HomeMy WebLinkAboutThe Seaforth News, 1947-09-25, Page 6CANADA
PACKERS LIMITED
REPORT TO SHAREHOLDERS
The twentieth ;fiscal year of Canada Packers Limited closed March 27th, 1947.
The following ,are the key figures, setting forth volume and profit, with the
comparative figures of theprevious year: -
Year Ending
March 1947
Sales...._.........,...:..........................................„.»,».......,.„.... $204,068,650
Tonnage »...1,373,000,000lbs.
Profit after all charges except Income and
Year Ending
March 1946
$208,997,520
1,526,000,000 lbs
54,620,712
Income and E.P. Tax 1,699;208 2,809,931
Net Profit :. $2,059,6.44 $1,816,781
Note:
* 1, Tonnage, -weight of product sold, -was down „...,,,„ 10%
(reflecting an advance in average price of products sold of approxi-
mately 8%.)
3, While Profit before Federal Tax was down approximately ... $860,000.;
nevertheless, -because of the reduction in Income and E.P. rates
(applied to the lower Gross Profit) Net Profit was up approxi.
mately .:».:.......... ...:.. .....:. $200,000
The following is a comparison of the main items of the Profit and Loss Statement
with tate corresponding figures of the previous three years. For clarity in comparing
years, each item is also expressed as a percentage of dollar sales.
Out of each Sales Dollar there was paid: -
For Raw Materials
For Wages plus Salaries
For Services (General Expense) ...
For Materials and Packages ..........;:.....;
For 'react (Municipal, Provincial,
Federal)
For Wartime Inventory Reserve „.....
For Depreciation on Fixed Assets .„...-
Remainder, -Profit from Operations..
Income from Investments, etc, ......:.. .
Total Net Profit for the' year, on each
1944
83.60c
6.77
3.46
3.08
1945 1946 1947
82.35c 81.33c 80.21c
7.35 8.06 9.10
3.83 4.13 4,25
3.32' 3,76 4.06
1.59 .1.70 198 .98
.24 .25
.45 .41 .40 .43
99.19c 99,2- 1- c 99.16c 99,0- 3c
.81 .79 .84 .97
.01 .01 .03 .04
.82c .80c .87c 1.Olc'
The products handled by the Company fall into four groups, -viz: -
Live Stock Products, comprising all products derived from
Jive animals:-
Meats, -Beefy Veal, Pork products, Lamb and Mutton;
By -products, -Hides, Skins, Tallow, Bones, Tankage, ctc.
Tonnage of this group .
Outer Farm Products, comprising, -
Butter, Eggs, Cheese, Poultry, Frosted Foods, Fruit,
Vegetables, etc.
Tonnage »
Non -Paint Products,. comprising,-
Edible
omprising;Edible Oils, Shortening, Soap, Fish, Fertilizers, Stock
Foods, etc.
*Alanulacturing, comprising,-
Canned
omprising,Canned Meats (sold chiefly to UNRRA) and'Canncd Fruits
and Vegetables
Tonnage
460,000,000 lbs.
207,000,000 lbs.
576,000,000 lbs.
130,000,000 lbs.
1,373,000,000 lbs.
The outst:mding feature of the year's result was the extremely small profit derived
from the fist two groups, -viz. Live Stock Products, and Other Farm Products,.
Total weight of products in these groups was 667,000,000 lbs.
Net profit for the two groups was ..... ..... .................... $233,592:00
equivalent to „ ......................._-,_,.-»_,„,. 3%c per 100 lbs.
otherwise . 1/30c per Ib.
Profit as percentage of Sales ..»..,..,,__...».. „... ................... 1/6 of 1%
On the ether two groups, totalling 706,000,000 lbs., net profit was $1,752,673.00
equivalent to 24.8c per 100 lbs.
otherwise
Profit as percentage of Sales ......„,.»..,.,.....„......,._.:............... 2,6%
The very low profit on Live Stock and Other Farm Products was due to conditions
arising out 01 war controls. On all these products, especially meats and poultry,
supply was much below demand, and prices paid by black market operators were,
for long periods, above the .equivalent of the established ceiling prices.
During those periods, processors who respected the ceilings were forced either to
buy the live stock at prices involving loss, or to withdraw from operations. For
the regular firms in the Packing Industry to cease purchasing live stock was, of
course, impossible. Therefore, the losses had to be taken.
In this situation, the record of the Packing Industry as a whole was a highly
creditable one. With only ram exceptions, inspected packers, large and small,
scrupulously adhered to the regulations and did everything in their power to assist
the officials of the Wartime Prices and Trade Board,
On their part the directing officers of the Board made a strenuous and continuous
effort to enforce ceilings. But the task was a difficult one.
The difficulty was that of securing evidence. Only two persons, She seller and
the buyer, knew the facts of illicit transactions, As both these persons were ex-
posieg themselves to heavy penalties, they were most undependable Witnesses. The
record of the illicit transactions, in the accounts of seller and buyer, furnished no
evidence. Goods were invoiced at ceiling prices. Payments in excess of ceiling
were in currency, and were made 'under the counter'.
Fn the main, violations were confined to processors on the fringe of the Industry,
These persons found themselves in is. position to greatly increase their volume,
at margins of profit much higher than normal. The fact that thcy were spread
throughout the cities, towns and villages of all Canada made ^the task of catching
up with them a very difficult one. In relation to offences, there were extremely
few convictions.
Under war conditions, steps had to be taken to ensure an even distribution of the
available food. The necessary war effort could not otherwise have been sustained.
The Wartime Prices and Trade Board was set up for this purpose. It was directed
et the top by a group of men of the highest ability and character. The job they
did was one of the most essential of Canada's total war effort. On the whole
ht was highly successful. But its enforcement of ceilings in respect of food left
much to be desired.
The following notes are set down in the hope they may prove useful in the field
of animal products, if the necessity to establish controls should again arise: -
1. When food is scarce and purchasing power high, enforcement of ceilings
is a most difficult task. The public may unreservedly endorse the -principle
of price control, but public opinion, of itself, cannot be counted upon to
check illicit operations.
2. Only by an alert and firm Enforcement Branch, can controls be made
effecgve. The post of Chief Enforcement Officer calls for a man with
the highest qualifications of ability, courage and cool judgment.
3. In respect of meats, illicit transactions begin at the stage where the meats
pass from the processor to the retailer. But the retailer is clearly an
unwilling participant. He does not wish to pay more than the ceiling
price, and with intelligent leadership could be secured as an ally of the
Enforcement Branch,
4. Enforcement is bound to fail unless penalties are severe enough to deter
offenders. (A fine of a few hundred dollars is no deterrent to a. violator
who is making illicit profits of thousands.)
5. Cancellation of licence is the ultimate and the only effective deterrent.
This is a drastic penalty which should be imposed only in case of flagrant
and repeated violations, involving the head or principal officers of the
firm.
Only a few cancellations would be necessary.
'Although the foods processed. In this department are rare products, -meals, - vege
tables, /cults, nevertheless the operation is opo which does not foam a necessary, or
customary, part of packinghouse operations. The plant required for the processing1s
specialized and expensive, It, is for these reasons that these operations are, segregaed
as 'Manufacturing'.
One result of black market operations was that producers received a higher
price for their live stock than the equivalent of the ceiling.
It is only just to point out that this involved no breach of the regulations, .either
technical or moral, on their part: Their animals were sent to market as usual,
and were told on the market, openly, to the highest bidder. No other system
Was Possible:
The Wartime Prices and Trade Board wisely refrained from imposing ceilings
on live stock. This was tried in United States and proved completely unworkable.
In view of the extremely poor results on live stock and, other farm products,
it was fortunate that volume in the other two groups was high, and profits hormal
(one-quarter cent per lb,).
In the fourth group the chief product was one developed in the Laboratories
of Canada Packers, viz. Canned Blood Sausage. All this product was .sold to
UNRRA. As suggested by the name, the product contains a substantial per-
centage of cooked blood (front inspected animals). This gives it a high protein
content. Other ingredients add important calcium and carbohydrate values. Be-
cause of its high nutritional value, convenient form, and comparatively low cost,
Canned Blood Sausage was a very useful food for UNRRA distribution:.
Once this product had been accepted by UNRRA, the Canadian Meat Board
directed that the formula should be passed on to all Canadian plants .equipped
to produce it. Shipments of Blood Sausage formed a very important part of
Canada's total sales to UNRRA. During 1946 total shipments from Canada
were 63,000,000 cans.
While this quantity was small in relation to UNRRA's over-all relief shipments,
nevertheless it is gratifying that a. product developed entirely in a Canadian
laboratory should have .played even as substantial a part in the relief programme
of 1946.
With the winding up of UNRRA, orders for Canned Blood Sausage have ceased.
It was essentially an emergency food. Notwithstanding its high nutritional value,
and low price, its colour subtracts from its appeal to the civilian consumer.
The experience of this year proves again the wisdom of the Company's policy
of diversification, . In -1927 when Canada Packers was formed, live stock plu
other farm products comprised 79% of the Company's total volume, . In the
year under review, the corresponding percentage was 49%. More than half
the volume and 85% of the profit were contributed by groups three and four.
It will be recalled that following World War I, deflation of food prices set in
during July, 1920,-approximatelyeighteen months after Armistice Day. That
deflation was brought, about by the fact that, by July, 1920, food' supplies had
begun to catch up with effective' demand,
Following World War II, it was expected that the greater destruction of property
andthe greater displacement of population, in Europe, might result in a more
.prolonged period of dislocation. However, it seemed likely that the restoration
of normal food conditions might follow the same generalpatternas in 1919-20;
-i.e. a period of advancing prices, to be followed at some time either by a
slide or a collapse.
(It is important to remember that the world's food supply is produced from
year to year. If one year's crop is inadequate, hunger [perhaps starvation] may,
be the result. However, a bountiful world crop.in the following year can' at
once restore normal conditions. The hunger of the previous. year -does not carry
over.)
World War II ended with V -J Day, August 15th, 1945. That is a full two
years ago.
But, as yet, world food supplics have not caught up with demand. Prices of
most staple foods are not only above those of V -J Day, but, actually, in the case
of many essential foods, are all at an all-time high.
The following table gives a comparison of prices. (iin Canada) of animal products
and cereals from 1939 to 1947,
CANADIAN FARM PRICES, 1939-1947
Good Steers, live, Toronto
Hogs, B-1 dressed, Toronto
Lambs, live, Toronto .,..,».....
Chickens Miik Fed A,
Toronto .........................
Eggs, 'A' Large, Toronto
Creamery Butter, Toronto
Cheese, f.o.b. Factory,
Ontario.....................„.».,.,.r
Wheat, No. 1, Nor.,
Ft. Wm . ............».....,,...,,,, ,_
Oats, No. 2 C.W.,
Barley, No. 1 Feed,
Ft Wm .,.,...-,....;..
Corn, Ontario Yellow,
Average Average
March March
1939 1941
6.78 8.62 11.77
12.25 11.33 17.16)
32)*
9.10 11.14 15.91
Average Average
March March
1943 1945
24%
21%
2134
28%
20%
35
11 14%)
)*
59Yet 76)4
28) 35%
32%
33%
35)
11.54
17.80).
1.62)*
14.92
35
35
35)
8%)*
2234) 23)
1 )*
*
97)4 • 1.25t
51
5034^w:.. :61 %
86% ,
* Subsidies, Federal plus Provineial.
f Official Wheat Board price, March 1939, 80c.
Wheat Board to make participation payment in 1950.
§ Equalization payments.
It will be sten that each price in July, 1947 is at the high point of the eight-
year period.
But all these prices would be higher still except for the operation of controls.
The chief control exists in the fact that (by mutual governmental agreement)
Canadian foods are not permitted to move to the United States,
In that country, prices for the same products throughout the same period arc
shown in the following table.
UNITED STATES FARM PRICES, 1939-1947
(Chicago lvfarket)
51%)
10)§
64%)
22%) §
1.27
Average
July
1947
14.47
22,01)
.97)*
17.21
• 39
3954
50)4
25%)
3 *
1,55$
65
93
Is it possible to forecast the course of live stock prices in Canada for the years
immediately ahead?
No attempt at a comprehensive answer to this question willbe made. But all.
the following factors have a bearing,
Prices cannot continue to advance indefinitely, At some point they must.
level off, and at a later date a substantial decline scorns inevitable.
However, the immediate ' trend in Canada seems upward rather than down-
ward.
This is certainly the case in respect of Hogs. An advance of 2c per Ib.
in the price of Wiltshire Sides has been announced for September 1st. The
present Bacon contract with England would seem to ensure the maintenance
of the September 1st level until the . expiry date of the contract, -viz.
December, 1948.
As to Cattle, the fact that Steers in United States are selling at twice the
Canadian price would indicate that the immediate price trend might also
be upward.
It must be remembered, however, that the great Beef exporting areas of the
world arc South America and Australasia. In both these areas, Cattle prices
arc ntuelr lower evert than the present Canadian level, When transportation
facilities arc restored, prices of Beef on the open world rparkets may soon
be brought to a level based upon costs in the exporting countries.
In' the present period of acute shortage and record prices, it seems difficult to
recall that the ten-year period immediately before the war was one of burden-
some surpluses and ruinous ,prices.
The war crisis brought about a clearer realization of the fact that a nation's
chief asset is the physical health of its citizens. An understanding of problems
of nutrition has been advanced as in no previous period. Each nation will make'
the better feeding of its people a main.objectivc. Except for widespread economic
breakdown, the world demand for food will be higlier' than in the pre-war
period.
Whatever happens, it is unlikely that the ruinous food prices of the 1930's will.
ever recur.
Nevertheless, a time will undoubtedly come when food -surplus countries will
have to 'compete' for the available world markets. When that time comes, each
food -exporting country will be forced to offer itssurplus in the form of those
products which it can produce most. efficiently..
In the cast of Canada', -one of the chief food -surplus countries, -two products
stand out. These are the two food products which, above all others, Canada
can produce in competition with the world.
They are"Wheat and.Bacon.
There sums little danger of Canada reducing her Wheat production, But
the record of the last two years: is proof that a serious danger does exist in the
case of Hogs.
Between 1944 and 1946, inspected Hog killings were cut in half. Only by in-
creasing and maintaining Hog production can Canada make her Agriculture safe.
The main objective of Canadian agricultural policy should bo .immediately to
build up her Hog population. For her Wiltshire Bacon there is an immediate,
and continuing anarket, namely Great Britain, And Great Britain needs Canada's
Bacon more urgently than ever before.
Ontario and. Alberta arc the two chief Hog producing Provinces. In both these
Provinces the Departments of Agriculture have recently launched active cam-
paigns to stimulate Hog production. The Ontario Hog Producers' Association
and the Alberta Livestock Co-operative Limited have Joined actively in these
campaigns. It is to be hoped other Provinces will take similar measures, especially
Saskatchewan, Manitoba and Quebec.
•It is felt that this year a more extended reference than usual should be made
to Labour relations.
The Directors recognize, without reserve, that the first claim on the earnings
of the Company should be that of Employees, -the men and women of all ranks
whose working lives arc spent in the Company's service.
Plant. Employees are represented by their Union, -the United Packinghouse
Workers of America. With the Union, except at times when negotiations are
under way, relations have been cordial and co-operative. This is mentioned be-
cause widely published threats' to strike, each time an agreement is being negotiated,
may have given Shareholders, -and the public generally, -a wrong impression.
During the war period advances have been frequent and substantial.
Following is a summary of the advances:--
During
dvances:-During 1941, 1942 and 1943, Cost of MEN
of $4.60 per week, and for women 18.4% WOMEN
Living Bonuses reached a total formen
of their wages. In 1944 these were
converted topermanenthourly increases
of 9;c per hour. 7c per hr.
In addition to this the following
successive general increases were
negotiated: -
In the agreement of 1943 ......_..... 5 c per hr. 5 c per hr.
In the agreement of 1945 - 6.8%,
equivalent to ..r.. . 5 c per hr. 31/se per hr.
In the agreement of 1946 ......, ,.. 5 c per hr. 10 c per hr.
Total rate increases from 1939 to 1996 .. 29%c per hr. 25%e per hr.
In addition, there have been many upgradings and individual increases, These
with the above general increases have resulted in raising average rates per
hour as follows:-
MF.N WOMEN
August, 1939, average rate per hour ......... 50.8c 32,8e
March, 1997, average rate per hour ........ 88.1c fi3.5c
Increase . 37.3c 90.%r.
1.27 The average advance in hourly rates throughout all Canada, for
the same period, as published by the Dominion Department of
Labour, has been .... „
Steers, 1200/1500 lbs.
Hogs, light (live)
Lambs, live -
Chickens, Spring
Eggs, Standards
Butter, 90 score .,,..»,..,.».�
Average
March
1939
11,50
7.70
9.25
22%r
1634
23%
1134
70%
32%
47
51)4
Average
March
19}1
11,30
7.80
10.90
22)4
17%4
30%
1934
9134
39%
57
69%,
Average Average Average
March March July
1943 1945 1997
15.95 16.25 30.68
15.60 14.75 26.00
16.30 16.40 24.46
28 29 31
38 34)4 437/
4734 41)4 659
23% 33
1,49/4 1.7634 2.36ux
64%82)4 1.01%s
92 75
1.02 1. 0% 219 %a
The startling fact regarding the two preceding tables is that United. States and
Canada arc two of the chief food -surplus countries of the world. That prices
in these two 'surplus' countries should have remained at these record levels
is due to three main factors:-
1,
actors:1, The pull on North America supplies due to the acute shortage of food
in Europe. (This shortage is aggravated by the fact that political dis-
harmonies prevent certain natural movements of food;-e.g., grain from
Eastern to Western Germany.)
2. The fact that in United States and Canada, purchasing power, --and
consequently domestic demand for foods, -is at en all-time high,
3. The further fact that, in the face Of this record demand (export plus
domestic), production of live stock in United States and Canada seems
definitely headed downward. Inspected slaughterings of Cattle and Hogs
for the last three years have b^ecn as follows:---
UNITED
ollows -UNITED STATES
1944
1945
1946
Cattle
13 960,337 .
14,538,405
11,413,325
Hogs
69,0161982
',40,959,809
44,393,920
C.;N.1n,t'
Cattle
1,35.1,101
1,820,127
1,666,3111
Hogs
r 7116 4.11
/,1,727
1,253,511_
59,6%*
The increase in hourly rates does not, of course, represent a cor-
responding advance in 'real'' income, -that is, in income meas-
ured by purchasing power. Subtractions must be made for
increase in the cost of living, also for Income Tax;- the latter
offset to some extent by Family Allowance payments. It is prob-
able, too, the actual increase in the cost of laving is some-
what greater than that reflected in the official table of the
Dominion Bureau of Statistics, -viz.. .... . 3'1,8°/a
15%rt.
However, when all allowances have been made, the increase in
real income of Plant Employees, as compared to 1939, is certainly
not less than ,. . _ „ ,
And this in spite of a substantial reduction in number of hours
worked (1939, -average weekly hours 461%; 1946, -average
weekly•hours 42%). If hours worked had been the same, increase
in real income would have been at least ............ a ............. 22%.
Over and above these rate increases, important supplementary ]aril ilc ges have
been granted. These include:
after 1 year -1 week,
Improved vacation schedule; -now after 5 years -2 wrelts,
after 20 years -3 weeks.
Rest periods with pay -10 minutes, morning and afternoon.
Night work premium -5c per hour over corresponding day rates.
Guaranteed minimunt.of 37)4 hours work per week -or pay in lieu of work.
Pay for eight public holidays.
These suppplrmentary privileges represent an annual cote to the Company of
approximately. $650,000,
equivalent to ....
Following the practice of previous years, an ;moot (ant share of the profits was
distributed to Employees in the form of Bonus,
The euro distributed at the year-end was31,250,000,
(Bonus distributed in March, 1939, was -$216,00.)
The practice of profit sharing ]las been in operation for t ittecn fisral years.
Within that period, total profit-sharing payments hive been ... $8,910,000.,,
Total Dividends to Shareholders within the same period have been .... $9,550,000,
Total Sales for the same period have been $1,716,000,000.
J. S. McLEAN,
Presiden t,
Toronto, Aum•ist 29th, 1947.
•
*Preliminary figure for October, 1946, reported in Department of Labour News
Release No, 3,000 of June I9ut, 1947,
(Dominion Bureau of Statistics Cost of Living Index for July 1st, 1947, basis
August, 1939 equals 1110.
E'tn'a copra of this report are /available and so l
mailed, to anyone regtsestiag them, on
detve brtto Zoe, tvl l be
Canada Packers Limited, 2'orotfto 9.