. — This is 1 the Association's largest asset, and, as | the business grows, this item must X>e ! expected to grow, too. It represents a very large number of advances to farmers against the security of their lands, stock, and produce, and it also includes the debit balances of all those | operating upon the Association's finances through their current accounts. Every care is exercised m safeguarding the Association's interests m the working of this important section of the business. All advances are on a "caJl" basis, and every endeavor is made to keep Individual liabilities ; within the value of the borrowers' [ moveable assets, viz., stock, etc. SUNDRY DEBTORS. General Merchandise, £136,245. Stock and Grain Accounts, £76,591. — Much the same as last year. These figures, especially the merchandise accounts, represent some thousands of accounts, and, considering the proportion of our operations, the amount is by no means large. I should like to mention, m connection with our general store business and accounts, that the discount system, which came into operation on August 1 of last year, has worked with much satisfaction. The volume of business done for cash has wonderfully increased, and a much larger percentage of accounts have been regularly paid each month than was formerly the case. Bills Receivable, £22,483. — Farmers' acceptances to adjust accounts: They are all perfectly good and negotiable. We have no bills under discount, neither were there any bills payable when we closed our accounts on July 31. Cash Balances. — The large increase m the amount of cash m hand, and otherwise available, is principally due to the additional moneys received through deposits and customers' current accouncs. The aim of the management had been to place the Association m a thoroughly safe position with regard to Us finances. PROFIT AND LOSS ACCOUNT. The total gross profit for the 12 months, as the balance-sheet shows, amounted to £137,882, as against £139,070 for the previous year, a decrease of £1088, which, I think, considering the exceptional conditions obtaining throughout the year, is higirfy satisfactory. ; On the debit side, the expenses and bad debts amount to £77,950, leaving a net profit of £60,031, which, with the £2801 carried forward, gives a total of £62,832 to be dealt with, and which your board recommends should be disposed of as set out m their report accompanying the balance-sheet. After a brief reference to what they regarded as the agricultural departments of the business, which showed steady, expansion, Mr. Pannett, gave some timely information on ARTIFICIAL. MANURES. The progress of this department during the past few years have be«n wonderfully satisfactory. The output of the association's mixed fertilisers increased from 2460 tons m 1909 (seven years ago) to 8849 tons last year, and, to cope with the increased trading, the directors recently made arrangements for a large addition to the mixing works at Belfast. A siding connection to serve this property had also been agreed to with the Railway Department. It is fexpected that both the now addition and the siding will be completed within the next three months. The war having severely interfered with the costs and supplies of basic superphosphute and other fertilisers, attention had been direp'od to the matter of lime as a fertiliser. Several good deposits have been located, and analyses and experiments are now being made under the auspices of the Agricultural Department, the results of which are awaited with much Interest. It Is not expected that limo will take the place of ordinary fertilisers, such as superphosphates, guano, etc., which supply the soil with the elements of plant food In which the soil is deficient; but the application of lime m very moderate quantities is calculated to greatly benefit our soils, both m supplying iho amount required as plant food, and also as a corrective of acidity In the soil. The association hoped to render the farmers a useful service m this connection. BINDER TWINE. The output of "Co-op." binder twine, the iLSsoeia'tion's chief proprietary Hue, the chairman said, was steadily increasing-, many co-operative firms m many parts of Australia and several kindred associations m the Dominion were drawing their supplies from the "Co-op." Tho bacon factory and cool stores, established to afford a service to small farmers and pig breeders, had achieved that purpose, and had also been a great ht;!p In providing cool storage for the association's dairy produce, etc. GRAIN AND PRODUCE. Dealing with this branch of Ihts association's business, Mr. Pannoil Kiild it hud been urged for many years, »jy tIIOHC Who have studied political history, that special terms and inducements should be given to grain and produce growers within Iho colony, to ensure that at leas! the colony, as a whole, should be solf-HUpportlnjc- It was contended by theso people that In tho event of any warrlnjr bof.veen nations possessing j maritime forces, unless this special j consideration woro given grain grrow--1 era. and If the colonies failed to bo self- ' supporting, when hostilities occurred, the Inhabitants of one colony mljjht be In a very awkward position, through Hupplloß being out off by enemy ships. He did not wish it to be understood for one moment that he w&s advocating a special bonus which would roam as a

tax on the consumer, but he did wish i to make it clear that, if from any cause the production of cereals is allowed to fall away, a consequent burden and | dislocation may m itself be a very seri--1 ous cause of disaster to this country. Whether the st?eps taken should be m I the direction of an assured price, on somewhat the lines that the English Government have adopted, he could not say. There was always a clamor raised amongst the ignorant and unthinking if, through bad harvests or world's fluctuations m price, any of our staple cereal products rise above what are considered normal rates. On the other hand, if farmers are confronted with unremunerative prices and poor yields, what is more natural that that they should turn their attention to more profitable articles of production The subject was one deserving more than passing attention. He was of opinion that some measures should be adopted which will ensure grain producers m this country a reasonable reward for their labors, while at the same time checking any undue exploitation of the consumer. The past 12 months had seen some crude attempts made to deal witti the position— attempts which were almost foredoomed to failure, primarily through the lack of efficient organisation of the statistical bureaux, supplemented by amateur efforts to deal with what information was available. Had the Government commandeered all wheat supplies, it would have afforded effectual protection to growers and consumers, instead of which an attempt was made to fix the maximum values for wheat. Such an attempt could only lead to failure, either bj f evasion or non-compliance. The net result of that effort was the natural consequence, but; m addition, considerable quantities of wheat were imported and sold at a material loss to the Dominion's finances. This year, owing again to the lack of accurate statistical information, relating to both area and , yield, both grower and consumer were entirely misled as to the actual position; the consequence was that when the new crop became available, prices went to a very high level, though not nearly to such extreme prices as ruled m the world's markets. Then, when the census was taken m July last on the basis of the threshing, and the actual figures were published, they saw what amounted to practically a collapse m price. The consequence was that millers and merchants who stocked up, m good faith of Government statistics, and farmers who had not marketed their crops, found themselves faced with very serious losses. The Government estimate showed a shortage of H4 million bushels, and on the strength of this they purchased 45,000 bushels from Australia at 6/6, they borrowed a further 100,00(1 bushels from the same source, and they purchased 405,000 bushels from Canada at 7/-. As the 1 result of some strong representations* which were made to the Government, they caused another official estimate to be taken, which supported the threshing figures, and it showed that there were 4,100,000 bushels m the Dominion for seven months, plus flour not used, equal to about three-quarters of a million bushels m excess of requirements. He considered, therefore, that the Government should lose no time m removing the export embargo, to admit of a reasonable quantity being. shipped to Australia, The equivalent could easily be brought over, if it were required, m December next. \ He sincerely hoped that one result of the past year's working will be. to force home upon the Agricultural De- , partment of the Dominion the absolute necessity which exists of obtaining accurate information annually of the area m crop, prospects, and ultimate yield, so that the true position may be made clear to all. Apart from wheat, we have had a profitable market for oats and other cereals and potatoes. Through the drought which existed m Australia, but which has now ended, . there ensued a demand for mill offals, chaff and straw, and It is many years since this province has been so denuded of the once familiar straw stacks. ' Mr. Pannett expressed a poor opinion of the commercial morality of some Australian produce men, who thought nothing of repudiating contracts on the most trivial pretext. Of course, there were some refreshing exceptions, but, nevertheless, there exists an urgent need for the Governments of both countries to legislate m some way that will afford businessmen a reasonable measure of protection. MACHINERY DEPARTMENTS. The Association's agricultural machinery department, though satisfactory, warranted better attention and support at the hands of farmers. There is a splendid range of implements and general farm machinery, and prices will compare with any competitors. The motor department, conducted solely upon an indent basis, continued to thrive. AUCTION AND STOCK DEPARTMENTS. Mr. Pannett said the congestion that occurred at the several freezing works through the disorganisation of shipping, and the dry season which exag-. gerated the position, seriously affected commission earnings, which closed oft* with £25,98G, against £30,905 for the previous 12 months. In these troublous times it is impossible to foreseo what the season immediately ahead will be, but farmers may rest assured that every possible care and attention will be forthcoming from on efficient and eager staff with respect to any business entrusted to the Association. Clearance sales continued to grow. A large number of very satisfactory sales were conducted by the association throughout tho year. A complete organisation of country agents exists throughout the several districts, and performed valuable services to shareholders m their respective localities. WOOL. The position of this commodity (said the chairman) Is certainly unique, and prices promise to bo on a very satisfactory level for the comiug season. In view of the fact that Continental outputs have been practically barred for 12 months, it would not have been surprising had tho restricted markets borne signs of weakness. On tho contrary, the Army requirements have been so extensive that prices have steadily hardened, and the dilllculties which have confronted manufacturers have been, not m getting their wool to the English ports, but m obtaining delivery, owing to tho retarded discharge of the carrying vessels, through dock and rail congestion. What tho ultimate effect of the war will bo it is, at this stage, difficult to foresee. At present, tlui English export trade must be very greatly restricted. When hostilities ceuso, the world's finances will bo bo greatly disarranged that it may be some time before business resumes its former channels. In the interval we must look for fluctuations from various causes, but it is not unreasonable to anticipate that from some quarter There will be sutneient demand lo malnt-iin prices at a fairly high level, especially so, as wool is one of those products which cannot be Increased In supply very rapidly. It 1h very KnUlfylriß to tho board .<uul I am Hum it is equally so to ah.-irohoid-«-rs, to note tho steady growth O f this section of our business during n><Wt years, as tho following figures demonstrate: During seuson ISII-U 1 tho Associatlon offered 9211 luk<K; jjijo j'., 9952; 1913- H. 11,707; 19H-lf>, 12~27o! There m no reason, no far us we can .see, why tho association nhould not soon occupy and maintain Iho premk-r position m thin product. Ho Bhould like, also, to any how glad he was to note that tho "Superior Jury" of the Panama Exposition, *<._ viewing the awards mado at iho end of Juno last, recognised tho great merit of Now Zealand's wool*, which reproaantod a variety distinct from othor

national competitors. It was realised that for Australian merinos, excellence occurred m specific directions for certain purposes, whilst the long and crossbred wools of New Zealand enjoyed an excellence for their own particular type, and New Zealand was awarded ;i well-merited Grand Prix for its comprehensive collection of long and crossbred wool. DAIRY" PRODUCE. Last year, m view of the uncertainty, and with the desire to ensure a fairly satisfactory price, a very large proportion of the output m New Zealand was sold outright. Those factories, on the other hand, which sent forward "on consignment," have benefited very largely, extremely high prices' having ruled throughout the season m Britain. Cheese and butter have formed an important part of the soldier's ration, and it has also been interesting to note on the battlefields of Europe boxes bearing the names of familiar colonial factories. At present there is every prospect of the British Government acquiring outright a certain percentage of the coming season's output, and this must have a very important bearing on the maintenance of present prices. ■^FROZEN MEAT. The past twelve months have been full of interest m connection with this j very important branch of the Dominion's productions. Very early m the season it became apparent that there would probably be very considerable difficulties with regard to oversea freight, and consequently congestion at i the works. Unfortunately, it was not j then realised how acute this freight i shortage would become, otherwise j earlier action would have been taken to supplement the storage available. As the season progressed, and when the storage question was becoming acute, the British Government stepped m, and commandeered all meat supplies. Prices were fixed, and at a fairly high level, though, as matters have resulted, not so high as would have been obtainable on the Home markets, but on this point he would not enlarge, for he was .sure their patriotism is such that they were not prepared to cavil at any action which results m our troops being well and properly fed. Unfortunately, the season went against growers, and when it became absolutely necessary for them to send away their stocks, space could only be found for a very limited percentage. One important feature of the business was the attempt made (and which we welcome as co-operators) to bring seller and buyer into closer touch, through the Government price "per pound" being advertised, and the freezing companies' service being utilised to receive stock and collect payment on these terms. Unfortunately, the beneficial effects of this step were, to a great extent, restricted by the companies continuing to allot space "pro rata," m accordance with earlier deliveries, and by this means dealers and speculators had what he considered, under the circumstances, an undue control, and also were able to materially benefit themselves at the expense of the producer. He sincerely hoped that this element would be ruled out- of action if a similar basis is continued another season, and that, either through the Association, or individually, the producer may derive the full benefit of scheduled prices. As some safeguard m this direction, I would urge growers to look as far ahead as possible, and endeavor to engage through us, or direct, at least a fair proportion of their requirements. Frozen meat has become a very important factor m countries which have hitherto practically prohibited its importation, and, having once obtained a footing, m my opinion it will not be displaced. Our trade may extend to the Continental markets. The destruction of live stock, too, must have an important bearing on later food supplies, and I feel justified m predicting that, with the increased demand and consumption, the outlook for meat exporting countries is decidedly m favor of the producer. The position the Dominion occupies m regard to oversea freight is at present covered by the British Government's action m commandeering 1 all insulated space. When that action is abandoned, the conditions will doubtless revert to certain companies working m accord and controlling the export trade of the Dominion. In previous years I have pointed out what an element of danger this monopoly is to the producers, and I would again emphasise the necessity of combined action being taken by all associated bodies representing them, to obtain more satisfactory conditions. I hope that one result of the combination of action amongst the various cooperative associations will be to keep alive, and formulate, some plan whereby freedom of trade m connection with this most important question will be ultimately secured. CO-OPERATION. Are we making the most of our opportunities? Distinguished visitors from other countries, whilst congratulating us upon the wonderful strides the cooperative movement has made m this country, . have almost invariably expressed surprise at the great number of separate farmers' organisations and associations of ono kind and another that exist here, each one apparently pursuing its own course m its own way, with a consistent exclusiveness, yet at the -same time professing tho same ideals, 1.c., protection and furtherance of the common Interests of the agriculturist and pastoralist There can bo no doubt that there is a tremendous amount of overlapping and wastage of individual effort, simply through the lack of organisation and a better understanding of one another. What would unionism, as we know it, be wor.th to the trades and artisan classes without organisation? Absolutely nothing. The same principle applies Co the producers and the agricultural Interests as a whole. Meetings are constantly being held of farmers m various centres, when all kinds of important subjects are discussed — perhaps the question of cheaper freights; or it niay be a discussion concerning ..alleged inequalities In the profits of our meat and other produce, reduction m the cost of distribution, etc.; no nuuter what so far as that goes. The fact remains that very little is ever achieved, simply because wo ure not properly linked up together. Last year I intimated that a federation movement was on foot, the object being the joining of tho forces of several farmers" co-operatlvo associations throughout" this country, and I I advised you then that a very repre- ; sentativo conference had taken place, and that the scheme was approved. I now have the pleasure of further advlHing you that a second conference )ia» been held during the year, working regulations have been adopted, and the various interested associations are now taking tho necessary ..steps to amend their respective regulations to enablo them to join the scheme. Our shareholders will also be called together In general meeting one day so^n for the purpose of giving their as.sent to certain amendments m our memorandum of association, to pormlt of this association joining m with the .others. Tho proposed co-operatiw wholesale fe<leration will. 1 trum, eomo into notuul bolnp biiforo very lonji. and I believe it In destined to play a most important part m tho m U- rests of the producers of this country. Mr. rnnnolt concluded his very able address by eutoKi^tic reference to the great work of merry belntf performed by the womenfolk of the Red Cross ami | kindred societies.