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HomeMy WebLinkAboutZurich Herald, 1943-09-09, Page 3c NADA TACKERS LIMITED REPORT TO SHAREHOLDERS FOREWORD In this Report, at various stages, four time periods are used: - 1. Calendar Year 2, Fiscal Year -of the Company; 52 vreelcs. Ending last Thursday rn March. Designated by year of close. e.g. Year under review is Fiscal 1943, 2, Crop Year -or Production Year. Beginning month of flush production. e.g. Flush production of Hogs begins in Sep- tember. Therefore, the Hog Crop Year is from Sep- tember to following August. Designated also by year of close, Hog Crop Year 1943 -is year from Septem- ber, 1942, to August, 1943. 4. War Year -The war began September, 1939. First War Year -September, 1939, to August, 1940. Second War Year -September, 1940, to August, 1941. Third War Year -September, 1941, to August, 1942. Fourth War Year -September, 1942, to August, 1943. Note -War • Year' is therefore co -terminous with 'Hog Crop Year.' The sixteenth year of Canada Packers Limited closed March 25, 1943. In respect of weight of product sold, and also dollar value of sales, new records were established: - Weight of product sold 1,328,616,840 lbs. Previous high (fiscal 1942) 1,228,029,942 lbs. Increase over previous high 8.2% Dollar value of sales $169,141,670.71 Previous high (fiscal 1942) $144,509,292.41 Increase over previous high 17% Net Profit (after Wartime Inventory Reserve, Depreciation and Taxes) was $1,611,417.68 Equivalent, On Sales $169,141,000, to .95% On Tonnage 1,328,616,000 lbs., to 12.1c per 100 lbs. Net Profit in relation to Sales, -.95% -was the lowest but one in the history of the Company. In the depression year 1932, Net Profit was .64% of Sales. The regular dividend of $4.00 per share ($1.00 quarterly) was paid throughout the year. The year was the fourth of the war period. (In fiscal 1940, there were seven war months, September, 1939 to March, 1940.) The following table sets up Tonnage and Sales for the four war years in comparison with the four prewar years. TABLE 1 Fiscal Yrar Tonnage Sales PRE-WAR YEARS 659,706,573 lbs, $ 63,686,883 774,270,797 72,699,619 836,420,547 84,145,596 800,763,592 77,225,732 1936 w -. 1937 _ .. 1938 - 1939 -... Average .. . 1940_.. 1941 .. w 1942 ...,. 1943 ..- Average.. .. ............ 767,790,377 lbs. $ 74,414,507 WAR YEARS 913,251,116 lbs. 1,091,263,352 1,228,029,942 1,328,616,840 1,140,290,312 lbs. Increase (average) 48% Increase fiscal 1943 over last pre-war 32% year (fiscal 1939) 66% 119% The last column of the above table shows the average price, per pound of product sold. In the last pre-war year (fiscal 1939), this price -per - pound was For the year under review (fiscal 1943), the corre- sponding figure was An increase of It is interesting to set up a comparison of farm prices same two years. The following table gives this comparison main farm products. TABLE 2 $ 88,205,639 110,291,839 144,509,292 169,141,671 $128,037,110 72% Average Price per lb. To provide a buffer against these losses, the Excess profits Tax Act provides for the setting up .0f,.a, Wartime Inventory 'Reserve. This , reserve is limited in scppe .. It ?}ray be set up only after the minimum tax (40%) has been"paid; also it may be set uponly in respect`of a volume equivalent to that of the last pre-war year. ,The need for such a reserve is indicated by the fact that, to convert this year's inventory to the pre-war price basis (that of March 1939) would require a res'er'"ve of $5,900,000. In the year under review, the Wartime Inventory 650,000. Reserve set up was The Consolidated Profit and Doss Account tells the story of the business in the simplest form. Each item in the Statement is express- ed as a percentage of total sales. The following table sets up a comparison for the fiscal years 1939 (last pre-war) and 1941, 1942, 1943. TABLE 4 Analysis of Profit. and Loss Years Ended March 1939 1941 1942 1,943 Sales $77,225,732 $110,291,839 $144,5.09,292 $169,141,671 (Jost of products, chiefly Live Stock Cost of materials and packages . Wages and salaries General Expenses Bond Interest Wartime Inventory Reserve Depreciation ., Total .cost of 'product, plus expenses Written off Investments Profit before taxes Taxes 80.5% 80.7% 2.6 3.0 8.9 '> 8.1 4.4 4,1 .2 .1 t3 1.1 .8 97.7 97.1 .1 2.3 2.8 .7 1.4 81.4% 83.64% 3.0 73 3.8 .9 .6 97.0 3,0 1.9 2.74 7.00 3.54 ,02 .38 .50 97.82 2.18 1.23 Net Profit 1.6 1.4. 1.1. .95 It will be seen that, in the yeai under review, -fiscal 1943, -out of each dollar of sales, there was paid for raw materials, principally live stock 83.64c This is a new and very important record. The previous high for live stock, -in fiscal 1942, -was 81,4e Compared to fiscal 1939,1the increased percentage to the producer is (83.64 - 80.6), 3.14%. Expressed in dollars,,, the extra sum accruing to the producer is (3.14% of $169,141,671)•;, $5,311,048. Another item in Table 4 which challenges attention is that for Wages and Salaries. Expressed as a percentage of _,sales, there' is a decline year by year. This does not mean that wage rates are lower. In fact, they have advanced substautially. But the percentage of advance in rates has been less titan the percentage of advance in sales. At the end of fiscal 1943, workmen at all plants but one had been granted the full cost of living bonus, --$4.25 per week, -and, in addi- tion, individual adjustments. which', averaged approximately, 4c per 9 6e hour. (At Vancouver, for special reasons, the cost of living bonus was 9 4a slightly less.) 10.10 Over and above this, the Regional War Labour Boards at Van - 9.6e 'couver and Edmonton have recently granted a further increase of 50 per hour. The Company declined to join in the application for these 9,7a increases. Following this action by the British. Columbia and Alberta Boards, it was felt that employees at other 'plants were entitled to equivalent advances. These have •been granted or are now under discussion. The decision of the British Columbia and Alberta Boards has im- posed upon the Company an, additional cost for wages of approximately $750,000,00. per year. A reference to labour would not be complete without mention of 11,2c the strain which has at tines been put upon plant workmen by reason of war conditions. 15% The appeal for increased, live stock production has met with a signal response from the farmers of Canada, -also under very difficult conditions in respect of manpower. The measure of that response is shown in the live stock deliveries (reported later in Table 6). However, owing 'to complications resulting from_ ceiling regula- tions, the increased deliveries, especially of. cattle, have come in a 9.75 10.1a 11.80 12.7e COMPARISON OF FARM PRICES, 1939-1943 Average March 1939 Average March 1943 9.6e 12.7c 32% for the for the % Increase 1939 to 1943 Wheat, No. 1 Nor., Ft. William 59Mtc 97a 63% Oats, No. 2 C.W., Ft. William 28% 51 79 Barley, No. 3 C.W., Ft. William 35% 62' a 76 Cheese, f.o.b. Factory, Ontario 11 20) 409 3)* Creamery Butter, Toronto 213 35 ) 100 • 8%)* Eggs, Grade A Large, Toronto 21% 33 53 Chickens, Milk Fed A, Toronto 24% 34 39 Good Steers, live, Toronto 6.78 11.77 74 )'+(ogs, 13-1, dressed, Toronto 12.25 17.12) 43 .40) * Lambs, live, Toronto 9.10 15.91 7ti *Subsidies. Federal plus Provincial. It is not possible to arrive at an accurate weighted percentage of increase for all farm products, but a glance over Column 3 in the above table would indicate that 60% increase may be taken as an approximate average. In addition to the comparison of sales volume (Table 1), Share- holders ( and the public generally) will be interested in a comparison of profits as between the war and pre-war periods. Unfortunately, no records are available for the Packing Industry ds .a whole. But the following table sets up the record for Canada Packers, TABLE 3 • -Fiscal Year Net Profit expressed as - Net Percentage Per Profit of Sales 100 lbs. PRE-WAR YEARS 1936.... $1,288,011 2.0% 19.5e 1937 .. ,. 1,522,662 2„1. 19.7 1938 ,. _ 1,100,559 1.3 13.1 1939 1,238,736 1.6 15.5 Average .- -- $1,287,492 1.7% 16.8c WAR YEARS _-_, ' 1940 ,, .- $1,667,809 1.9% 18.2e 1941 1,555,028 1.4 14.2 1942 .... 1,611,465 1.1. 13.1 1943 .. -, 1,511,418 .95 12.1 Average.. -- $1,611,430 1,3% 14.10 . The profits listed above are net,. after deduction of Bond Inter- est, Wartime Inventory Reserve, Depreciation, and Taxes. The principal deduction is that for Taxes. In the four pre-war years, Federal Taxes totalled $1,384,004,12 In the single year under review, Federal Tax (Income plus Excess Profits) is $1,843,664.65 For the four war years; Federal Taxes (Income plus Excess Profits) total $5,997,282.30 In war time, volume expands and prices advance. These are the conditions most favourable to profits. So profits (in war time) are high. It is the policy of Government. to take back the largest feasible share of these profits in the form of taxes, Such a policy is fair and necessary. The cost of carrying on the war could be met in no other way. I•Towever, at some. stage after the war, a reverse trend is hound to occur, Volume will decline, and prices will drop. The profits.of war time will then be replaced by unavoidable losses. quite- irregular flow. Over considerable periods deliveries have, been extremely light, with the result that certain of the plant gangs have had very short hours. During these periods, the attraction of higher wages elsewhere has drawn off many key workmen. These periods of short deliveries have in turn been followed by other periods of heavy deliveries. At these times the strain upon the reduced gangs has been very severe. The present month (August) is normally the month of minimum deliveries of cattle plus hogs, And even at the present time the prob- lem of processing the live stock is by no means light. In the coming Fall, beginning mid-September, the appeals of the last three years for increased live stock production will begin to take their full effect. It is expected that in•October and November, record deliveries of cattle, hogs, and lambs will arrive en the markets. How these record deliveries are to be processed is a problem which is causing much anxiety. For the first time in history the Canadian Packing Industry may find itself unable to handle all the live stock. Plant facilities are ample. The shortage will be that of skilled work- men. The Council of Canadian Meat Packers has had this subject up urgently with the National Selective Service. During the past two mouths, deferment has been requested for all key men. And some consideration has been given to these requests. But many men have been taken, The only possible method of avoiding a most serious crisis is that ,National Selective Service should provide replacements in large num- bers, and should assist in turning back to the industry, (a) those key men who have gone to other industries; (b) perhaps also, for limited periods, certain key men in Armed Services who have not yet left Canada. Only those engaged in the Live Stock Industry can realize how serious would be the crisis, if live stock, especially hogs, could not be processed when they reached market weights. 'The Packing Industry is an element (an important one) in the broader Live Stock Industry. The key element is the Farmer. It is he who determines what quantity of live stock shall be produced. Since July 1940, constant appeals have been made to the farmer to lucrease production, particularly of hogs and cattle. Higher prices have added further stimulus. To these appeals, the farmer has made a notable response. It is indicated in the following table of Slaughteriugs at Inspected Estab- lishments:- TABLE 5 Staughterings At Inspected Establishments Total Canada Crop Year Sept. 1 to Aug. 31 Cattle Calves Sheep Swine 854,953 67.4,963 793,724 3,186,740 887,312 690,706 '758,428 4,601,845 940,795 696,943 794,638 6,172,982 1,010,012 708,546 798,315 6,467,185 1198,886* 598,619* 887,048* 6,457,635* 1939 1940 (War Year 1) 1941 (" 2) 1942 (" I 3) • 1943 ( " 4)" increase from crop year 1039 to " " 1943 143,933 76,344° 43,324 3,270,805 17% 11% 5% . 103% "August, estima ted, ".Minus. Note 1 -The diminution in marketings of calves indicates, not so much a decline, as a prospective increase in meat production. The 'reason fewer calves were marketed is that a greater number were held on the farms to grow up into breeding stock. 2 -Although crop year 1943 shows a diminution, as compared with 1942, in the number of cattle (11,126) and of bogs 0,550), ---nevertheless the actual quantity of beef and of pork produced was greeter, inasmuch as the animals were heavier. 1`t'.9I.to.12) incrwaeases: its weight of meat produced (crop year 1948 over --- Beef 6,5 per emit, fork 6,5 ' 3 -'.fabler s is the record of Inspected Slaughteriu s. No rec'or'd exists of Uninspected i3Inugbterings, but in Crop year 1943 these were muck higher, both of 'cattle and lroge. It is the general, view, though no official record exists, that beef cattle population in Canada is now higher than at any time in ten years. As to hogs, a forecast of marketing4 for the first quarter of the approaching crop year has been issued by the Federal Departrnentor Agriculture. it is as follows: - TABLE B Forecast by Federal Department of Agriculture. Hog Marketings -- October, November, December, 1943 Percentage Forecast 1943 Actual 1.942 lucrease Alberta Saskatchewan Manitoba Total Prairies Ontario Quebec • 799,000 575,000 29.5,000 599,600 329,700 218,500 33.0% 74.0 35.0 1,669,000 1,147,800 45,4 Total Central Provinces 529,000 526,900 ,45 150,500 119,500 26.0 679,500 646,400 5.0 Total five Provinces 2,348,500 1,794,200 31.0 It is likely the unfavourable crop prospect in Eastern Canada may lead to reduced breedings. It so, the increase for the later part of the coming crop year will be less, There might even be a decrease. Recent Allied successes give ground for hoping that an Allied victory in Europe may come at an earlier date than had been expected. The problems of the, post-war period already call for study. What demands will. that period present to the Canadian Live Stock Industry? The discussions of the recent Allied Food Conference at Hot Springs give some lead as to the answer. In that Conference, forty-four Allied countries participated. The published reports may be summarized as follows: - (a) In the immediate post-war period the demand for food will be greater, not less, than at present. In that period, many occupied and neutral countries, now extremely short of food, must receive immediate supplies: Conunittess were set up at the Conference, to work out pians in advance tor these immediate host -war shipments. These relief shipments will need to be continued for a period of one or two years. (b) As to the long-range food problem, the Conference envisaged a policy of setting up higher nutritional standards in all Allied countries. it was the view of the Conference that if effect could be given to such a policy, the food problem would be, not how to dispose of surpluses, but rather how to pro- duce enough food to meet world requirements. Such a world policy, if practical effect can be given to same, would have far-reaching implications for Canada, which produces, and must for many years continue to produce, a large food surplus. But to set up adequate standards of nutrition in 44 countries (and many more, -for neutral and enemy countries would have to be brought in) is a vastly complicated problem. In every country new methods of food distribution would have to be introduced. It would be a pro- gramme which would take years to work out to completion. It is, therefore, simple common-sense that every existing outlet for Canada's surplus food should be assiduously cultivated. In the field of live stock, Canada has one chief surplus crop, and one established customer. The surples crop is hogs. The customer is Great Britain; -(the surplus is shipped in the form of Wiltshire Bacon). • in this market, before the war, Canadian Wiltshire Bacon was a second -place product. Danish Bac' n held first place. Canadian Wilt - shires sold at a price approximately 8 shillings per Cwt. below that of Danish. In respect of British bacon s'uppltes, the war imposed upon Can- ada a special obligation. from June 1940, when Norway, Denmark and Holland were overrun, Canada became Britain's sole outside source ot Wiltshire Bacon. Canadian farmers were urged to iucreae production to the limit: Their response is indicated in the record of bacon shipments. Exports to Great Britain in the highest pre-war year (1937) had been 192,000,000 lbs. This year, the objective is G75 million lbs. Shipments may fall short of this,' but will exceed 600,000,000 lbs. Alongside the increased production, for two .years there was car- ried forward a most successful campaign of hog improvement (led by the Canadian Department of Agriculture and the Canadian Bacon Board). By the Spring of 1942, Canadian bacon had reached a. standard ot quality and sizability higher than had ever before been achieved. Re- ports coming back from. England gave ground for the hope that at last Canadian bacon might become established in first place in the British market. (In addition to the popularity based upon improved quality and sizability, there was the strong emotional factor that Canada had come to Britain's help when bacon was not available from any other source.) What would it mean to the Canadian farmer if Canadian bacon were established in first place iu the British market? In addition to the greatly increased volume, It would mean an extra 8 shillings per Cwt. ($3.00 per hog) on all the bacou shipped to England. That, in turn, would mean an extra $3,00 per hog on all the hogs produced in Canada. (For the price of the total crop is determined by the price which can be obtained for the surplus.) Inspected killings in Canada this year will be approximately 6,500,000 hogs, 2,600,000 " Uninspected killings, at least 1.e. total hog production in Canada is now in excess of 9.000,000 An extra $3.00 per hog would mean to the Cauadian farmer an added income of $27,000,000 per year. This is the suns at stake in the issue whether Canadian bacon, after the war, shall occupy first or second position in the British market" Within the last twelve months the prospect of achieving first position has been jeopardized. The reason lies in the urgency of the British demand for bacon. The British Ministry of Food was very intent upon mainatining a four -ounce ration of Wiltshire Bacon. To do this, they required from Canada 675 million pounds yer year. To meet this requirement, the Canadian Bacon Board cut down domestic consumption to one-fifth of the Canadian production. Not- withstanding this, however, British requirements could be met only by finishing Canadian hogs to a heavier weight. At the urgent request of the Ministry of Food, this has been done. The result is that Canadian bacon is beginning to lose its accept - ante, not with the Ministry of Food, but with the British public. British housewives are beginning to think of Canadian bacon, as in the last war, as heavy, fat bacon. Consciously or subconsciously, the idea is being re-established in their ?winds that Canadian bacon is really a second-grade bacon. But that is not the only penalty. in the last analysis, the person who determines the quality of the bacon is the man who produces the pig. Twenty years have been spent in bringing home to the Canadian farmer the necessity for lean hogs and sizeable weights. The present request for heavier bacon is bound to blur the farmer's mental picture of the proper type of bacon hog. it is a much easier matter to break down standards than to restore them. AU these facts have many times been considered by the Depart- ment epartment of Agriculture and the members of the Bacon Board. In the emergency they have felt they must respond to the request of the Ministry of Food. However, the increased marletings of the coming crop year should make possible an early return to the standards already reached in the Spring of 1942, and thereafter a further sustained campaign of improvement. The sunt at stake makes this the most important single issue iu Canadian Agriculture. " As in previous years, a copy of this report will he sent to every employee of the Company. And, as in previous years, the Directors wish to express their appreciation and gratitude for the loyal and efficient work of em- ployees of all ranks. The Company's profit-sharing plan has been continued. The bonus distributed to Employees at the close of the fiscal year was $790,000.00 A reference at length has been made to the difficult problem which will arise in the coming months, of getting the work done. The processing of foods is ane of the most essential war jobs. The Directors feel they can assure Shareholders and the public, that the men and women who work for Canada Packers will not fail. TORONTO. 23rd August, 1943, J. S, I12cLEAN, President. Extra copies of this Report are available, and so long as they feet will be mailed to anyone requesting them. Address to Canedit Packers Limited, Toronto.