THE FARMERS’ CO-OP.

Star (Christchurch), Issue 16846, 23 September 1922, Page 9

THE FARMERS’ CO-OP.

RESULTS OF YEAR OF DEPRESSION. The heavy loss made by the New Zealand Farmers’ Co-op. Association of Canterbury, Ltd., during the past year is disclosed in the forty-first- annual report which has just been issued to shareholders. This loss, however, has not come as a surprise, since the business of the association is so intimately connected with the farming community that any adverse conditions are reflected. in the earnings of the organisation. The results shown by the accounts represent the inevitable echo of the slump period. Considering the magnitude of the association’s operations, compared with the results of other institutions carrying on a similar business, the returns, it is claimed, are creditable to the management,, -which lias certainly passed through a most trying and stressful period. The actual trading operations, so far as merchandise sales are concerned, have been satisfactory in the volume of business —particularly when the reduced values of tho goods sold are taken into consideration. The directors state that throughout the year under review, however, prices continued to fall, and each succeeding shipment showed reductions, which necessitated severe writng down of existing stocks. Altogether, during the year the amount actually written down off merchandise totalled £124,000, and this practically accounts for the total losses revealed in the profit and loss account. It is stated that the stocks are now upon an absolutely safe basis. After writing down to the extent indicated, the total stocks according to the balance-sheet- on July 31 stand at £538.308, as compared with £763,803 on July 31, 1921, which shows that tho association has made a very determined effort to liquidate this asset. Sundry advances against freehold lands, stock, etc., disclose an increase in comparison with the previous year, whilst the advances against stock, grain, and produce shipped have been reduced to the extent of £63,000. The reduced amount of sundry debtors shows that an endeavour has been made to curtail credit —a wise proceeding. Bills receivable are also less to the extent of £63,000. On the liability side of the balance-sheet, sundry creditors are less by £70,000, while the bank overdraft is higher in consequence. The Property Account shows an increase. It is stated that this is mainly accounted for by the completion of and additions to branch premises, as well as t-o the main buildings at Christchurch, mo.4t of which were in course of progress at the last balance date. It is pointed out, however, that in connect tion with the association’s properties, the figures standing in the books represent original cost. less depreciation. Not one penny piece has ever been added by way of increment. This means that a substantial reserve exists in this relation. In anticipation of restricted earnings, rigid, economy lias been exercised in all Departments, resulting in considerable savings in overhead expense, aggregating, £27.552 for the year. As indicating the severe depression that has ensued in regard to real estate operations during the past year, it is interesting to observe that the commission earnings have fallen away to the extent of nearly £20,000 compared with the previous twelve months. Interest earnings have also suffered a severe fall, because of heavier rates paid to depositors, to bankers, and upon all other /funds employed in the business. Bad debts, which represent a small item under normal conditions, absorbed no less than £70,000 last year. Taxation accounted for another £44,134, making the taxation paid by the company during the last six years £226,846. In order to pay the Gov-, ernment this year’s amount of taxation, and the interim dividend to preference shareholders, it has been necessary to draw on the reserve account, which has now l>een reduced from £190.000 to £131,000. This means that when the amount of loss for the year is transferred to this account, the reserve would, be reduced to about £9OOO. Although the position represents severe setback after forty years’ successful trading, the shareholders have no cause to he unduly alarmed, the management state, because matters are much the same with pretty well all other similar organisations throughc*** the world- The Co-operative Wliolesale Society of Manchester, for instance. for the six months ending December 24, 1921, shows a loss of £1,416.000. The worst part of the slump period has been passed, and if members of the association loyally support their organisation, and provided that expenditure is kept under close supervision, it should he possible, in the near future to get back to something like normal trading conditions, when the usual dividends and rebates can again be, paid. The directors regret that the results do not permit of the paying of tho usual dividends. So far j as preference shares are concerned, an interim dividend to the end of January last was paid, but with regard to the second half of the year’s instalment now due, this, being cumulative, will be carried forward and paid as early as possible when profits permit. The work of the association for the last two years, it was stated in an interview this morning, had been of a national character, inasmuch as the directors had felt the responsibility 1 of carrying the producers through a period of depression, and it was gratifying to know that despite the losses incurred hundreds of , farmers throughout the country had improved their position, which more than justified the extra efforts of the association to help them.