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HomeMy WebLinkAboutZurich Herald, 1940-09-05, Page 2A PACKERS- LIMITED ere had had ea part In baying the 'ecsuivalent" prinetple ester). - 31.920, and subsequent amendments, This Clarice had beea part oe the Custeme Regulations for 2,0 yens, Canadian Pack. - 3'16110, It Wanes nof only in reepect cat Meat exposes, but oe W Canadian manufactured nrodacts, leader th'Equiralerte Clause, Canadian Packers were clearly entitled to a Drawbeak of the Deity paid: - American Bacon was imported, -- fends valent Canadian Bacon exported, However, a complicatlon arose in respect o• f non -exporting Canadian Packers, Itasemen as they did not export Canadian Bums, they were not entitled to a Drawback of the Duty paid on American Bacon. Non -exporting Packers protested, and be- cauee of this the Drawback privilege was cancelled, Cancella- tion was made retreactive.The retroactive feature was clear- ly unfair, as the Customs Department had ruled that the Drawback applied, and most at the product had already been sold upon that understanding. It other reepecie exporting Peckers agreed with the relitg. (7) Mach of the discussion on the subject of Ascaerican imports overlooked the tact that the Canadian-Amecrican Trade Agree. nett was involved in the issue. This Agreement is of 'lege. value to Canadian Farmers, itasnauch as it peovieles the only outlet for Canada's surplus Cattle. Moreover, the discussion lost sight of the fact that, even ia respect of Pork Predects, the movement is frequently in the other direction, that is from Canada to United States. It is Indeed quite possible that within the neat few Ito/sties United States may be a very welcome outlet for some of Canale'e surplus Hog product. It has been so many times in the pest REPORT FOREWORD In the following Report, constant references are made to the •war. They have to do solely with its effect upon the Canadian Live Stock Industry, and the operations of this Company, . In the war, issues are at stake greater than any which inan- ktnd has heretofore been called upon to solve. But, for a discus- sion of them, a commercial report is not the appropriate place. The Directors who write this Report, and the Shareholders to when it is addressed, are keenly aware that in relation to those issues, the fortunes of a single Industry, -still more of a single business, -are a matter of small moment. Nevertheless, the war adds to, rather than detracts from, the importance of every unit engaged M essential industry. By the utmost efficiency of operation, an Industry best serves the Nation,as well as its Shareholders. The necessity, therefore, to attain such efficienee, never was so great as now, TO SHAREHOLDERS The thirteenth fiscal year of Canada Packers Limited closed March 28th, 1940, Net Profit, after Bond Interest, Depredation, and Taxes was $1,667,809,78 Equivalent, (on 200,000 Shares of Common. Stock) to $8.34 per Share. The regular Dividend, 75c per quarter, was paid through- out the year, and as in the ease of last year, an extra Dividend was declared, (and paid July 2nd, 1940) of $1.'00 per Share. Total Dividend e4.00 per Share. $800,000.00 Preceding year Increase Sales fox' the year were $88,205,639.75 $77,225,732.65 14.2% Weight of products sold, lbs913,251,116 800,768,592 14.0% Net Profit ($1,667,809.78) was equivalent to 1.9% of Sales and to 18c per 100 1b. of product sold, that is,' -slightly less than 1/5 per lb. - . . The following condensed set-up of the Profit & Loss Account, ex- presses the operations of the year in comparison with the average of the previous five years: - Average Year ended 5 years to March, 1940 March, 1939 Sales ct88,205,639.75 100.0% $71,368,937.94 100.0% Cost of products, chiefly Live stock 69,767,159.36 Cost of materials and packages 2,461,790.30 Salaries & Wages, including Bonus 7,738,780.98 Expenses,- Selling, Advertising, Re- pairs, and general operating costs 3,808,775.20 Bond Interest 95,564.79 Taxes 1,194,515.13 79.1 2.8 8.8 4.3 .1 3.3 Total cost of pro- duct, plus Expenses $85,066,585.76 96.4 Wartime Inventory Reseiwe 579,000.00 .7 Depreciation on Fix- ed Assets 898,081.71 1.0 Profit from Opet- tions Income from Invest- ments $86,543,667.47 98.1 56,845,044.67 2,099,654.25 6,251,740.21 3,512,035.58 155,793.08 504,331.92 79.5 3.0 8.8 5,0 .2 .7 $69,368,599.71 97,2 801,694.75 1.1 $70,1'70,294.46 98.8 1,661,972.28 1.9 1,198,643.48 1.7 5,837,50 - 95,083.01 Total Profit, includ- img Income from Investments $ 1,667,809.78 1.9% $ 1,293,726.49 1.8% . . . . . The chief (and original) business of Canada Packers is to purchase Live Stock, and to process and sell the products, -Meats phis By -Products, But mistereue stein-it:nary operations are also carried on, including the processing and sale of; - Butter and Cheese, Poultry and Eggs, Fish, Canned Goods, Soap, Vegetable Oil products, Fertilizer and Stock Feeds, Wool Puliery products (Wool and Skins), etc. Live Stock products constitute the bulk of the volume, and because the producers of Live Stock have a natural interest in the subject,a separate accounting is kept of the Profit on purely Live Stock operations. In the year under review, this Profit was equivalent to:- 101/aci per 100 lbs. of products sold, i.e. to just over 1/10c per lb. Broadly speaking, it may be said that the margin of Profit in the Beef division was less than average, and that on Hogs was greater than average. On total Live Stock products, the margin per 100 lbs. was in line with the average of the last 5 years, But the amount of the Profit was higher, because of record volume. The year under review began April lst, 1939. In retrospect it divides itself into two periods: - 5 months up to September 3rd, 1939, -when war was declared, 7 months, September 3rd, 1939, to March 28th, 1940. The first has been described as the period of the war of nerves. A constant throat of war existed. The demand for certain foods was active, due to the policy of Great Britain, France,and Germany, of storing re- eenve supplies. During this period the weight of product merchandised was ....10% greater, but Profit was somewhat less, than in the same period of the preceding year. The second period began with the declaration ef war. It brought an immediate step-up, both in volume and in margin of Profit. This improvement came in part from increased shipments to Great Britain, The increases consisted chiefly of three commodities, -Bacon, Cheese, Eggs. These increases, however,. were to some extent offset by decreased shipments of other foods, which were put under license, -and In some cases excluded, -by the British Ministry of Food. Such foods were Canned Goods, Dressed Poultry, etc. The chief improvement, however, both in respect to Volume and Profit, came from the increased Industrial activity within Canada, which began with the war ana` which expanded as Canada's war effort developed. Evi- dence of this is seen in the increased Volume of the second period (as compared with the previous year) -first period, increase ....10'% -second period, increase ....17.3%. The higher Profits of the second period derive not so much from advancing prices, (as was the case in the last war), as from the general quickening of industrial activity. In the main, prices of the chief products handled by this Company have not been advanced by the war. Cattle prices have been firm, but this has been due to two causes quite independent of the war: - (a) A high price level in United States, especially for choice geades. (b) Comparatively light marketings in Canada. Since the declaration of war, Canada's only exports of Cattle or Beef products have been to the United States. Hog prices since September, 1939, have, on average, not been higher than during the corresponding period a year earlier. (This, however, does not mean that the war has failed to hap the Canadian Pig industry. Very much the opposite is the case. Had it not been for the war, Hog prices in Canada would have been much lower.) But although there was no general advance in price levels, certain products., of which this Company held substantial quantities, did advance tepidly because of the war. Chief amongst these were the following: - Hides and Skins -of which there are always on hand the equivalent of about two months' take -off. Wool -stocks of Wilkie were heavy, because, for several months preceding the war, it had been very difficult te sell Wool in Canada. Butter and Cheese -At the outbreak of war storage stocks of these were at their maximum. Vegetable Oils - -of Web, because of their distant sources, it is neces- sary always to have on hand eeveral months' supply.: An immediate increase occurred it the inventory values of the above products of approximately $579,000, This advance at some time will have its counterpart in a (=respond. Ing decline. Therefore, instead of *being taken Up as Profit, the sum of $679,000 has been set up as a "Wartime Inventory Reserve." • Until the present, the war has had Many unexpeeted developments, In Great Britaibt there has been no scarcity of food. On the other hand, there has been a definite sca.reity of munitions and iniplements of War, At the mottient, the placing in Canada of enormous orders for muni - tittle has, to some extent, diverted attention from the role assigned to Canada in prewar phins,--thitt of the chief source of food, Cimada's Ag ricultural production is much .above that of the other Dominions, and her geographical position adds greatly to her importance in this respect. T he three essential foods which,by natural endowment, Canada is best fitted to produce are 'Wheat, Bawls and Cheese. And the Agricultural economy of Canada is geared specially to makt. her the source of these three pro- ducts, • With the experience of the last aver in mind, there was little thought that too much of any of these could be produced. And yet at this moment there seems a possibility of an embarrassing surplus of both Wheat and Bacon. From the point of view of Great Britain this may seem an advantage, --inasmuch as a nearby reserve . exists whichtcan be called upon ,at any time. But from the point of view of Canada, the prospect has some anx- ieties, For Agriculture is still Canada's basic industry, and Canadian econ- omic welfare hinges on the purchasing power of the Farmer more than upon any other factor. A Farmer cannot purchase other goods with Wheat or with Hogs which he is unable to sell, The Wheat situation does not come within the scope of this Report, and it is sufficient to say that with a carry-overgef 300,000,000 bushels, and a crop in sight of (peehaps) 400,000,000 bushels a problem faces Can- ada for the first time as to how its, Wheat can even be stored. No doubt the storage problem Will be solved, and when it is,' anxiety will be partly alleviated, for when, properly stored, Wheat does not deteriorate. With Hogs it is otherwise. Hogs must be marketed when ready, and the Meats into which they are processed cannot be stared for more than a limited time. In respect .of Hogs it should immediately be said that up to now no serious problem has occurred. All surplus production has been bought by the British Ministry of Food. Record quantities have been ehipped. The fact is, the war rescued the Canadian Pig producer from what otherwise would have been an embarrassing situation. It happened that just when war broke out, a marked increase in 'dlog deliveries was about to arrive upon the Canadian markets. By the terms of the Ottawa Agreements (1932) Canada had been given a Quota of 50,000 cwts. weekly. (Cwt. -112 lbs.) And, because of this outlet, Hog production had since then been the most profitable branch of Canadian Agriculture. But Bacon shipments had never reached the Quota, as is seen from the following table: - AVERAGE Weekly SHIPMENTS TO GREAT BRITAIN OF CANADIAN HAMS AND BACON .(Quota Allotment 50,000 cwts. weekly) 1933 12,281 " 1934 20,554 " a 1935 21,348 " a 1936 26,574 " a 1937 32,977 " 1938 ,091 " 1939 (to Sept. 1) 28,6'86 " It This failure to ship the allotted quantity- was not due to indifference. It was the result of a succession ,of crop failures in Western Canada. Hogs cannot be produced without Grain, and in large areas of the West, farmers bad no Grain. In 1938 the Western crop was large and well distributed. Many dis- tricts had feed for the first time in seven syears. Thousands of farmers swung back into Hog production. The sows were bred beginning September 1938, and it was realized that beginning September 1939, marketings would be much heavier, ei articularly in the West. But no one expected an increase so great as actually occurred. The extent of this increase is evident from the following table of average Weekly Hog Gradings:- • AVERAGE Weekly HOG GRADINGS 1933 All Canada. Eastern Canada 61,264 29,939 193468,426 25,474 1935 1936 57,102 72,029 • 26,169 36,143 1937 75,506 . 40,879 1988 62,304 ., 38,268 1939 (to !Sept. 1) 59,569 ''' 35,842 • 1939 Sept. 62,815 7.9% 38,518 Oct. 97,733 34.1 54,148 14.0 Dec. 86,561 52.1 36,965 27.3 464963:,525988965 etTov, 110,849 48,6 54,560 25.9 1940 Jan. 78,639 38,4 87,628 30.7 41,011 Feb. 93,014 45.6 48,446 27.5 44,568 Mar, 88,602 31.7 47,033 14,8 41,569 Apr. 95,319 50.0 53,694 43.6 41,625 JuneiViaY100,748 60.7 52,055 38.1 48,693 94.7 81,047 56.4 43,762 35.7 37,285 92.0 (Percentages - *indicate Increase as compared with previous year.) The fact is, had It not been for the war, Canada would last Fall have had a serious problem to market her Hogs. Because of the war, the moblem did not arise. During the months when the rums were heaviest (October, November, December) the British Minstry at Food willingly bought all the Bacon Canada was able to ship. In due course a contract was made between the British. Ministry of Food, and the Canad- ian Government. The contract was for 50,000 cwts. -weekly, but the Ministry agreed to take Jaeger quantities in ease they could be used. Actually., from September 1939 until January 1940, Canada shipped prac- tically all the Bacon of suitable type which she herself pradaced, and left herself without sufficient Bacon for domestic requirements. This deficiency was made up by importations from United States. However, about the middle of January 1940, et new and important phase of the export situation set in. The British Ministry notified the Bacon Board (which had been set up in Canada to administer the contract) that stocks of Bacon in England had become embarrassing. They requested that fee a per- iod, shipments should be restricted to the contract quantity. Later, - in the month ot February, - further notice to the Board stated definitely that ship- ments must henceforth be limited to the contract quentity of 50,000 owts, weekly, and since that date this limit has been strictly enforced. By this order, the whole Bacon position was transformed. Current mar- ketings were more than sufficient to provide the export allotment (50,000 cwts.) plus Canadian domestic requirements. The situation was farther COM - plicated by the fact that, in anticipation of continued unrestricted exports, large quantities of American Bacon had been bought and were coming for- ward. Because of the now restricted export outlet, and of the relatively low Deice of the American product, these importations, had they continued, would quickly have broken down the price of Canadian Hogs. The dilemma was a serious one. The Government, after consultation with the Bacon Board and the Packers, decided that steps must be taken to restrict American iraaorts. However, because of the Canadian -American Trade Agree- ment, such action could not be taken without full explanation to the United States Government. Considering the' difficulties of the satiation, the Canadian Government handled the matter with despatch. An agreement was arrived at, which was promulgated by Oeder-in-Council, that beginning February 26th, 1940, Amer - ken importations should be limited to the average of the period January to August, 1939, While the discussions were under way, Packers had agreed, at dthaectsuggestion 04 the Bacon Board, to disco/eel/sue purcha.ses of American pro- Sincegthat date, imports of American pearled have rapidly declined. Theee`has been quite wide comment in the press and elsewhere regarding imports of American Bacon, and it is worth while to state the facts which an as folletvs:- , • Western Canada 31,315 32,952 30,933 35,887 34,627 24,036 *•••se '4.13,727 • -7.0% 24,297 45.0% 71.7 80.1 77.8 46.3 72.2 57.8. 59.0 . - (1) During the time that unrestricted quantities of Canadiali Ba- con were being shipped to England, American Bacon had to be brought into Canada for domestic requirements. Otherwise shipments to England would have had to be cut down. (2) These imports (of American. Bacon) did not affect the price which the Canadian Producer received for his Plage. That was based upon the price received in England or Canadian Ba- con. (In April the price of Hogs in Canada broke, but this was 7 weeks Linen' American importations had been checked, and was due to the growing apprehensioe that the purchases of the British Ministry would not be sufficient to clear total Caneclian stocks,) (3) American Taiwan was not sold in Canada. as Canadian Paeon, nor at the Canadian Bacon peace. (4) Amerioan Bacon was not re-exported to England, even to the extent at a single pound. (5) Throughout, the disparity In cost es between Canadian and American Daeori led to complieatiots and complaints.- Never- theless, so long as imports continuedeall Packers were forced to handle Atnericat produet, Otherwiee.they could not have Met competition in the lbw price field. (0) 19aaerting Packers received a Drawback of the Duty which, they had paid on imported American product. This also has been a subject of considerable tomment. But the facts xis Very simple, The Drawback was made under a clause in the Canadian Customel Drawback Regulations, known as the Equi valeatt" Manse, covered by Order-in-Coebeil, of 25th Miel'ele Since the Ministry ot Food informed the Canadian Bacon Burl (in Feb- ruary) that shipments must be restricted to 50,000 ewes, weeely, several 1317., snits have occurred which vitally, affect Britain's ]3econ 14 -applies. On April 90. the Germans invaded Norway and Denmark, thus wetting off imports of Scandinavian Bacon, On May 10th Holland was overrun, thus cutter; off the, Dutch supplies. From that date forward Canada became the :Joie external source of Cured Wiltshire Sides, Further, because of the necessity of restricting iropertaticeas of seede, Bra. ash Pig producers have been enjoined to cut their herds to one-third, But notwithstanding all these facts, the British Minietry still interims tile! Canadian Bacon Board they do not wish heavier shipments from Canada, If heavier shipments are not taken, Canadian Hog producers will this Fail find themselves in a most embarrassing position.. Beginning in September or October, 1940, it is certain that Hag market - Inge will heavily exceed all previous recalls. The Canadian Farmer WV; prod .duced these Hogs in the belief that by so doing he was playing his 'eat in the general war effeet. Because of the experience oe the last war, everyone (in - chiding theeBritish Ministry oe Food) took it for granted that all the Hogs' which Canada weld produce would be needed. Present forecasts are that in the coming year (October 1st, 1)40 to Sep- tember 30th, 1941) Hog marketings will be 6,000.000 as compered to 4,827,000, in the present year (October lst, 1939 to September 30th, 1.940 - elegust-Sepd tember estimated). If this forecast is realized, the surplus available for export, will be approximately 75,000 cwts. weekly. For this surplus Great Britain is the logical buyer, and it is eareseetly hep - ed the British Ministry of Food will lay its plans to take all of it. This, it is believed, the Ministry can easily do. For, with shipments from Canada of 75,000 cwts, weekly, total supplies will be barely more than one - hale normal consumption, and will not exceed the total involved iu the reboil - 4 ounces per person per week.* *-NOTE.-Since this Report was set up in type, exports of Seems have, been stepped up for a period, It Is hoped this step-up rosy be the essrerenneri of an increased scale of shipments. It must always be kept in mita that Canada has no claim on lees British market unless, in addition to quantity, she also produces the qualisy of Hogs desired. During the last war, this fact was lost sight of. As that war progressed, Canada produced increasing numbers cif Hogs, but the quality deteriorated.: After the war, as soon as Danish Bacon was again available, Canadian :flaconl was pushed off the British market. Pig production in Canada is now mach more important than eee.r before, If, at the end of the present war, Canadian Bacon were again pushed off the British market, the disaster to producers would be one of first magnitude. The only safeguard is, daring the war, to produce exactly the type of Bacon the British. consumer wishes. So that, at the end of the war, the Bri- tish consumer will demand Canadian Bacon instead et refusing to at it. In the last ten years, substantial progress has been made in impeaving, the quality of Canadian Hogs. This has been done largely through the estabd lishment of testing stations in which the best strains are given R.O.P. (Record' of Production) rating. And this improvement is being maintained. One last step still remains to be taken. It has to do with the tetteabilitye of Canadian 13aeon. The British market demands Wiltshire Sides of lean typal weighing 55 to 65 lbs. At present only about 55 per cent. of the Bacou saippecli from Canada falls withix this range, as compared with 95 per cent, of Contin-, ental Bacon (while Continental supplies were still cosning). The present is Canada's opportunity. She is now almost the sole extereal source of supply for British Bacon, and this may =tines for a period of ona or two or three years. If, daring that period, Canada provides the British con- sumer with exactly the type of Bacon he requires, then. the demand at the end of the war might be for Canadian Bacon, and the dream of sixty years might be realized, Canada would find herself in the preferred positiee on the British market which Denmark has held for that length at time, To that end, one change in trade practice would contribute more than all others: -via that all Canadian Hogs should be marketed an a dressed weight bases. This would make possible accurate grading, both in respect ot quality and aizeability, and would permit accurate apportionment of peeminees the Se- lect Hogs, and penalties for undesirable types. The adoption ot universal: rail grading is a step whieth can be enjoined only by the Federal Department' of Agriculture, and it is to be hoped tbat no time will 'be kik in establishing this practice. nee. ........ Canada Packers Ltd., has now 5,500 employees. Durant the year !wider re- Vie-, Plant efficiency 'was further advanced This was reflected in enprove- ment in the quality of products, and at the same time reduction La the cost of producing them. In this advance, the Chief contributing factor has been the skill and co- . opeeatiou of the Company's workpeople. For this, Directors, on behalf ot th.a Shareholders, extend to employees of all ranks, their sincere appreciation and thanles. Directors had pleasare, daring the year, in welcoming to the Board an Employee Director, as authorized by the Shareholders at the last Armee/ Meeting. The first person elected by employees to this office is Mr. Geo, J. P, Ayers, a workman on the Beet Cooler Staff of the Toronto Plant. His fellow Directors have pleasure in testifying that Mr. Ayers' Cervices have been of high value to the Company as well as to the employees whom he specially preset ts. During the coming year, because of war conditions", tho problem of Plant efficiency will be one of steadily increasing difficulty, The loss of experienced men due to enlistments will be heavily felt. To meet thee difficulties as they arise, the Directors bespeak on the part of all employes% the saw:. spirit 01 loyalty and co-operation as in the past A copy of this Report will be mailed to each employee. At tee last Annual Meeting authority was also given by the Shareholders to appoint a Director representing Live Stack Producers. No appointment has yet been made under this authority. Advice has been sought of numerous per. sons prominent in Agriculture, as to a method ot seIettion which will carry the approval of Live Stock Producers generally. As yet ee such plan has beet arrived at. The Directors and Shareholders are sincerely anxious that such a plat may be found, and it is hoped that within the teeming year the appointment may be made ot a Director who will specianY represent Live Stack Producers, 'TORONTO, August 19th, 1040, S. S. MeLEAN, President Extra copies of this Report are rivailable, and so long as they last will be maned to anyone requesting them. Address to Canada Peaces Limited, Ten onto. VOICEOF E PRESS TWO GUESSES The censor allows you two guesses at the identity of that new place name in the news, "Ari Eastern Canadian Port." -Vancouver Province, -0-- WHAT AILS US What ails this continent is too many people in too many cars in too mach of a hurry going in too many different directions to nowhere for nothing. -Qtrebee Chronicle -Telegraph DIPLOMATS Weed inepeetors must be sup - 'orb diplomats. If weed inspectors in some municipalities teallY did their duty they would be drawn and quartered, -Farmer's /1.,:veeate. • THE CHILDREN'S CHANCE The character of meet (chil- dren) is influenced by environ- ment. &vial workers whs deal with neglected children Ste daily the miracle of astounding change come about' in a child. An ailing, cowed, inhibited, backward, anti- social little creature can he help- ed to turn into a robust, bright, ambitious, ingenious, ce•eatwe and Ivell adjusted boy or girl, 14 is literally. true that as a result of the good care that is given them, their own mothers cannot me- agniee them Thus if any British or refugee children who come here show marks of former nege led and lack of 'oppcetunities, they should, through the care and Understanding offered them in Canadian h 0 IteS, develop into healthy, useful citizens of the Empire.* --Toronto State