The Waikato Times With which is Incorporated The Waikato Argus. FRIDAY, OCTOBER 5, 1923. CO-OPERATIVE MEAT CO.

Waikato Times, Volume 96, Issue 15358, 5 October 1923, Page 4

The Waikato Times With which is Incorporated The Waikato Argus. FRIDAY, OCTOBER 5, 1923. CO-OPERATIVE MEAT CO.

The Poverty Bay Farmers' Meat Company are in ah unfortunate position, and they will have the sympathy ol settlers everywhere. They have gone into business with insufficient capital. The Bank to whom they are largely indebted urges them to sell, and the offer made to them is little more than half the face value of the business'. The result of accepting the offer would be that shareholders would lose their capital, and the guarantors would lose a further £80,0.00. If on the other hand they do not accept the offer, the Bank threatens to force them into liquidation; and the effect might be even more disastrous. The position is greatly complicated by the fact that the offer to purchase has been made on behalf of Messrs Vestey Bros., from whom the farmers do not expect to receive a fair offer for their stock. It is noteworthy that the works have shown a profit during each year's operations, except in 1922, when £5886 was lost, and the profit to 1923 was not sufficient to cover this loss. A sum of £300,000 is due to the Bank, and the question arises why the company relied on the Bank for so much of its capital. If the farmers 1 were in earnest in their desire for works of their own, they should have found a larger proportion of the capital, and if this was not available they should have contented themselves with smaller works. Then again, had they no advisers who could tell them that the attempt to run a ship of their own -was certain to lead to loss. When asking questions an enquiry might be made of the Bank how it came to advance upon such a scale. As a result they are placed in an unpleasant position, for they are led to urge the company to sell at a stupendous loss, and to sell a co-operative works to what is commonly regarded as a meat ring. No doubt the position might be traced back to the results of war. The high prices' came first and threw out everybody's -judgment, and then came a disastrous slump, which the company was in no position to face, as it was short of capital. The laok of business ability on the part of the farmers', and of the Bank, looks likely to make a present of the works to Messrs Vestey Bros, at half price. There is a suggestion that the Minister of Agriculture should be asked to refuse his consent to the transfer of the license, but it is to be hoped that ho will do nothing of the kind. It would be of no assistance to the farmers, because it would not operate to prevent the Bank forcing liquidation, and if that took place it is unlikely thai any. higher offer will be made, even if any offer whatever is received. Purchasers' of meat works at a quarter of a million sterling arc not met everyday. It is not only that the refusal to transfer would do the farmers no good; the further effect would be that the credit of the country would be injured. If the Bank cannot exercise their legal remedy for the recovery of debt, they will be loath to mate advances. In the present instance it looks as if they had done so to an unwise extent, but that is no justification for the attempt to make them continue their advances. The position is worse because of the guarantee given by the directors, and as this js the second instance of the kind which has come before the public, really one is led to ask if they were aware they were running a risk. If farmers elect to go into business, they should learn something about it, as otherwise they are not helping their fellows, or furthering the cause of cooperation. They are in fact helping

those whom they regard as the enemy, by providing works for them at half price.

From the statement of the profits made to August, 1923, and to August, 1922, it would appear that the company was working upon an extremely small margin of profit. It can never be safe to do this in any business, and particularly one. which is subject to such fluctuations as the meat trade. If co-operative concerns are to flourish, they must act on the same lines as prudent business men; make a profit when it is to be had, and put some of it on one side against the Lime when losses arc made. If the works' are to be run in such a manner as to give the farmer all the profits of a good year, he will inevitably lose his capital when the bad year comes, even if no such overdraft exists as the company owe in this- instance. All this is, of course, the A.B.C. of business, but it is useless to engage in big undertakings and ignore all the experience that business men have bought and paid for. It is particularly unfortunate that the evil may not end with the loss of the capital which has been subscribed, and the payment of the directors' guarantees. The farmers suspect that they will not get a fair remuneration for their stock, and certainly they will not get what the company would have paid them, for Messrs Vestey Bros, cannot afford to work on the lines of distributing all the profits. The suspicion that inadequate prices are paid is enough to cause discontent. If farmers resolve to go into business, they should seek the assistance of some men of experience. If they saw a lawyer or merchant endeavouring to farm, they would be entirely scornful about his prospects of success; and if they could only believe it, there' is as much to learn about business as about farming. • We have commented before on the fact that the professors of economy pointed out what would result from the war, and the manner in which it was financed. It is not strange that farmers should have known nothing of this, but it would have been expected that banks, who are continually faced with such problems, would have done so. Apparently they had no more anticipation of the course of prices than the farmer. It is not a very good showing on either side, and it is difficult to see how anything but 'disaster can result from it. Experience has commonly fo be bought by each generation, but in this instance it is being bought at a very high price.