WINES A SPIRITS. DECADE OF DAIRYING

Waikato Times, Volume 118, Issue 19639, 27 July 1935, Page 4

WINES A SPIRITS.

DECADE OF DAIRYING

TE AWAMUTU COMPANY.

SUPPLIERS’ ANNUAL MEETING.

RETURNS NULLIFIED BY DROUGHT.

. A .milestone In the history of the To Awamutu Co-operative Dairy Company, Ltd., —the 'completion of , 10 1 years’ operations—-was reached yesterday when, the 10th annual meeting of supplier-shareholders was held in the Te A\yamutu Town Hall. Mr,- C., ’ M, Alexander, chairman of directors, presided over an attendance of some 350. In moving the adoption- of the report and statement of aooounts the chairman remarked that the year under review had been slightly better that the previous season so far as financial returns were concerned, but to a large- extent this had been nulll- : fled by. decreased output of all factories In this part of the province ’ on acoount of the dry spell In January and February last.' Undoubtedly, sc* far as prices were concerned, the dairy farmer had a good distance to traverse before it could be said that he was workihg on a sound financial basis. The directors had spared no effort to keep manufacturing costs at bedrock, and the tables submitted In the balance sheet confirmed this. “It gives your directors great pleasure to report that, this year, the mortgage on the factory buildings and plant has been wiped out," added the. chairman. “Six years ago, the mortgage stood at £5750. Possibly, in view of the difficult times we have passed through during' the last few years, some suppliers may, consider that the directors should have beeD less punctilious in meeting this obligation to our bankers, beoause there might then have been more money to distribute on tho butterfat supplied. :! wish to make it clear, however, that ■the proceeds received from the -sale of our butter have never been encroached upon for the repayment pf our- mortgage. money comes from. the share capital contributed by our shareholders, and even If we-had.j not reduced our mortgage by one j penby during the last six years, the payment for butterfat would not have been increased. The money would have remained In the bank, because we-cannot take the proceeds of share capital and pay, this out on butler- | fat. The policy followed by your' directors has placed the company in an exceptionally strong position, as our assets In the (form of land, building, machinery and plant now stand at.£17,000. / : ‘ Resumption of Shapje Capital. “Our company holds a somewhat unique - position insofar that you? directors have always maintained the policy of paying a dividend on share capital, and also resuming share capital at the full face value In all cases where suppliers, give up dairying. Under this heading, slnoe the company j commenced, we have paid out cheques amounting' to £4700, and in many : cases these payments have been ofthe greatest benefit to recipients. We maintain that, in many respects, our ; share capital, system resembles a bank, ; because we pay a dividend on the money received, and refund the full ; value in all bona-fide cases. “The past season has-, witnessed | some important developments In the j Industry, and recently I had the op- i portunity of attending the National .Dairy 'Conference in Palmerston North ; when these proposals were fully re- j viewed. It is gratifying to learn that the new Dairy Board is determined to proceed-with the re-organisation, of j the local market at the earliest pos- ! Bible moinent. Some dairy companies : have a large share of this market, and adopt somewhat drastio methods to prevent other companies securing, a ! footing. The advantage of the local, market will be apparent when 1 mention that the average wholesale J price for the season of butter on the local market (including the saving in f.o.b. charges which are incurred in | export) was just on lid per lb,, whereas the average price realised for export butler was BJd. There is, therefore, a substantial margin out of which to. pay . commissions, and still ■ show a profit. '

Guaranteed Prloee.

I “The National Conference had a i full discussion on the proposal relating to guaranteed • prices. 'On the surface this appears tempting to dairy farmers, hut it is not generally realised that there is no proposal relating solely to a guaranteed price for butterfat only. Ttfe proposal involves a guaranteed price for all industries. N Figures which have been taken out show that, if -2d per lh additional were guaranteed to the various primary producers, the annual cost would be as follows:—Dairying, £4,000,000; beef, £1,600.000; mutton, £2,400,000; lamb, £2,600,000; wool, £2,400,000;. total, £13,000,000. “When wo ask where this total of £13,000,000 per annum is to come from, wo receive only vague statements, and the only thing we are certain about is that it would have to be found by the people of New Zealand. However difficult the present position may be, dairy-farmers would be illadvised to support any proposals which would placo them in a worso position than the present. Undoubtedly, the dairy-farmer is in need of I higher prices or lower costs, and the soundest method by which ho can be helped is by a rise in the price-level of his products on the London market, lln this connection, the reports from j London have had a better undertone I than has been the case for a long time past, and I sincerely trust that the I coming season will show a return to more normal conditions.”

Secretary-Manager’s Review. In reviewing the balance sheet the secretary-manager, Mr A. J. Sinclair, explained that the paid-up share capital had shown little chango from last year. Many suppliers did not qualify for extra shares on account of the lower production. The share reserve fund, comprised of savings from suppliers wiio did not .take up shares', had increased by £2l and now, stood at £2311. The interest reserve fund increased from £557 to £669. The amount advanced to suppliers was £3533, and sundry creditors were owed £620. Commenting on the assets side, Mr Sinclair pointed out that the value of machinery and plant had increased from £8272 to £11,454 as a result of purchase of plant. The financial position of the company had improved without any further accommodation from ihc hank. The company’s shares in the Auckland Farmers’ Freezing Company. £1227, were now fully paid-v° Unsold butter In the

freezer or on shipment was estimated at £25,‘513. Referring to the statement of sales Mr Sinclair said lochl sales amounted to £2557 compared with £3187 last year, which indicated that a larger proportion of butter had been exported; Sales of butter 1 exported.realised £118,945 and sales to suppliers yielded £2194.

The Average Advance.

The average advance' to suppliers, without cream_ cartage, share reductions or bonuses, was 7.91 d. It had been found that there was often a difference In the company’s advance and the individual supplier’s advance, but it was usually found that the supplier who had a higher advance had cows which came in earlier or obtained finest grade over a longer period. Tho cost' of cream; collection was . £2986 as against £2817 last year, an increase, despite the faot that less butterfat was collected. However, this was accounted for by the fact that the levy on cartage was reduced this year from £d to 3-16 d per lb.

Mr Sinclair criticised the action of some companies in publishing balance sheets which showed average advances but did not disclose cream cartage charges separately. His company followed the practice of showing the two figures separately. Boxes and parchment had cost £4382. There had been reports that the latest type of wired boxes was detrimental <to the butter and investigations showed that the complaints were to a certain extent - justified. There were two types Of wire boxes and It was 'the peeled timber type , which appeared to be causing the trouble. This year the company bad made arrangements with a Taumarunui firm for supply of reliable boxes by which the charge per box would be Is 2d compared with Is 2£d fast year. Mr Sinclair added that factory wages were £2187 compared with £2409 last year, the decrease being due chiefly to the 'reduction* In butterfat made. The wages cost per ton of butter was £1 9s Id as against £1 9s 5d last year. The speaker reviewed remaining charges and expressed the opinion that , the position disclosed was highly satisfactory. Reduction of Costs. Although handicapped by a smaller output the company’s manufacturing §nd overhead costs were the lowest .on record. 'Manufacturing costs •were £5 :18s lid (last year, £6 3s 9d); voharges to f.0.b., £3 15s 2d (£3 13s Id): overhead. Including depreciation, £1 9s' 7d (£1 ,;8s ltd); total, £ll 3s 8d (£ll 5s 9d). The average per cent for moisture' and salt and the average weight were, respectively, 15.70. 1.71 and 561bs 2.060z.5. In seconding the motion Mr G. Howoroft (Otewa) congratulated the directors on the balance sheet which he described as the best ever presented. He paid a warm tribute to the chairman and the other directors. Mr I. E. Glennie disagreed with Mr Sinclair that a reduction in local sales was a good thing. If there were more local sales the overhead charges on exported butter would be obviated Looal Market Position. Mr Sinclair agreed that there would be a better return If more butter were sold on the local market, but it was Impossible to get a payable share of the atrade as certain companies had a monopoly. It was for that reason that he had advocated that there should be a change in the system of selling on the local market. The average wholesale price for pat butter on the local market for the 12 months ended May 31 last was i0.82d per lb, whereas the return on export'butter was about 83d. He had collected 14 different wrappers from different parts of New Zealand and it was found that all the butter wrapped by them came from'one factory not 100 miles away. Dairy companies should receive a fair price for packing, wrapping and distributing but if there was any surplus he maintained that it belonged to the Industry and not to any particular dairy company. Mr Verity contended that producers should eat more butter. At present suppliers paid 3d per lb for butter more than what they received for butterfat and he they should receive a rebate as an Inducement for them to -consume more butter. . Mr Alexander replied that at present suppliers received butter at the wholesale price. He agreed that tho directors should investigate the suggestion.:, , Regarding a question about loans for shed ; improvements, Mr Sinclair said the matter had been discussed at a conference of dairy companies in Hamilton-recently and it was thought that the Government’s insistence on the loans being guaranteed by the dairy companies was unsatisfactory. Efforts to overcome this were being made. The report and statement tof accounts were adopted. Messrs C. M. Alexander and G. Spinley, the retiring' directors, were re-elected, Mr W. F. Woodward being unsuccessful. Mr O. O. Joufdain was re-appointed auditor. The directors’ remuneration was fixed at the same sum as last year. Mr Sinclair explained , the scheme from Tauranga for selling cream on the local market and pointed out that at present Government regulations prohibited such sale. To introduce the scheme it was desirable to have the regulations lifted. A resolution urging such action was carried unanimously. Warm and spontaneous tributes to the work of Mr Sinclair, his staff and to the directors were voiced before the meeting closed.