January 25, 1958

CCF

Willis Merwyn (Merv) Johnson

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

Mr. Johnson (Kindersley):

Before the lunch hour, Mr. Chairman, and before the passing of the amendment proposed by the Minister of Agriculture, there was considerable discussion on the factor of cost of production. I believe this has been the focal point in

the whole debate on the agricultural stabilization bill. There have been requests from farm organizations, members of the C.C.F. and Social Credit groups and from members of all political parties for the application of a cost-price formula to the bill which will ensure the farmer a fair return. It has been pointed out that during the past ten years there has been a cost increase to the farmers of 50 per cent, whereas in the case of the western farmer there has been a decline of 21 per cent in the prices they have received during the same period. It is therefore evident that this cost-price relationship is, as I say, one of the focal points of the argument and the term cost of production becomes very important.

I feel convinced that the term "cost of production" in the bill as it was originally introduced by the Minister of Agriculture was one which caused much concern to members of this group. That was also expressed in a press statement of the Canadian Federation of Agriculture issued on December 15, 1957, as follows:

The Canadian Federation of Agriculture has repeatedly urged that there should be a formula in the bill to be used as such a guide, and that the formula should compare prices received by farmers with the cost of goods and services which the farmer must buy. This is commonly referred to as a parity formula.

It is apparent that the criticism stems from the failure of the Minister of Agriculture in initially drafting the bill to include a clause relating the cost of production to the price received, and I think it is very significant that, as a result of complaints lodged by the Canadian Federation of, Agriculture, the interprovincial farm union council and also voiced by members of this house, that all the amendments to the bill were introduced on December 14. The term "cost of production" was placed in the bill in two instances. In the preamble we have the term "cost of goods and services" and in clause 2, subsection (2), we have introduced the term "cost of production". It is significant, then, to follow this one step further and note that this term was placed in the bill and that the interprovincial farm union council made a representation with respect to the agricultural stabilization bill, Bill No. 237, on January 7, including the following submission:

The beard shall establish support prices for commodities by determining the cost of production of any commodity on a regional basis and such price will be the guaranteed price for such commodity for a prescribed period.

Here again we have the term "cost of production". I am firmly convinced it will be one of the deciding factors with respect to the beneficial results of this bill.

Agricultural Products-Price Stabilization

The minister proposes to make further amendments which will include the term "cost of production". I think if we review the record of speeches made on this subject we will find this term appearing with extreme regularity, in fact I notice that in replying to a question before the lunch hour, the minister himself used it three times in a very short paragraph. It will, I believe, appear at least once in each sentence, and the minister has made use of this term on several other occasions. We noticed also that the Prime Minister used the term "cost of production" yesterday and that it was also used by the hon. member for Bow River this morning. All hon. members have used it and all hon. members will recognize the importance of the term because it is used by farm leaders and farm organizations throughout the country.

Clause 2 of this same bill to which we are referring states that the governor in council shall be guided by the estimated average cost of production. There again we have this same term appearing in the bill before us and it appears in a further clause dealing with requests that there should be a relationship to the cost of production.

I might ask the committee just what does this term "cost of production" mean? Does it apply to the cost of the land or to the cost of the fuel the farmer must use to produce his commodities? Does it allow him a reasonable profit? Is it related to a specified period? Are we referring to cost of production for a specific commodity and applying that to all farmers?

If I might be allowed to quote the Prime Minister once again, when he was speaking on the Agricultural Prices Support Act on July 29, 1944, he had this to say as reported at page 5600 of Hansard:

But if this bill is to be anything more than the promise of a hope, there must be something in it to show that the prices farmers are to receive will assure them of reasonable costs plus a fair return.

Here again we have that same factor coming forward-cost of production. It is most necessary that this be clarified for the benefit of the members of this house and without elaborating on it any further I am going to move an amendment, an amendment which will place the definition of cost of production among the definitions in this bill. I am certain this amendment cannot be ruled out of order on the ground that additional expenditure will be involved. I think in all probability the minister will accept the amendment as correcting an oversight which has been made in the further amendments he has introduced and that it will be readily recognized that in the first

draft of the bill the term "cost of production" was not involved. It was introduced into the bill in the amendments which the Minister of Agriculture made at a later date, and it therefore becomes necessary to define in the bill this term, giving guidance to those who will later be called upon to administer the act.

I might say at the outset that I think it is very difficult to define cost of production, but I have had the good fortune of having a university education in agricultural economics. I have also been associated with the subject and have discussed the matter with my colleagues who have also had this training, together with men in technical agriculture. We have concluded that the definition of cost of production should be as I will now state and I therefore move, seconded by the hon. member for Humboldt-Melfort (Mr. Bryson):

That subclause (1) of clause 2 of BUI 237 be amended by Inserting therein immediately after subparagraph (c) the following new subparagraph:

"(d) 'cost of production' means the cost of all goods and services necessary to the production of the commodity and shall include a fair return for investment and labour;"

and by relettering subparagraphs (d) and (e) as subparagraphs (e) and (f).

It is apparent, as one analyses the definition which I am requesting be placed in the interpretation clause of this bill, that we are providing the farmers with a price which will meet their costs of goods and services used in the production of a certain commodity and will give them a fair return after their investment and cost of labour. This is a very reasonable definition and one for which I am certain members of the civil service staff, members of the government and others will be extremely grateful in their administration of this bill. As a result I am more than certain the farmers across Canada will be grateful if this amendment is accepted and approved by the minister or by the house, as the case may be.

I think I should point out that the majority of members are of the legal profession and it should not be necessary for me to convince them of the desirability of having this term defined in the agricultural stabilization bill. Those of us who are practical farmers will certainly support it in the terms used by the Prime Minister when he was speaking in 1944 and when he used the expression "if the bill is going to be something more than a promise of a hope".

Therefore, Mr. Chairman, I will conclude my remarks by asking the minister to accept this amendment, which I am certain is in order and which will follow up the principle we have been trying to emphasize in our discussion of this bill, that is, to improve it and

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Agricultural Products-Price Stabilization make it a better bill for the farmers across Canada. The minister himself has said he does not expect that this measure is complete in every detail, and his remarks were reiterated by the Prime Minister when he spoke yesterday. I am suggesting that by making this amendment now we will be saving hon. members of this house and farmers across Canada some difficulties which no doubt they will experience on some future occasion through lack of this definition.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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PC

Douglas Scott Harkness (Minister of Agriculture)

Progressive Conservative

Mr. Harkness:

Mr. Chairman, I see no

necessity for this amendment. As a matter of fact, it seems to me that it is merely an attempt on the part of the hon. member and his friends who are supporting it to try to tie the hands of the advisory committee and the board with regard to their determination of what the average cost of production is for any particular commodity. I cannot see that it would add anything to the value of the bill, and therefore I would oppose it.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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SC

James Alexander Smith

Social Credit

Mr. Smith (Battle River-Camrose):

We in

this group are quite happy to support this amendment because we feel that cost of production should be defined in this bill. Other items are defined. The base price is defined, the board is defined, and so on, and since cost of production is the key around which the whole bill is likely to revolve we can see no reason at all why there should be no definition of what is meant by cost of production in the act.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Hugh Alexander Bryson

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

Mr. Bryson:

Mr. Chairman, the point the minister made a moment ago in criticizing the amendment moved by the hon. member for Kindersley is precisely the point we are trying to make. There should be some clear definition of what the minister means and of what is involved in the expression "cost of production". The definition given is certainly a logical one, and it could not be interpreted in any other way. The point I should like to make is that when the minister makes a statement that he is prepared to consider or take into account cost of production he is, in effect, doing something which seems to me almost impossible to carry out. I say that as one who has some knowledge of the United States program with regard to cost of production. That is why we in this group have been very critical of any kind of program directed toward helping the agricultural industry which is based on the theory of supply and demand. We have advocated parity prices for the very reason that under such a system you can take cost of production into consideration.

Does the minister mean he is going to say to every producer of wheat, for instance- when wheat is taken under this scheme; and this example applies to other products too- that we are going to consider that every

[Mr. Johnson (Kindersley) .1

farmer who grows wheat should receive his cost of production? If he does he will never sell that idea to the consumers of this country, because it is completely unrealistic.

I should like to give the committee a concrete example. I grow wheat in what is called the Carrot valley of northern Saskatchewan. From an economic view the operation is completely inefficient. My hon. friend from Kindersley can and does produce the highest quality of wheat grown anywhere in the world, and he carries on that operation more efficiently than, possibly, could be done in any other part of Canada. My costs of production are way out of line compared with his, and if you are going to say to me; we are going to subsidize you; we are going to penalize the consumers of this country and the taxpayers of this country to the extent that we are going to give you your cost of production, then I say that the whole proposition is completely unrealistic.

What has been done in the United States to overcome this problem? They have approached it in this way. There are certain designated areas; a wheat belt, a corn belt, a cotton belt, a soya bean belt, a tobacco belt and so forth, and within these narrow areas they set the price so that an economical producer can receive a payment which will give him his cost of production. Anyone outside these areas is free to grow any product he likes, but he must take his chance, because his cost of production is likely to be higher and, therefore, he must make up his own mind as to the economic feasibility of growing the crop.

I say to the minister that he is going out on a limb if he is going to make it clear to the farmers of Canada that regardless of where they live they are going to get their cost of production. I do not think it is reasonable, and I do not think it is realistic. In the area of the United States that is designated as a wheat belt there is set up a great catalogue of items which are considered as being part of the farmers' cost of production, that is, the things he buys which go into his operation. Every three months these items are reviewed, and if the cost of them has changed, the changes are included in the calculation of the cost of production and are related to the price the farmer gets. That is one of the reasons we have advocated parity prices rather than a price based on the theory of supply and demand.

A little later on I may have the opportunity of saying something further in this regard, but at the moment I think the amendment which has been moved is a logical amendment. We should certainly like to have the minister clarify his views on this matter and state

Agricultural Products-Price Stabilization

more clearly what the terms of reference to the committee will be in setting up this formula embodying cost of production.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

Mr. Chairman, as my colleague from Kindersley has said, I am sure it is an oversight that this particular provision was not included. When Bill No. 237 was first prepared there was no preamble. Now, as the preamble in the reprinted copy, we read:

Whereas it is expedient to enact a measure for the purpose of stabilizing the prices of agricultural commodities in order to assist the industry of agriculture to realize fair returns for its labour and investment, and to maintain a fair relationship between prices received by farmers and the costs of the goods and services that they buy. . .

Since the minister has decided that it is important that this preamble be included, I think it is logical that the amendment proposed by the hon. member for Kindersley should be accepted without further argument. Yesterday the minister suggested that people in this corner had heaped abuse on the Minister of Agriculture. I tried to rise at the time to deny that. I want to say now that I have always said that I consider the present Prime Minister selected the most suitable member of the Conservative party for this important post. Having said that, however, I hope I am not prevented from criticizing this legislation. I admit very frankly that the Minister of Agriculture took over a department that had been run on the rocks for 20 years and he had to assume command of a situation wherein the Canadian farmers in all provinces had been getting a raw deal while farmers in other countries of the world had been receiving generous assistance.

I was quite disappointed that the minister last night saw fit to raise a point of order and refused to consider including wheat, oats and barley from the prairie provinces. It will not be possible to give the prairie farmers anything approaching a square deal as long as the minister is not prepared to accept that amendment.

According to the Wheat Review of January 6, 1958, it is stated that in the three prairie provinces there were 895 farmers on a one-bushel quota, 887 on a two-bushel quota and 256 on a three-bushel quota. There is no hon. member from any prairie constituency who will argue that even the farmers who are on a three-bushel quota-

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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PC

Douglas Scott Harkness (Minister of Agriculture)

Progressive Conservative

Mr. Harkness:

Mr. Chairman, on a point of order. There is no question but that the hon. member should not be going back to a general discussion with regard to quotas now that we are dealing with this particular clause and amendment. His remarks are completely irrelevant to the clause before us.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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PC

Charles Edward Rea

Progressive Conservative

The Acting Chairman (Mr. Rea):

The point raised by the Minister of Agriculture is very well taken. I hope the hon. member will confine himself more closely to this clause and this amendment.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

Mr. Chairman, I was merely trying to show that the prairie farmers are going to be left out in the cold under this legislation-

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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?

Some hon. Members:

Order.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

I am not proceeding with it. I am merely suggesting, Mr. Chairman, that no member of parliament from a rural constituency in western Canada will go back and meet his farmer constituents and say, "I stood up in the House of Commons and voted against an amendment to ask that this be guaranteed so the cost of production will mean the cost of the goods and services necessary to the production of the commodity and shall include a fair return for investment and labour." I think it is significant that there was a slaughter of Liberal members of parliament from Manitoba on June 10 last. During this debate the Conservative members for the constituencies of Lisgar, Provencher, Portage la Prairie, Brandon South, Churchill and Marquette have been silently sitting it out on second reading.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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PC

Gordon Minto Churchill (Minister of Trade and Commerce)

Progressive Conservative

Mr. Churchill:

Is it any wonder? They want to get it through.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

These hon. gentlemen rode into parliament last June to fill the vacancies created as the result of the failure of the Liberal members-

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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PC

Charles Edward Rea

Progressive Conservative

The Acting Chairman (Mr. Rea):

Order. I must again ask the hon. member to come back to this clause and this amendment. I would point out that we are not discussing the elections act. I must ask the hon. member once again to apply himself to the subject before the committee.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

I am suggesting, Mr. Chairman, that we want to hear from some hon. members on the government side of the house.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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?

An hon. Member:

Sit down and you will hear from them.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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?

Some hon. Members:

Order.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

Mr. Chairman, I am suggesting that we should hear some argument from the government side of the house.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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PC

Gordon Minto Churchill (Minister of Trade and Commerce)

Progressive Conservative

Mr. Churchill:

We are not hearing any from you.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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CCF

Alexander Malcolm Nicholson

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

Mr. Nicholson:

The Minister of Northern Affairs and National Resources made an unfortunate interjection the other day regarding the Saskatchewan farmers going to California.

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Agricultural Products-Price Stabilization

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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PC

Douglas Scott Harkness (Minister of Agriculture)

Progressive Conservative

Mr. Harkness:

Once more, Mr. Chairman, it is out of order for the hon. member to refer to what was said several days ago. We are now on a particular amendment and if the hon. member cannot confine his remarks to the amendment he should not be allowed to have the floor.

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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January 25, 1958