THE NORTH CANTERBURY SHEEPFARMERS’ CO-OP. FREEZING EXPORT AND AGENCY COMPANY, LIMITED

Press, Volume CVI, Issue 31247, 20 December 1966, Page 31

THE NORTH CANTERBURY SHEEPFARMERS’ CO-OP. FREEZING EXPORT AND AGENCY COMPANY, LIMITED

, th? € rh?lK? rSt /y? lual General Meeting of Shareholders was held 14th De?eS^ r i9°4 mmerCS Christchurch ’ on Tuesday,

t Chairman, Mr I. A. Hart, presided over a small attendance. In moving the adoption of the Annual Report and Accounts the Chairman said:—

We review this year not merely the past season’s operations but as it was the completion of fifty years of service to the fanners of Canterbury, perhaps a little time should be spent considering the part the Company has played in the development of the province. When the Company was first suggested in 1914, there were only two freezing works in Canterbury, both predominately processing concerns, killing on behalf of several exporters. Many farmers found it difficult to have their stock killed when required and to overcome this shortage in facilities this Company was promoted. Due to delays caused by the first World War, promotion and construction took longer than expected and it was not until Dec. 16, 1916, that the first stock was killed at Kaiapoi. In the meantime another works had been commenced at Belfast by Thos. Borthwick & Co. and the two new freezing works opened within a week of each other. So we had grown in Canterbury from two plants to four in the short space of two years. With storage difficulties due to shipping losses, the additional storage in the district was a distinct boon during and just after the war, but in the twenties and early thirties it was freely said there was one too many works in Canterbury and because Kaiapoi was the smallest, the finger was usually pointed at us as being the superfluous works. Again in 1939 the problem of storage was brought to light with the outbreak of the second World War and there is no doubt that the storage available at Kaiapoi meant a great deal to the fanners in Canterbury during those war years. After the end of the War there began the steady increase in flock numbers and it was not long before demands were being made for more and more killing facilities. Instead of the old story of “one works too many,” the demands were made for Canterbury works to expand so that stock could be killed when it was ready and that long delays should be eliminated. During this latter period, a steady expansion has been taking place at Kaiapoi. In 1946, the first year after the war, the throughput totalled 242,000. In 1964/65 a record kill of nearly 600,000 was achieved and last season despite the build up of flocks In the district, our tally was only slightly behind the previous years’ record. There is no doubt that the Company had Its full share of trials and crises to overcome in the period from 1928 to 1939 and it is to the determination of the Directors of that time, to the loyalty of all sections of the staff, and the steadfast support of many suppliers, who stuck to the Company through many lean years that we owe a great deal of thanks today.

The greatest expansion has taken place over the last ten years. In 1956/57 our daily kill was a maximum of 3.700 and the season’s total just over 400,000. Today the daily throughput is 5600 and the seasonal kill around 600,000, an increase of approximately 50%. The list of additions to Buildings and Plant to cope with this expansion is impressive and include a new freezer block, extension to the slaughter-board, new amenities for all men In the slaughterhouse and fellmongery, additions to wool room, more sheepyards which have also been provided with a roof and gratings, extension to the engine room, the effluent tank, new screen washers for the skins, new wool drier, an additional boiler, and extra refrigerating compressors, and of course equipment of various sorts required under the Hygiene regulations. All our recent planning has had the objective of ultimately providing for three killing chains.

The last season opened steadily after a favourable spring with feed in good supply in all districts. It was apparent right from the beginning that lambs had done better than expected and average weights were about 2ib higher than the previous season when drought conditions had prevailed. Following rains in November and December, all works experienced a period of erratic killings towards the end of February, and throughout March. In fact, at the end of March, our killings were over 50.000 below those of the previous season, but we picked up most of this by the time the season ended. Lamb killings were actually 4 per cent higher than in 1964-1965, but as was expected after the record kill of sheep in that year, last season’s sheep kill was down nearly 30 per cent The total kill showed a decrease of only 2 per cent. However, average weights showed an increase of 2 Jib for lambs, nearly 51b for ewes and 3Jlb for wethers, so that the tonnage exported rose by 765 tons, just over 10 per cent Due to the plentiful feed at the beginning of the season fairly large numbers of overfat lambs were taken out of the exports grades. Later in the season, with replacement of stock becoming very expensive, fanners were reluctant to kill, and as a result there was a second period when overfat lambs were found in many lines.

SCHEDULES: The opening schedule for a 29/361b lamb was 20jd, increased by Id on

December 20th. Towards the end of January it fell by Jd but a month later returned to 21Jd. By the middle of March, it had risen a further id followed by another id in mid April, and it was maintained at 22jd until the end of the season. Throughout the season, the prices for Prime and FA.Q. qualities were the same. Ewes opened at 7id for both Prime and FA.Q. qualities U/481b increased on December 20th to Bjd, on February 14th to 9id on March 21st to 10id and finally on April 18th to lid per lb. The reduced quantity of Ewe mutton available met a strong demand from Japan and brought about these very satisfactory returns for old ewes.

This season, in response to requests from Federated Farmers the basis of the woolly Lamb schedule has been altered, and now the basic figure includes only bare meat and net value of Pelts. No value for wool has been allowed for in the schedule and the value of wool will be added to each line received according to the estimated yield of that line. SHEEP STATISTICS: Due to the dry conditions in 1964 and early 1965, there was again, only a small increase in breeding ewes in the Canterbury Land District, 1.76 per cent accounting for just over 110,000 head. Figures just released giving the numbers of breeding ewes as at 30th June, 1966, show the following increases:—

Canterbury 420,000 equivalent to 6.6% Otago

302,000 equivalent to 6.9% Southland

257,000 equivalent to 5.1%

979,000 equivalent to 6.2% There are therefore nearly one million more ewes in the South Island as compared with 1965. GRADING: As a result of the strong protests made by all exporters in the South Island, supported by the’trade in Great Britain, the New Zealand Meat Producers Board dropped their proposal for the establishment of a “DOWN” grade in the South Island. The Grading Committee set up by the Meat Board has recommended the introduction in 1967/68 season of a new grade, at present called “OMEGA,” into which it is intended to place those lambs with a long leg and which have a tendency to have a little too much fat over the back. It is expected that some trial shipments of this classification will be made before this present season is over. EXPORT KILLINGS: Total killings of all classes of meat for the export year ended 30th September, 1966, declined by 16,000 tons to approximately 508,000 tons. The tonnage of lamb, both in carcase form and in cuts, increased by nearly 9000 tons. In the South Island there was actually a decrease in the numbers of carcases exported but the higher average weights resulted in increased tonnage. For the Dominion the total number of ewes killed fell by nearly 900,000, over half a million of the decrease being in the South Island. Boneless Bull and Cow beef increased substantially but Bobby Veal showed a decided decrease.

By the end of September there had been a good clearance of lamb from stores in New Zealand and the quantity of Ewe Mutton was only a third of what it had been the previous year. Shipments of ail classes of meat to the United Kingdom for the year ended 30th September totalled 337,000 tons, about 6000 tons up on the 1964/65 figures, but shipments to destinations other than the United Kingdom rose from 126,000 tons to 183,000 tons. Part of the increase would be accounted for by the amount of Ewe mutton sold to Japan ex the 1964/65 production but not shipped until well on into this last year. Japan took nearly 64,000 tons of meat in the period under review, 57,000 tons being Ewe Mutton. At Kaiapoi we increased substantially the number of Lambs processed for the Meat Development Co. for shipment to Canada. MARKETS: The London wholesale price for a 29/36 lb Lamb in January, which was the first bulk arrival of new season’s meat, opened at 27 id per lb, 4d per lb less than the previous year. Over the next five weeks it fell steadily until it stabilised for a while at 24}d. The threat of the British Seamen’s strike caused a short lived increase, but after the strike was settled it quickly returned to the 25d level. Early in July, contrary to the usual run of prices at this stage of the year, a rapid dedine set in and by September it was only 22 Jd. It is only within the last few weeks that any upward movement has been apparent. Even so, at the end of November it was still 2d per lb lower than in 1965.

Plentiful supplies of Home killed Lamb at wholesale prices only a little higher than those now being asked for New Zealand lamb, are being favoured by a majority of retailers as they find they are able to make a greater profit on sales of fresh lamb. Stocks of imported lamb in store at around 29,000 tons at the end of October remain steady and are unlikely to fall measurably until the peak In Home Killed supplies is over. The Japanese market for

our Ewe Mutton was on a much firmer tone this past year. Realising that the export production was to be much less than the previous year Japanese buyers paid reasonably good prices for their requirements. Of the total production of 60,000 tons, Japan will have purchased probably 52,000 tons. We have steadily increased our sales to Japan and last season apart from some heavy weight carcases sold to manufacturers in the United Kingdom, all the rest of the mutton, both ewes and wethers, were sold to Japan. With an estimated increase in total sheep to be slaughtered this season, we should expect a small reduction in prices will be sought by Japanese buyers. Prices received for Tallow last year began on a good note but towards the end of the season, fell substantially. The same trend was noticed in our selling of Dried Blood, but the local market absorbed all our production of Feeding Meat at a stable figure.

During the year prices paid for Pelts rose higher and higher, stimulated by the American demand for suede fashion goods. Unprecedented values were realised for Lamb Pelts, in some instances 70/- to 80/- higher per dozen than one would nonnally have expected such prices would be. I don’t think many farmers realised the influence these increases made to the schedule but a rise in value of 70/- per dozen is 70d per carcase and this is the equivalent erf 2jd per lb on a 281 b carcase.

It is now apparent that stocks of unworked pelts and of finished leather are fairly high in the hands of the American Tanners, and opening prices for this year’s production are well down, and prospects at the moment are not bright.

While on the subject of Pelts, again last season we handled a great number of skins affected by damage from grass seed. Due to the prolific growth of grass, skins from practically every district were affected, some worse than others. Publicity through farmers journals, Department of Agriculture advisers, sessions on Television have all been used lately to bring home to every farmer the loss our overseas funds are sustaining due to the depreciation in values on these damaged pelts. The matter is serious, as over the last five years our percentage of seedy lamb pelts rose from less than 5% to nearly 28%. Other works in Canterbury have had the same experience.

DIVERSIFICATION: You will know that the New Zealand Meat Producers Board has introduced a scheme under which all exporters are required to dispose of 10% of their export kill of Lamb to markets other than the United Kingdom. On any poundage of meat by which the exporter fails to fulfil the required 10%, a Diversification Levy of 3d per lb has to be paid. It is a pity that such widespread publicity was accorded overseas to the details of this scheme because today we are finding that buyers in the Continent and elsewhere are offering prices which to all intents and purposes are merely 3d less than the United Kingdom quotations. Devaluation by the Argentine of their currency has not helped N.Z. exporters recently, and with the extra competition coming from more exporters who are all looking to get meat into the same areas, trading is going to be difficult.

CONDITIONING AND AGEING OF LAMB: Following comments from the United States of the lack of a uniform standard of tenderness of our New Zealand Lamb, the industry requested that the Director of the N.Z. Meat Research have been studying visit America to evaluate their criticism. The Meat Research have been studying this problem for two or three years and were aware of some of the conditions which caused some meat to be tougher than others. The Director’s mission was to find some method by which we could achieve a uniform standard of meat destined for sale in the United States. Comprehensive data has been compiled and strict adherence to temperature ranges and times are essential to obtain the desired result It is necessary to have separate special conditioning and ageing rooms to meet the specifications and we are at present in the process of having an area converted for this purpose.

OWN ACCOUNT SHIPMENTS: The number of lambs shipped on Own Account was only slightly less than in the previous year, and still some 40% less than in 1963/64. The erratic nature of the Smithfield market compared with the fairly steady increase in the schedule paid in New Zealand no doubt contributed to the attitude of producers to “play it safe.”

WORKS ALTERATIONS: The additional Ammonia Compressors and the Fuller Rotary Booster were installed during the year, and we can safely say that we have ample refrigeration capacity for some years ahead. After some difficulties with the new Wool Dryer, the manufacturers made modifications at their expense and we are happy to report that this machine is now giving excel-

lent results. In the Tallow Department an extra I-Wel has been installed and although new Cooling equipment was ordered for the department it has not yet arrived from overseas. An additional screen washer was installed in the Fellmongery to cope with the skin pieces.

The Gut house was remodelled to provide for future increases in killing and the improvement in working conditions in this area is very noticeable. Work was begun in March on the Effluent Tank to deal with our trade wastes, and although there was a delay in getting some of the larger pumps, trials have been run in the last few days and results so far are very gratifying, and we should have no difficulty in meeting the requirements of the Pollution Act. A further section of the Sheepyards was roofed, repairs carried out to the unloading bank, and a wash installed for cleaning muddy stock. As our present Pelt processing department is only just adequate for present daily output. Directors have decided to proceed with a new building which will house new equipment for this department. On the recommendation of the N.Z. Leather and Pelt Research Assn., a change to the new Drum Processing of Pelts has been advocated, and four Drums have been ordered 'from the United Kingdom. Work on the building has commenced and it is expected that this new sec-, tion will be in operation for the 1967/68 season. The road into the Works has been tar-sealed and adequate parking areas laid out for staff and for the convenience of customers at the Butchers’ Shop.

BALANCE SHEET: During the year additions to Buildings and Plant amounted to £97,741. Depreciation written off for the year totalled £26,262, so that the net increase of Fixed Assets is £61,479. Since January, 1957, we have spent nearly £400,000 on additions to our Fixed Assets.

Sundry Debtors are some £20,000 less than last year while Stocks and Materials show a small increase of around £2600.

During the year, a further sum of £lO,OOO was spent on Hygienic Requirements and this has been added to the amount which first appeared in last year’s Balance Sheet. The first instalment on the original £48,000 amounting to £4BOO has been repaid, so that this Term Liability now stands at £53,200. It is not expected that further money will be needed for these purposes.

Sundry Creditors show an increase chiefly due to some of the Capital items which had not been paid for at Balance date. Over the year Shareholders Funds have risen by over £15,000. Your Directors are pleased to announce an increase in Net Profit after providing for Taxation of £8713. With further heavy commitments for Capital Expenditure still to be met, no alteration to the Dividend rate is contemplated. The sum of £15,000 has been transferred to the General Reserve bringing this up to £llO,OOO. STAFF: Once again I would like to thank all sections of the staff for their co-operation throughout the year. It is a tribute to the commonsense of union management that work at all times flowed smoothly. I have much pleasure in moving the adoption of the Report and Balance Sheet, which embodies Directors’ recommendations for the transfer of £15,000 to the General Reserve and payment of a dividend of 5i% on the Preference Shares and 6% on the Ordinary Shares. After the motion has been seconded by the Deputy Chairman, Mr H. J. Mclntosh, the accounts and report will be open for discussion.

Mr H. J. Mclntosh, in seconding the motion said:— Mr Chairman,

You have covered quite comprehensively many matters which have affected the meat industry generally and our own company in particular. Last year I made some comments on the larger number of overfat Lambs being killed at the works and I don’t intend to repeat them now, but there are still too many lambs of this description arriving at the works this season. No grader enjoys having to put out from export grades carcases of this type, it is a most thankless task and gives no satisfaction. It is the job of the producer to breed stock which will not have this tendency to put on unwanted fat In connection with the increase in facilities installed at Kaiapoi over recent years I would repeat that we, as directors are fully aware of the necessity to keep the plant up to date and that the most modern equipment is provided. On the completion of this, our Fiftieth season, thanks are due to the Directors who saw the company through its difficult years and kept it in existence. Mr Chairman I have much pleasure in seconding your motion for the adoption of the Annual Report .and Accounts.

The motion was then open for discussion. Mr R. C. Dunn referred to the new layout of the Balance Sheet and suggested that the Fixed Assets could have been divided into separate headings, one covering Land and Buildings, the other Plant and Machinery. He also suggested that Directors might consider bringing the Land owned by the company into the accounts at a more realis-

tic valuation instead of the cost price as at present shown. Mr W. M. Cleland commented on the alteration made this season to the method of paying for wool as a separate payment in addition to the basic schedule. This has been done at the request of the farming community and the difference in payment even at this early stage could be as much as 2/- to 2/3 per head in favour erf the Cross-Bred types. He was concerned that this might encourage a tendency to change from the Down type in favour of the wool breeds. It must be remembered that our early kill in Canterbury depends on the Down type and any swing away from this early production would accentuate the demand for extra facilities at all works to handle a peak demand which would tend to be used for shorter periods. Mr Hart replied that he thought that the type of land really was the predominant factor and that the man on the light land will still have to produce early lambs. Then being no further discussion on the report and accounts, the motion for their adoption was put and carried.

The Chairman reported that the retiring Directors Messrs E. A. Foster and C. R. Watson, had signified their willingness to continue in office and there had been no other nominations. The retiring Directors were then re-appointed.

No nomination for the position of Auditors had been received and therefore the present Auditors, Messrs Hicks and Ainger, continued in office.

Mr R. C. Dunn asked if, in view of a possible large swing to beef production, had the Directors considered any possible provision for beef killing facilities.

The Chairman replied that this matter was ever present in the minds of Directors who had considered such a provision several times over the last few years, but had not proceeded with any installation in view of other demands on the company’s resources. Mr D. H. Butcher stated that as a result of a survey undertaken by the company, it was considered that ample facilities were available in the province, and a further installation would not be economic at the present time. Statistics reveal that lamb production still gives a better return per acre than beef.

Mr Dunn raised the question of any possible redemption of the Preference Shares, and asked if the Directors had any plans for a Capital Reconstruction. The Chairman replied that conditions had not changed since the sale of the Ordinary Shares by Sir Arthur Sims two years ago, and quoted from the circular issued to all shareholders at that time.

Mr G. C. Weston briefly summarised the various stages of the Capital movements since 1937. As mentioned in the 1964 circular, the arrangements for the disposal of the Company’s output with Sir Arthur Sim’s interests, would now continue for a maximum period of four years, subject to certain provisions which could reduce that period. Although the Ordinary Shares had been transferred to the two purchasing companies in 1964, the running of Kaiapoi had been solely in the hands of the Directors, and there had been no interference with their objectives, in any way whatsoever. He considered that the matter of re-arrange-ment of capital could well be left for three or four years. Mr Cleland, representing the New Zealand Refrigerating Co., Ltd., but speaking personally, said that it was hoped to retain farmer interest in the Kaiapoi works and it was quite probable upon a reconstruction that Preference shareholders would be offered Ordinary Shares. He was happy to leave the running of Kaiapoi to the Directors and glad to see the figures increase. His worry would be if killings at Kaiapoi fell, as this would be detrimental to his company from the point of view of their long-term investment. In reply to the Chairman, Mr Dunn said he was satisfied with the explanations given. Mr F. A. Sheat commented that Directors might consider altering the Articles of Association to give them a right of refusing to accept transfers of shares, if such transfers could be used to permit domination of the Company and an eventual take over. He was not unduly concerned at the possible change from “Down” bred lambs as production depends largely on the type of land being farmed. He was in full agreement with Directors’ policy of keeping the Works up to date and they were to be congratulated on their achievements. He was happy to move a vote of thanks to the Directors. This was seconded by Mr B. T. Hockridge and carried by acclamation. Mr Dunn wished to be associated with the expression of thanks to all sections of the staff. The industrial record at Kaiapoi spoke for itself. Mr Hart thanked those present for their confidence and assured them that Directors were there to do the best they could for all shareholders. There being no further business he declared the meeting closed. At a subsequent meeting of Directors Mr L A. Hart and Mr H. J. Mclntosh were unanimously re-elected as Chairman and Deputy Chairman respectively for the ensuing year. —P.B.A.