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History: The Packers’ dollar

Reprinted from the December 1949 issue of Canadian Cattlemen

The Packers’ dollar
By R.J. Deachman

The packer took less than a cent — who got the other 99?

In the fiscal year ending March 30, 1949, total sales of Canada Packers Limited amounted to $314,918,000. Ten years ago, in 1939, the total was $77,000,000. This is an agricultural industry. It deals with the processing of farm products. Farmers in these years were prosperous. Total income from the sale of all farm products in Canada moved up from $717,000,000 in 1939 to $2,250,000,000 in 1948. Keeping these figures in mind let us now examine what might be called the “packer’s dollar,” for 1949, the fiscal year ending March 30 in both years.

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Out of each dollar received there was paid:

packers-dollar-history

 

Profits from operations per dollar of sales in 1949 were less than half the 1939 level. On each $100,000 of sales in 1939 the net profit from operations was $1.61 — in 1949 in was 76 cents. To this was added, in the latter years, two other items which did not come out of pocket of the consumer: income from investments and dividends from subsidiaries, bringing the total profit to .89 cents per dollar of sales.

This is an interesting statement; it raises certain questions:

  1. How did the consumer fare in those two years?
  2. Was labour well paid?
  3. Did the farmer get a fair deal?
  4. Were profits sufficiently high to encourage expansion of industry?

The evidence is shown in the Annual Report of Canada Packers for the year ending March 30, 1949.

The consumers were prosperous. Prosperity is measured by the capacity to consume. Consumption of meats varies from year to year. Demand depends on the price of meat and the earnings of those who buy it. In 1939, per capita consumption of meats by civilians stood at 114.6 pounds. It moved to a high of 155.5 pounds in 1943. In 1948 it was down to 135.3 pounds. This is higher than any pre-war record. It was high during the war years. Men and women were working hard. The hours of work were long, they needed more meat. In 1948 average consumption was 20.7 pounds above the 1939 level. The facts tell the story, the evidence is irrefutable.

Was labour well paid? The actual amount paid out in salaries, wages and bonuses in the fiscal year ending March 30 was three times the 1939 level.

What about the farmer? The Bureau of Statistics puts total income from the sale of farm products at $717,015,000 in 1939 — $2,449,865,000 in 1948, more than three times the 1939 level.

In this period, earnings of all classes were high but in many other industries, as well as the one we are now reviewing, profits per dollar of sales were exceptionally low. The figures here given are typical of other firms in the same industry. High-volume production, low profits per unit of sales is the real basis of sound industrial progress.

Meat prices rose during the war and are still high. The average price of all products sold by Canada Packers Limited in 1939 was 9.6¢ per pound, in 1949 it was 21¢ per pound. Why did prices rise? Canadian consumption increased sharply. The figures are already before us. Exports to Britain moved up from 186,500,000 pounds in 1939 to 692,300,000 pounds in 1944.

Costs of production were high. It was necessary to increase prices in order to increase production. Everybody kicked about prices. The meat packing companies were big and the bigger the target the easier it was to hit. Some deemed it good business, politically, to hit the meat packers. The criticism still continues. It always will. The only objection to it is that some people were careless with the facts.

There are those who want to nationalize this industry for the benefit of the employees. Since 1944 Canada Packers Limited has paid more in bonuses to its employees than it has paid in dividends to its shareholders; profits from operations have been cut from $1.61 per $100 of sales in 1939 to 76 cents per $100 of sales in 1949.

If you bought products valued at $1,000 in 1939, the packer, for his services, received $16.10. In the fiscal year ending March 30, 1949, the packer on this piece of business made a net profit of $7.60 or less than half as much as he made in 1939. Selling on an exceedingly small margin Canada Packers made a lot of money, and yet the total wage, salary and bonus payments amounted to $6,820,000 in 1939 — to $22,092,000 in 1949. This is the procedure which has spelled industrial progress on this continent.

For more of the past from the pages of our magazine see the History section on our website.

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