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HomeMy WebLinkAboutZurich Herald, 1946-09-05, Page 7CANADA PACKERS LIMITED REPORT TO SHAREHOLDERS The nineteenth year of Canada Packers Limited closed March. 28th, 1946. The following is a comparison of operations with those of the preceding year: - Year Ended Year Ended March 1946 March 1945 Decrease Dollar Sales - - - $ 208,997,520 Tonnage - lbs. - - 1,526,000,000 Net Profit after Taxes and Depreciation but before Inventory Re- serve 1,816,781 Net Profit expresed as: Percentage of Sales 0.87% Per Ib. of Product sold-approx. 1/8c per Ib. $ 228,398,111 8.5% 1,698,000,000 10.1.% 2,405,811 24.5% 1.05% 1/7c per Ib. 17.1% 16.0% (During each of the war years, - as explained in preceding Annual Reports -a portion of the profit was set aside as Wartime Inventory Reserve. in year ended March, 1945, the amount set aside for this purpose was $581,000. In total the sums so set aside amount to $4,000,000. It is hoped this total will prove sufficient. Accordingly, in the year under review, no reserve has been set aside for this purpose.) The share structure of the Company is: - 400,000 'A' Shares which carry a cumulative preferential dividend of $1.50 per Share. 800,000 'B' Shares non -cumulative, present dividend 50c per Share. Net Profit ($1,816,781) therefore is equivalent to: -- On 'A' Shares $4.54 per Share. On all Shares $1.51 per Share. The table below sets forth the record of the year's operations in terms of Sales, Out of each Dollar of Sales there was paid: - This Year Last Year • For Raw Materials, chiefly live stock - 81.33c 82.35c For Expenses, consisting of wages and salaries, materials, packages, sundry charges and taxes 17.43 16.20 For Depreciation .40 .41 Total for Raw Materials and Charges - 99.16c 98.96c The remainder, Profit on Operations, is - .84 '1.04 Sundry Income, from Investments, etc. - .03 .01 Total available for Shareholders - .87c 1.o5c Set aside for Wartime Inventory Reserve - - .25 Net available for distribution Dividends paid Remainder out of each Sales Dollar, left in the business for its expansion and improvement .39c .87c .SOc .48 .39 .41c the operations of the Packing Industry are of importance to' all groups of the community. Inasmuch as meat is an essential food, the welfare of all citizens is involved, - as consumers. Their interest requires that the meats should be processed in the most palatable manner, end that all nutritional elements should be safeguarded. (In respect of nutrition, exigencies of the war period have led. to important advances. Food elements of high value are now being saved for human consumption, which formerly were u'ed chiefly in feeds for live stock. Most of these are at present being shipped to Europe in the form of canned meats, and are be'n;; distributed through the UNRRA organization.) Besides its interest as consumer, one group is specially interested on the economic side, - viz., the producers of live stock. In the year under review, out of each sales dollar, producers received 81.3 3 cents This is less than the return of the preceding year, which was 81.35 cents The lower return to the producer`` was due to an increase in the cost of materials and wages: - Last year 16.20 cents This year 17. 4.3 cents The sum available for Shareholders is also reduced :- Last year - - - 1.05 cents This year .87 cents V -E Day was May 8th, 1945. V -J Day was August 15th, 1945. So that, at the close of the Company's fiscal year (March 28th, 1946), the war in Europe had been over 101/ months; -that in the Pacific 71/2 •months, Nevertheless, conditions within the Food Industry were still being determined by factors deriving from war, more completely than in any war year proper. The end of the war found world reserves of food at the lowest level of modern times. On the other hand, it threw upon the Allies the duty of feeding the populace of enemy as wen as of allied countries. The food so urgently needed had to come from the surplus- producing countries. Of these, Canada is one of the chief. No one would claim that Canada has done all possible to cope with this food crisis. In a world in which hundreds of millions are undernourished, and in which scores of Millions are living on the verge of starvation, consumption of food in Canada is at a higher level than ever before. This is not due to indifference. In a country where food is abundant, it is easy to forget that, *Footnote Although the Producer received a lett, percentage of the Packer's Saks Dollar, nevertheless the actual prices paid for live stock were higher; as appears from the following table - Average Prices for Month March, March, March, July, 1939 1945 1946 1946 Good Steers, live, Toronto - - 6.78 .Hogs, 13-1 dressed, '.Toronto - - 1225 Lambs, .live, Toronto - - - 9.10 Eggs, 'A' Large, Toronto - - - 21.3/4 Creamery Butter, Toronto - - - Cheese, £o,h. factory, Ontario - 11 *Prices of Hogs, Butter and 'Cheese hick subsidies. 11.54 12.12 13.22 19.42t 19.35t 21,87f 14.92 14.94 16.91 35 35 46 431/2 44/'t 48%+ 26/t 2614f 26 4f de Federal and Provincial thousands of miles away, food is scarce, Besides, Canada is her- self feeling the pinch of scarcity in certain foods, especially edible fats and sugar. 'This fact tends to obscure her overall abundance. Canada's contribution has been substantial. She has curtailed (by rationing) her consumption of certain foods -- especially meats and butter. And in total very large quantities of foods have been shipped to Great Britain and Europe. For the year 1945, these shipments included:- Bacon ncluded:-Bacon - - - 447,000,000 lbs. Other Pork products 10,000,000 lbs. Beef - - - - 184,000,000 lbs. Cheese - - 133,000,000 lbs. Canned Meats - 95,000,000 lbs. Mutton and Lamb - 7,000,000 lbs. Evaporated Milk, Milk Powder and Condens- ed Milk - - - - 25,000,000 lbs. Shell Eggs - - 60,000,000 lbs. Dried Eggs - - 24,000,000 lbs. Canned Fish - - 57,000,000 lbs, 1,042,000,000 lbs. - 521,000 tons The above is the list of `protective' foods. Canada's major contribution in 1945, how- ever, was in the form of cereals. Shipments of these were: - Tons Wheat 181,300,000 bushels 5,438,000 Oats 13,400,000 bushels 228,000 Barley 4,000,000 bushels 97,000 Flour 9,900,000 barrels 970,000 6,733,000 tons Grand Total 7,254,000 tons In no previous year had the enormous potentialities of Canadian Agriculture been so fully demonstrated. Live Stock Marketings Compared to the year, Cattle slaughterings during 1945 were heavy, while Hog slaughterings were light. The following table gives the record of Canadian Inspected Slaughterings for the war years. 1939 1940 1941 1942 1943 1944 1945 Cattle . Hogs 873,000 890,000 1,004,000 970,000 1,021,000 1,354,000 1,820,000 3,628,000 '5,455,000 6,274,000 6096,000 7,174,000 8,766,000 5,684,000 Examination of this table reveals a striking divergence of trend as between Cattle and Hog deliveries. In the early war years, Hog marketings increased rapidly:- from apidly:from - - - 3,628,000 in 1939 • • to a maximum of 8,766,000 in 1944 An increase of - 5,138,000-142% Following 1941, a decline set in. In 1915 the decline was - - - This decline has continued in 1946. To the end of July, the comparison January to July, inclusive, 1945 January to July,_ inclusive, 1946 Decrease 1945 to 1946 - Decrease 1944 to 1946 - - 3,082,000 Hogs -35 % is:- - 3,625,000 Hogs - 2,601,000 Hogs - 1,024,000 Hogs -28% 3,049,000 Hogs -54% Cattle marketings, on the .other hand, in the early war years increased slowly. By 1944 the increase (as compared to 1939) was - - 55 `;, However, in 1945 inspected slaughterings of Cattle reached an all-time high, viz. 1,820,000 head This was an increase over 1944- of 34' and an increase over 939 of - - - 100',;; - In retrospect, this variation in trend (as between Cattle and Hog production) is easy to understand. In the early war years, the pressure in respect of live stock production was to increase Hog numbers. When Britain's sup- plies of bacon from Europe were cut off (in June, 1940), Can- ada became the sole external source of supply for Wiltshire Sides. Canadian Farriers were urged to produce every Hog possible. A further° factor counted heavily. On Canadian farms, and in Canadian elevators, was stored a vast quantity of grain, - wheat, oats, barley, - for which no cash market existed. The only way in which this grain could be converted to cash, was through the medium of live stock. Moreover, in those years, Hogs brought back to the Farmer a higher return for the grain fed than did other forms of live stock. This combination of factors culminated•in the phenomenal Hog marketings of 1044. However, by the middle of 1944, the reserves of grain had been much reduced. There was not enough feed in the country to continue Hog production on the scale of that year. Moreover, an eager demand had sprung up in United States (at high prices) for every bushel of feed grain which Canada was wiling to let go. By this time, the swing towards Cattle production had already set in. For Cattle could be produced (relatively) with little grain. They could be fattenedon the grass in Summer and car- ried over the Winter on 'roughage', - stay, straw, and corn stalks. Moreover, by 1944, Cattle prices had caught up with Hog prices. Cattle were bringing back to the Farmer a return equal to or better than that for Hogs. And the final and decisive factor was that the labour involved in raising Cattle was much less than that required for l -togs. Hogs had to be fed twice daily -365 days of the year. On the other hand, Cattle could be turned on to the pastures in Summer, and roughed in Winter. By 1944 the Farmer was feeling the strain of the war effort. In response to constant appeals, he had enormously increased production, in spite of the fact that farm manpower had been rduced more than 20 per cent. And he naturally swung to the less laborious form of live stock ,production. The result has been that, at the present time, Cattle marketings are .at an all-time high, whereas Hog marketings for the first seven months of 1946, while still 46% above those of 1939, are 54% below the peak of 1944. This reversal in trend, as between Cattle and Hog production, was natural. .But it carries a hazard to the long-term interest of Caadian Agriculture which the Farmer should have very much in mind. For Flogs and not Cattle are the keystone of Canada's Live Stock Industry. This statement is based upon fundamental economic factors. Canada can. produce Hogs in competition with the world. And she cannot so produce Cattle. Canada is a country of vast agricultural areas, and relatively sparse population. She produces, and must continue to produce, a great agricultural surplus. More than upon any other factor, her economic welfare depends upon the prosperity of her Agriculture. And, the prosperity of her Agriculture depends upon marketing the `surplus' through the medium of those products (a) for which an adequate world market exists; (b) for which the world price will return a profit to the Can- , adian producer. Those products are determined by Canada's soil, climate and geography. In the main, they are Wheat and Bacon. In the past (particularly in the 1920's) Canada has at times sought to market her surplus almost entirely in the form of Wheat. This policy brought disaster, because the world market could not absorb all of her Wheat. And, though for the moment the demand is unlimited, it would eventually bring disaster again. But world markets WILL absorb Canada's total agricultural sur- plus if presented chiefly in the form of Wheat plus Bacon. For Bacon, the open market of the world is Great Britain. For sixty years Canada has had a place in the British Bacon Mar- ket, but never better than second place, -and often worse The circumstances of the war have placed her at the moment in undisputed first position. And the maintenance of that posi- tion should be the main objective of Canadian agricultural policy. Is this objective attainable? The answer is:- Yes, but not without a careful and intelligent long-term plan. Such a plan must include:- 1. nclude:1. Constant improvement of the quality of Canadian Hogs. Much has been accomplished, but much remains to be done. 2. Improvement of methods of husbandry; - to produce Hogs at the lowest possible cost. In this the chief factor is the feeding of a balanced ration. 3. To increase production to a level - (a)'which can be maintained year by year; (b) which will permit exports to Britain in quantities suf- ficient to maintain Canada as her chief source of sup- ply. 4. To send the Bacon forward in even week -to -week ship- ments. The Canadian Meat Board has already proved that this can be done, a fact never before demonstrated. Of this programme the first and fundamental step is to reverse the trend of the last two years, and restore Hog. production to an adequate level. That level should be such as to supply Can- adian requirements of Por=k products and, in addition, provide shipments to Great Britain of 400/500 million pounds yearly. Prospect for Cattle Prices Cattle marketings are now at an all-time high. Does it follow, (from the argument of the preceding section), that in respect of Cattle production Canada is now in an unsafe position? Not, at any rate, for three years. The Minister of Agriculture has indicated in Parliament (March 26th, 1946) that the United Kingdom will require all the Beef which Canada can spare in 1946 and 1947 and probably in 1948, and that discussions were continuing for the extension of the current contract to the end of 1947. However, Canadian Beef can not hold a permanent place in the British market. For Canada can not produce Cattle in competi- tion with South America and Australasia. At some date, it seems likely that the pre-war situation will be restored, when two out- lets only will be available for Canadian Cattle - The domestic Beef market. 2. An outlet for a limited number of Cattle in United States. The domestic market will be a much broader one than in the pre-war period. In the last three years consumption of Beef in Canada has averaged 641/2 lbs. per capita per annum. The cor- responding figure for the three pre-war years was 55 lbs. This incree e in domestic consumption amounts to 112,000,000 ahs. yearly, equivalent to approximately 240,000 Cattle. And a :till further expansion of the domestic market is possible, through a programme of co-operation between Producers and Packers. The outlet in United States is restricted but most valuable. And it is hoped that when the time arrives to renew the (now sus- pended) trade agreement, an increase in this movement may be arranged. On the whole, the near-term outlook for Cattle prices in Can- ada is more premising than in any preceding 'peace' period. For the long future, however, the big fact is that Hogs and not Cattle are the livestock medium through which Canada's surplus must be clerred. Since the close of the war, efficiency of plant operations has sterdi:y improves. Tliis has been due chiefly to the return to employment of experienced workmen following release from the Armed Forces. An important additional factor has been the attitude of co-operation which has replaced the somewhat dis- turbed atmosphere of the war period. For this, the officers of the Company wish to express their thanks and appreciatirn to employees of all ranks. As in previous years, an important share of the profits was dis- tributed to employees in the form of Bonus. The sura distributed at the year-end was - - - - 81,200,000 That this was a substantial distribution is evident fain comparison with the following figures:- Net Profit was - - - 81,816,781 Dividends to Shareholders were •- - - 51.000,000 Since the policy of Bonus distribution was begun (1 1 years ago), total distribution has been - - 87,368,000 J. S. McLEAN, Toronto, August 23rd, 1946. P" esident. Extra copies of this report are availAlr aiul so long as they l<.st. will be mailed to anyone requesting them, Address to Canada 1'ad tu.s Limited, Toronto 9, Ont.