On the orders of the day:
Hon. J. A. MaeKINNON (Minister of Trade and Commerce): Mr. Speaker, on Tuesday last I intimated to the house that I expected to be able to make a statement shortly with respect to the coarse grain situation. This matter has been fully considered and I wish to make a statement outlining the government's policy.
Members of this house will recall that the government's programme for the 1942-43 crop year was a programme designed to stimulate the production of coarse grains and to remove any fear of a decline, in the. prices of these grains as a result of increased production. Minimum basic prices of forty-five cents for oats and sixty cent} for barley were guaranteed, with the Canadian wheat board instructed to purchase in the event that the market declined to these floor prices. At times last autumn the board had to purchase both oats and barley in order to prevent a further decline in prices, and it was only because of the development of a heavy feed grain demand from the United States and difficulty in making delivery that this situation has not continued. It was clearly stated last year that the ceiling prices of 51i cents on oats and 64| cents on barley would be maintained, and this part of the coarse grains programme has effectively contributed to the maintenance of our live stock programme.
Since early in February, Winnipeg prices for oats and barley have been at or close to ceiling levels. In the meantime, United States grain markets have been advancing, and the difference between our prices and United States prices has widened considerably. The government were naturally concerned about finding a means to enable the western farmer to benefit from the United States market, and at the same time to maintain those price controls in the domestic market which are a part of national policy.
Another problem arising from these circumstances which had to be considered by the government was the fact that exporters of Canadian feed grains were placed in a position to obtain more than a normal margin, had export permits been freely issued. The government is naturally concerned that the full American price less transportation, duty, and forwarding costs be returned to the western producer.
The price ceilings on coarse grains in the Winnipeg market were imposed as part of our national price control policy, and were
based on the highest prices recorded during the base period. With the price control policy in effect, it is important that domestic feeders who purchase coarse grains will be able to keep their feed costs in proper line with the prices received for the bacon, beef, dairy and poultry products which they are producing and upon which there are various ceiling and contract prices, in order to meet the needs of the United Kingdom and our own domestic food requirements. Without the ceiling protection, feed prices could and might rise to a level which would prejudice the effective prosecution of our extensive and vital live stock programme.
It is of the greatest importance that any action taken at this time should not disturb the basis of live stock production. It is the considered view of the government, therefore, that the ceilings on oats and barley in the Winnipeg market must be retained. To the extent that coarse grains can be exported at prices above our ceiling levels, the government have sought to develop a workable basis which would give producers who sell coarse grains the advantage of any higher export prices on that portion of the total coarse grain marketings which go into export.
With this principle in mind the government are instructing the Canadian wheat board to charge an equalization fee on the issuance of export permits to exporters of Canadian oats and barley. The equalization fee will, as nearly as possible, represent the difference between Canadian prices and United States prices, less transportation costs, United States import duty and forwarding costs, and with allowance for exchange. The equalization fee will not be fixed but will vary in accordance with the United States prices as compared with Canadian prices.
The Canadian wheat board will set up two special funds into which equalization fees for oats and barley, respectively, will be paid. These funds, in turn, will be distributed at the end of the crop year on a pro rata basis to the growers who have delivered these grains since March 31. Naturally, the amount in either of these funds for distribution to farmers will depend upon the future margin between Canadian and United States prices and upon the volume of exports.
By the method I have just outlined, the growers who sell their coarse grains will receive, in effect, a combined price, which reflects the ceiling price on that portion of their sales which has been disposed of in the domestic market, and the export price on that portion which has been disposed of in the export market.