HONEY PRODUCERS.

Waikato Times, Volume 100, Issue 16818, 9 June 1926, Page 8

HONEY PRODUCERS.

NEW ZEALAND CO-OP. ASSOCIATION MEETING OF SHAREHOLDERS. Tlio annual mooting of shareholders of the New Zealand Co-operative Iloncv Producers Association, Limited, was held in Hamilton yesterday, Mr T. E. Clark (chairman of directors) presiding over an attendance of about GO shareholders. Annual Report. The twelfth annual report and statement of accounts was presented as follows: II has to be noted that our balance-sheets as at December 31 have, formerly been based on an estimate of values of stocks, which at that period Was fairly heavy, and any value taken is subject to realisation by sales. It has now been considered advisable to take our London stocks in at a nominal value, that is, on a c.i.f. basis, plus a small proportion to cover London charges already incurred. This method cuts out any estimate of profits, any credit balance shown being profits on completed business. Although the final accounts for 1924 business show a loss of £4OO Os Gd, tbe actual trading resulted in a small profit, the loss being accounted for by the loss of £1043 dSs. made in the sule of the supplies business, which was included in that year's accounts. The position is shewn by reference to the 1924 Export Market Profit, and Loss Account. Stocks at December 31, 1924, taken in at GAcl par lb, showed a credit of £4-139 3s 7d. This credit on realisation was reduced by £2-172 17s 9d, as shown in ;he final 1924 export market trading account at December 31, 1925, tne £4OO Os Od loss being the difference between the net profit of £2072 i'ts 3d shown in the general revenue and trading account, 192-i, and the debit balance ol £2472 17s 9d stated above. Sales in 1924 were made of 44 r >.G42j lb of bulk honey and G52,007t1:0 of packed. Sales of 192-i honey were completed in October, leaving tiie market clear for 1925 honey, although various Quantities of 1925 had been sold from June onwards.

At December 31 410,4121 b of 1925 honey had been disposed of, leaving a considerably larger quantity in hand than at December 31, 1924, owing to the big increase in the quantity shipped in 1925 as compared with previous yosrs. As it is certain that the amount for export for 192-1 will be onsidcrnbly less than the amount exported for U'2s, it will enable 1925 sales to b« sprfad over a longer period, whereby our prices can be maintained. This, however, will delay final returns for 1925.

The 1925 bulk siocks have been taken into the acounts at Gd per lb. This represents the. cost to the. company of the honey m London, shown as follows: First advance o-lvrionl (average), 4.50 d; freight, etc., BGd; overhead, .3Sd; London landing charges, storage, etc., to dale, .2(1(1; total cost, G.OOd. Local market. —The local marker, account shows a profit balance of £1443 3s 4d. Competition on the local market is very keen and prices very unsteady, so that the profit made must be looked upon jis very satisfactory. Balance-sheet. —The difference between our estimated values of stocks and realisation by sales for 1924 and the writing down of our slock to nominal values at December 31, 1925, increases the deficit shown on our 1924 balance-sheet at £15,7G3 5s 9d to £16,8G7 3s Bd. . Finance.—The company's indebtedness to the bank under debentures has been reduced to £5300, and the unsecured indebtedness to Messrs Mills and Company, Ltd., by £4897.

General.—The scope of our markets has been extended by the opening under contract of a packing depot at Wiesbaden, in Germany. Our other European business is being maintained and developed. Our London agents are considering agencies for extending our trade to Egypt and India. From this end we have a satisfactory business developing in Ihe Straits Settcments and Malay Slates, and'the South Sea Islands, and opening consignments have been sent to Hongkong, Manila and Monlc Video.

Imperial Bee Honey is now being sold in the following countries: The .United Kingdom, Irish Free State, Germany, isle of Man, Channel Islands, Greenland, Straits Settlements, Philip.pines, South Sea Islands, Argentine, Denmark, Norway, Sweden, Finland, Faroe Islands, Iceland, Federated Malay States, Hongkong, Uruguay. Statistics. —The amount of honey received was 849 tons, and 742 tons were exported to A. J. Mills, Ltd., London. Payments were made up to 0 l-3d lb on white special honey, -4 3d lb on light amber special, 5d lb white prime, 4 id lb light amber prime, -id lb medium amber prime, id lb light amber good, 2d 11) medium amber good, 2d lb dark prime, ljd lb dark good, I.WI lb manufacturing. Payment to suppliers totalled £30,383 lis Gd. Shareholders increased from 1044 to 1083, and subscribed capital from £18,120 to £18,90(1. Paid capital increased from £8055 to £O4BO. Statement of. Accounts. Export market trading account (ending December 31, 1025): Payments for control levy amounted to £407 7s lOd; for exchange and stamps, £BBI !0s; honey absorbed (first advance payment), £31,213 8s Gd; freight and cartage, £3BBO 17s 7d; general charges, £l3l 10s id; insurance, £241 10s Gd; storage, £238 is 7d; wages, £l7l 8s Gd; London commission, £917 13s lid; general, £2397 5s 3d; interest on advances, £O3O Os Gd; London depot, £2BIO Os Id; charges accrued (packing, etc.). £473 0s: interest to agents, £859 15s Id. Sales accounted for £15,220 3s lid, and the value of Mock honey was placed al £31,770 7s 2d. Packing material was valued al £OOI lis 3d, and £4GG t3s id was received from grading receipts, laving a balance, of £2473 10s lo Ihe general revenue and trading account. Local market trading account: The expenses amounted lo £ll,lOO 5s 2d. and there was a balance of £1443 3s 4d to the general revenue and trading account. Sales had accounted for an income of £9835 15s 7(1, while stock honey was valued at £lBlB 14s. The profit and loss account showed a loss £10,807 3s Bd, consisting of £15,703 5s 9d carried forward from 1924, £OB4 17s from the general revenue and trading account, and an expenditure of £419 0s lid as interest on fully-paid deduction shares and amount paid on alt shares. Comment of Auditors. The following letter was appended to the statement of accounts by the auditors, Messrs Thomson, Gray and Hodgers, of Auckland: "We. beg to draw attention to the fact that the total liabilities of the company as shown by the balance-sheet (other than capital) exceed the assets by £7377 18s Od. Against this Ihe uncalled capital on shares issued amounts to £9200 5s 4d, so that il is obvious that further losses of capital cannot continue without jeopardising the position of Ilh> company, in our supplementary report to shareholders of May, 1923, wc made reference to the fact that the financial position of the company was very largely dependent

on the realisation of the stocks at adequate prices, that is to say, advances made to shareholders, plus expenses, should not exceed a figure that can be realised on the sale of stocks. In the interest of all concerned we strongly urge a conservative policy in this respect." Managing Director's Remarks.

Speaking to the meeting on the company's operations during the past, year, Mr J. Rcntoul (managing director) said he would not enter into a discussion of the marketing policy with the meeting, but would confine his attention to the balance-sheet, which was more explicit than those of the past, and was an endeavour to give more information with regard to accounts. At the, end of December, when the balance-sheet. was taken out, large stocks of honey were in London, and had to be taken into consideration at a value. The appearance of the balance-sheet was dependent on those stocks, which should not be inflated. Last year valuation was assessed at a figure which was not realised, but this year the value, of the stocks had been computed at a nominal value based on the cost of getting the honey to market, including advances to honey suppliers. Neither profit or loss could be shown in the balance-sheet by that method.

The balance-sheet had shown a considerable deficit in the last three years, and this year the amount had been slightly increased, but was not due to further loss. In 1924 the operations of the company were reviewed in their entirety for the first time since the inauguration of the. marketing association. The company cleared expenses in 1924, and there, was no loss in actual trading. The deficit referred to by the auditors was not a new feature of the balance-sheet, but had appeared in the accounts for the past few years, and was actually the result of the initial cost of establishing business in England after the war. The reason why the deficit had not been disclosed before was because stocks were still on the market and until a clearance was made it was impossible to ascertain the true position. The money that had been expended had created the present markets at Home, and the company was still obtaining the world's leading prices for honey. The deficit could be justly called an asset. Advances Too Liberal. The auditors' principal complaint was that the advances had not been reduced sufficiently. The directors had to take some business risks and beekeepers had looked upon the first advance as the standard price for honey. From a business point of view that was not good policy, and it was a big risk for any company to take to make advances which left little margin for setbacks- and trade upheavals. The honey business was more difficult in that respect than any other, as the sales could be carried over for 12 months. Advances to suppliers were fixed in January, and it was not till the end of the j following year that stocks on which advances had been made were realised. Advances were made at least 20 months ahead of the final sales of honev, and that increased business difculties. The directors had considered the auditors' comment and had made arrangements to reduce advances accordingly to meet this year's requirements. marketing Costs. It had often been brought forward that although the English consumer paid Is Gd lb for honey, the New Zealand beekeepers received only id or 5d lb return. One pound glass jars were retailed at, Is Gd at Home. About 00 per cent, of the honey was sold packed, and the inquiries received showed that ils distribution to the English retailer was being increased. Even if every Jb of honey was sold there must still remain a substantial difference between the price paid by the consumer and the payment made to the producer. The cost of packing in glass jars was approximately 5.22 d per lb. The actual cost of packing 30001 b of honey in glass jars in New Zealand would be s*d lb. The cost could perhaps be reduced by the cmplovraent .of boy and girl labour, but the' directors preferred to utilise the services of men. World-wide Distribution. The markets were principally in the United Kingdom where they were sure of good sales. Some progress had been made in Germany and business would grow. There were fair markets established in Scandinavia and Denmark. The London agents were negotiating in India for the establishment of the honey trade there, and a trial shipment had been made. It was hoped to start distribution shortly in India and Egypt. They were doing their best to open up outside business, for they had a good article, and a reputable method of packing, and there was no reason why thev slmuld not have a world-wide distribution. Fan- quu'.lUUcs hail been sent lo Singapore agents and initial consignme.nls had been forwarded lo Hong Kong and Montevideo, of which reports were awaited. They had been led to believe that, a market might be established in the Argentine, but there did not seem lo be much hope for bulk distribution there, though a trade might be opened up for packed honey. The Sydney representatives of the Singapore agents had taken a great interest in the New Zealand honey and arrangements had be¥»n made for a consignment for Manila, in the Philippines, where it would encounter the American duly. Further orders had been received from Singapore and Shanghai and there was a possibility of a market in China, but the bovcott there had embarrassed British* trade. From that brief summary of the company's operations it would be seen that the directors were endeavouring to promote world-wide distribution. Criticism of Directors. Mr J. S. Cotlrell, of Te Aroha, intimated that be wished lo put certain question- to the directors and asked them lo give an account of certain operations "in which he considered the effects of bad administration were reflected. „ , Mr Cotlrell said: Frrm the tenor of the auditors' letter, is it. not a fact that the whole of the called-up capital has been lost'.' Mr Clark (chairman) : It has been practically all spent. Is any part of the losses sustained attributable to some of the late managers ?—-Part of it is. "The chairman said the paid-up capital had been spent, bill not lost. The propriclarv article was certainly the only asset thai, could be put against a loss, but shareholders retained their goodwill in the company. There was a loss of over £llOO on the current year's working, was there no t?_Mr ncntoul said lie would not answer that question. The average loss for the past four years has been £4215 annually, will you admit lh.it.—That is so. Association's Financial Position. If the Association were to go into liquidation at present would it pay 20s in the £. —Thai depends largely on what the proprietary article could be sold for in London. Anil also on the uncalled capital? —That, is so. Mr Rcntoul admitted lliai, about £II,OOO was owing to the London

agents for advances to producers. Mr cotlrell said: What is there lo offset I bat?

Mr Renloul: Only the uncalled capital of the Company. There is £II,OOO deficiency?—That is so. We have no slocks against that amount. Arc the debentures which were, issued registered with the registrar of joint stock companies?—l am not certain, but T do not think so.

Mr Cotlrell: You arc under a liability for not doing so, I suppose you know. The chairman protested against the detailed nature of the questions, explaining that the directors bad not sufficient data before them to allow them lo answer Mr Cotlrell properly. Mr Cotlrell: Were the values placed on the London stocks checked by an auditor?—Yes. You will admit, that the interest, paid on shares could be called a dividend? —Yes. Had the Company earned a dividend that year, and knowing the finances of the H P.A., you would recognise that the payments were ;*aid nut of borrowed money?—The chairman: More or less. Is not. five per cent on the gross value an excessive commission to allow the London agents?—Mr Rcnloul: We do not consider it an excessive charge. Honey is a different proposition to dairy produce and has to be put on the market in such a way that the standard will not be deteriorated by inferior honey offered. For that, reason distribution has been limited to one agent lo control and sec that objectionable honey docs not go on the market. The agents are the Association's representatives and practically under an obligation to extend its markets.

Mr Cottrell: Has any representation been made by the H.P.A. to the Control Board to appoint an additional agent with a view to speeding up distribution and reducing costs? —No, the object is to prevent competilion among New Zealand products with one another. Has the H.P.A. made any representations to the Shipping Board for a reduction of freight and docking charges?—The Control Board has, but no concession has been made. Vote of Censure Proposed. Mr Cottrell moved as an amendment to the motion for the confirmation of the directors' report, "that in view of the whole of the paid-up capital and the larger portion of the un-called capital being absolutely lost as disclosed by the balance sheet, and the letter received from the auditors in connection threeto, this, the annual meeting of the Association, records its want of confidence in the present directors, and further, this meeting passes a vote of censure upon them for their mismanagement of tho affairs and finances of this Association and calls upon them to resign in writing." There was no seconder for the motion and it lapsed. The report was then confirmed. Mr Cottrell subsequently rose to move further amendments, but was ruled out of order by the chairman. Directors Re-Elected Unopposed. Messrs Gibb and J. Hentoul, who retired from the directorate by rotation and ballot respectively, were reelected unopposed. The auditors were re-elected. The chairman said he was pleased that the directors had been criticised, and had replied lo Iho questions in a perfectly straight-forward manner, lie pointed out that even if the Association was not in a sound financial position, they bad made some progress. A sum of £12,000 had only been obtained from the bank on the personal guarantee of fhc directors, who were giving every attention to the Association and had faith in it. They could look'forward with a certain degree of confidence to the future and this season hoped lo show a small profit. An amount of £IG,OOO owing to the agents had been reduced to £II,OOO and the £12,000 owing to the bank had been reduced to £5300. He thanked those present for the manner in which they had shown their confidence in the directors.