HomeMy WebLinkAboutThe Seaforth News, 1944-09-21, Page 2CANADA PACKERS LIMITED
REPORT TO
SHAREHOLDERS
The seventeenth year of Canada Packers Limited closed March
30th, 1944.
Both in respect of Dollar Sales and weight ofproduct sold, the
year established new records.
Sales were Y'^09,155,037.74
Previous high (Fiscal 1943) 0169,131,570.71
increase over previous high 22%
Weight of product sold, was 1,582,932,566 lbs.
Previous high (Fiscal 1943) 1,328,616,610 lbs;
Increase over previous High 19%
Dollar sales were three times, and weight of product sold, twice,
those of the last pre-war year. •
• • •
Profit after taxes and depreciation was $2,187,586.76,
Equivalent to .:....................
From this was set aside for Wartime
Inventory Reserve
Equivalent to
1.06%u of Sales
been the phenomenal increase in producltoe. The first word
should be a sincere tribute to the Farmers of Canada;
When Germany overran Western Europe in the early months
of 4940, one phase of the disaster was that Great Britain was
deprived of important sources of food. In this respect the most
serious loss was that two-thirds of, her external Bacon supplies
were cut off.
Canada was the only source from which those Bacon supplies
could be replaced.
An urgent appeal was made to the Farmers of Canada, and the
measure of their response is indicated` in the following table:-
TABLE 1
Prior to 1940, the .heaviest shipments of Bacon to.
500,000.00 Great Britain in any one year had been 192,000,060 lbs.
.24% of Saks
Leaving Net Profit $1.,687,586.79
Equivalent ; to .82%
i.e. 4/5 of 1% of Sales
Except that of the low depression year, -Fiscal 1932, -this is
the sinallest net profit in the history of the Company, in terms
of percentage of sales.
Nevertheless, because of the record sales, the sum of the net
profit was the highestbut one in the Company's history.
One other record was established.
Income and Excess Profits Tax was ........ $3,023,244.06
This was $600,000 above the previous high of Fiscal 1942..
Income and Excess Profits Taxes for the five
war years have been ' $9,531,025.76
In each of the war years, a sum has been set aside out of profits
for Wartime Inventory Reserve. The item this year is $500,-
000.00.
Several inquiries have been received as to the nature of these
items.
By the Department of National Revenue these items are treat-
ed as profits, and upon them full taxes have been paid.
And they are profits in every respect except one, viz. that all
or part of them are certain to be lost at some period following
the end of the war.
During the war, live stock prices have advanced to levels which
cannot be permanently maintained.
For example, present prices of cattle and hogs (on the Toronto
market), compared to those of the last pre-war year are: -
1939 1944
Good Steers (1,050 lbs. down)
Live weight $ 6.77 $14.70
6,1 Hogs -dressed weight , 14.90 17.20
As prices advanced, greater than usual profits were made. But
most of the excess has been paid to the Department of Na-
tional Revenue as taxes, There is no complaint regarding this.
In war time the Government must take the extra war profits.
However, when the decline comes in the post-war period, losses
will be made, the counterpart of the extra war profits.
From this there will be no escape.
The Wartime Inventory Reserve is set up as a butler against
these anticipated losses.
The sums set aside for this reserve have been:
Fiscal 1940 $ 579,000.00
1941 380,000.00
1942 1,310,000.00
1943 650,000.00
1944 500,000.00
Total $3,419,000.00'
Whether this total is too much or too little, no one at present
can tell. But the following facts have a bearing:
(9) To convert this year's inventory
(March 30, 1944) to the price basis
of the last pre-war year. (March 30th,
1939) would requirea reserve of .. $6,600,000.0.0
(2) In the deflation year 1920-21 follow-
ing the last war, the four Companies
which now comprise Canada Packers,
made a combined loss on operations of $5,500,000.00
• a
•
On January 2nd, 1944, the final payment was made upon the
Collateral Trust Serial Debentures. The Common Shares are
now the Company's only outstanding securities. This is an im-
portant event in the Company's history, and the occasion seems
appropriate for carrying out a plan which the Directors have
had in mind for several years, viz. to make possiblea wider
distribution of the Company's Shares.
To this end, Shareholders will he asked at the forthcoming An-
nual Meeting to approve a By-law to subdivide and reclassify
the issued and outstanding 200,000 Shares of the Company.
Each Shareholder will receive with the notice of the meeting,
a copy of the By-law which contains full ,particulars of the
proposal.
• • •
The year under review is the fifth war year.
There seems good reason to hope that the end of the war til
Europe may now be in sight: It is therefore an appropriate time
to look back over the war period as it has affected .the Live
Stock Industry, (of which the Packing industry is the marketing
branch).
The outstanding wartirl e feature of the Live Stock Industry has
Following the appeal of 1940, shipments have been as follows:
During .1940 344,000,000 lbs.
" 1941 460,000,000 "
1942 , 524,000,000 "
" 4944 (5 months estimated) 900,000,000 "
1943 560,000,000 "
This increase in exports of Bacon is all the more phenomenal,
when it is remembered: -
(a) that record increases have occurred also in production of
all other forms of live stock and live stock products, -
Cattle, Sheep, Poultry, Cheese, Butter, Eggs;
that these enormous increases have been achieved with
a farm population reduced 26 per cent. (Labour Gazette,
May 1944).
• • •
Apart from the Farmer's patriotic response, three factors have
been important in bringing about these phenomenal increases
in live stock production. They were:
(1) that for live stock and live stock products there has been
an unlimited demand, whereas until recently cash outlets
for grain have been restricted.
that throughout the war period there has been a substan-
tial extra profit in marketing grains through the medium
of live stock, -as against selling them in the cash market.
that throughout there has been the stimulation of ad-
vancing prices. The measure of this advance is seen in
the following table, which sets up the average price per
100 lbs. (Toronto market) of cattle and hogs, for the
period 1934 to 1944: -
TABLE 11 TORONTO MARKET
(b)
(2)
(3)
Increase in price 1939 -1944 -Cattle 73%; Hogs -A's - 61%
The combined effect of the increase in production, plus advance
in price, is reflected in the following table (Dominion Bureau
of . Statistics) :-
TABLE 111.
Cash Income from Sales of Live Stock
1939 $495,386,000
't940 245,243,000
1941 320,900,000
1942 383,400,000
1943 449,716,000
Increase 1939 to 1944 $254,000,000
Number of Canadian farms,
approximately' 700,000
Estimated number of farms selling live
stock S00i000
Average increase per farm, '1939 to 1944 $508
The above table is the record of the sales of Live Animals only.
In addition, -Animal Products comprise Poultry, Eggs, Butter,
Cheese, Milk, Wool, Fur Farming. The complete picture is that
of Animals plus Animal Products, as shewn i;n the following
table (Dominion Bureau of Statistics)
TABLE 1V
Cash Income from Sales of Animais plus Animal Products
1939 $364,224,000
1940 , 428,503,000
1941 558,808,000
1942 71 8,166,000
1943 834,184;000
Increase 1939 to 1944 .... , $470,000,000
Estimated number of farms selling
600,000
animals 'and animal products
Average increase per farm 1939 to 1944 878:1
In the marketing of live stock, the Packing House is an essential
link. For live stock as such cannot be consumed. The Producer
sells his animals to the Packer, who processes them and markets
the products. The Packer, in short, is the Farmer's marketing
agent.
11 follows that the operations of the Packing Industry are of vital.
interest to the Producer. Unfortunately, no complete Profit and
Loss record exists for the whole Industry.*
In cases where information is lacking for the Industry as a whole,
the records of Canada Packers will be Used. 'These have -been
published in full, each year since the formation of tie Company
in 1927..
Because of its importance than of Canada Packers, for the year
under` review, is here reproduced in simple form. •
TABLE V
The statement shows the distribution of each $100.00 of Sales."
Out of each $100.00. of Sales, the following -
sums were paid: -
To Producers, for live stock -
To Suppliers $3.08
'1'o Employees 6.77
To Service Organizations .. 3.45
To Bondholders .01
To Taxing Authorities , 1.59 r
The above items were paid out to pet•-
sonother than shareholders.. They total $98.50
The remainder was retained by the Com-
pany for the benefit, of Shareholders 4.50
Add income from investments .01
883.60
14.90
Gross Profit out of each $100.00 of
sales
From this sults of $i.51 there was set aside:
For Depreciation 45
For Wartime Inventory Reserve .24 .69
$1.51.
Remainder, Net Profit
Out of this remainder, dividends were paid
to Shareholders
The balance was retained as working capi-
tal for the extension and improvement of
the business
.82
.39
.43
* The Dominion Bureau of Statistics publishes an annual review
"Slaughtering and Meat Packing."
This review contains much useful iinformation, but includes no state-
ment of profit of the Industry as a whole,
Such a statement could easily be added, and the value of the report
thereby greatly enhanced. Publication of total results need involve no
disclosure of the results of individual firms.
This story of the year's operations is reduced to still simpler
terms, if condensed and transposed as follows: -
TABLE VI
Packer's Selling Price $100.00
minus Operating Expense $14.90
minus sum retained by
Packer 1.50
16.40
A
13
C
leaves a remainder which
is paid to, the Farrier
for his live stock $ 83.60 D
(For convenience in reference, these items are designated
A, B, C, D.)
Sales from the processing of live stock comprise only about 60 per cent
of the business of Canada Packers, Other Canadian farm products cons -
prise a further 30 per cent,
In the calculation of Tables V and VI it is not feasible to segregate
the percentage of the dollar paid for live stock only. The margin of
error is small. The basis of the calculation is the same each year; so
figures are comparable from year to year.
It is hoped that every Farmer who reads this report will carefully
examine Table VI.
In it is condensed the `economics' of the Live Stock Industry.
The Live Stock Industry is a joint operation between the Farmer
who produces, and the Packer who processes and sells. Much
discussion regarding the Industry seems to take it for granted
that the interests of the Producer and the Packer are opposed.
The fact is their interests are not opposed, but parallel.
As to the interest of the Producer, there can be do doubt. He
wishes to get the highest possible return for his live stock, -in
other words he wishes that Item D should be as high as
possible.
The factors which bring this about are revealed in Table VI:
They are:-
1, That Item A, -the total sum for which the products are
sold, -should be as high as possible.
In this at least, the interests are parallel. For the Packer
constantly strives to get the highest possible price for his
products.
That Item B, -the Packer's operating expense, -should be
as low as possible. In other words, that his efficiency should
be as high as possible.
It certain the Packer works constantly, m his own inteceat5
to improve his efficiency.
And in this he is working equally in the interest of the Pro-
.
3, That Item C, -the sum retained by the Packer,. -should be
one which the Producer cannot challenge.
Here, on the surface, theinterest of the Producer and the
Packer May seen opposed.
And it is true that if the Packer receives more lima he
should, to that extent the Producer receives less than he
should,
How much sloes the Packer receive?
No record is available for the total Industry. However, the
results of Canada Packers have hecto published annually
since the formation of the Company in 1927.
In the 17 years-
the
ears .the highest Net Profit was
the lowest Net Profit was .
average Net Profit for the '1
For the year under review, it has
been seen that Net Profit was
2 8% of Sales
.7% of Sales
7 years was 1.4% of Sales
e,re,i'�' k13itr6' y6, r'64
alreadyrarw-,.5;y�i
82 , i.e. 4/5 of 1 %n
Probably in no other major industry is the percentage of
profit so small. And to the Producer; It is only the-percano
tage which matters. The Producer is concerned with one
question only. That is: how much does he get hack out of
each sates dollar?
• • s.
(Continued on Neat 'Pagel
v.....1 a,as
runts
Good Steers
Premium tsr A's paid by
1,050 lbs.
flown
Live weig•hl
8,1
1)ressed
Toronto
-
Packers'
Province
of
Ontario
Federal
Uep't or
Agric.
Total
for A's
1934
$ 4.85
$10.95
-0 .65
011.60
1036
6.79
11.38
.65
12.03
1936 ------
5.04
11.25 •
.65
11.90
1937 -
8,72
11.93
.65
12.58
1938
5.97
12.65
;65
13.30
1939 - - - -
6.77
11.90
.65
12.55
1940
'7.68
11.43.
.65
12,08
1941 - - - - - -
8.70
1.3.26
.65
$ .65
.14.56
1942 - - - - - -.
1.0.29
15.69.
.65
.65
16.99
1943
11.76
16.87
.65
.65
1.8.17
1944 (7 months)
11.70
17.20
.40
.65
$1.95
20.20
Increase in price 1939 -1944 -Cattle 73%; Hogs -A's - 61%
The combined effect of the increase in production, plus advance
in price, is reflected in the following table (Dominion Bureau
of . Statistics) :-
TABLE 111.
Cash Income from Sales of Live Stock
1939 $495,386,000
't940 245,243,000
1941 320,900,000
1942 383,400,000
1943 449,716,000
Increase 1939 to 1944 $254,000,000
Number of Canadian farms,
approximately' 700,000
Estimated number of farms selling live
stock S00i000
Average increase per farm, '1939 to 1944 $508
The above table is the record of the sales of Live Animals only.
In addition, -Animal Products comprise Poultry, Eggs, Butter,
Cheese, Milk, Wool, Fur Farming. The complete picture is that
of Animals plus Animal Products, as shewn i;n the following
table (Dominion Bureau of Statistics)
TABLE 1V
Cash Income from Sales of Animais plus Animal Products
1939 $364,224,000
1940 , 428,503,000
1941 558,808,000
1942 71 8,166,000
1943 834,184;000
Increase 1939 to 1944 .... , $470,000,000
Estimated number of farms selling
600,000
animals 'and animal products
Average increase per farm 1939 to 1944 878:1
In the marketing of live stock, the Packing House is an essential
link. For live stock as such cannot be consumed. The Producer
sells his animals to the Packer, who processes them and markets
the products. The Packer, in short, is the Farmer's marketing
agent.
11 follows that the operations of the Packing Industry are of vital.
interest to the Producer. Unfortunately, no complete Profit and
Loss record exists for the whole Industry.*
In cases where information is lacking for the Industry as a whole,
the records of Canada Packers will be Used. 'These have -been
published in full, each year since the formation of tie Company
in 1927..
Because of its importance than of Canada Packers, for the year
under` review, is here reproduced in simple form. •
TABLE V
The statement shows the distribution of each $100.00 of Sales."
Out of each $100.00. of Sales, the following -
sums were paid: -
To Producers, for live stock -
To Suppliers $3.08
'1'o Employees 6.77
To Service Organizations .. 3.45
To Bondholders .01
To Taxing Authorities , 1.59 r
The above items were paid out to pet•-
sonother than shareholders.. They total $98.50
The remainder was retained by the Com-
pany for the benefit, of Shareholders 4.50
Add income from investments .01
883.60
14.90
Gross Profit out of each $100.00 of
sales
From this sults of $i.51 there was set aside:
For Depreciation 45
For Wartime Inventory Reserve .24 .69
$1.51.
Remainder, Net Profit
Out of this remainder, dividends were paid
to Shareholders
The balance was retained as working capi-
tal for the extension and improvement of
the business
.82
.39
.43
* The Dominion Bureau of Statistics publishes an annual review
"Slaughtering and Meat Packing."
This review contains much useful iinformation, but includes no state-
ment of profit of the Industry as a whole,
Such a statement could easily be added, and the value of the report
thereby greatly enhanced. Publication of total results need involve no
disclosure of the results of individual firms.
This story of the year's operations is reduced to still simpler
terms, if condensed and transposed as follows: -
TABLE VI
Packer's Selling Price $100.00
minus Operating Expense $14.90
minus sum retained by
Packer 1.50
16.40
A
13
C
leaves a remainder which
is paid to, the Farrier
for his live stock $ 83.60 D
(For convenience in reference, these items are designated
A, B, C, D.)
Sales from the processing of live stock comprise only about 60 per cent
of the business of Canada Packers, Other Canadian farm products cons -
prise a further 30 per cent,
In the calculation of Tables V and VI it is not feasible to segregate
the percentage of the dollar paid for live stock only. The margin of
error is small. The basis of the calculation is the same each year; so
figures are comparable from year to year.
It is hoped that every Farmer who reads this report will carefully
examine Table VI.
In it is condensed the `economics' of the Live Stock Industry.
The Live Stock Industry is a joint operation between the Farmer
who produces, and the Packer who processes and sells. Much
discussion regarding the Industry seems to take it for granted
that the interests of the Producer and the Packer are opposed.
The fact is their interests are not opposed, but parallel.
As to the interest of the Producer, there can be do doubt. He
wishes to get the highest possible return for his live stock, -in
other words he wishes that Item D should be as high as
possible.
The factors which bring this about are revealed in Table VI:
They are:-
1, That Item A, -the total sum for which the products are
sold, -should be as high as possible.
In this at least, the interests are parallel. For the Packer
constantly strives to get the highest possible price for his
products.
That Item B, -the Packer's operating expense, -should be
as low as possible. In other words, that his efficiency should
be as high as possible.
It certain the Packer works constantly, m his own inteceat5
to improve his efficiency.
And in this he is working equally in the interest of the Pro-
.
3, That Item C, -the sum retained by the Packer,. -should be
one which the Producer cannot challenge.
Here, on the surface, theinterest of the Producer and the
Packer May seen opposed.
And it is true that if the Packer receives more lima he
should, to that extent the Producer receives less than he
should,
How much sloes the Packer receive?
No record is available for the total Industry. However, the
results of Canada Packers have hecto published annually
since the formation of the Company in 1927.
In the 17 years-
the
ears .the highest Net Profit was
the lowest Net Profit was .
average Net Profit for the '1
For the year under review, it has
been seen that Net Profit was
2 8% of Sales
.7% of Sales
7 years was 1.4% of Sales
e,re,i'�' k13itr6' y6, r'64
alreadyrarw-,.5;y�i
82 , i.e. 4/5 of 1 %n
Probably in no other major industry is the percentage of
profit so small. And to the Producer; It is only the-percano
tage which matters. The Producer is concerned with one
question only. That is: how much does he get hack out of
each sates dollar?
• • s.
(Continued on Neat 'Pagel