May 17, 1955

STANDING ORDERS


Second report of standing committee on standing orders.-Mr. Harrison.


PRIVATE BILLS

FIRST READINGS-SENATE BILLS


Bill No. 373, respecting the Commercial Travellers' Association of Canada.-Mr. Michener. Bill No. 374, to incorporate Petroleum Transmission Company.-Mr. Fairey. Bill No. 375, to incorporate Yukon Pipelines Limited.-Mr. Mcllraith. Bill No. 376, to authorize Trans-Prairie Pipelines, Ltd., to construct, own and operate an extra-provincial pipe line.-Mr. Weaver. Bill No. 377, respecting Equitable Fire Insurance Company of Canada.-Mr. Boisvert. Bill No. 378, to incorporate S & M Pipeline Limited.-Mr. Mcllraith.



The house resumed, from Monday, May 16, consideration of the motion of Mr. Lapointe for committee of supply.


FINAL PAYMENT, 1953-54

CCF

Hazen Robert Argue

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

Mr. H. R. Argue (Assiniboia):

Mr. Speaker, I rise at this time to express grave concern over the extremely small final payment for wheat announced yesterday and grave concern for the whole future of the wheat-producing area of western Canada. Ever since 1945 the price of wheat has been relatively stable. The wheat board has paid the western wheat producers a final price for each crop year since 1945 of something in excess of $1.80 a bushel, and usually about $1.83 a bushel. But with the final payment announced yesterday, for the first time since 1945 the price of wheat to the producer has fallen far below $1.80 a bushel for No. 1 northern basis Fort William.

With the final payment announced yesterday the total price for wheat amounts to only $1.56 a bushel. This more than 25 cents per bushel drop in the price of wheat to the wheat producer is causing grave hardship 50433-242J

in western Canada, is meaning a tremendous loss in purchasing power by western farmers and, as we all can see, is reflected in widespread unemployment and in a recession in many of the industrial areas of Canada.

Since 1945 the policy of the wheat board and the government in reference to wheat has been approximately as follows. In the beginning of each crop year an initial price of $1.40 per bushel was paid; the following February an interim payment of 20 cents per bushel was made; and in December of the same crop year a final payment was made, usually between 20 cents and 25 cents a bushel. Now not only have the payments fallen off drastically but the payment is made at a later and later date. In the 1953-54 crop year there was a delay in the making of the interim payment from February, the usual time, until December and a delay in the making of the final payment from December until May or June of this year when the farmers are likely to receive their cheques. The interim payment for the 1953 crop was reduced from 20 cents a bushel to 10 cents a bushel and, as I have said, the final payment was reduced from an average of 20 to 25 cents a bushel to an effective final payment of 6-2 cents per bushel.

This same thing can be illustrated in another way. When the 1950-51 wheat pool was wound up and the final payment was made there was a surplus on hand of $106 million. For the 1951 crop there was a surplus of $115 million, and for the 1952 crop there was a surplus of $123 million. This time the surplus, which has always averaged more than $100 million in the period I have referred to, is reduced to just over $25 million. The reduction of $80 to $100 million in the surplus representing money that cannot be made available to farmers as a final payment is not only very serious as far as the prairie provinces are concerned but is very serious indeed as far as the whole Canadian economy is concerned.

The drop in the price of wheat is reflected in a drop in farm net income. I have in my hand the latest figures for farm net income. They show that during the period from 1951 to 1954 there was a drop in farm net income of 48 per cent or from $2,154 million in 1951 to $1,125 million in 1954. A very substantial part of the 48 per cent drop in farm net income is directly attributable to the falling off in the price of wheat and the

Wheat

reduction of wheat board payments. Let no one go away with the impression that I am opposed to or critical of the wheat board method of marketing grain. We continue as always to support the wheat board method of marketing grain, and even though the price of wheat should fall even lower the wheat board method will remain the best possible method because it gives to each producer of wheat in the prairie provinces exactly the same price as his neighbour receives for the one-year period. The wheat board cannot guard against all severe fluctuations in the price of wheat but it can and does give to the farmers within a 12-month period the same price for wheat, and that in itself is a very important and worthwhile accomplishment.

I believe the Canadian government should establish a sound price for wheat based on the principles of parity. I have mentioned in the past how the government is behind other nations of the world in so many fields, and I regret that I am able to point out this afternoon that the farmers of Canada are guaranteed the lowest price for wheat of wheat producers in any wheat producing country in the free world. I hold in my hand a table of guaranteed prices for the various countries taken from the Alberta Wheat Pool Budget of March 25, 1955. Here is how the prices go:

Guaranteed price per bushel of

Country wheat

Turkey $3.21

France 3.04

Tunisia 3.03

Germany 2.83

Spain 2.81

Argentina 2.80

Japan 2.61

Greece 2.40

Belgium 2.29

United Kingdom 2.20

Sweden 2.10

United States 2.06

Australia 1.57

Syria 1.54

Canada 1.44

These prices are expressed in terms of United States currency. The Canadian wheat producers get from their government the worst treatment, in the way of a guaranteed floor price, of the wheat producers in any important wheat producing country in the free world. It is for that reason I say our farm organizations are justified in asking for an adequate support price for wheat, and in asking that parity prices be established.

From time to time we have asked the Minister of Trade and Commerce (Mr. Howe) what was happening to the Canadian export market for wheat. Time and time again the minister has replied that all was well, that

our markets were holding up well. As recently as last Friday the minister, in reply to a question asked by the hon. member for Humboldt-Melfort (Mr. Bryson) as to the drop in Canadian export sales of wheat, had this to say, as reported at page 3732 of Hansard for May 13, 1955:

We believe that our policy of selling for dollars is the proper policy for Canada. I know of no reason why we should sacrifice wheat which is the property of the producers of western Canada for the sake of the odd few sales we might get if we accepted a different currency.

On March 28 the minister, in reply to a question by the hon. member for Prince Albert (Mr. Diefenbaker), had this to say, as reported at page 2429 of Hansard for that date:

I think it is encouraging to find that, in spite of the offers of wheat made by the United States, Canada is selling more wheat than the United States has succeeded in disposing of by the various methods it has adopted.

Apparently not until yesterday did the minister realize what was happening in the world wheat export picture. What has been happening has been this. Canada's percentage of the sales of export wheat has been dropping every year since 1952-1953, from 43-2 per cent until now when it is running currently at 33-4 per cent. Even though there has been a substantial increase in the world trade in wheat, Canada has obtained practically none of that increase. The United States has obtained an increase of 64 million bushels to date in the current period; the Argentine, 14 million bushels; Australia, 12 million bushels, and Canada the very small increase of 2 million bushels.

It is clear from those figures that our government is going to have to adopt a different technique in the exporting of Canadian wheat if we are to hold our position in the export markets of the world. I suggest that position can be held only if the government moves away from its present position of demanding dollars and cash in return for the sale of every single bushel of wheat. Instead of criticizing the United States government for having made wheat available to countries that are short of cash, and short of hard currency I suggest the Canadian government should be adopting a similar policy which would result in the underdeveloped countries obtaining increased quantities of wheat, and which would obtain for Canada its traditional share of the world market for wheat. The government may not realize the very serious condition of agriculture in Canada, particularly in western Canada at the moment.

The Western Producer, published by the wheat pool organization, came to my desk yesterday. It is dated Thursday, May 12,

and in an editorial entitled, "Are Farmer Organizations on Their Toes?" in speaking about the dominion-provincial conference, I read the following:

In the circumstances, is it not highly significant that the dominion-provincial conference should be seized by the problem of unemployment which, bad though it may be, is no more than a symptom of the real disease, the core of which is the decline in agriculture.

And nothing is being proposed by the government today which will bring agriculture out of the deep depression it is now in, in western Canada, and which in turn would help to bring Canada out of the current recession.

Speaking about the disposal of agricultural surpluses, the Western Producer in the same issue, in an article entitled "The Surplus Problem", has this to say:

Agriculture today in Canada and elsewhere is confronted with many grave problems. Among the most serious, we suggest, is that posed by the inability to distribute surpluses and give farmers the green light to produce to the optimum in the knowledge that they will be assured of ready markets at fair prices. At a time when everybody admits that the food is needed and that a prosperous agriculture is the foundation for general prosperity this is not an unreasonable objective. On the contrary, to permit agriculture to slide into a depression might easily drag the whole economy down and thus gravely imperil the position of the whole non-communist world.

It is time that a concentrated effort by organized agriculture should be made to urge our own government to give top billing to consideration of ways and means for surplus food disposal.

I suggest to the government that instead of criticizing the action taken by the United States to get rid of their surplus agricultural products, the Canadian government should be co-operating with the government of that country, and should have similar policies to get rid of current agricultural surpluses in Canada.

Yesterday in his statement the Minister of Trade and Commerce pointed out how successful the United States has been in its current drive to make wheat available to soft currency countries. He pointed out that the government of the United States under this policy has made available 60 million bushels of wheat at a cost of about $200 million. Then, as reported at page 3782 of Hansard, he went on to say:

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.

In other words, according to that statement by the Minister of Trade and Commerce, American policy does not affect our commercial markets for wheat but, in the words of the minister, increases consumption in areas that cannot afford to buy wheat.

Wheat

That is what the C.C.F. has been advocating for many years, that our surplus agricultural products should be used to feed the hungry of the world, and that the government should not follow a policy of attempting to restrict production by enforcing stop-loss floor prices which ruin the farmers, or a policy of saying, "We will sell for cash, and for cash only, even if we lose a very substantial share of the international market for wheat".

The group of which I am a member believe in the principle of parity prices. We do not believe that parity prices are something that can be described as pie in the sky. We do not think that parity prices are something that is impossible of accomplishment. We think that parity prices, in the interests of all Canada, must be accomplished and must be provided. Until agriculture is assured of reasonable treatment, reasonable prices and a continuing steady share of the national income it will face recurring periods of drops in income. Farm income has dropped. 48 per cent in three years.

In order to overcome this recurring recession in agriculture, with its evil effects on the whole Canadian economy, the C.C.F. stand four-square behind the principle of parity prices. Parity to us is equity and justice. We do not support, as some other parties in this house do, notably the Social Credit party, a certain percentage of parity for any commodity which is less than 100 per cent, no matter by what formula it may be arrived at.

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CCF

Hazen Robert Argue

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

Mr. Argue:

I shall prove that to you in one moment.

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SC
CCF

Hazen Robert Argue

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

Mr. Argue:

I will prove it right now by quoting the hon. member for Acadia who gave the Social Credit position on agriculture in the budget debate, as reported at page 3626 of Hansard, as follows:

In this group we have been advocating a two-price system for a number of years; that is, that the domestic market for farm products should be supported at 100 per cent of parity and that farm exports should be sold at the best prices obtainable in the international market, preferably under international agreement but supported by a reasonable support price.

That is the policy.

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SC
CCF

Hazen Robert Argue

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

Mr. Argue:

The hon. member for Acadia says "agreed"; that the return to agriculture on a given commodity shall be the return which is derived from selling a part of the production on the domestic market at parity prices.

Wheat

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SC
CCF

Hazen Robert Argue

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

Mr. Argue:

Yes, on the domestic market but where the domestic market cannot use all the production, then the remainder is sold on the international market at the market price, and the farmer gets the amount that is obtained at the market price. For example, on wheat today it would mean a fair support price but still not parity. With parity for wheat today at perhaps $2.05, and as the hon. member says, if wheat sold outside Canada at $1.75 today the farmer would take the average and he would get less than a parity price.

Just as we believe that people are entitled to 100 per cent of justice in the courts and should not settle for anything less, therefore we believe that agriculture in Canada is entitled to full equity and full parity prices. We do not support anything less than full equity for agriculture.

I can point out that one of the first organizations that appeared before the cabinet asking for full parity prices and full equity for agriculture was not a farm organization but a labour organization. 1 hold in my hand a program for full employment as outlined by the national U.A.W.-C.I.O.-C.C.L. conference to fight for full employment, dated at Ottawa, February 24, 1954. In this program they have point eight, which is entitled "full equity for working farmers". It reads in part:

The impressive and productive efforts of Canadian farmers to assure Canada abundance of food and fibre should not be rewarded by depressing the living standards of the people who work the land.

We propose the establishment of a federal farm program that will provide full equity to working farmers, help meet their credit problems at low interest rates which only the dominion government can provide, improve markets, and include other measures necessary to permit farm families to enjoy higher living standards, consistent with a program of full employment and full production.

That is not the view of an agriculture organization; it is the view of very large trade union organizations. I know what the press will say. I know what the Sifton press in western Canada will say. It will claim that parity prices make for agricultural surpluses. That is a fallacious contention. As a matter of fact, the way you get agricultural surpluses is to reduce the general level of agricultural prices; and farmers, in an endeavour to protect their income, milk more cows, seed more acres to wheat and attempt to increase the volume of production in order to protect their standard of living. There is not an agricultural economist that I have read who says that the answer to surpluses in Canada or in the United States

is to reduce prices, because If prices are reduced surpluses will be increased.

The United States farmer this year is going to have to make a very difficult choice. He is going to be asked to choose between obtaining a support price for wheat at only 70 per cent of parity, which works out to about $1.70 a bushel, if he agrees to a 30 per cent reduction in wheat acreage; and, if he says no to that, production will be unrestricted and the support price will be $1.19 a bushel. There is a very great danger to the whole international price for wheat that the United States farmer, asked to accept an acreage reduction of 30 per cent in order to obtain 70 per cent of parity, will say, "I will take a gamble with full production, and take whatever the market will bring". That is the kind of policy with lower support prices that does not reduce surpluses; it adds to the surpluses, and that huge surplus then is available to depress the market further. So I say that anyone who claims that parity prices by themselves result in creating surpluses is wrong. Surpluses can be created, and surpluses have to be dealt with; but there is another way to get rid of surpluses than trying to lower prices to the point where you wreck the agricultural economy and by wrecking the economy hope that farmers will decrease their production.

The way to handle surpluses of food products is to increase demand. I am sure that there are many thousands of Canadians who are undernourished and who need more food. I am certain that no old age pensioner in Canada today receiving $40 a month has sufficient to buy the kind of food to give him an adequate diet and a reasonable nutritional standard. The government should adopt a policy which will give more purchasing power to our low income groups and to those on the old age pension. The government should provide a school-lunch program to take care of further agricultural surpluses. In other words, the government should adopt policies to ensure that every Canadian has an adequate diet. If that were done it would take care of a substantial part of any agricultural surplus that may appear. The government also should follow a policy of accepting soft currencies in exchange for wheat. The government should follow a policy of making wheat available for famine prevention and for a school-lunch program in the underdeveloped countries of the world. The government also, I suggest, should make advance payments for farm-stored grain in order that farmers can obtain purchasing power when they produce a crop and are unable to market that crop through congestion.

The government should encourage the storage of any temporary surpluses of wheat on farms as a method of saving storage costs. The minister has told us that the costs of storage have gone up in the past year very substantially-8J cents a bushel higher than the previous year. The farmer pays that 8J cents a bushel. The storage costs that are paid today are paid only to the elevator systems in this country and not paid to farmers, and that encourages the elevator companies, as the Minister of Trade and Commerce well knows, to expand their storage facilities in order to make greater revenues and greater profits. All of the time the farmer is paying the total shot. The farmer knows no reason why he should have to build his own storage on his own farm and then have to pay for the duplication of that storage by elevator companies. So I suggest to the government that, in addition to paying storage to elevator companies, which is part of the cost of marketing grain, they should adopt a policy of making storage payments on temporary surpluses of wheat available to farmers when they store their grain on the farm.

These are the points I suggest the government should now adopt to meet this very grave situation. There should be full parity prices for wheat. The government should immediately announce the interim payment on 1954 wheat and not wait till next December. The government should accept soft currencies and make wheat available for famine prevention and a school-lunch program. The government should make advance payments for farm-stored grain and encourage farmers by paying for storage of any temporary surpluses of wheat on the farm.

If this kind of six-point agricultural program for the wheat producers were put into effect, we would restore the purchasing power to this huge area of Canada. We would restore in a large measure the purchasing power to 200,000 farm families in the three prairie provinces. By so doing we would reduce the amount of unemployment in Canada, and, if we made available, as we should, our surplus food to hungry people and to underdeveloped countries, we would be making a very important contribution to peace far exceeding, I suggest, the contribution that is made even by our present defence program.

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SC

Victor Quelch

Social Credit

Mr. Victor Quelch (Acadia):

Mr. Speaker, I do not think there is any doubt that the farmers of Canada will be disappointed at the announced price payment, especially when it

Wheat

is realized that the total payment they will have received is $1.56. I will admit right away that the farmers will be better off with that price than they would have been if we had been under the open market system and if there had been no wheat board. If there had been no wheat board in operation in the past four or five years, with the three very large crops we have had, the price of wheat would have gone to a very low level, because whenever there is a large surplus the grain trade always uses that as an excuse to depress prices.

On the other hand, in the light of history and the government's wheat marketing policy since 1945, and in the light of the world situation, I would say that today the farmers are entitled to a higher price than $1.56. It is interesting to note that under the formula that is used under the Agricultural Prices Support Act, section 9(2), using 1943-44-45 as the base year, the parity price of wheat today would be $2.27. I obtained that price from the dominion bureau of statistics; $1.56 is a long way below the parity price as formulated under the Agricultural Prices Support Act as $2.27. But, of course, grain does not come under the Agricultural Prices Support Act.

I should like to review very briefly the history of the government's wheat policy since 1945. Remember that after the war it was government policy to allow our allies to have wheat at a lower price than the actual world market price. The minister of trade and commerce of that day, Mr. MacKinnon, pointed out that it would not be fair to our allies to soak them for every cent we could get in selling our wheat to them. That was the policy of the government when the British wheat agreement was formulated under which we allowed them to have wheat at a price quite a bit less than the price for class II wheat. I know that the Minister of Trade and Commerce (Mr. Howe) on different occasions has said that every member of the House of Commons supported the British wheat agreement as being a good agreement for the farmers. I should therefore like to quote what I said at the time when we were discussing that agreement in this house in 1947, when the agreement came before us in the amendment of the wheat board act. I then had this to say as reported at page 745 of Hansard of that year:

If in the next two or three years there is a wheat shortage, if crops are poor, the price of wheat will be maintained at probably a high level and will remain there. Then the guarantee becomes absolutely useless. If that should be the situation over the next two or three years the farmers of this country, as a result of this agreement, are going to lose several hundred million dollars . . .

I believe that the wheat agreement with Britain was fully justified but it does entail in its early

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SC

Victor Quelch

Social Credit

Mr. Quelch:

What is the true purpose of international trade? What is the real justification for insisting that a certain proportion of our production should be sold for the currency of the importing nation? The justification for that insistence is that the true purpose of international trade is the exchange of goods and services between nations on the basis of mutual advantage. Would anybody deny that that is the real principle or the elementary purpose of international trade? If you accept that as the real purpose of international trade, then surely when you sell your goods to another nation, the only currency you need is the currency of that nation, because it is the currency of that nation that you will have to use to buy its goods. You therefore do not need dollars. Yet strangely enough, as I say, every time that question has been raised in the house and a vote has been taken on it, members of other parties have voted against it.

Last year I referred the Minister of Trade and Commerce to what was happening in the United States. I quoted from the U.S. News and World Report, showing that they were going to introduce a policy under which approximately $1 billion of United States produce could be disposed of in foreign nations either in exchange for their currency or in the form of gifts. At that time, as reported at page 5997 of Hansard of June 15, 1954, the Minister of Trade and Commerce interjected these words:

That program was adopted some months ago. So far as I know, India has not taken any wheat for rupees and very few other countries have taken wheat for local currencies.

I then went on to point out that the minister was confusing two programs. I was referring to a program that was going to be brought down. When he said it had been in operation for two or three months, he was referring to another program which was called the mutual security act, under which $250 million worth of United States produce could be exchanged for foreign currency and the foreign currency used mainly for defence purposes. But under the new act, the agricultural adjustment act, over $1 billion of United States farm products can be either exchanged for foreign currency or given in the form of a gift. It was strange to me that at that time the government seemed to show so little concern about the program of the United States in regard to being willing to accept foreign currency in exchange for their produce. Even up until a few days ago the minister seemed to think that a program of that kind could not amount to anything because, as reported at page 3732 of Hansard, he stated:

I know of no reason why we should sacrifice wheat which is the property of the producers of western Canada for the sake of the odd few sales we might get if we accepted a different currency.

I cannot understand why he should use that word "sacrifice". There would be no sacrifice entailed in accepting sterling. The sterling area covers a large percentage of the world. It includes many countries. If we accepted sterling, we would be able to use that sterling for the purchase of goods in any part of the sterling area. Where would be the sacrifice?

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LIB

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

Liberal

Mr. Howe (Pori Arthur):

I have yet to know of a case where that kind of sterling is not frozen sterling. In other words, I know of no case where the United Kingdom has offered sterling that can be used in any part of the sterling area in return for purchases here. I am extremely doubtful if that offer would ever be made.

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May 17, 1955