January 25, 1958


Amendment agreed to. Clause 7, as amended, agreed to. On clause 8-Establishment of base price.


SC

James Alexander Smith

Social Credit

Mr. Smith (Battle River-Camrose):

We in

this group have always strongly argued that support prices should be related to some period of years when the prices of agricultural products and the costs were in approximate equivalence one to the other. Several such basic periods have been suggested; the years 1925 to 1929 have been used for several years now by the Canadian Federation of

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Agricultural Products-Price Stabilization Agriculture and the administrators of the agricultural prices support board use the period 1943, 1944 and 1945 as their base years. The period 1948 to 1957 is also a stable period of years and it is close to being as effective as the other two periods I have mentioned.

The Canadian Federation of Agriculture has pointed out that this basic period using the 80 per cent average as proposed in this bill would establish prices which are slightly below their 70 per cent of the parity for such items as hogs, butter, eggs and cheese.

The present Prime Minister, in speaking in this house on March 12, 1956, is recorded at page 2021 of Hansard as having said with respect to the best period of years:

The squeeze which the farmer suffers results from the disparity in the relationship between the prices of farm products and the prices the farmer has to pay. When they are in proper relationship parity is established, and it is parity that the farm organizations across this country are asking for today. Not charity but parity. When one looks at the general price relationship one begins to realize how far in recent years that desirable end has been departed from. As far as parity is concerned, it must be related to a basic period-

I wish to repeat, Mr. Chairman:

-it must be related to a basic period which is regarded as one in which prices and costs are in approximate equivalence one to the other.

During the course of the same speech the Prime Minister gave a definition of parity in the following words:

I know of no better definition of parity than that which appeared in yesterday's New York Times. I have made the necessary changes in the definition to'meet the situation in this country. It is as follows:

Parity prices are the dollars and cents prices that give to farm products the same buying or purchasing power they had in a selected base period when prices received by and prices paid by farmers were regarded as in good balance.

In view of this, Mr. Chairman, I wish to move, seconded by the hon. member for Vegreville:

That section 8, subsection (2) be amended in lines 3 and 4 by striking out the following words: ''the ten years immediately preceding the year in which the base price is established" and substituting the words "the ten year period between 1948 to 1957, all years inclusive."

I would point out that section 8, subsection (2) as amended would read as follows:

The base price for an agricultural commodity shall be the average price at representative markets as determined by the board for the ten year period 1948 to 1957, all years inclusive.

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-

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):

Would the Chairman kindly put my amendment to the house before it is spoken to?

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):

It has not

yet been decided whether the amendment is in order, and I was wondering whether the Minister of Agriculture had any comments to make.

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:

Yes, Mr. Chairman, I was going to point out that in my opinion this amendment is out of order on two grounds: Firstly, it is contrary to the general principle of the bill, which is to provide a system of flexible price supports for agricultural products. This amendment is intended to put a rigid formula into the bill by deciding on a fixed base period, which of course is one of the main features of a rigid formula. We would then be tied to a particular base period and it would not matter how much conditions might change, what technological advances might be made or what changes there might be in export markets, general levels or anything else. Secondly, this is out of order because it could have the effect of increasing the charge on the public treasury. On those two grounds I would ask that the amendment be ruled out of order.

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):

I would like to draw attention to the explanatory notes where it says:

The board will establish the base price for a commodity by calculating the average price at representative markets for the ten years immediately preceding the year in which the base price is establsihed.

The house approved that, in principle, on second reading and therefore this amendment would be contrary to the general principle of the bill and I rule it out of order. Shall clause 8 carry?

Topic:   AGRICULTURE
Subtopic:   MEASURE TO PROVIDE GUARANTEED PRICES FOR CERTAIN COMMODITIES, ETC.
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Clause agreed to. On clause 9-Duration of action to stabilize prices.


LIB

James Garfield Gardiner

Liberal

Mr. Gardiner:

I wish to raise a question upon which I think the minister and I are now agreed. Yesterday I made a statement that on three occasions there was a two year period for butter and I think the minister was under the impression that there were only two such occasions. I would just like to ask him whether I was not correct?

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:

Yes, Mr. Chairman, the right hon. member for Melville was quite correct. There were three of those periods rather than two, as I had in mind. I was incorrect in my statement and I would like to apologize to the right hon. member.

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

James Garfield Gardiner

Liberal

Mr. Gardiner:

You do not have to.

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, clause 9, subclause 1 contains a very interesting feature, namely the security feature which it embodies, or the forward pricing feature. Both

the Prime Minister and the hon. member for Halton speaking yesterday characterized this one-year forward price as the vehicle by which a long-term planning on the part of agriculturists could be carried out. In agricultural circles both in this country and in many other parts of the world two concepts are used in arriving at a pricing formula for agricultural products. The first is the concept of parity. I do not want to be called out of order, Mr. Chairman, because I am going to refer to this only very briefly in order to lay the foundation for the case I am going to make. One concept is parity which, I am the first to agree, involves certain production restrictions. I do not think anybody will deny that this would be the logical outcome of such a policy. Not a curtailment of production-I want to make that clear

but a curtailment of certain aspects of production. And it envisages possible subsidies.

The other concept is an agricultural price formula based on the concept of supply and demand. That, of course, is the principle embodied in the bill which is before the committee this afternoon. One of the strange things is that in recognizing and attempting to introduce a pricing formula, a program involving the theory and the concept of supply and demand, the minister and his government have not accepted the principle of forward pricing which is the key to this concept and principle which has been advocated by all those who have implemented or brought into existence an agricultural policy based on the concept of supply and demand. In effect this one-year forward price is not a forward price at all, and an agricultural program based on a forward price of one year is doomed to failure. It is with this aspect of clause 9 that I wish to deal, rather briefly.

What does a forward price propose to do? Its purpose is to iron out the fluctuations in price over a production cycle. That is the purpose, and that is the anchor which might make for successful operation, even though the present formula is based on supply and demand which is the market price. Why is it advisable that these fluctuations in price should be eliminated?

The losses and the hardship to prairie farmers due to price instability are impossible to calculate, but they are great. Long term production planning is practically impossible in view of the lack of long term price assurance. Consequently, farmers, in an attempt to guess the market, are in-and-outers and this increases the wide fluctuations in price. Let us take the case of cattle as an example.

Agricultural Products-Price Stabilization

When prices are low and breeding stock is becoming scarce the market prospects look attractive. Farmers begin to purchase and breed livestock. By so doing they absorb stock which would otherwise have gone to market. Packers, in closer touch with the market and employing the staff skilled in analysing trends, increase their purchases of storable meats. The supply of available stock is further decreased. Prices rise rapidly, but the farmer has little available for sale. He is himself a buyer. By the time he has completed his breeding program and his stock is ready for market many others have done the same thing and have reached approximately the same point. The packers, by drawing on supplies built up during the period of low prices, purchase to a minimum. Farmers are not purchasing breeding stock because their needs in this line are filled.

The result is an immediate supply far exceeding immediate demand and prices take a drastic drop. The farmer is caught. He cannot hold off the market because his product deteriorates. Production is not economical in many instances and the breeding stock goes to swell the supply of killing animals. Many farmers who should never have been in the livestock business, for economic reasons, have been attracted by the later very high prices. For them, retention of a livestock production program at low prices would be business suicide. Their herd goes, lock, stock and barrel. Prices are depressed far below a level which will even show a net return to the most efficient producers, and they remain low for a much longer period than they remained at the peak. Not only have many farmers bred stock just before the slump but many continue to breed for some time after in the hope that the recession is an abnormality which will be short lived.

However, the forward price carefully administered can closely reach a certain objective and may lead to results far superior to so-called competition as presently practiced. Provision must be made for a lower price if the supply cannot be absorbed. That is the point the minister stressed the other day. When he is about to set the prescribed price he is going to have to take into consideration the demand on the market, and if the demand is great, it is logical to suggest he will raise the prescribed price above the preceding 10-year average to encourage production; but if the demand is less than the supply, conversely, he would lower the prescribed or guaranteed price below the last 10-year average in order to discourage production. That is, in essence,

Agricultural Products-Price Stabilization a true forward price. But you cannot do it on a 12-month period. You must do it on the basis of a production cycle.

It is well established what is involved in a production cycle. You cannot say you will make an investment in livestock just because you know that 12 months hence the price is going to be what it is today. You have to know five years ahead, and the production cycle is accepted in agricultural colleges throughout the country as being five years for livestock. It simply means that you must know what the price will be of the progeny of an animal five years hence. Thus a realistic forward price for cattle must be over the entire production cycle for five years. That does not mean the minister will have to wait five years to set the price. The price will be set each and every year, but when a man invests in livestock in 1958 he is going to know that in 1963 he will receive the price that prevailed at the time he went into the business. We will say for argument's sake it is 20 cents a pound. Now, if in 1959 the minister believes that demand has outstripped supply he could raise the price to 21 cents a pound in that year. In 1960 if the minister thinks that supply is greater than demand he could drop it to 19 cents.

The point I am trying to make is that the man who invests in livestock must know at the end of one production cycle, namely five years, that he is going to get a guaranteed or prescribed price equal to the price that prevailed when he first went into the business. I suggest in all seriousness that this program based on supply and demand which completely ignores the key to this proposition, which is a forward price base of one production cycle, is doomed to failure and because of that, Mr. Chairman, I would move seconded by the hon. member for Kindersley the following amendment:

That subclause (1) of clause 9 of Bill No. 237 be amended by deleting all the words after the word "board," in line 18 to the end of the subclause, and by substituting therefor the following words:

"and shall continue thereafter for a period of one production cycle in the case of all named and designated commodities, or for such other additional period as the governor in council prescribes."

One further word, Mr. Chairman. The argument I have made is not simply that I do not believe a farm program can realistically accomplish what of necessity has to be accomplished by using the pricing principle of supply and demand. I believe that never in history has demand ever exceeded supply. It is simply a question of distribution. That is the problem we should be trying to solve rather than worrying about demand. We have land, labour and

capital almost continuously producing grain which should be producing livestock. At certain periods we have land, labour and capital producing livestock which should be otherwise engaged. And always we have labour and capital producing agricultural products which would be much more effectively employed in the production of secondary products for consumption by society. It is our duty as custodians of the agricultural industry to institute the necessary steps to adjust these allocations to as high a standard as we can reach and I honestly believe that we cannot do this with this measure which we will pass in a few minutes. I also believe that only by the application of the principle of a parity price properly administered can we hope to reach that very desirable goal.

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 am not going to maintain that this amendment is out of order; I do not know whether it is. In any event I wish to say a few words in connection with it. It is a provision which is so completely vague and impractical that we just could not consider it. The amendment reads:

-"and shall continue thereafter for a period of one production cycle in the case of all named and designated commodities-"

What is the production cycle for cheese which is one of the named commodities? What is the production cycle for eggs? The hon. member said that the production cycle for livestock is five years. As a matter of fact the production cycle differs for every type of livestock. There are no two kinds of livestock for which the production cycle is the same. I think, therefore, the amendment is completely indefinite, impractical and is the sort of thing which if you attempted to write it into a piece of legislation would only serve to put you into endless trouble. It could serve no good purpose whatever.

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, may I say just a few words. What the minister has said about production cycles is absolutely correct, there are variations. But may I point out to him that there is a production cycle for all the commodities he has named. Certainly the minister does not expect me or any hon. member in this house including himself to attempt to figure out what is the production cycle for these various commodities. There are any number of people in this country who are fully qualified to do this. It has been well known for many years that there are production cycles. This principle has been laid down and we do not have to tax our ingenuity at this time in any effort to define a production cycle for

each of these commodities. I suggest to the minister that his argument does not carry-very much weight with me.

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

Willis Merwyn (Merv) Johnson

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

Mr. Johnson (Kindersley):

Mr. Chairman,

I would like to speak in support of the amendment which my colleague has moved. I am of the opinion that the minister has overlooked the main objective in moving this amendment. The purpose of this amendment is to provide for the stabilization of agricultural commodities and unless we as farmers can obtain some reasonable assurance of what the price is going to be in the future we are unable to regulate our current production to it. That is one of the complaints hon. members in this group brought forward at the second reading stage of this bill. As a farmer who has a fairly substantial livestock enterprise I am in the position right now of being uncertain whether to expand or contract my livestock operations. If we are going to give all the farmers of Canada some assistance it would appear that we will have to give them a guaranteed base on their production cycle.

Certainly the minister was right when he said that the cycle is different for each of these commodities. I am glad that he recognized that because it is not recognized in the bill. It is explicitly stated in the bill as 12 months whether it happens to be cattle, hogs, poultry, soybeans or what have you. The bill limits it to 12 months in the case of all commodities. The minister is one who appreciates flexibility. Over and over again he has requested hon. members to give consideration to the principle of flexibility which I maintain the hon. member for Humboldt-Melfort is attempting to instil in the bill by letting us have a production cycle for each commodity. I further maintain that the members of the agricultural staffs in our experimental farms, the Department of Agriculture and the economics division of this department could very easily define what is a production cycle. Surely it is just as easy to define a production cycle as it is to define the cost of production. I request hon. members to give serious consideration to supporting my colleague's amendment with a view to stabilizing agriculture in Canada.

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):

I should like to point out to the hon. member for Humboldt-Melfort and the hon. member for Kindersley that once again we come back to the principle of the bill which refers specifically to the fact that a ten-year period average shall be taken for a price which will stay in effect for 12 months. This amendment would certainly have the effect of changing the principle of the bill and therefore I do not see how the Chair can do other than rule the amendment out of order.

Agricultural Products-Price Stabilization Mr. Schulz: Mr. Chairman, I have brought this matter to the attention of the minister several times and now that we have arrived at this clause of the bill I am going to try it once more.

We have been told that support prices placed under commodities will be in effect for a period of 12 months. I have always maintained that the bill does not provide for that and the proof is right in the third last line of subclause 1 of clause 9 where I find these words:

... in the case of a designated commodity, for such other period as the governor in council prescribed.

That means that the period could also be less than 12 months. It says "for such other period''. What period? It could be six months, three months or eighteen months. I am not going to submit an amendment but I suggest that the word "other" in line 20 should be struck out and that the word "additional" or "longer" should be substituted therefor.

Then it will be consistent with the preamble. The 12 month period will then apply to all named products or designated products. If this is not done it will only apply to named products which will be revised every 12 months. The word "or" is the key, "or, in the case of a designated commodity, for such other period". I suggest to the minister that we should strike out the word "or" and put in "additional" or "longer".

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 think the hon. member for Springfield demonstrated when we were dealing with the cash advance legislation that he is not able to understand these clauses properly. The clause definitely provides for prices to be set 12 months in advance for any commodity, either named or designated. The provision "for such other period as the governor in council prescribes" in the case of a designated commodity is there for the specific purpose which the right hon. member for Melville mentioned when speaking on this matter some time ago. It is to take care of those cases where a price has not been set and something happens such as the outbreak of foot-and-mouth disease which we had. You can then put a support price in effect. Perhaps that price would not be an appropriate one to be in effect for 12 months thereafter. When you came to the regular period for the setting of the guaranteed yearly prices a year in advance you would probably want to change that price. That is why that provision is there.

If an emergency of any kind arises you can establish a support price which would be good for three or four months, two months, five months, six months, whatever period it was necessary to cover until you came to the

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Agricultural Products-Price Stabilization normal time which, as I have said several times before, would be the January to March period when the yearly guaranteed prices would be set. That is the purpose of having that clause there. You have to have something along that line to deal with emergencies which may arise. Otherwise you would be in the position that you could not deal with them.

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

James Garfield Gardiner

Liberal

Mr. Gardiner:

That is exactly the point I had in mind yesterday when I raised the question. I was not certain that this clause was in the bill at that time but I looked it up afterwards and found that it was there. It must be there in order to deal with such cases as the blowing off of 85 per cent of the apple crop in Nova Scotia, for example. That was something that could not be foretold. Maybe it only took three months to handle it or it may have only taken three or four weeks, but you have to have the authority to do that kind of thing. I quite agree with the minister that it must be there.

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

Stanley Howard Knowles

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

Mr. Knowles (Winnipeg North Centre):

suggest that the minister said something quite unnecessary when he remarked that the hon. member for Springfield did not understand this clause. I suggest that the member for Springfield understood the clause quite clearly when he said that under the wording it is possible in the case of designated commodities to have prices set for a period less than 12 months. It was precisely to correct that situation that the member made his suggestion. He understood it very well.

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:

On that point, on several occasions the hon. member for Springfield has said that the legislation did not provide for setting guaranteed yearly prices which would be good for 12 months. He has said that on several occasions and he repeated it a few moments ago. The legislation does provide for that, as I have pointed out, and that is why I made the statement.

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