ANNUAL MEETING OF FARMERS’ CO-OP.

Star (Christchurch), Issue 18579, 29 September 1928, Page 15

ANNUAL MEETING OF FARMERS’ CO-OP.

(CONTINUED FROM PAGE 2) Speaking of the annual meeting of the shareholders of the New Zealand Farmers’ Co-op., the chairman, Mr J. Stevenson, said:— CHAIRMAN’S ADDRESS. It is very pleasant to be able to congratulate you that we meet to-day under much more satisfactory conditions than have prevailed in our Dominion during the past few years. The trading and general financial atmosphere of our province, and indeed the whole of New Zealand, is now brighter and more comfortable. We are all feeling better. The position has definitely improved, and \vd are thankful lor it. Our trade balance has recovered wonderfully. In 1926 we imported a surplus of goods to the value of six million pounds more than we get for all our exports. This year, however, we are more than twelve million pounds on the right side of the ledger. Within the short space of the last twelve months we have cut down our imports by four millions, and we have received over nine millions more for our exports than we did in 1927 —a rapid transition from adverse to prosperous conditions which is satisfactory and significant. In our own business this has been reflected in better returns to our farmer clients, which have been most welcome: and while the public economy in purchases of general merchandise, especially during the first six months of the year, lias resulted (as I ventured to predict at our meeting a year ago) in a leaner year for many wholesale and retail businesses similar to our general stores departments; we. are happy to be able to announce reasonably good increases in turnover in most of our departments at head office and branches, and having held our own in others. In connection with sales of merchandise, it is interesting to note that, while in common with all other importing houses we have carefully restricted our purchases from overseas during the past two years, in order not to be I caught over-stocked, our purchases of I locally-manufactured goods steadily increased, and we are finding that the quality of New Zealand productions is rapidly improving. F° r . our displays, during Empire Shopping Week, we were awarded three prizes—the largest number to any one firm—and one of the first prizes was for the best display of New Zealandmade goods. IMPROVEMENTS. During the year we have greatlv improved our Cashel Street stores and offices, and are feeling the tangible benefit which follows the approval of our clients and shareholders. Our cool stores have been enlarged, and obsolete machinery replaced by the latest new equipment, which should copo successfully with this growing business. The garage has been modernised and provided with the übiquitous bowsers, and our petrol sales have much increased. New cars have not, however—for obvious reasons—been sold in larger quantities during the past year. Our branches at Ashburton and Hawarden have been modernised and their facilities improved. We azp receiving many expressions of satisfaction at the better service which is now given, and solid proofs that this is appreciated. Minor improvements have been made at other branches in equipment, and large improvement in service to our clients and costomers has been effected by better organisation. The cost of these alterations, replacements, improvements and extensions has been well over £26,000. A portion of this has been paid out of revenue, and an item of £24.497 appears under this head in the balance-sheet. Of the £9OOO which your directors recommend to be taken out of profits and written off pliant, etc., a sum of £4OOO is to be written off this item. PROFITS. The gross profits for the twelve months are not much larger than they were the previous year, but our expenses have been considerably reduced. The net profit shown for the year is £38,261, which, with the £21,772 brought forward from last year, makes a sum of £60,023 standing to the credit of our profit and loss account. In addition to the £9OOO which your directors recommend should be written off plant and alterations, it is recommended that a sum of £IO,OOO be placed to a special reserve account, and we hope that from year to year contributions may be made to this special reserve in order to build it up to a substantial figure. It is further recommended that two years’ dividends at the rate of 6 per cent be paid on our first cumulative preference shares, which will absorb a sum of £IB,OOO, and will discharge these dividends right up to date. These shareholders have waited for several years for their dividends, and I congratulate them on this happy outcome of their patience. It is also recommended that a halfyear’s dividend at the rate of 6 per cent be paid on our “A” cumulative preference shares, which will absorb a i sum of £6OOO, and will leave this class eighteen months in arrears. I am glad to be able to recommend this payment. It is a beginning of what we hope will be a return to normal regular dividends for these shareholders. If you approve, payment of these dividends will be * made on Monday October 8. Our articles of association preclude payment of any dividend on the “B” cumulative preference shares until we have paid the dividends on the “A” shares right up to date, but we may, I think, regard this payment as a very hopeful sign fur the “B” shareholders, and, indeed, also for the ordinary shareholders. If these recommendations are accepted, there will remain a balance cf £17,023 out of our profits to be carried forward. Nobody, I hope, will disagree with the poliev of—perhaps slow—but real and steady progression towards complete recovery, and if your directors are thought in some quarters to be a little cautious, this is surely better than a premature and unsubstanital optimism. STOCKS, ETC. Our stocks on hand— particularly stocks of goods which are seasonal and fluctuating in value—have been scrupulously examined by experts, and wherever necessary, have been properly discounted. We believe they are sound and merchantable, and conservatively valued at the figures appearing in the balance-sheet. Special attention is constantly given to our very large number of ledger accounts, and adequate provision has been made for any doubtful cases. During the past year a number of clients (whose accounts were regarded as hopeless when we made a reserve provision for such two yeprs ago', have unfortunately succumbed, in spite of all our efforts to keep cheir heads Above water, and our losses over these have reduced the amount reserved by £89,000. It will be seen that there is still a

[ sum of £96,486 to the credit of this | reserve account, all of which will be | required as forecasted by the directors ; two 3’ears ago. FINANCE. It will be satisfactory to our shareholders to note our improved position with our bankers, especially as for over a year the bank rate of interest on overdrafts was increased, by half per cent. It was felt that we could not pass i on this increase to already overburdened clients, and therefore this was not done in a single case. You will also have observed that our Secured Deposit Stockholders, whose stock amounts to a sum aggregating £910,000, decided by a very large majority last week to renew these deposits for further periods of ten years. This is a mark of confidence in the Association which is appreciated by both directors and staff, and the extended period will free our hands to cope with, not only the necessary current business of the Association and its proper expansion, but such rearrangements of our finances as may be possible and advantageous during the next few years. Our Association can not be said to have successfully grappled with the whole of the accumulated difficulties which had piled up since the slump of 1921, and subordinated them to the orderly progress of the business in the future. If the years to come are reasonably gQod years, these difficulties are definitely finished with. We can now give more attention to increased service to our supporters, and larger business: and here let me say that any suggestions for higher efficiency and more useful service, which our customers may think we can render, will be welcomed and carefully explored. We believe our present methods of handling and sale of clients' wool to be unsurpassed by any other firm. TIIE NEW WOOL CLIP. The question of wool prices for the new clip is just now creating lively interest, and it appears to be generally assumed that the coming season’s prices will equal last season’s closing rates. There is some ground for this opinion. The statistical position is strong. Japan and Russia are believed to be likely to purchase more largely and to create stronger competition. Trade and industry are improving nearly the world over, and improved standards of living everywhere are calling for wool textiles in increasing quantity. On the other hand, there are signs that English and American buyers are disinclined to the recent high prices, and are indicating that they will be reluctant to do business unless at a reduction of probably 10 per cent. The August Sydney sales were weaker, and more than 20 per cent- of the catalogue was unsold, and the recent watersiders’ strike has not helped matters. The recent New Zeaand crutchings sales were dull, and. owing to the lad* of usual competition, realisations were from Id to 3d per pound less than was expected, although in the main prices were much better than those for the corresponding crutchings sales of 1927. The London sales, held last week, were slower and weaker than the July sales. This, however, may be indicative of the desires of the buying trade, rather than their intentions when the new clip is actually offered. The world’s production of artificial silk is continuing to increase, and the output for this year is estimated to equal 300,000,000 pounds, or the weight of nearly one million bales of wool. Perhaps the most sound view of the situation to take' at present is > the middle view that we may not see low prices for wool for some years to come, but that high prices—say. higher than a little below the average of last season—are unlikely, and, if obtained in any one year, should be regarded as exceptional to the general trend of world prices. FAT STOCK. There are too many uncertain factors in the field of fat lamb and mutton prices to permit any useful prophecy of what prices for the coming season may be. Nobody could ha\*e predicted that the Canterbury schedule for fat lambs, which opened at 9id for primes under thirty-six pounds, would eventually rise to 12Jd per pound. It was a pity the fattening season in this province was not as good as the over-all prices. While the Dominion’s killings increased by half million lambs, Canterbury’s tallies showed very little increase, and, speaking generally, our lambs did badly. However, conditions are very promising at the present time, and assuming that anything like tenpence per lb is available this season, and we increase our normal output, it will be very good business. There are, however, other factors contributing to the over all prices offered for our lambs, as will be obvious from the fact that in March this year Smithfield prices for prime lamb were 2d per lb lower, and to-day prices are practically one peny lower than they were in January last. Therefore no estimates can be sound which are merely based on the value of the bare meat in London. The Association’s meat pools at five Canterbury works will again be available for those clients who wish to use them, and full current schedule prices, without any deduction of .commission or other charges, will - be offered as usual. BUTTER. The past season has been better for suppliers, both as regards production and prices, and it is pleasing to record tha/t prospects are bright for the season about to open, especially as regards cheese. Indications point to a price for butter-fat that should show a satisfactory return to producers. Although dairying does not play a major part in Canterbury, as it does in the Waikato, it is pleasing to seej satisfactory prices to dairy farmers, though one is afraid that the prices indicated for the coming season are higher than may reasonably be expected for future years. WHEAT. ETC. Grain—particularly wheat—is one of our staple products in Canterbury. The average yields for the Dominion during the last two seasons of over thirty-eight bushels to the acre have been phenomenal. In the forty-six years from 1869 to 1914 this yield was only equalled once—that was in 1903 —while the average for those forty-six years was but 26.2 bushels to the acre. The substantial increase in the area sown—from 220,000 acres in 1926 to 270,000 in 1927, was indicative of what could be done, and the extra good yield amplified the results, A third satisfactory help was the action of the Government in giving the New Zealand wheatgrower the protection of a sliding scale of duties on imported wheat and flour, which was designed to prevent the price of bread from rising higher than one shilling for a 41b loaf to the public, and the price of good average milling wheat from falling below 6s per bushel on the average to the grower. Unfortunately, the increased area sown and large yield combined, indicated a surplus for the year above the normal requirements of the Dominion and as millers and wheatgrowers have found themselves unable to get together, the anticipated surplus has

depressed the market against the wheat, grower . . . There are strong indications teat this surplus will be wanted for consumption wichin the next six or eight months, and it is a pity arrangements were not made to deal with it. The sliding scale of duties has, however, prevented wheat slumping to the extent it did last year. With the object of meeting such situations, a voluntary “ Wheat Pool ” or Wheatgrowers’ Association has been started here, \ r ery much on the lines of pools in other countries,_ and all growers are being asked to join it and sign contracts for five years. This Association has edcided to give all facilities and assistance to this new organisation, and hopes it will prove to be success. It has many problems of a difficult nature before* it—problems peculiar to the commercial side of the question—and it would, perhaps, have been able to overcome these better and more quickly had it secured the assistance of a few commercially trained men on its directorate. However, it has our_ cordial good wishes and assistance in its object of obtaining for the wheatgrower a fair and steady value for his product. COSTS OF PRODUCTION. The early part of the past year saw a continuance of the movement toward a reversion to sound land value. Much land fell back into the hands of vendors. Excessive mortgages—frequently covering fictitious profits on sales of land —were found to be valueless, and were reduced or abandoned. During the past few months there have been indications of a healtLier state of things. There has been more interest in land and more sales at genuine prices have taken place. The doubts of the last few years concerning land as a sound investment appear to be passing away. This is a good sign, and we hope we have seen the last of artificial inflation of land value. But even with reasonably priced land, and easier rates of mortgage interest, costs of production are still high in New Zealand, and lower expenses and higher productions are desirable; in fact, they are imperative if the generally expected decline in world’s prices of our products tal<es place. It is capital to see increases in wheat production, and higher fat lamb and butter production, due to improved methods, larger use of fertilisers, labour-saving machines, etc., and we must continue this and give it impetus. Production costs in New Zealand are too high, both in the primary and secondary industries, because of rigid and inelastic labour conditions which are now reacting unfavourably both on employer and employed. High and unequal taxation and local body rates, large Customs duties on many imports,

t- and inefficient methods, also take an undue toll. t If our competitors in the world’s mar- ' i- kets can cheapen their production costs t more than we do, we shall suffer, even ' & though we maintain our high standard e of quality. The National City Bank of New York, in its August Bulletin, quotes some extraordinary figures of farm cuth tivation costs on large farms in Mon- ” tana. The average cost of labour in n ploughing one acre of land is shown s as 27 cents, seeding 7 cents an acre, H double discing 10 cents an acre, and harvesting and threshing at one operation cost 40 cents an acre. e This is not the result of cutting v wages, but is on a wage payment of 0 six dollars a day, but there is no regulation or restriction by Arbitration t Courts over there. 3 Professor M. L. Wilson, Agricultural Economist, of the Montana Experiment ~ Station, is quoted as stating: 3 "Three years ago there were few f farmers anywhere in the world who 5 produced wheat with less than eight hours of man labour to the acre. To--1 day, many well-organised, efficiently f operated tractor wheat farms raise r their crops with only two hours of man labour per acre.” I believe that within the next few years extravagant and rule-of-thumb l methods will be as surely doomed on 1 the farm as they are now in the fac- * tory. This does not, however, mean that r every farmer should straightway go out J and buy a tractor. In some hands, and on some properties, these machines have proved to bo expensive play--5 things. [ It does mean, however, that com- ‘ petent examination of our extravagant l costs of harvesting, threshing and \ transport is overdue. * It seems certain that prices generJ ally are steadily falling all over the world. In New Zealand we are liable to : be misled on this point by such undue 1 fluctuations downward as occurred in 1925, 1926 and early in 1927; and up--1 wards as at the end of 1924, in 1927 and this year. J Speaking generally, wholesale prices 3 in New Zealand have declined by about : 10 per cent since 1924, and these prices ' are intimately bound up with costs of 5 production. But in great Britain and on the ConJ tinent of Europe, prices have declined I much more than this, and wages have l been adjusted and necessary adapta- • tions of conditions of labour have been : made, unhampered by the immobile re- • strictions we suffer in New Zealand—--1 consequently production costs are also coming down. The recent Industrial Conference was necessary—it was indeed overdue; and while it was pleasant to observe the good feeling which prevailed, something more definite should have resulted—something which would definitely

lower costs of production—otherwise both wage earner and employer will suffer. _ In conclusion, I should like to mention the hard and difficult duties which Mr Machin has so efficiently carried out with the loyal and able assistance

! of the indoor and out-door staff at ail [ points, during the past year. Also the excellent work and supervision .of our • auditors, both of the internal staff, and t our official auditors, Messrs Best and i Wilkinson. From the thoroughness and : care they exercise in their onerous work,

we may count on them to see that the business continues in a healthy state. I I have much pleasure in moving the j adoption of the report and balancesheet.