Zurich Herald, 1938-07-07, Page 6CANADA PACKERS LIMITED
REPORT -TO SHAREHOLDERS
The eleventh fiscal year of Canada Packers Limited ended March 31st,
Profit, after Depreciation, recfation, Boud interest, and Income
$1,100,559.48
Tale is 550 per Share
Equivalent, on 200 000 Shares, to • •• $. p
Out of this sum it ,has been decided to distribute, during
the current fiscal year, as Dividends ou the Common $ 600,000.00
Shares $3.00 per Share.
That is i1 let, 1937, to Novem-
The year began well. For the fast 7 months, -April
ber 1st, 1937, -Profits exceeded those of the previous year by $100,000.00. But
from Novembe.• forward Profits declined rapidly.
This
midsummer
id decline
Inht about by the Packingre Industrry ltheerece recession registered,
which set in
about m
'not so much in reduced Volume, as in a drastic decline in prices of certain
commodities, chiefly By -Products.
The following table illustrates the extent of this decline as between Sep-
tember let, 1937 and March lst, 1933: Price per lb.
Sept. lst, March 1st,
1937 1935•
Sc
14
314
Hides, Light Cows, Toronto
Calf Skins, "
Tallow, rc gg
151 a ..
241/1
5% 111/4131
Lard,
G,7 4.55
Vegetable Fats,
On these products alone, large quantities of which must always be carried
m necessary part ooperaCThie Loss inescapable.ers took an enWhen prrtory ices
ssof
arthan one-half Million Dollars.
again advance a corresponding Inventory Profit will be made.
The Plant extension programme, begun
commenced itn the years
ns agoVan s cormPiand
in January, 1933, when operations
That programme bas involved a total expenditure as follows: 304,091.81
Year ended March, 199366 $1,067,030.72
" 1
„ g• •� 1938 ,161,953.41
If the Canadian price could be brought up to the level of the Danish
price, the Canadian Producer would receive for 'his Hogs an extra
15/20 million Dollars per year.
To interpret market opportunities such as this to the iroducer, and to the
Government, is one of the Packer's chief duties, For he is the only person
in intimate contact with the Producer on the one hand and outlets for pro•
duct on the other.
From the point of view of the Producer, the year was profitable as to
Hogs and disappointing as to Cattle.
Month by month, average prices for Hogs were as follows:
(Bacon Hogs, f.o.b, Ontario Country points)
1934 1935 1936 1937 1938
3:100 8.180
8.24 7.93
8.15 8.16
8,02 8.40
7.81 8,50
8.52 3.90
8.71 9.89
8.89 10,27
8.13 10.17
7,66 8.37
7,24 7.85
7.86 7.97
A.-erage for ;ear 7.860 8.21c 8.090 8.70c 9.140
During part of the year the price of Grains was also high. To the Pro-
ducer who had to buy his feed, the relation between Hog and Grain prices at
times caused anxiety. However, most Farmers do not buy their feed. They
grow it on their Farms. And the Farmer who gets normal crops of Wheat,
Oats, and Barley, and converts those into Hogs on the basis of 9 cents per ib,
gets a good return on his land. Since January 1933, when the Ottawa Agree-
ment came into operation, Hog production has without question been the most
profitable branch of Canadian Agriculture,
As has always been the ease in the past, that Farmer has done best who
continued • • produce Hogs all the time. The unfortunate Farmer is he who,
throi h a -'ries of crop failures, has been forced out of Hogs. And there are
many such. The evidence of this lies in the Hog deliveries of the Prairie
Provinces during recent months.
HOG GRADINGS
Alberta Saskatchewan Manitoba Total -Prairie Provinces
Percentage
1938 Decrease
141,623 18.2%
120,837 30.1%
138,391 30.3%
101,640 39.5%
95,732* 37.0%
January
7.36c 7.81c 8.210
8.67
8.92 7.85 February
March 3.36 7.43 9,47 7.47 7.99
9.54
April 7.80 8,64 9.80 (estimated)
May 8.47 9.17
June 8.54 8.90
July 7.87 9.16
August 7.74 8.63
September7.25 8.19
October7.14 7.24
November
ovember
December 7.37 7:65
Total$2,533,075.94
From the time of its organization, in August, 1927, Canada Packers' main
objective, -continued for 7 years, -had been to build up Working Capital.
But it had always been recognized that the Company's operations must in time
extend to Alberta and British Columbia. The decision so to extend was made
in 1935. In addition, certain jobs of expansion and repair had to be under-
taken at the older Plants.
The buildings and equipment of the Company are now in excellent con-
dition. The new Plants at Edmonton and Vancouver are of the best type of
Packing House construction, and are also amongst the finest examples of
industrial architecture in Canada.
The completion of the Plant extension programme has involved a reduc-
tion in Working Capital, as follows:
Working Capi`al, as shewn in Balance Sheet March 26th, 1937 .,.• $6,842,769.72
Profit for the year $1,100,559.48
Depreciation set up $836,759.55
Transfers from Depreciation Re-
serves of amounts set up in re-
spect of properties sold during the 231,291.02 605,468.53 1,706,028.01
year
$8,548,797.73
Less
Investments in Plants ,.. $1,393,244.43
Less Book Value of properties
sold during the year 231,291.02 $1,161,953.41
600,000.00
Dividends
Serial Bonds retired 750,000.00
Transfer from Current to non -Current Assets 89,051.58 2,601,004.99
January
February
March
April
May
June
July
August
September 35,145
October 46,977
November 91,915
December 90,991
Working Capital, as shewn in Balance Sheet March 31st, 1938 $5,947,792.74
It is hoped now to settle down to another period of rest, so far as Plant
construction is concerned, and to start again building up Working Capital.
Total Salus for the year were $84,145,896.57
Total Tonnage 836,420,547 lbs,
The Net Profit, ( $1,100,559.4S ) is, therefore, equivaalentt to:-
1.3 percent of Sales,
appro..huatelY %c per lb. of product sold. •
The following table sets up an analysis for 4 years, in percentages, sheav-
ing how the total sums received from Sales were apportioned as between
cost of Live Stock, Expenses, and Profits:
March
1935
Cost of raw materials, principally
Live Stock 78.3%
Cost of materials and packages 3.3
Wages and Salaries, including
Bonus
Expenses
Interest on Bonds
Taxes
Total Cm. of Product and
Expense
Depreciation c Fixed Assets
Profit from operations
Income from investments
To'a1 Profit, including Income
from Investments
Year ended, -
March Mach March
1939 1937 1938
1937 1933 1937 1938 1937 .1938
77,698
85,138
106,704
94,352
54,891
94,297
56,645
49.939
Average
4 Years
78.6% 78.9% 81.2% 79.2%
3.1 3.2 2.7 3.1
8.8 8.9 8.8 8.6 8.8
5.6 5.5 5.1 4.6
5.2
.2 •1 .3 .7
.7 .3 .8 .6
1937
74,585 32,109 21,636 63,322 45,402 173,129
67,076 34,262 15,491 53,393 38.270 172,793
82,817 35,046 15,945 56,711 39,629 461
60,963 30,341 14,635 43,412 26,042 168,105
58,526* 27,376 12,249* 39,653 24,957* 151,924
33,600 45,783 173,680
23,798 36,840 117,283
18,562 21,712
16,995 27,153
24,450 38,489
39,972 62,519
29,465 50,940
90,203
79,293
109,916
194,406
171,386
TOTAL 914,692 343,967 345,955 79,956 539,932174,3001,800,679 598,228
*May estimated.
For the 5 months January to. May 1938, decrease of Hog 'marketings as
compared to the previous year have been: Number of Percentage.
Hogs decrease
104,816 23.4%
79,177 49.8
82,196 32.0.
Alberta
Saskatchewan
Manitoba
VOICE
of th
CANADA
THE EMPIRE
PSS' t
•�,.
,
THE WORLD
ATLARGE
CANADA The EMPIRE
Sunday Observance
In the interests of all parties
it is greatly to be hoped that the
unofficial compromise that has
been generally reached between
ancient laws and modern practice
will remain undisturbed. Public
opinion today is on the whole in
agreement with the principle en-
unciated by John Stuart Mill near-
ly a century ago that "the only
ground on which restrictions on
Sunday amusements can be de-
fended must be that they are re-
ligiously wrong; a motive of legis-
lation which can never be too
earnestly protested against." The
banning of harmless ways of em-
ploying Sunday leisure would drive
many people, not into places of
worship, but into Tar less in-
nocuous methods of utilizing the
day. Under modern conditions
there must' be a measure of tol-
erance and give and take on both
sides. Few in this country would
like to see a Continental Sabbath
•
involvingmerely another working
day for a vast number of people
whose vocation lies in serving
others. But an attempt by legal
enactment to restore the Sabbath
of the Puritans would be equally
unpopular. -Johannesburg Times.
Gold hoarding reported
in Belgium.
When the Howl Starts
The howl of the timber wolf
will be as nothing to the howl
that will go up if they start pull-
ing up railway tracks in Canada.
-Regina Leader -Post.
Total Prairies 266,139 30.8%
This decrease is due entirely to crop' failure. Many Farmers have no feed.
And in many districts there has not been water for Live Stock.
As this Report is written, Cash and. October Grains Equivalent art Farm quoted as follows:
Fort William u'
96.9 97.0 97.1 97.8 97.2
1.2 1.1 1.0 1.0 1.1
1.9 1.9 1.9 1.2 1.7
100. % 100. % 100. % 100. % 100.
.3 .1 .2 .1 .2
2.2% 2.0% 2.1% L3% 1.9%
Wheat
Oats
Barley
The Farmers of Canada, particularly Western Canada, of late have had a
difficult time. When the Saskatchewan Farmer, struggling to raise Hogs and
Cattle through continued years of drought, reads that a Packing Company has
made a Net Profit of a Million Dollars, it is small wonder if he contrasts the
lot of the L: a Stock Producer with that of the processor. What he may not
realize is that the Million Dollars derives from Sales of 80 Millions, -pro-
cessed in Plants which have cost approximately 20 Millions. In other words,
that the suns, though large, is small in relation to Investment and to Turnover.
The essential facts are epitomized in the table of percentages above.
Out of each dollar of Sales, the Packer pays- 73,3 cents
To the Farmer
To Employees 8.8
To Suppliers of materials, and for sundry Expense, 9 8
Finance, and Taxes
He Himself retains for Depreciation and obsolescence1,1
and for Profit 1.7
u
Yf
"
Cash October
per bu. per bu. per lb. per bu.
75c $1.01 1.680 59c
35 .33% .98 24%
67 .39% .82 431/4
per bu.
$1.17
.44
.53
Cash October
per lb.
.98c
.72
.90
Based on October prices, the cost, per Ib. at the farm of a 870
mixed ration -one-third each Wheat, Oats, Barley, would be
The best available estimate is that in Canada, on average, it takes 5 lbs.
of Grain to produce 1 lb. of Hog.
Accepting this as the basis, and estimating the cost of the Grain at
October prices, the cost 'of producing Hogs farrowed October forward, would
be: 5 x 87c or 4.350 per lb.
Delicate Problem
The delicate problem, as no
doubt Mr. Bennett knows, is to
eliminate graft and corruption
from politics without eliminating
politics. - Toronto Saturday
Night.
Adapted to the Tirnes
Collingwood reports a hail
storm with ice the size of golf
balls smashing down crops. The
vernacular of the day is going
modern, as years ago hail stones
were always referred to as being
as big as hen's eggs.-Peterboro
Examiner.
The Prison Report
Penologists may differ as to
the recommendations, but the lay-
man who believes that humane
treatment of prisoners is, in the
end, the wisest course, and is the
oniy way that reform can be ac-
complished -and this should be
the main objective of all prison
confinement -will indorse the re-
port. -London Fret- Press.
The next great advance in Pig husbandry in Canada will be the general
use of a balanced ration. The facts involved are no longer a matter of
'speculation. For in almost every Pig producing area of Canada,
indivand iidua
Farmers have achieved a feeding e8iciency as high as 33/.:1, -with
out skim Milk. When Canada has achieved a standard of quality and also a
standard of feeding efficiency equal to that of Denmark, then it will not again
be possible f r Denmark to push Canada off the British market. For, granted
equal truant- and equal feeding efficiency, Canada is endowed by nature to
produce Bacon Hogs more cheaply than Denmark. And there seems at last a
possibility of Canada achieving the dream of two generations, that of becotn
ing the dominant shipper to the British market.
But to achieve this objective there is still a long way to go.
The average selling price for Bacon Hogs, f.o.b. Prairie points
throughout 1934 was approximately 6.85c per lb.
" 1935 " " 7.21c per lb.
" 1936 " " 7..090 per lb.
" 1937 " " 7.70c per lb.
" 1938 to date) " 8.14c per ib.
It a price obtains throughout 1939, equal even to the lowest of the above
years (1934), -there will be a Profit in producingHogs lb. follows:-
Selling price 6.85c4.35c per lb.
Cost price
Profit • 2.50c per lb.
Per Hog (200 lbs.) $5.00
In Cattle the year has been disappointing. The season 1936/7 had been
a very successful one: Feeders had made large Profits. As a result, in the
Fall of 1937 much larger numbers of Cattle than usual were put on feed.
Demand for the feeders was so active that prices were forced up 1 to 11,4
cents per lb. above those of the previous Fall. And by January, 1938, it was
already evident more Cattle were on feed than were needed.
In United States, which ordinarily takes Canada's surplus Cattle, con-
ditions
onditions were very similar. Prices there were........ 21/4 cents per Ib. lower than
in January, 1937. As a result the movement of Cattle from Canada to United
States was much less than in the previous 937
Shipments 19 8 were as follows:
22,680 4,462
15,980 ` 3,046
17,551 10,171
11,305 4,271
14,816 3,372 (estimated)
So on.Iffavourable a crop prospect is8harvested. d to this year onring about alarge the Prairiesase in there will
production. If a goodp
likely be the greatest increase on record in Hog breedings.
Fortunately, Canada's Bacon Quota in Great Britain is such that a very
large increase can still be absorbed. That Quota is 2,500,000 H1,600,490
o g00,490 Hogs
s.
During 1937 shipments totalled
For the first 5 mouths of 1938 (January to May) shipments
have been
Shipments for the year w probably 1938 ill tottal
674,000 Hogs
1,500,000 Hogs
• So that increased shipments can still 7 be made o! one million
ly in 1940gHgs. Given
a large crop it is quite possible that, in 1939, or
a
may fill her Quota.
100. cents
The Packer performs an essential service in marketing the Farmer's Live
Stock. For clearly the householder 'cannot lluy live Cattle and live Hogs.
The Packer buys the live animals and converts them into Meats. His job is
to produce the most palatable Meats possible; then to offer them for sale in
those markets of the world in which they will bring the highest price,
The Packer constantly seeks new markets in his own interest. For the
pioneer in a market makes an extra Profit. But he Is followed into that
niarket by competing Packers. This competition immediately brings the
Packer's Profit balk to the normal level (1. to 2 per cent). Thereafter the
entire benefit of the new market goes to the Farmer.
This is not just theory. A. striking illustration of it occurred in the
advance of Hog prices when the British market for Bacon was opened up by
the Ottawa Agreement. Within 12 months (March 1933 to March 1934) Hog
prices in Canada advanced from 31/4 cents per lb, to an average level of.more
than ....Se per ib. The Packer was the instrument through which this advance
was realized. He shared in the benefit through an extra Profit during the
period of the. advance. This extra Profit was approximately one-half of one
per cent of Sales. But the Farmer's advance was from a 3 cent level to an
8 cent level, (nearly 200 per cent) and this remained.
These facts are worth recalling inasmuch as they illustrate clearly the
fundamental relations between the Farmer and the Packer. These: may be
summarized as follows: --
When prices of Live Stock advance, the Packer makes an extra Profit.
Convy,
ersel when prices decline, the Packer's Profit is reduced,
Therefore, the Packer works constantly for higher Live Stock prices.
But the . ulcer,within his own province, can do little to advance prices.
Advances come from two main sources:-
(a) ' Improved markets: -example, the rapid advatice in Hog prices chi
ch
derived from the Ottawa' Agreement. Improved markets are br g
ht
about mainly bat Government action.
(b) Better Live Stooks' --example, Canadian Bacon sells on 'the British
Market at 8/- per cWt, less than Danish Bacon,• --because it le not so
good.
The calculation above of production cost, is made ou a basis of....
i.e. 5 lbs. of mixed Grain (Wheat, Oats; Barley) to 1 lb. of Pig. That
is the ratio generally accepted as representing average Canadian
experience.
But in every Province of Canada there are hundreds of Farmers
who are prancing Hogson a basis of
And in Denmark the average for the whole production is
These• are challenging figures. Their significance is that if average Cana-
dian feeding efficiency were brought up to the level of Danish efficiency, the
cost of producing Hogs would be reduced one-quarter.
In 1937, when Grains were high, Canada produced appro xima a the Farm,0
HHogs. It is impossible to state exactly the average cost, p
of producing 'those Hogs. An approximation to this. average cost per lb.%act
the Farm may be taken at
(Most Producers would probably say it was .substantially more.)
It we. assure that average feeding efficiency was $13.00.
At this basis a 200 ib. Hog would cost to produce
on a basis of
and 11 we further assume that it was possible
throughout Canada to achieve a feeding efficiency • 3� :1,
equivalent to Denmark, Le, Y••• -•"
then it follows that a saving in the cost of production 3.25 per Hog.
might have. been made of one-quarter, (of .... $13.00), 1•e,. 22,550,000,
On 7,000,000 Hogs, approximately
On two occasions, n after achieving an important position in Great Britain,
lashed out of that market by the Danes. In a gen,
as been
eral way
Bacon
rt was rrlealized this happened because Danish Bacon was better thani
Canaian Bacon. But it is only recently that Canadians have begun to rya
e
fully that the Danish advantage lay thistly in their higher feeding efficiency.
There must, of course, be some explanation for this very great difference
an sh Pigs from birth get
in feeding efficiency. It lies partly in the fact that D
a balanced ration, This is due chiefly to the fact that almost ery n. vend t Varna
in
Denmark carries on Milk production as well as Pig pro
out the entire growth of the Pigs, Milk is included in their ration,
In Canada this is not possible, for many of the rF'umson which , n most Pf s are
are
produced haveno Milk available for feeding. M
Farms, it is not possible to go in for. Milk prods ction. But In recent years
the knowledge has become general that altbougira Milk ingredient provides
the best ration, still a balanced ration Is pose, ble w.1 Fou tiMin iugheelemente
eefScrap;
contributed by iVIlllt carr be oracle np from oilier soul c ,
Fisk .meat, etc,
January
February
March
April
May
Total 82,032 25,322 •.
Some relief carne from Great Britain. There prices of fed Cattle were
high. They were willing to take as many Canadian Cattle as could be tram
Unfortunately,
nfortunately, due to limited Ocean space, the number was not large.
However, those shipped helped greatly to relieve the situation. Shipments'
to Great Britain were as follows: 1937 1938
1,440
35 3,114 -
211 4,046
474 2,469
373 3,186 (estimated)
5:1
81,4:1
3%:1
January
February
March
April.
May
Total 1,093 14,255
Both in United States and Canada, Packers made strenuous efforts to re,
lieve the depr-seed Cattle. situation. In both countries "Eat more Beef' cam*.
paigns were launched, with the object of stimulating consumption. and reasonablention
was called to the fact that Beef was plentiful, of good quality,
in price. In United States the campaign was organized on a broad Canada
Packers, Cattle Producers, and the Government all participating.
plans were not made in time to permit this this movement
o g nizati n, buts indivi fair'
Packers carried on active campaigns.
to say that Canada Packers took the lead.
As the result of these campaigns, Beef consumption was substantially
stimulated, and from April forward Cattle prices became firmer. Unfortun-
ately feeders are still making Losses, but these are much less serious than
those anticipated in January.
The success of these campaigns suggests possibilities for stimulating
Beef consumption which had not previously been thought of in Canada. i
will probably lead to a broad plan of co-operation between Producers, Packers,
and Government.
As is always the case, the conditions which brought about a
Loss to Cattle Producers, similarly brought about. a Loss to the
Packer on his Beef. In the year 1936/7, -the year of advancing
prices and large Profits to Producers, -Canada Packers made a $279,0OO,Oi
-Profit on Beef of
The year just closed, which was an unprofitable one to Pro -
dicers, was likewise unprofitable to Packers. On Beef opera- 262,000.01
tions during this year Canada Packers made a
Ls throughout the of $
On the other hand, on Hogs, prices for which
year were high, the Result was unusually good, Profit being $766,000.09
5:1,
The Directors again wish to inform the Sh 9ehol fthe In ghlya loyal is
and efficient service rendered by the Company's Employees.
dustier quality of products is the fundamental condition of success. Employees
of all
ranks have taken a zealous interest in achieving perfection
eofized db t
uct
and of seviCe. Absolute perfection will, of course, never be ,
the constant aim to achieve it not only tribj b of each man and whe bust,
ness, but adds dignity and significant to
Wages at all Plants are now on a higher level than at any previous time.
not excepting the post-war peak of 1921. practised a Profit-sharing plan. Front
For several years the Company has
net earnings is first deducted a sum equivalent to 6 per cent
ongthe
Sha -
holders' equity. Beyond that point, Profits are divided ev 3
Shareholders and Employees, The Employees' share is distributed at the end
of the year,- in the form of a Bonus,.
T the last three years, the sums distributed to Employees as BonUS hnvaj
been:-
Year ended March, 1936. $413,000,00
511,000.00'
" " 1938 103,000.00
Each Employee of the Company shares in the Bonus. The distribution 1d
made by a Committee of the Senior Executives, who do their best
htoe allocate
to each individual in
accordance with his or her contribution to
eillb
At thee approaching Annual Meeting, Shareholders Will be asked to ON
approval to this distribution.
A copy of this Report will be forwarded, as usual, to each of the 6,011
Employees of the Company, . J. S 1VicLl;AN,
President.•
«' 1937
Toronto, 2411. Artie, 1938,