MIDHIRST DAIRY COMPANY

Taranaki Daily News, 23 July 1929, Page 7

MIDHIRST DAIRY COMPANY

GOOD FINANCIAL POSITION THIRTY-FOURTH ANNUAL MEETING CASEIN POSITION REVIEWED. Additional interest was centred in the thirty-fourth annual meeting of the Midhirst Dairy Company, which was held in the Midhirst Hall yesterday, as it marked the first year’ in which the company had been manufacturing and drying casein. Mr. W. Vickers, chairman of directors, presided over an attendance of over 150 suppliers. The annual report submitted the following figures showing the working result, the figures for the previous season being giVbn in parentheses:—Milk received, 42,264,3511 b (35,043,6081 b average test, 4.48 (4.41) £ lbs fat, 1,893,549 (1,548,273); butter made, 2,378,3321 b (1,971,2361 b overrun. 20.5307 (21.0859); cream, 79.6661 b; total fat, 1,973,2151 b. Butter account. —Butter manufactured totalled 1061 tons 15cwt 121 b. The bal-ance-sheet shows a surplus of £13,351 18s Bd, which will suffice to pay a first and final bonus of 1 7-8 d per lb butter-fat over the fat supplied from October 1 to May 31, making an average payout for the season of Is GJd per lb. The cost of manufacture was l-41d per lb butter (last season 1.48 d). The sum of £1.847 6s has been written off in depreciation.

Casein account. —The casein manufactured in the new factory was 405 tons lOcwt 2qrs. The balance-sheet shows a surplus of £2.928 13s sd, which is equivalent to Id per lb butter-fat. At May 31, 1929, the casein unsold was 309 tons, and the directors have agreed that the surplus over advances received be taken in at a very conservative figure ( £Bll Ils 6d). It is anticipated that this stock will have been sold prior to the meeting. The sum of £675 8s has been written off in depreciation. Casein suppliers have received 2d per lb butter-fat for milk supplied for casein making, which amount, together with the surplus, is equivalent to 2jJd per lb for the season. CHAIRMAN’S REVIEW. In moving the adoption of the report and balance-sheet the chairman said: — "At the last annual meeting I suggested

that for the season to come prospects for our industry appeared very bright, and it is a pleasure to-day to come before you with these hopes fulfilled, by an excellent pay-out for the season, and we can congratulate ourselves on once more ranking with the most successful dairy companies in the Dominion. “Throughout the Dominion the industry has had a most successful season, with greater outputs generally and better prices realised for the produce sold. Our company has participated in this increased production and in these increased returns, our tonnage for the year having increased by 181 tons and our pay-out for butter by jd per lb butterfat “At the commencement of the season the board considered that a consignment policy would be in the best interests of the company, and this course was followed until November, when the output from December to March <was sold at Is 5 3-Sd per lb i'.o.b. Since March the output has been sold at prices from Is 5d to Is old per lb f.o.b. Those transactions. as events have proved, could not have been improved upon, for our consigned butter was on the market when peak prices were secured, and when the market dropped our sale became effective and the four months’ sale showed at least lid per lb-increase over consignment prices. “At the same time as our selling operations have been successful our working costs show very satisfactorily; our cost of manufacture has been decreased from

l-48d to l-41d per lb butter, and nearly all our charges are down, on a tonnage basis. Repairs and renewals show an increase of £613 19s 3d for the year. It is the policy of the board that this company shall be up to date in all its equipment. and no requirement in this respect has been withheld. This year £1847 6s has been written off in depreciation, which is an increase of £719 18s. This is accountable to the charges for depreciation on one more creamery (Tuna), on the new Midhirst creamery, on two new lorries, and the writing down of the old Midhirst creamery, which is now only a garage. HEAVY LEGAL CHARGES. “We have suffered heavily on law charges during the season, and the account is made up as follows: The Tuna amalgamation and the easements on Mr. Wellington’s property have cost £53 12s Gd, and our water pollution case cost us £553 3s 9d, made up as follows: Damages £lOO, provision of water supply £75, general costs £3BO 3s 9d. “We have now completed our first season (or part season) in the manufacture of casein at our own factory, and tlie results shown have justified the company's action in building and equipping its own drying station. In the first place the cost of the undertaking is within the estimates, the total cost of the building and plant being £13,508 10s 3d, approximately £5OO under the estimate.

“Suppliers to casein have received 2d per lb fat, as much as has ever been previously received for casein, with the exception of last year, and there is a surplus in excess of £d per lb fat in hand, which amount, owing to the conservative estimates made of casein in stock, will, we are sure, be increased.

“In connection with the financing of

the casein project, at the outset the arrangement with the bank was that all receipts in excess of 2d per lb fat should be paid to the bank in reduction of our liability, but with the completion of the season the bank is prepared to accept

the sum of £2.000 in reduction, and the balance can be paid to suppliers as a bonus.

“It has cost the company £22 Ils Gd per ton of casein to manufacture, ship and market our product, and the cost of paying 2d per lb fat to suppliers has been £29 0s 6d. making a total of £5l 12s per ton to pay 2d per lb fat with all expenses paid. Manufacturing charges can be reduced when we have a full season’s operations, and we are confident that if we can sell casein in the vicinity of £64 per con, a return of 3d per lb butter-fat can be realised. For the season just ended we missed manufacturing during the early half, when the tests of milk supplied were low, and with a full [season before us this early milk supply will greatly affect the average payment, it having been proved that the casein content in milk does not increase in proportion to the increasing test as the seaso advances, and therefore later in the season we pay out more money for only

a slight increase in. the quantity of casein taken out. During the past season, in November, we required £27 10s per ton casein to pay 2d per lb to suppliers, while for May supplies we required £34 owing to the increased tests. It is therefore obvious that with a full season’s operations ./the average price required to pay 2d per lb ■would be reduced. “As far as sales of casein are concerned, we have not received the prices we had anticipated, and this is in part due to the fact that our casein is a new product on the market and has received the most stringent inspection and test by likely buyers. There have been efforts to secure our product at much reduced prices arid at a figure apparently much below the prices held out for by other manufacturing companies. We have received criticism of our quality from our selling agents and our scientist, and improvements are being made in accordance with the suggestions made. It is anticipated that, with the improved water supplies now available and attention to the other points raised, a high standard- of quality will be produced next season. Small lots of casein have been sold, at low prices as sample parcels in order to get the product known to buyers, and good results should be forthcoming from these sales. “A further point which has been a handicap this season is the fact that casein went on the market late in the season, when buyers had in most cases placed their orders for the year. In spite of many setbacks, tho last two shipments have been sent direct to Hamburg as forward sales at £65 per ton for 20 mesh and £63 per ton for 30 to 80 mesh, and now that “Rusby” brand is becoming known, and buyers have had opportunity of sampling our product, I feel sure that this fact and our greater knowledge of manufacture will reflect very favorably. “The past year has been one of the most strenuous, if not the most strenuous, in the history of the company, and the board has faced and overcome the ■yery many problems placed' before them with that spirit of determination which is almost sure to result in success. The staff has again done the best of work, and throughout the year the men have worked for the success of the company.” The chairman called on the secretary, who reviewed tho balance-sheet at length, showing the splendid position of tho company. The motion for the adoption of the report and balance-sheet was seconded by Mr. A. E. Cowley and carried. “IRREPROACHABLE SHEET.” Mr. Shotter congratulated the directors on the balance-sheet which he considered -was irreproachable. He was particularly pleased with the manner in which the casein working position was presented. Though fuel, etc., looked high lie considered the company had been able to save £2 per ton. He thought a saving could later be made in packing, etc. He pointed out other savings that had been made, particularly in the cartage of the dry curd as against the green and he would like to see fresh markets exploited, as once the casein got into the right channels it would command the best price. They must always be prepared to face a slump in the casein market.

1 The chairman said the directors had 1 already sent samples of casein to the Eastern market. Mr. E. 11. Linnell asked whether the ' directors could give an assurance that there would be no recurrence of the recent pollution case, which had cost such very heavy law charges. The chairman said he could give no definite assurance. .The case had been a test one and the company had, since complied with the Supreme Court’s ruling at a cost of £75. Steps had been taken to prevent any skim milk or whey going down the creek. Mr. J. Browning pointed out that depreciation on the casein plant had been written down at the rate of £1 18s Gd per ton. A northern concern had written off £5 18s Gd per ton. That difference of £4 per ton enabled them to pay out an additional farthing per lb butterfat. He asked whether the directors considered the depreciation sufficient. The secretary said their depreciation was considered sufficient. k The chairman explained the position and in reply to a further question said that while it was hoped to make a further payment, nothing definite could be stated till final returns were received. Mr. L. J. Petch congratulated the secretary on having secured a higher test and a lower overrun, as -well as having kept the creameries running all the winter. The motion was then put and carried unanimously. DAIRY INSTRUCTOR RETAINED. Some discussion took place over the question of the engagement of the dairy instructor. The chairman submitted a resolution from the directorate advising the department that in view of the fact that the directors desired renewal of dairy instruction, the new dairy instructor would be accepted pending an expression of opinion by the shareholders at the annual meeting. The chairman considered it would be a retrograde step to do away with the instructor. Since his appointment there had been a marked improvement in the quality of their produce. Last year their grade had been 94.05, and they were second in the test of 37 factories grading at Moturoa, whereas this year the grade had increased to 94.245. Mr. Petch considered that if the instructor visited the district only twice a year the company could do without his services altogether. He moved in that direction but the motion was not seconded. The chairman said that if the instructor visited that particular district only it was certainly a credit to the cleanliness and high quality of the milk supplied by that district. Unfortunately there were other suppliers who required much more attention. He advised suppliers to be very careful in what they did, as if they did *w?.y with the instructor it would mean that those now sending high quality milk would suffer from deterioration of the produce owing to sofne suppliers sending bad milk. A supplier considered that the managers should know bad milk when they saw it and should be able to deal with the matter without sheltering behind an instructor.

The chairman said the manager’s time was more valuable to the company than the instructor’s, who cost them only £450 per year, Mr. H. Kerkly agreed that it would be a backward step to do away with the instructor, as an official had more authority to deal with matters on their farm than a manager. He instanced cases where the instructor had undoubtedly done good work. Mr. A. Sangster said it ■was not the duty of the instructor to condemn the suppliers’ milk but to instruct them how to send clean milk to the factory. His

services were well worth retaining. The chairman pointed out that the casein manufactured at the factory was made or marred on the farm.

Mr. M. Lepper moved that the company approve of the proposal of the directors to continue the engagement of the instructor for a period of a year. This was seconded by Mr. Linnell. Mr. J. Browning moved as an amendment that the instructor be empowered to work with the Government inspector so as to see that suppliers were given clean whey from the factory. This was seconded by Mr. A. E. Cowley and carried.

Mr. M. Davis moved that the company was in favour of dairy farm instruction being made universal. Produce was sold as New Zealand. produce and instruction therefore should be on a universal basis, he said. The motion was seconded by Mr.' E. J. Bieck and carried unanimously.

PREMIUM ON SUPER FINE CREAM.

The chairman said the question of premium of a halfpenny per pound for super fine cream supplied by shareholders had been before the directors, but in view of the fact that the directors were not unanimous on the subject it had been decided to refer it to. the shareholders. A deputation from the home-separating suppliers had waited on the board on two occasions during the season and asserted that by separating at home the factory was saved at least Jd per lb fat, by their non-use of the factories’ separators, ‘but in view of the fact that the company was a whole-milk factory, and the separators were available, the separating of the supply of milk would cost practically nothing. By granting preferential payment to cream suppliers, they were likely to alter the policy of the company, which was purely a whole-milk factory. Midhirst always paid out amongst tfye best of factories, and the pay-out had in most cases been equal to id per lb above the home-separating factories. There would thus be the danger of inducing a supply of cream from other parts" of Taranaki. Mr. A. Sangster, as a cream supplier, said the main argument they advanced was that home separation saved the factory skimming losses and they wanted only what was considered a fair thing. The half-penny was hardly a fair estimate. Midhirst was the only factory that did not pay more to its cream suppliers, and it should come into line. He moved that the matter be referred to the directors for favourable consideration. Mr. A. Bretherton, in seconding, said he, like the mover, could "not possibly cart milk to the factory owing to the state of the road. Mr. J. Shotter agreed that these men should have consideration, but there were many delivering cream who could deliver milk. The motion was carried. ELECTION OF DIRECTORS. Prior to the election of the directors Mr. J. M. Shotter spoke in high terms of the work done by the three retiring directors, Messrs. W. Vickers, G. Anderson and J. E. Schumacker, in connection with the casein committee, and on his motion they were given a vote of thanks. For the five vacancies in the directorate caused by the retirement of Messrs. Vickers, Anderson and Schumacker by rotation and D. J. Gillanders and R. j. Morey, who resigned, there were eight nominations and the election resulted as follows: J. E. Schumacker (1033), W. Vickers (996), G. Anderson (842), F. Wellington (539)> J. M. Shotter (399), elected, and J. H. Kirkby (347), C. H.

Volzke (213) and P, R. Paul (132). Mr. T. H. Penn was re-elected auditor, the fee being increased to £25. In his report the auditor said: “I have to congratulate your company upon a very successful season and upon having made a wise choice of a secretary. His book-keeping is very good and his heart is evidently in his work.” - A formal resolution was passed increasing the share capital from £30,000 to £35,000.

At a subsequent meeting of directors Mr. W. Vickers was re-elected chairman of directors.