Hon. Gordon Churchill (Minister of Trade and Commerce):
Mr. Speaker, during recent weeks the government has been giving close study to the food situation in Colombo plan countries. Because of short crops on the Indian subcontinent, India and Pakistan have had to import unusually large quantities of wheat, much of it from the United States under the provisions of public law 480, in addition to their usual commercial purchases from traditional suppliers like Australia; and Ceylon will require additional food as a result of recent disastrous floods.
A few months ago, as the situation worsened, a decision was made to supply a limited quantity of wheat to both India and Pakistan and some flour to Ceylon out of available Colombo plan funds. This decision was warmly welcomed by these commonwealth countries. The totals could not be as large as we might have wished, $7 million to India, $2 million to Pakistan and $1 million to Ceylon, because the funds had already been largely committed for urgent purposes of national development.
Some weeks ago, the Indian government approached us to ascertain whether Canada would be prepared to supply additional wheat for payment over an extended period. Having in mind the great interest the Canadian people have shown in assisting India in its gigantic task of economic development, the government believed that parliament would wish to go as far as possible to meet the Indian request.
Accordingly negotiations have proceeded, and I am in a position to inform the house that an agreement has been reached between the Canadian wheat board and the Indian government for the supply of a quantity of 400,000 tons of wheat, approximately 15 million bushels, to be shipped during the winter
and early spring months. This agreement is subject to the conclusion of financial arrangements between the two governments which will provide, in brief, that payment will be made in seven equal annual instalments beginning three years after shipment. Interest is payable annually at a rate equal to the borrowing cost to the Canadian government plus a small charge for overhead. This rate is not likely to exceed 4J per cent.
These terms are, of course, most unusual. They are not terms that could be offered in ordinary commercial markets without the danger of turning cash sales into long-term credit sales. They can only be justified as part of Canada's effort to consolidate the very real gains that are being made in India, Pakistan and Ceylon and other Colombo plan countries, to prevent the serious setback which could result from the need to import and pay immediately for large scale imports of foods.
When the government of Pakistan was informed of these discussions with India they asked if wheat would be available to them on the same terms, and we assured them that the same terms would be available to all countries in receipt of assistance under the Colombo plan. Pakistan also requested that part of next year's Colombo plan appropriation be used for wheat. Because of prior commitments with respect to continuing projects this would have been difficult. But, as I shall indicate shortly, the government is proposing an increase which will be of assistance to Pakistan.
We have reason to believe that India will require additional quantities of wheat, over and above 400,000 tons, from Canada during the coming months. Some of this they may be prepared to buy on terms similar to those I have outlined. Pakistan and Ceylon and other countries within the Colombo plan may also make similar requests in due course.
The government is confident that parliament will support the provision of wheat and flour to Colombo plan countries on the terms I have outlined. We are also confident that at this difficult time in the affairs of our friends in south and southeast Asia, parliament and the people of Canada would wish to see an increase in the amount of aid in the form of outright grants that is being made available to them.
When the Minister of Finance brings down further supplementary estimates later this
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Inquiries of the Ministry month parliament will be asked to vote approximately $30 or $35 million to be loaned to Colombo plan countries for the purchase of Canadian wheat and flour, and an additional $15 million as an outright grant for the same purpose. We have in mind that a part of the $15 million grant will be used to meet an urgent request for assistance by the government of Ceylon arising from the vhry serious floods that have caused such devastation in that country.
Canada has assumed responsibility to assist in the development of the countries of south and southeast Asia through the Colombo plan. This development is threatened by grave shortages of food. It is fortunate that our abundance coincides with their need and that we are in a position to play some further part in keeping this great effort of the free world moving ahead.
I am making this statement now so that plans for the movement of the wheat can proceed with a minimum of delay, and so that hon. members will be aware of this important development in government policy before they are asked to consider the relevant items in the estimates.
On the orders of the day:
Subtopic: COLOMBO PLAN
Sub-subtopic: STATEMENT ON PURCHASE OF WHEAT BY MEMBER COUNTRIES