Memorandum submitted by W. Geoffrey Chapman
(DFoB 15)
We were with Milk Marque and then joined DFOB.
This was to be a business by farmers for farmers. I belong to
a farming experience on both sides of my family for generations.
At first the idea of DFOB appealed to me but soon it became clear
that the Board was taking a wrong course. I contacted the management
to complain. They were taking money from each farmer's monthly
milk cheque to build up a reserve for future development which
was O.K. BUT I was told that they were going to create a General
Reserve Account to which these monies would be credited. There
was to be no means of identifying who subscribed these amounts
and by how much. In other words they were to create a "black
hole" into which all these monies would be deposited. I said
I would be no part of this and would be obliged to advise other
farmers to do the same, leave and send our milk to other buyers.
The result was that John Cook, Chairman at that time, with David
Rees our area representative came to see me at my home for discussions
on two or three occasions. I made it clear that unless they created
shares in the company and at each year end issued these pro rata
to members in accordance with the year's monthly deductions from
each one the method of running the company was not acceptable
to me.
The upshot was the idea to create farmers capital
accounts and pay interest on the amounts each farmer had subscribed.
I pointed out that they were going to build up a massive amount
of debt on the Balance Sheet and that this method did not mean
that farmers owned the business as was intended. Nobody at Head
Office seemed to see that eventually the business would be overloaded
with debt. At this point, and with the farm safely in the hands
of my two sons I was offered a post as Company Secretary Accountant
and CEO in a company with various dealerships in motor vehicles,
Agricultural Implements and Tractors and a turn over of some £4 million
in which I became a Director. After installing VAT Decimalising
and being a good age to retire I left that company in safe hands
to return to the farm and resume my interest in DFOB. My wife
had invested in Preference shares and the 2012 Loan arrangement.
Soon after I attended a regional meeting at which DFOB was represented
by David Rees and Matt Sheehan. They brought a slide screen and
projector. The meeting was very well attended by local producers.
Having read in the farming press that DFOB was claiming to have
made substantial profits I was looking forward to seeing the figures
they brought. I was horrified to learn that what they were trying
to put over to members as profit was a figure which included all
the monthly deductions relevant to the period. I am afraid I stood
up and "Read the Riot Act". I told members in no uncertain
terms that H.O. were either trying to deceive them into thinking
the business was making a larger profit than was true or that
their monthly deductions were to be lost to them by the company
absorbing these amounts in reduced purchase prices paid to them
for their milk.
I had had considerable difficulty in getting
these two representatives to accept that that part of the monthly
statement showing the amount due to a farmer for his milk was
in fact a self bill invoice. They either didn't understand what
I was talking about or it was best that they pretended that they
didn't. However I put a motion to the meeting that the two "reps"
return to H.O. with a full detailed report of all that had been
said. The motion was unanimously carried and I was told afterwards
that if I had not been there they would not have been any wiser.
I told the "reps" that in my opinion the management
were not capable of running the business and it appeared that
the Board were powerless to challenge them if indeed they knew
what to challenge them about. It goes without saying that we never
had any reaction from HO nor any reply. This might seem a bit
long winded but I am 85 now and I have done my best to interpret
the facts as they were for you. I am not surprised that the business
has ended up as it has. By borrowing money from the banks excessively
to "grow" they tried to run before they could walk.
W. Geoffrey Chapman
September 2009
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