CANTERBURY FROZEN MEAT COMPANY LTD

Press, Volume CVIII, Issue 31579, 17 January 1968, Page 18

CANTERBURY FROZEN MEAT COMPANY LTD

The statement by the chairman of the Canterbury Frozen Meat Company, Ltd (Mr L. D. Cotterill), reviewing the year ended October 1, 1967, and to be presented at the eighty-sixth Annual General Meeting to be held at the Head Office of the Company, 172 Cashel Street, on Monday, February 19, 1968, at 11 ajn., says:

THE YEAR’S TRADING The following is a quotation from a memorandum prepared by a well-known New Zealand financial adviser: “New Zealand’s well-being throughout its history has been based primarily on the success buoyancy and profitability of our farming industry. That fanners should continue to be prosperous is all important to New Zealand, and anything which encroaches upon the profitability of the farmer should always be looked at time and again before any move is made to worsen the lot of those engaged in farming. In many cdses the development of secondary industry in New Zealand should always be considered in relation to its effect on the the farming industry, and if higher costs through the economy are transmitted as part of the fanners' increased costs, then there surely must be some limit to engaging in uneconomic secondary industry in the above context” There can be no doubt that the New Zealand farmer, in general, is going through a difficult time. His costs are higher than they have ever been and the sheep farmer has had to face a fall in the price and marketability of wool such as has not been experienced for many years. Both the farmer and the freezing industry have, in addition, been faced with quite unpredictable fluctations in the realisable value of meat For the second year running, the English meat market where 92 per cent of New Zealand export lamb is sold, has been thrown out of gear at a critical period by strikes; in 1966 the general shipping strike, and in September, 1967, by an “unofficial" dock strike. Both of these occurrences produced what would appear to be fortuitous rises in the market due to nervousness on the part of purchasers as to continuity of supplies. The unreliability of price fluctuations in the latter part of the year as a guide to the future has been illustrated in the early months of 1965, 1966 and 1967 by considerable fans. In 1967, the fall had assumed greater proportions than in the previous two years and continued into April, bringing severe losses on al] meat purchased in the early part of the season. The trend of prices for 1968 is hard to forecast because, as usual many quite unpredictable factors influence the prices of our products most of which we have to sell on unprotected “free” world markets.

New Zealand farm exports represent nearly 90 per cent of our total export income and complete stability in farm prices 1s just about impossible to achieve by controls,” Boards or Commissions, or anyone else. To mention a few of the unpredictable factors, we have only to see the experience of the past 18 months or so with strikes, Australian drought, foot and mouth disease, but it is apparent that if New Zealand is to regain any real prosperity, farming must be made more profitable. ACCOUNTS There has been a loss in the year’s trading of the Parent Company of $B9 933 which is partly offset by profits from subsidiary companies, resulting in a consolidated loss of $18,266. The amount carried forward from last year in the Profit and Loss Account of the Parent Company is $289,156 and, after charging the loss for the year, there is a credit balance of $199,223. An amount of $200,000 has been transferred from the market fluctuations reserve and, if the recommendation of the Directors for payment of dividend is adopted, there will be carried forward in the Parent Company’s Profit and Loss Account a credit of $211,723. A disturbing feature is the constant increase in costs. Devaluation by itself is not the

corrective to a high cost structure, and it is already clear that devaluation by one country can quickly snowball with the result that it is not impossible that before very long the major exporting countries may find themselves in the same relative currency position as they were in before it started. However, difficult though it may be, the cost structure of every industry must be most carefully overhauled, and that applies to both the farming and the frozen meat industries. Many of the costs of farmers are beyond their control and that also applies to a meat freezing company, but there are avenues for savings and we are making a close examination of our cost structure throughout. In that connection, criticism has been directed to the rise in shipping companies’ charges for transportation to overseas markets. There has also been criticism, in some quarters, of the proposed twoport loading scheme. In regard to the latter, all I can say at present is that it is a scheme which should receive a trial before any judgment is passed on it INCREASE IN CAPITAL In April, the Company made an issue of capital to shareholders of 600,000 ordinary $1 shares at par on the basis of one share for every four shares held. These new issue shares rank for half of the dividend on the current financial year. LAMB MARKET DIVERSIFICATION

The diversification target of 10 per cent for the year 1967, recommended by the Market Development Committee, was approved by the New Zealand Meat Producers’ Board. To date, we have achieved approximately 9 per cent towards this target The target for 1968 is 12 per cent with a levy of 2 5 cents per lb payable by those whose exports to markets, other than the United Kingdom, fail to reach 12 per cent of total slaughterings for the season, the shipping period being from October 1, 1967, to December 31, 1968.

Apart from the lambs we have sold to the Meat Export Development Company for the United States of America and Canada, sales have been made to the West Indies, Caribbean and Pacific Islands. Europe and Japan.

Trade with European countries is most difficult. Import regulations and quotas are among the chief of the difficulties to be contended with. Development of these markets calls for special preparation and packing, varying with different countries, and the servicing of new markets is a costly business, but the importance of doing the utmost possible to open up and develop markets outside the United Kingdom cannot be over-emphasised. There appears to be a reasonable prospect of the United Kingdom taking present quantities of our export lambs, including possible increase, for at any rate another three years or so, but the present disturbed economic position of the western world and possibility of some form of entry by Britain into the Common Market community renders it difficult in the extreme to make confident predictions extending beyond the immediate future. Other markets will, no doubt, continue to be developed, but, if compelled to sell any considerable quantity outside the United Kingdom, New Zealand might well be faced with having to accept a quite substantial reduction in price obtainable. DISTRICT LAMB COMPETITION The Mid-Canterbury Export Lamb Competition was held at Fairfield Works on November 17, 1966, under the auspices of the Ashburton Agricultural and Pastoral Association. Entries totalled 348 lambs. BY-PRODUCTS Wool.—Unsold stocks of wool at balance date were 1403 bales, i.e. 238 bales less than last year. Ninty-one per cent of our slipe wool was

sold on F. 0.8. terms in New Zealand. Pelts.—During the season which • I am reviewing (1966/7) we had to accept almost continually declining prices for both lamb and sheep pelts and towards the end of the season, prices for both were at abnormally low levels. Our average prices were 69/6 per dozen for lambs and 119/- per dozen for sheep as compared with 139/2 and 165/4 respectively for the previous season (1965/6). This decline represents nearly 6/per lamb and nearly 4/- per sheep. We are accustomed to fluctuations in the market for pelts but those of the seasons 1965/6 and 1966/7 were unusually severe. There has been some recovery in recent price quotations but the future for the current season is still uncertain.

sheep. We are accustomed to fluctuations in the market for pelts but those of the seasons 1965/6 and 1966/7 were unusually severe. There has been some recovery in recent price quotations but the future for the current season is still uncertain. Seed damage is still causing a large loss and 452,000 pelts had to be down-graded as compared with 460,000 pelts for the previous year. This damage from barley grass and storksbill meant a selling price reduction of l/4d-l/5d per skin. A further loss of approximately 8d per skin arose from buyers paying less for ribby pelts. Tallow.—Throughout the season the market generally has been weak and prices disappointing, the average price being 10% lower as compared with the previous season. Casings.—During the past year, prices for sheep and lamb casings weakened considerably and the outlook for the coming year is not bright for these products. THE CANTERBURY FROZEN MEAT COMPANY (LONDON) LIMITED Our London subsidiary has been in existence since 1945 and since resumption of private trading in 1954, it has built up a considerable marketing organisation which handles the whole of the marketing of our meat and edible offals and a large proportion of our other by-products in the United Kingdom and Europe. In 1963, an interest was acquired by our subsidiary in conjunction with Messrs R. & W. Hellaby Ltd. in the old established London firm of W. Greatrex & Company Limited which added to our marketing organisation the benefit of a Smithfield stall. The Chairman, Mr L. S. Grigg, last visited New Zealand in 1966 and the present Managing Director, Mr Donald Lusby, will be spending some weeks in New Zealand early in 1968. Our General Manager, Mr Iles, accompanied by Mr Cox has recently returned from a month’s visit to London, Europe and U.S.A. for detailed discussions on various aspects of our marketing connections. HEAD OFFICE BUILDING In my statement for the year ended Ist October, 1965, I referred to the building of a new Head Office on the property formerly owned by Ashby Bergh & Co. Ltd. which had recently been purchased. It was then the intention to erect a 10 or 12-storey building of which five floors would have been used by the Company and the remainder let as offices. At that time and taking into account rents then ruling and the shortage of office and commercial accommodation in Christchurch, the project appeared likely to be highly profitable, but by the time the necessary permit had been obtained and plans prepared, other multistorey office blocks had been and were in process of being erected and this, taken in conjunction with the change in the economic situation, which by then was becoming apparent, brought about a revision in our planning. It has now been decided to erect a building of five floors which will give the Company all the accommodation it needs plus reasonable provision for expansion. In May, 1967, the Company acquired the Liverpool Street property of Field and Boyds Limited which provides an alternative outlet to Cashel Street and has considerably simplified the planning of the new building on Cashel Street besides adding substantially to the potential development value of the site as a whole. As a result of the delay the company is going to reap the benefit of the reduction in building costa over the past two years and the new building is expected to cost substantially less per square foot than estimated for the original project. DIRECTORATE

The resignation of Mr J. H. Grigg marks the end of an association of the Grigg family with the Company since its formation.

In November, 1881, the late John Grigg, the first, of Longbeach, arranged a meeting which decided to form the company and he was appointed its first chairman. He remained chairman until his resignation in 1960, due to ill health, and be died in the following year. His place on the board was filled by his son, the late Mr J. C. N. Grigg, who remained a director until his death in 1926 when Mr J. H. Grigg was appointed in his place to be a director for 41 years during the last six of which he was deputy chairman. The influence of the Grigg family on the development of the company has been very great The

first John Grigg was one of the outstanding figures of New Zealand in the farming world. His two notable characteristics were foresight and courage. These characteristics were particularly exhibited in the transformation of the Longbeach Estate from its original swamp-like character into one of the best known agricultural and pastoral farms of the English speaking world. He carried . his foresight and fearlessness into the founding and development of the Canterbury Frozen Meat Company Ltd. His example was followed by his son and grandson and, although neither of them was chairman, both played a leading part in the affairs of the company from the resignation of John Grigg, sen., down to the present day. The names of John Grigg (father, son and grandson); of John Deans, director from 1917 and chairman from 1930 to 1961; and of Sir George Clifford, chairman from 1902 to 1930, will always live as the great names in the first 86 years of the history of the company. Mr I. E. O. McKellar, of Riversdale, Ashburton, was appointed to fill the vacancy caused by the retirement of Mr J. H. Grigg. STAFF Mr N. P. Bergin, Assistant General Manager, retired on March 31 after 55 years service. He joined the company in 1912 at Timaru and came to head office in 1920. He was appointed production manager in 1950 and Assistant General Manager in 1956. He died in November after a period of indifferent health. Mr A. H. Henry, who had been chief engineer at Belfast since 1935 and superintendent engineer since 1965, retired on June 30. Mr I. A. McGregor, of Wellington, has been appointed to succeed him.

Mr W. S. Minehan, Timaru Branch Manager, retired on 30th September after 46 years service. He joined the Head Office staff in 1921 and became Chief Clerk at Timaru in 1924 and Branch Manager in 1934. Mr G. R. Burling has been appointed Timaru Branch Manager and Mr J. D. Barrell, Pareora Works Manager. Mr A. A. Mitchell, Senior Stock Clerk, retired on 30th September after 59 years service. He started at Pareora Office in 1908, and after service at Pareora and Timaru and four years in the First World War. he became Head Office Stock Booking Clerk in 1919, a position he held until retirement. Mr T. C. Blain has been appointed Stock Manager for the Company. Mr R. D. Iles, who joined the Company in 1913, will retire on 31st-March next He has been General Manager since 1945 and will be succeeded by Mr K. F. S. Cox, who joined the Company in 1946 and who has been Secretary since 1949. Mr T. M. Cullen, Chief Accountant, who joined the Company in 1926, will succeed Mr Cox as Secretary. The deaths occurred in November, 1966, of Mr A. Fyall, who had represented the Company as a drafter in the Waimate district since 1933, and in November, 1967, of Mr A. D. Wilkie, who retired in 1961 after 55 years service.

The thanks of the Shareholders are due to the retiring Executives for their long service with the Company, and to all other staff for their work during the year.

KILLINGS

Total lamb, sheep and cattle killings at our three works were higher than those of the previous season. The comparison of the numbers handled is:

The average weight of lambs was 30.021 b per carcase compared with 31.611 b for 1966; wethers 46.491 b compared with 49.761 b; and ewes 49.151 b compared with 52.461 b. The total payment to our clients for all stock killed in the 1967 season was some $10,125,000. There was an increase in lambs shipped on consignment through our shipping pools this year, some 309,000 lambs being handled compared with 160,000 in 1966 and 270,000 in 1965. As shown in the Accounts, the balance sheet figure' of our three freezing works after providing for depreciation, amounts to $6,795,491 as compared with $6,704,088 in the previous year. I am not, this year, Itemising expenditure at each works other than to say that modernisation and development is being proceeded with as rapidly as is considered desirable and as is consistent with available finance. The following is a summary of the last four years capital expenditure at all three works:

1967 1966 Lambs .. 2,126,602 1,935,295 Sheep .. 438,273 232,594 Cattle .. 18,039 20,127

Land and Plant Buildings Total Year S S S 1964 245,656 554.040 799.696 1965 .. . 242,524 556,512 799,036 1966 397,950 496,742 894,692 1967 233,IM 246,186 479,340 Total .. 31,119,284 31,853,430 32,972,764