May 16, 1955

COMMITTEES OF THE HOUSE

RAILWAYS, CANALS AND TELEGRAPH LINES CONCURRENCE IN NINTH REPORT


Mr. H. B. McCulloch (Pictou) presented the ninth report of the standing committee on railways, canals and telegraph lines and moved that the report be concurred in. Motion agreed to. Second report of standing committee on marine and fisheries.-Mr. Ashbourne.


REPORT ON 1953-54 POOL OPERATIONS

LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Trade and Commerce):

I am now in a position to make a statement about the results of the 1953-54 wheat pool. This pool was closed as at April 29. I had suggested an earlier date but in the opinion of the Canadian wheat board a more satisfactory accounting could be made if the closing of the pool were delayed until after the opening of navigation on the great lakes and on the St. Lawrence. Therefore, the government agreed to the closing date recommended by the wheat board, namely, April 29, 1955.

From the standpoint of a marketing operation, the 1953-54 pool was the most difficult in the post-war history of the wheat board.

In the first place, as hon. members will recall, the 1953 wheat crop was the third in a succession of three bumper crops produced in the prairie provinces. In spite of a very high level of exports and domestic demand in

1951-52 and 1952-53, substantial stocks of wheat remained in elevators on July 31, 1953. Sales from the 1953-54 pool could not begin until these carryover stocks from the previous pool had been reduced to reasonable proportions. Actually, sales from the 1953-54 pool did not begin until February 1, 1954. To put the matter briefly, stocks of wheat were carried in the 1953-54 pool from August 1, 1953 to April 29, 1955-a period of 21 months. Sales operations were carried on over a period of 15 months. It is not surprising, therefore, that carrying charges applicable to the 1953-54 pool were substantially higher than in any previous pooling period administered by the wheat board.

Now, let me describe briefly the marketing situation faced by the wheat board during the life of the pool. Following the unprecedented export demand for cereals in

1952-53, world demand for wheat fell away sharply in the crop year 1953-54. As the house knows, our exports of wheat and flour in that crop year were 255 million bushels as compared with 385 million bushels in the preceding crop year. This decline in world demand affected particularly Canada, the United States and Australia.

While world demand improved during the first nine months of the present crop year, competition has been extremely keen and during this period the United States surplus disposal program has emerged as one of the chief factors in the international wheat position. Canadian export sales have improved, but not to the extent that would achieve the rapid movement of wheat hoped for earlier in the crop year.

The United States has a triple-barrelled surplus disposal program in effect. Wheat may be bartered for strategic materials, may be distributed to importing countries for local currencies which are usually left in the recipient country for development or other purposes, or may be given away as a relief measure. So far the cost of procurement of wheat in the United States for surplus disposal abroad has amounted to over $200 million. In addition to this surplus disposal program, which cannot be regarded in any way as ordinary commercial transactions, the United States have during the present crop year increased their export subsidies in order to effect sales. As at the end of March, the United States had increased their exports of wheat and flour by over 60 million bushels as compared with the previous crop year, and the increase will undoubtedly be larger by the end of the crop year.

The wheat board and the government expect, and are fully prepared, to deal with competition in world wheat markets. The record shows that we have met this competition most effectively. Canada has retained a high proportion of commercial markets throughout the world. In recent months, however, the surplus disposal programs of the United States are being pressed to the point where, in our opinion, they are having a disturbing effect upon commercial markets.

3782 HOUSE OF

1953-54 Wheat Pool Operations

The purpose behind the surplus disposal efforts of the United States is to increase consumption in areas that cannot afford to buy wheat. Canada has no quarrel with that principle. It is doubtful, however, whether anything is gained, and certainly much is lost, if surplus disposal programs are pushed to the point where they disturb normal trading relationships.

I should add that during the period of the 1953-54 pool, wheat prices declined substantially and this, of course, has lowered the return which the wheat board have been able to secure from their sales. With these general observations in mind, let me deal now with the financial results of the 1953-54 wheat pool.

Producers' deliveries of wheat to the pool were 398 million bushels. A total of 148-7 million bushels, including 21-4 million bushels of priced open sales contracts, were transferred to the 1953-54 pool from the 1952-53 pool as at January 30, 1954. Deliveries from others than producers were 1-4 million bushels, bringing the total volume of wheat in the pool to 548-1 million bushels. Completed sales to the close of business on April 29 amounted to 384 million bushels. Therefore there remained as at April 29 a balance of 164-1 million bushels. These stocks included 42-9 million bushels covered by priced open sales contracts and unsold stocks of 121 - 2 million bushels.

In closing out the 1953-54 pool the open sales contracts were transferred to the 1954-55 pool at contract prices and unsold stocks were transferred on the basis of board selling prices for April 29 less an allowance for carrying charges subsequent to the date of transfer and an allowance for market risk in the case of certain slow-moving grades.

The final operating surplus in the pool is $64,725,147.55 from which must be deducted the 10 cents per bushel interim payment made last fall. This payment amounted to $38,638,704.15. After providing for P.F.A.A. levy on the interim and final payments and after allowing for final payment expenses, the surplus for distribution to producers as a final payment is $25,411,407.89.

On producers' deliveries of 398 million bushels the average final payment is 6-384 cents per bushel.

The final net payments to producers on the

principal grades of wheat are as follows:

No. 1 northern per bushel

No. 2 northern

No. 3 northern

No. 4 northern t*

. 10-715 **

. 13-303 **

Feed wheat

Prior to the deduction of the P.F.A.A. levy, the net price realized by producers for No. 1 northern wheat basis in store Fort William/ Port Arthur or Vancouver will be $1-56426 per bushel.

The Durum wheat position continued very strong in 1953-54 and again in the present crop year. The final payments on Durum grades are as follows:

No. 1 Amber Durum

51-987 cents per bushelNo. 2 Amber Durum

52-307 cents per bushelNo. 3 Amber Durum

56-427 cents per bushelNo. 4 Amber Durum

55-063 cents per bushelNo. 5 Amber Durum

19-159 cents per bushelNo. 6 Amber Durum

21-139 cents per bushel

Prior to the deduction of the P.F.A.A. levy, the net price realized by producers for No. 1 Amber Durum will be $2-12613 per bushel.

There will be final payments on grades of wheat which did not participate in the interim payment last fall. For example, the final net payment on No. 2 Garnet is 5-105 cents per bushel; on No. 2 Alberta Winters, 3-002 cents per bushel; and on No. 2 C.W. Soft White Springs, 13-798 cents per bushel.

To complete the story, here are representative board selling prices applicable to the 1953-54 pool. The average selling price for No. 1 northern wheat basis in store Fort William/Port Arthur or Vancouver was in round figures $1-73 per bushel. The corresponding result in the case of the 1952-53 pool was $1-90 per bushel. Therefore, by reason of the decline in wheat prices the board in 1953-54 received 17 cents per bushel less than in the preceding pool, measured, of course, by the return for No. 1 northern wheat. The lower level of board selling prices is reflected in the prices which producers realized on their deliveries to the 195354 pool. I have already referred to the relatively high carrying charges in this pool; the actual increase as compared with the 1952-53 pool was approximately 8i cents per bushel. In these two factors, lower selling prices and increased carrying charges, we have the difference between prices realized by producers. The distribution of final payment cheques will commence before the end of this month.

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PC

John George Diefenbaker

Progressive Conservative

Mr. J. G. Diefenbaker (Prince Albert):

Would the minister allow an observation on the statement he has made and a couple of questions?

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

I will allow questions but no observations.

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PC

James MacKerras Macdonnell

Progressive Conservative

Mr. Macdonnell:

That is for the Speaker to say.

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

The farmers will be disappointed as a result of what has happened.

Is it a fact that the United States is engaged in a policy of disposal of surplus wheat by way of relief and also through currency deals to a degree that has interfered with the world market for wheat? Will the minister give figures as to the total amount paid during the pool year for storage, and will he also give some indication why it is that Canada's share of an expanding world wheat market declined so substantially during the first eight months of this year?

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

Well, the disposal program of the United States has affected us seriously in our minor markets such as Israel and Norway, smaller countries that usually buy substantially from Canada. This year they are taking wheat from the United States either as relief or on currency deals. I do not think the world price of wheat is affected particularly except as we find it necessary to lower our price to meet the premiums paid on United States wheat. Our price has remained stable now for several months. I think that answers the first question. As to the second question-

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

The total amount of storage charges.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

-I cannot of course give the figures offhand. I think my hon. friend might put that question on the order paper.

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

The minister mentioned that it was very high this year, 8J cents a bushel higher than the year before. How much was the total?

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

I do not carry the total figure in my mind. That is a matter that will have to be referred to the wheat board and the easiest way for my hon. friend and for me is for him to put it on the order paper. Then it will go to the wheat board automatically.

The third question was what?

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PC

John George Diefenbaker

Progressive Conservative

Mr. Diefenbaker:

Why was it that Canada's share of the world market fell away in the first eight months of this year?

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Pori Arthur):

It is difficult to assess Canada's share of the world wheat market at this time. Various wheat comes on the market at various periods. As my hon. friend knows, for the first four months of the eight months' period we can only ship out of Atlantic or Pacific ports. I do not believe you can assess Canada's share of the world market until the end of the crop year. We are more than holding our own in our principal markets. Our over-all share may be down due to the fact we are being hurt in the smaller markets. I doubt if any great light can be shed on our share of world markets at this particular time.

1953-54 Wheat Pool Operations

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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. H. R. Argue (Assiniboia):

I wonder if I might ask a question of the minister. Is the government of Canada considering adopting any policy in order to increase our share of the world wheat market or to recover our share of the world wheat market, such as accepting local currencies or following a policy of making wheat available whenever there is a famine?

There is another question I should like to ask arising out of the statement the minister has made. It concerns the very low and disappointing final payment. I am wondering if the government and the minister would consider making available immediately an interim payment on the 1954 crop in order to at least alleviate the very serious financial catastrophe in western Canada?

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

The government is always considering every means of increasing Canada's share of the world markets. If we decide on any different procedure than that being followed at the moment, I shall announce it immediately in the house.

So far as the second question is concerned, I think the producers in western Canada believe that, in a period of congestion, the present price of wheat has been holding up very well. I might say that Canada is largely responsible for the fact that the price of wheat has not collapsed. We have refused to be panicked. I believe that, considering the situation of world supplies which are dropping, it would be very unwise for Canada to enter into a give-away program simply for the purpose of reducing our wheat surplus.

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CCF

Hazen Robert Argue

Co-operative Commonwealth Federation (C.C.F.)

Mr. Argue:

Would the minister say whether an interim payment is being considered, because the payment he has announced today amounts to only about $150 per western farmer, and that will not go very far.

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LIB

Clarence Decatur Howe (Minister of Defence Production; Minister of Trade and Commerce)

Liberal

Mr. Howe (Port Arthur):

May I point out that this follows a prairie farm assistance payment of about $28 million. It is, of course, quite impossible to consider an interim payment on the wheat of the last crop year, since very little of that wheat has been sold.

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May 16, 1955