THE CANTERBURY FROZEN MEAT COMPANY, LIMITED Chairman’s Statement

Press, Volume XCVIII, Issue 28795, 16 January 1959, Page 13

THE CANTERBURY FROZEN MEAT COMPANY, LIMITED Chairman’s Statement

The seventy-seventh annual meeting of the Canterbury Frozen Meat Company, Limited, will be held at Christchurch on Wednesday, February 11th.

The following is the circulate<Lstatement of the Chairman, Mr John Deans:—

THE ACCOUNTS The Net Profit for the year is £84,554. The amount required for the dividend and bonus recommended is £71.126, and it is proposed to add the remainder £13,428 to the amount carried forward making a total of £108.863 compared with £95.435 brought in from last year. The dividend rate and bonus recommended is unchanged. At the last Annual Meeting, attention was drawn to the severe fall in the price of lamb on the London Market which during the preceding three weeks had been up to 4d per lb on some grades. The fall in price was serious, and < was in part due to the increase |in the supplies of Home Killed • meat and to the increase in the i consumption of other foods, and particularly poultry, which now competes in price with lamb. The high opening schedules for lamb in the past season turned out to be quite unrealistic and with falling overseas prices for meat, wool and pelts, the early purchases showed heavy losses and to the end of February the falling markets were* not adequately reflected in the overall schedule for lamb. However, an increased throughput at the Works, showing a reasonably satisfactory working and processing return, was largely responsible for the year’s results. Stocks of meat unsold at Balance date are 28 per cent, i lower, and the unsold stocks of wool are about the same as last year. The Directors emphasise the trading risks in meat, wool, pelts ; and in all by-products, and they are seriously concerned at the heavy fall in the price of casings. ; and in the lesser recoveries of some of our by-products which i can so materially affect the coming year’s accounts. Profits of the Subsidiary Companies have been included in the i Profits of the parent Company only to the extent of a dividend received from one subsidiary, but , undistributed profits of subsidiaries have been taken into consideration by the Directors when framing their recommendation for the year’s appropriations The value of the Fixed Assets has increased by £231,000 before writing off depreciation. Of this amount £21.000 has been spent at Belfast, £164.000 at Fairfield, £28,000 at Pareora, and £lB,OOO on Motor Vehicles, offices and ’ houses. There will be further heavy expenditure at Fairfield to continue I the alterations there and at Pareora for extensions to the lamb ’ and mutton slaughterhouse. It . is hoped that the building of a t Beef -Slaughterhouse, Chilling i and Freezing plant at Pareora re- ; (erred to last year’s Statement will be coffimenced in the near i future. The cost will be very heavy. ' The finance required for expansion now being planned will be spread over a number of years, and the Directors have under consideration arrangements for meeting the position. Further increase in the capital of the Company is not contemplated. “Stock at Works and Value of Interest in Consignments Unrealised” are lower than last year. The sale of our holding of Government Stock and the realisation of a greater proportion of our meat stocks than usual has helped our cash position and has helped towards the considerable works expenditure referred to above. The Year’s Trading Prices on the Smithfield Market for 1958 Season’s lamb which opened in January at 27d. for Prime Twos rapidly declined and by the middle of February had fallen some 4d to 5d per lb. No improvement was shown until the end of April when the market had taken a slight turn for • the better. About the end of •the first week in May, the strike ’on Smithfield caused a rise in ’all meat prices; however, the jpeak reached at that time did not I last very long, and after the imiddle of June, prices again began to fall, rising .during August, continuing with an upward tendency until the beginning of October and remaining fairly stable during that month. Factors contributing to in- | creased demand for our lamb i were the short supply of, and J higher prices, for beef and the • later marketing of Home produced lamb, but Home killed supplies of meat continue to increase. | The total quantity of Argentine Beef imported into the United ! Kingdom for nine months to the ■ end of October showed an in- | crease, but shipments of Argentine lambs may be very much less ithan last year. Stocks of Frozen ’Meat in store in the United Kingdom at the end of October were 1 about 44 per cent, lower than ’at the same time last year. ; brought about by a reduction in ithe imports of Beef, Mutton. and 'Lamb and a slight increase in ; consumption.

Over 90 per cent, of our exportable beef has been shipped this year to markets outside the United Kingdom—the bulk to the United States and Canada, partly boneless and partly in frozen quarters. In our endeavours to increase our marketing in these directions in beef as well as in lamb and mutton, a senior executive of the Company has recently ; visited Canada and the United States of America.

In the United Kingdom, the [consumption of poultry, especially as Broiler Chicken, has shown a very marked increase at prices which compete with Lamb, and this trade now plays a very important part in the food business. The effect on the sale of our lamb can be considerable. i On a matter affecting sales of pur lamb, I must stress the importance of growing a lamb, and especially a milk lamb, without excess fat. It is a serious matter I—a carcase should be well covered, but excess fat is not wanted, and at the high price of meat today, the housewife simply will Inot have over-fat meat.

The irregularity in the wool market in the November/December, 1957 London Series became apparent in February, 1958, as a marked decline in values and by | the end of May had developed

into a drop of between 20 per cent, to 30 per cent, on . rates ruling in January, and this was the position until mid-July when on upward move was registered. In September, there was another decline, but in the October Series the market steadied with a firming tendency, but there is still a very long way to go before the ground lost during the twelve months is recovered.

We continued the policy of selling a considerable quantity of our wool on f.o.b. New Zealand terms, as well as consigning to London. Approximately 69 per cent, of our production has been sold in New Zealand.

The price of wool is a big factor in the make-up of the “overall” buying schedule of lamb and the effect of the fall in prices will be understood when it is realised that halfbred lamb slipe was valued in October/November, 1957, at 6fld London per lb, and in October/November, 1958, at 42d per lb, a fall of 24d per lb. Sales of pelts were maintained as and the market for these was a fluctuating one opening at 60s per dozen for lambs gradually declining to 45s in January and then rising to 50s at the end of July. The average price for the season was 17s 6d per dozen below the previous year. As usual all our production was sold here. Sheep and Lamb Killings at our three Works in the 1957/1058 season were nearly 12 per cent, above the previous year. Cattle killings were practically unchanged. Lamb weights were 38.811 b compared with 32.98 in the previous year, and sheep weights were just over 11b heavier. The percentage of second quality declined by nearly 9 per cent. The opening schedule price for lamb D’s to 281 b was 28d and for Twos 29/361b 26d. The average price per head for the season was 56/8 compared with 65/6 for the previous year, and the total payment to producers for stock killed was in the vicinity of £3,800,000. .

BELFAST WORKS Alterations have been made in the Beef House increasing the capacity by at least 30 per cent, and a Boning and Packing Room has been fitted up to handle packaged and cut meats to cater for North American and other overseas markets. Some new plant has been purchased and further work has been done in improving the treatment of the Works’ effluent. There will be a considerable amount to do on effluent disposal during the next 12 months. FAIRFIELD WORKS The work nerf enlarging this plant is proceeding satisfactorily. The new Fellmongery Is now complete and in use in conjunction with the new Pelt Department. and the enlargement of the Wool Room is complete. We expect to have the new Slaughterhouse as well as the offal floor complete by the end of September next. Extensive alterations to existing buildings will be necessary to complete the expansion of this Works. PAREORA WORKS The Slaughtering Department on the ground floor has been altered during the last few months and is working satisfactorily. Considerable planning has been done in connexion with the proposed Beef House, and we have reached the stage where working plans can be proceeded with. OPEN DOOR POLICY Every assistance for realising stock on “Owner’s Account” is given by this Company, and the large numbers of lambs entrusted io us for handling in this manner is proof of confidence in our Marketing Organisation. Our C.F.M. Brand is available to those farmers who entrust their stock to us for sale. DISTRICT FAT LAMB COMPETITION The Mid-Canterbury Fat Lamb Competition was held at Fairfield on November 21, 1957, with an entry of 543 lambs. LONDON SUBSIDIARY Mr S. A. Chisholm, who retired from the position of United Kingdom Representative of the New Zealand Meat Producers* Board during the latter part of last year, has joined the Board of our London Subsidiary as Managing Director. STAFF The thanks of the Shareholders are due to all the staff, permanent and otherwise, whose work has contributed to the year’s results. —P.B.A.