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HomeMy WebLinkAboutZurich Herald, 1941-09-04, Page 6CANMA P ACKERS LIMITE REPORT TO SHAREHOLDERS The fourteenth fiscal year of Canada •Packers Limited closed March NWith, 1941. et Profit, after Bond Interest, Depreciation and Taxes, was $1,555,028,47 Equivalent (on 200,000 Shared of Common Stock) to $7.77 per Share. $1,667,809.78 Previous year $8.34 per Share. DIVIDENDS The Company was organized in August, 1927. a� Until April, 1935, no Dividends were paid on the Common Shares. At that time Dividends were begun at the rate per $3.00 per Share year (payable quarterly) of In July, 1939, and July, 1940, an extra Dividend was paid of $.1 00 per Share This brought Dividends for each of those two years to $4.00 per Share The Directors have decided the Working Capital position is now such that $4.00 per Share may be adopted as the regular Dividend. To give effect to this decision an extra Dividend was paid April ist, 1941, of 50c. per Share, and until further change, regular quarterly Dividends will be at the rate of $1.00 per Share, preceding year Increase Sales for the year were $110,291,839.97 'Weight of product sold, lbs1x 91, 28 ,352 Net PToolt 1.4% of Sales) to and to 14c per 100 lbs. that is approximately —.1/7 cent per lb. * * * * $88913,5251,116 19.5% was therefore equivalent 1.9% of Sales 18e per 100 lbs. 1/5 cent per lb. * * The following analysis of the Profit & Loss Account expresses the operations of the year h comparison with those of the previous year:— Year ended. Year ended March, 1941 % March, 1940 % Sales $110,291,839,97 100.0% $88,205,639.75 100.0% • Cost of products, chiefly Live Stock 88,959,695.51 80.7 Cost of materials and packages 3,279,579.72 3.0 Salaries and Wages, 8,879,264.37 8.1 Including Bonus Expenses, - Selling, Advertising, Re- pairs, and general operating costs _. Bond 'interest Taxes Total cost of product, plus Expenses Wartime Inventory Reserve Depreciation on Fix- ed Assets 4,612,385.85 69,825.00 1,575,637.94 107,376,391.39 380,000.00 907,656.60 108,664,047.99 ,Profit from Opera- tions Income from Invest- ' ments Write-off of Invest- ments Net Profit $ 1,5� 55,028.47 1.4% $ 1,667,809,78 1,9% 1,627,79118 4,037.00 76,800.51 4,1 1.4 97.4 .S .8 98.5 1.6 69,767,159.36 2,461,790.30 7,738,780.98 3,808,775.20 95,564.79 1,194,515.13 '79.1 2.8 8.8 4.3 .1 1.3 85,066,585.76 96.4 579,000.00 .7 898,081.71 86,543,667.47 1.0 As late as July 1940, the Ministry advised they wished, --and would con- tinue to wish, --from Canada, not more than 50,0 mats. Canadaweekly reserves This advice was very disturbing. Not only had in the freezers, but all forecasts agreed that in the approaching crop yeted ar (beginning September 1940) the increase in the number true, Cf anmarIcanted would be not less than 25%, If those forecast pa need an export outlet for '70,000 cysts, of 13acon weekly. (It was under these conditions the second Bacon Contract,—referred to in the next section,—was negotiated,) 1940, the Cana- Tlie situation was finally cleared. In early August, ,ts to a level dian Bacon Board received permission to step up s ipinea which would clear Canadian storage stocks by the end to e September.aThe, e fear was thus removed that heavy reserves would have the conning crop year. SECOND YEAR 1st, 1940 to Aug. 31st, 1941 98.1 1,661,972.28 1.9 5,837.50 Sept. An increase in marketinga,was expected of approximately 25%, ally, the increase proved to' be 31'%, Total marketings (second year) were 6,100,499 hogs Total marketings (first year) 4,640,762 Increase 1,459,737 After providing for normal; domestic consumption, this made able for export approximately 70,.000 cats. weekly. THIRD YEAR ' Sept. 1st, 1941 to Aug. 31st, 1942 Actu- avail (b) That the price should be in no way influenced by the urgency o.. British need for ,Bacon, Tia war is Cenada'e war as well 114 Britain's, and to suPpy the sorely needed Bacon is one of Canada's first duties, In the discussions, Canadian negotiators will also have in mind eon. siderations which go beyond the 'immediate centtact, When the war as over, Canada will be producing Hogs anada eeale lSuc r a1 exceeding l previous experience, Prior to the •wnada'. weekly. quota (under' the Ottawa Agreements) was48,000But her heaviest shipments in any one year hadbeen ,00 3 0 cwt'. weekly. 50,000 cwts. weekly. 74,000 eats. weekly. (1937) In the two war years, shipments haveen:— September 1st, 1939 to August 31st, 1940 September 1st, 1940 to August 31st, 1941 (August estimated) And in the coming (third) year Canada expeets to deliver115,000 eats. weekly, At the end of the war, Canada will have alsurplus production of at Bx ta'-. will be `leant ....100,000 cats, weekly, and for that sup us sea I the only outlet. Canada will then need a quota in the British market such as (in peace time) has never before been thought of. In the main, quotas ult of discussions involving economic give and take;— Owing to conditions .to. be mentioned later, no increase in production is expected in Ontario and Quebec. In these. Provinces some well-informed persons look for a slight decrease. In the West there will undoubtedly •be another substantial increase, except insofar as it may be•,lirnited in certain areas by an unfavourable crop. An average estimate of, the total Canadian increase for the coming crop year (over the second year).. would perhaps be 15%, 915 000 Hogs. equivalent to, approximately ti • - ••- If this estimate proves accurate, marketings during the crop year September 1941 to August 1942,wil1 be,.approximately .... 7,000,000 Hogs (2) BRITISH REQUIREMENTS StaiC :TTHE BEGINNING OF THE WAIT 'r_. * w • * • . are fixed as a res. but also an important element in such discussions is 'good will , At that time good will on the part of the British Government will have a high importance for Canada. There is another type of good will still more important. That is the good will of the British consumer. In the past, Canadian Bacon has held `second' place in the favour•of the British housewife. Danish Bacon came first. In this respect, the present is Canada's opportunity. `Canadians' is, now the only imported Bacon the British housewife can buy. More than ever before, it is important that now, during the war, Canadian Bacon should become established on the highest level of quality, flavour, and sizeability. Toward this objective a good deal has already been accomplished. In spite of difficulties in transportation (due to the slow speed of convoyed ships), Canadian Bacon to -day stands higher than ever before in British estimation. The improvements have been brought about by co-operation between Producers and Packers under very expert guidance by Officers of the Federal Department of Agriculture. Though little has been heard of it, this is one of the most important and far-sighted achievements of the war period. To some extent this subject has been dealt with in Section (1), So that a brief recapitulation 'tali;' be suffielent1940,the British Ministry of (a) From September;1.939,.to February Food accepted all the:Bacon• Canada wished to ship. (b) From February 1'40 t'b early August 1940, the Ministry rigidly limited Canadian shipments to' 50,000 eats. weekly. During this period it' was frequeictily stated no larger shipments would be required.' T'• In• November 1940,'" the 'Mm1s$xy agreed to take 70,000 cwts. weekly. The Ministry_ ,stipulated the sum paid for the 70,000 cwts. should not exceed that formerly paid for the 50,000 cats., but in the end. the sum paid was somewhat higher. By May 1941,, the situation had been transformed. Although Bacon was rationed 'to 4 ounces. per person per week (one-half pre-war consumption) Britain was receiving from all sources less than sufficient to fill the ration. From that date forward, Can- ada was urged to produce and 'to ship all the Bacon possible. This bald summary of the facts may appear to imply a criticism of the Ministry of Food. This is not intended. _In wartime, conditions change with great rapidity, and policy must be adjusted to the changes. Perhaps there was some delay in recognizing the inevitable implications when Denmark and Holland were overrun. .If so it is easy to understand. It must be remembered, Bacon -teas ',only one Of scores of food products, for 'the supply. of wwhich the. Mi Sti7 , hsd to lay its plans. (3) CONTRACTS BETWEEN THU`:MINISTRY OF'FOOD AND T,HE CANADIAN pVllaINMENT •Soon after the declaration of, azar, the British Ministry. of Food asked. the Canadian Government to quite a price on 40,000 cwts. weekly. After exchange of canes extending t ught several. weeks, the first contract was' cannpieted:' is terms were as wallows.---- • FIP.ST CONTRACT The increased volume was due to war conditions. Export volume showed the greatest increase. This was due to demand from Britain. In the domestic field, the increase was less but still substantial. The follow Ing table sets up the comparison with the previous year: -- COMPARISON OF VOLUME txg 'Exports 1941 To Britain. 138,682,956 lbs. To other countries 27,954,290 (Domestic Volume In Canada 892,762,340 In U.S. 31,863,766 1,091,263,352 1940 Increase 76,693,288 lbs. 81% 18,623,124 50% 789,638,081 28,296,623 913,251,116 13% 12% 19.5% The increase of 188% in Canadian volume is probably a fairly accurate ;measure of the increase in domestic food consumption. It is due to the 'increase of purchasing power, resulting from expanding industrial activity. The increased volume to Britain was due almost entirely to heavier shipments of Wiltshire Bacon, And since this Report will deal largely with !the subject of Bacon exports, it is well to set ap a framework for the idiscussion. The factors involved are: -- (1) Number of Hogs marketed in Canada. • (2) British requirements since the beginning of the war. (3) Contracts between the British Ministry of Food and the Canadian Government. (1) NUMBER OF HOGS It happened that just at the time war was declared, Canada's Hog population stood at (to then) a record level. (Space does not permit a review of the causes of this, but the subject was dealt with fully in the two .previous Annual Reports of this Company.) As the war began September 1st, it will assist in measuring its effect on Hog production if marketings are quoted in years September 1st to Anrgust 31st. (In any case this is the natural crop year, as the heavy Fall marketings begin in September.) Following is a table of Hog marketings for crop years 1929/30 to 1940/41, inclusive:— Crop nclusive:Crop Year— Sept. 1 to Aug. 31 Hog 1IIarketings • 1929 1930 2,493,339 1930 — 1931 2,334,320 1931 — 1932 3,251,916 1932 — 1933 3,097,048 1933 — 1934 3,073,251 1934 — 1935 2,975,316 1935 1936 3,195,056 1936 — 1937 4,141,158 1937 -- 1938 3,429,857 1938 — 1939 3,264,856 1939 1940 4,640,762 42.1%* 1940 — 1941x 6,100,499 31.3%* * Increase over previous year. x August 1941 estimated. FIRST YEAR Sept. 1st, 1939 to Aug. 31st, 1940 (c) (d) The amount of ause ofvtheainterest in tin this he tsubjeto cteon the part both acon contracts seemed necessary, of Producers and pubic. In the carrying throughthis contracts, these incomplete gfreview would bthe e without so some hadar vital part toe pay. And reference to the manner in which the job has been done. It is especially called for by the fact that not infrequent criticisms of the Packing Industry have been heard. The reasons for such criticisms are easily understood. The Prodslcer is constantly told that the price of Hogs hinges chiefly upon the outlet for the country's surplus. that,during the past year, the price of This is equivalent to sayingg Hogs has depended chiefly upon the British contract price. That price has been constant. And yet the price of Hogs has not been constant. At times it was higher than the contract parity. At other times may not fully When the price is above the export parity, producers understand the reason, but they naturally do not whose Hogs a Oain. the otherr hand, when the price is below parity, producers marketed feel they have a grievance. In both cases the explanation lies in the fact that other factors also have an influence on Hog prices,—at times a quite important influence, During the past year such factors have been:— (a) The dramatic advance in American Hog prices. (Between April and July, 1941, top prices at Chicago advanced fronn...8c low to..__12c high.) Fluctuating conditions of supply and demand in the domestic field. Within the past fifteen months there was one period in which Canadian housewives were urged to consume all the pork pro- ducts possible. Supply exceeded demand. During that period Pork products sold as much as ....2c per lb. below the export par- ity. At a later period exactly the opposite happened. In order to make larger quantities available for Britain the Bacon Board restricted the amount of Pork product whch could be offered for sale in Canada, first by ..__25% and later by a further __..25%. By reason of these curtailments, domestic supply was much below demand,.. and the price advanced above the export • parity to a maximum of ....2c per lb. .As to the manner in which the Packing Industry has discharged its obligations, certain facts are essential, and they are clear enough:— (1) The Packing Industry performs a vital service in processing the • Live Stock and distributing the resultant meat products. (2) Its obligation is primarily to the Producer. That obligation is: - to produce good meats by the most efficient processes, and to perform this service at a reasonable margin of profit. It can fairly be claimed the Industry has measured up to these obligations. In the year under review an unprecedented volume of Live Stock was handled. The product was admittedly good, particularly the vital export product. The reputation of Can- adian Bacon in Great Britain today stands higher than ever before. The margin of Profit for the whole Industry is not known, but in the case of this Company the margin was ..__ 1/7 of a cent per 1'b. For the total Industry, it would perhaps note1/10 of higher cent per lb: than (3) Most of the anomalies which puzzle the Producer are caused by the highly competitive character of the Industry. Nevertheless, it is this highly. competitive feature which is the Producer's chief safeguard. (b)) (c) equivalent, to Terni—November 11th,,;4939, to Octgber 31st, 1940. Quanity iced t take as, muchmo em :50,090 cwts. easlcould be used. . The my prom - Price— 91/1 per cwt. (112 lbs.) $18.02 per 100 lbs. f.a.s., (free, alongside) Atlantic Seaboard. When the contract was ivade, it was estimated that, for its total period, the price would work back to approximately ....9c per ib. live weight, Toronto (for Bacon Hogs), Actually the averageprice throughout the contract period was almost one-quarter cent per lb. less. I't`was ..8 7.7c. This was due to the influence of conditions in the domestic field. From April to August, 1940, the apparent surplus was . such that product had to be `forced' upon the domestic market. During this period domestic prices v. ere on a level much below the export parity. The contract price was,' a fair one. Xi to Beef t As in past years, the outlet For the five years preceding the far, average prices of Bacon Hogs, prices. Canada's was h Uni• ted to States. And if numbers alone were Toronto, bad been as follows tl k seemed less important than in the imine The increase in marketings during the first war year (42,1%) derived from breedings datingSeptember 1938 forward. It was due to causes leritirely unconnected with the war. f . However; it was fortunate the Hogs were available. For there 'was need of them all. In the early months of the war this need seemed by no means certain. Until April/May 1940 when Denmark and Holland were overrun, Britaiiin continued to receive large quantities of Bacon from the Continent. addition, because of the heavy Canadian marketings, very large quantities 41 Bacon were going forward from Canada. Total arrivals in Britain exceeded current consumption. The surplus was placed in freezers through- aut Britain, to be held as a food reserve. By February, 1940, all available freezer space was filled. The Min- . lady was actually embarrassed by the quantity of Bacon it had on hand. . instructions were cabled to cut down Canadian shipments to 50,000 cats, 'weekly. The surplus over 50,000 cats. had to be placed in freezers in anada. The quantity stored asa result reached its peak (31,000,000 lbs.) MaytSt 1940. For several months there was serious doubt as to whethernot hese Canadian reserves conid be cleared before the beginning of ter tt e`w crop seasonrnSSeptember 1940. 'h When Denmark and Holland were overrun (April/May 1940) it was ected that increased quantities would soot be needed from Canada. 'Nit reserves in. Britain were so large that this demand was long delayed, (b) e;. s, 4, * * Although this review is already long, a section must be added in respect of the Cattle Industry. Within the Live Stock field, Cattle are second in importance only to Hogs. dace the war has not seemed directly to affect Cattle has been shipped to Britain. for surplusdate considered, even thatoutlet pre-war year. Shipments to United States for the last four crop years have been as follows:— Crop Year Cattle Shipments Sept. 1 to Aug. 31 to United States 81,245 292,0.78 134,071 158,000 1935 " 8.94e per lb. 1936 T 8.43 1937 8.92 9.45 1938 1939 to Sept. 1st "_, Average 6.89c 1937 — 1938 It may appear that a price of 8:77 in a•a•rar year, was Iow in coin- 1938 -- 1939 parison with —8.89 for the five pee -war years. But two countervailing 1939 _. 1940 factors must be kept in mind -< 1940 u 19esti (a) But for the war, „• ivy delitieries, Canadian prices °Agust estimated would undoubtedly hat 'be:;,ii loner;- perhaps much lower. Throughout the whole te'r,Xn of this contract, Hog prices in AIthough. nambers have been reduced, these exports to L nited•Statas United States were much belba. those prevailing in Canada. , have been vitally important. It was because the Beef was needed in As against a Toronto 'price ter the year of :_.. $8.77 per 100 lbs., Canada that fewer Cattle were exported. Nevertheless, the outlet in. top Chicago Hogs in the aa.ne pealed sold for 5.94per 100 lbs. the United States for the surplus has been the factorwhich chiefly cteteriu- (average)• lied prices. The United States -Canadian Trade Agreement of 1935, and had a the subsequent modified Agreement of 1938, have had a value to Caci- SEGONOCUNTRA.CT adian Cattle Producers corresponding (in respect of the Hog industry) to the Ottawa Agreements and the later war demand for Bacon. Throughout the two war years, Cattle prices have steadily advanced - Cattle breeding and Cattle feeding have both been much more pxof;table than at any time since 1930. The following table indicates the advance in prices:— (b) Term— November lst,'1940, to October 31st, 1941, Price— equivalent to 80/per cwt. ``$15.82 per 100 lbs. f.a.s. Atlantic Seaboard, Quantity -70,000 ewts weekly. The conditions under whiclii .this: contract was negotiated have already, been explained, *. An '`apparent' surplus of bugs existed, and the price was fixed accord- ingly. The reduction in price proved ;discouraging to Canadian Pig Pro- ducers, especially in Quebec and Ontario, In these 1: rovinces many sows were marketed which otherwise .would have been- bred. To 'some extent the situation was relieved by bonuses paid by the Provincial Governments of these two Provinces. But at the 'end of six months the contract had to be revised,: The immediate cause of the revision was an advance in the price of American Hogs. In April the American market reached a level at which Canadian Hogs began to move South. This movement had to be stopped, and on May 2nd 1941 the contract was amended. ThMinistry of Food raised its price from 80/—per cwt. to 85/—per cwt. The Canadian Government undertook to pay whatever additional sum was necessary to prevent the Hogs moving to United States. To implement this clause, the following payments (by the Canadian Government) have been. necessary:- 7bc per 100 lbs. On June 2nd, 1941 . On June 24th, 1941, a further 76c per 100 lbs. 1 On july 23rd, 1941, a further, $1.00 per 100 lbs. At the present time, on every Hog exported from Canada,, the Domin- ion Government is contributing ....21c per lb. (Wiltshire weight). This contribution amounts to approximately --1$150,000.00; pea week, ' 1 THIRD CONTRACT Negotiations for the third contract are now in progress. The terms are as yet unknown, and only general comment in regard to it would be in place, This much may properly be said i ('a) That the price should be fair t4 Canadian producers, --indeed, such as to insure maximum pod:, 'tion, . (1) (2) Crop Year Sept. 1 to Aug. ,31 Average price for year, Good to Choice Steers 1,050 lbs, down, Toronto 1934 1935 $5.27 pea 100 lbs. 1935 — 1936 5.21 1936 — 1937 6.32 1037 — 1938 6.10 1938 — 1939 '7.556.28 1939 ---1940 8.4.5 1940 --1941* 'August estimated. This rather dramatic advance was duo to two major; causes:— Demand for Beef was greater than nominal. For this there were two reasons. (a) Exports of Bacon were heavy, and a domestic `vacuum', was created for Beef. (b) The very large number of men in military' camps set up a new and important 'demand' factor. In the face of this extra demand, supplies were barely normal, as will be seen front the following table of Inspected 1' illingsi Crop Year Sept. 1 to Aug. 81 1937 - 1938 1938 1939 1939 -- 1940 1940 — '.1941* Killings in Inspected Houses 912,355 870,096 884,053 915,000 '"August estimated, Canada produces, and must continue to produce, a surplus both of Hogs and of Cattle. And the prosperity of her Agriculture depends upon securing a satisfactory export outlet for those surpluses. (Continued on following page)