With respect to the actual payments made in toto to the dairy farmers during the time of the previous administration, which now is so critical of our program, as compared to the period when we were in
April 26, 1967
office, in 1966-67 some $19 million were paid to dairy farmers. During the coming year our contribution to try and put this industry in shape, as hon. members know, will be some $120 million. As compared to this, in 1962-63 the contribution of the previous administration to the solution of this very grave problem, which I am sure was as grave then as it is now, was some $42.3 million in respect of the stabilization board subsidies and another $13 million in respect of the payments made at that time on butter. In 1959-60, it was $9.8 million; in 1960-61, $11.4 million. I cite these figures to show how we have dealt with the problem and in what degree as compared to the previous administration.
We heard criticism from the hon. member for Kent (Ont.), to the effect that our dairy production was decreasing. I am sure the hon. member for Kent (Ont.) would not want to mislead the house, the country or the dairy farmers. I know very well he is interested only in the truth and in facts, so I think we should lay those facts before the house. In
1957 the total dairy production in manufacturing milk was 17,000 million pounds, going up to 17.7 in 1958, 17.6 in 1959, 17.7 in 1960, and 18.3 in 1961. Today that production it at 18.4 thousand million pounds.
Some concern was also expressed with regard to the total income of dairy farmers. Let us take a look at that. In the six years from
1958 to 1963 the gross income of dairy farmers in Canada increased from $479 million in 1958 to $509 million in 1963, an increase during that six year period of $30 million. From 1964 to 1966 it has increased from $509 million to $581 million, a $72 million gross increase during a period of three years.
We also have some concern with respect to the consumption and production of butter. During the period between 1958 and 1961 the consumption was down by some 30 million pounds by reason of the policies then in effect. Consumption from 1962 to 1966 has gone up some 60 million pounds, thus increasing the volume of the market and improving the income of the dairy farmers to that extent.
With regard to the policies which were in effect when we came into office, so that we may determine whether or not satisfactory progress has been made I should like to cite one or two articles current in the newspapers of that day. I refer to the Globe and Mail for November 15, 1962, which contained the following paragraph:
Since May 1, butter consumption has gone up but so has output and agriculture minister Hamil-
ton has warned that price support cuts seem inevitable. In turn, Ontario milk producers have asked for a national dairy industry royal commission.
On November 12, 1962 the Ottawa Citizen had this to say:
The federal government will go into 1963 with 237,000,000 pounds of butter in storage, 40,000,000 pounds more than a year ago, and no immediate plans for preventing further growth of the butter surplus in the year ahead.
This was the dismal picture presented today as federal and provincial authorities gathered for their annual conference to review agricultural developments over the past 12 months and the outlook for the year ahead . ..
The minister indicated the government has not yet come up with an answer to the problem of butter surpluses.
We have had lots of answers tonight, however.
Mr. Hamilton denied that the buildup of surpluses was caused by the 64-cents a pound butter support price established by the federal government. This is equivalent to $2.50 a hundredweight for milk, less than the price at which a farmer could make a living, he asserted.
So that is what the farmer received in 1962, according to the then federal minister.
The Canadian Federation of Agriculture, major spokesman for the farmers of Canada, also indicated it has no answer to the problem of growing butter surpluses.
"Dairy industry policy is a vexed question and it is no secret that at the present date neither this organization nor any other agency responsible for carrying out the recommending policy has a ready answer to it," it said in a brief presented to the conference by its president, H. H. Hannam.
I suggest that that statement was a responsible one.
The brief called for the formation of a national policy that would provide for an increase in demand and a contradiction in supply of butter stocks...
At the same time, the federation said the 12 cents a pound consumer butter subsidy established by the government earlier this year to counteract the sharp fall in demand should be followed by the establishment of some form of quotas to tailor production to demand.
Mr. Chairman, I do not think the house has heard as much old straw threshed over for a long time as we have heard during the last few minutes from the Minister of Agriculture. He was the minister who was to take the farmers of eastern Canada out of the wilderness into which they had wandered during the years of the Tory government. He is the minister who represented a party that went to the peoples of eastern and central Canada with the election slogan: "Elect us and we shall do for the farmers of eastern and central Canada what Diefenbaker did for the farmers of western Canada." Now this minister comes before parliament with his swan song-because it can be nothing else. He has admitted that he can do no better than the government of the right hon. Leader of the Opposition, during the period it was in office-all this despite the fact that more than double the subsidies today are paid to the dairy industry. I shall have more to say about that as I go along.
What has been the result of this govez'n-ment's policies? The result is that we have to import butter and cheese, and the farmers have been forced out of business. I wondered, listening to the minister's speech, how many dairy farmers went out of business as he talked, as he tried to tell us why his policies of the last three or four years had failed.
When Hon. Harry Hays was minister of agriculture he said, "If you have six cows you can make a living." "This minister tells the people, "To make a living now you must have ten cows." The minister's thinking shows why the dairy industry in Canada, under this government, has declined. Imagine, Mr. Chairman, you need ten cows to make a living under this government's policies. Those words the farmers of the country understand very-well.
We could forgive the government if they had not the answers, but time after time, on platforms across Canada and in the House of Commons, they have claimed to have the answers. I see the Minister of National Health and Welfare is present. He was one who thought he had the answers for all these problems. Yet this government failed to do for the farmers of central and eastern Canada what the right hon. Leader of the Opposition had done for the western farmers.
The minister gave us figures. He said that in 1962-63 the subsidies had amounted to approximately $42.3 million and $13 million, making $55 million approximately. The government of that day had a 40 million pound surplus of butter, but that butter represented something tangible in return for the $55 million which had been spent supporting the dairy industry. This government spent $90 million, and our people have to buy butter from the other markets of the world, and our farmers disperse their herds. The minister has the audacity to come to the house and say, "You are not a dairy farmer unless you have ten cows."
I challenge the minister to say that in Quebec, to say that in the maritimes, in Ontario, in British Columbia or on the prairies. What kind of mockery have we today? Does the minister not realize that the small farmer is still the bulwark of agriculture in this country? Where are the promises and the answers which this party had to offer in two election campaigns? Today, in this debate on the eve of the ending of this session, we saw Liberal members rising to discuss the dairy question. Why? Because they realized, perhaps for the first time, that this government has failed miserably to solve the problems which face the dairy farmers of this country. The minister could not keep them quiet and the whip could not keep them quiet.
We think of what the hon. member for York-Humber had to say. It is all out of the bag, now. They have not had these discussions in caucus, of which we have heard so much during the last four years. This is the ministry which was supposed to bring the brass and the grass together so that the Canadians might have a better future. This is the ministry which was supposed to give all those engaged in agriculture in eastern and central Canada the equity and justice which is their right.
Tonight we heard the Minister of Agriculture giving his swan song-it cannot be described as anything else. As he admitted so
April 26. 1967
freely, this government has failed to bring before parliament the type of legislation which would protect the dairy industry. I think he said the dairy farmers had not stood still. I believe those were his words. I agree that the dairy farmers of this country have not stood still: They have gone back while this government has been in office. Why else would they want to come to Ottawa en masse to place their case before parliament and the Canadian people?
These are reasons which justify the debate which has taken place in the last few hours. The neglect of a government which would not listen to the opposition in this house cannot be justified. Time and time again members on this side have asked that this question be given the consideration it deserves, before a crisis develops. But we have a Prime Minister who seems to want crises, a Prime Minister who revels in this type of thing, a man who never does anything until a crisis is upon us.
I sympathize with the Minister of Agriculture; I think he tried. But he had to contend with the Minister of Finance. He had to contend with the Prime Minister and others of his colleagues in the ministry. As a result, the dairy farmers find themselves facing the difficulties which they are encountering today. In these circumstances we cannot but wonder whether the government deserves the supply for which it is asking at this time. What we heard tonight was an admission that the government has no policy for the dairy farmers. This is very disappointing to me, because I had almost succeeded in convincing myself, after listening to members opposite saying so often that they had some of the answers, that such a policy did exist. But now we know they do not have the answer.
[DOT] (12:30 a.m.)
In view of the late hour I do not wish to take up any more time, but I feel we reached a milestone in agricultural history tonight when we heard the minister make the admission, passively accepted by his backbenchers from the dairy areas of Canada, that there has been defeat in meeting the problems that they came to parliament to solve.
Had the minister started his description from the 1950's he would probably have found a great similarity between the program in force at that time and the present program taking into consideration that the earlier program was designed to take care of surpluses rather than shortages. The simple
fact is that the senior officials of his department are exactly the same people now as then, and the surprising thing is that the minister tonight admitted he is not making the policy, that it is his officials who are making it.
There has really been no change in policy at all, and it is not hard to understand why fluid milk shippers are not being supported. Can the minister explain why for the first time last year surplus manufactured milk coming out of fluid milk was covered by subsidy, but it has now been placed back under the old system? Members should note that the minister has not taken control of his department, that policy is not being designed by him but by the senior officials who are doing now exactly what they have done for many years.
The time may have arrived to take a further decision, which must be a political one, to arrange for the pooling of all milk so that it may all be brought under one control with no difference in respect to fluid milk and manufacturing milk. This is a decision which the minister will have to take, not his officials.
It was interesting that in the figures the minister gave us he mentioned that the domestic price for spray powdered skim milk was 25 cents a pound in 1957-58. Now the price in the support program is 20 cents.
Then I misunderstood that, but I repeat that in the near future the minister will have to make a decision on total pooling. Also in the near future the minister should call a conference that all farm organizations have been seeking. When the agricultural committee was out in western Canada we heard the same plea in each province, that a conference should be called of provincial and federal officials at which the whole problem could be discussed by the various agricultural ministers, the farm advisers and the officials of the various departments. We should not be comparing one period with another. This only indicates that although we sometimes think we may be making some policy decisions, we are not really making any decisions at all.
All we are doing is rearranging the small changes which take place. When the minister refers to the Conservative legislation, this is one reason that I find no difference between that policy and the policy of the Liberal government, because really it is not the minister who makes the policy decisions, it is the senior officials in the department. This, probably,
April 26, 1967
will be amusing to the farmers who have known this for a long time. I believe this places all members who are interested in this problem in the position of perhaps being more sympathetic to the minister, who may have difficulties which we do not know anything about. Perhaps we should be more sympathetic toward the minister and provide more constructive criticism so that we all can help accomplish what I believe is inevitable; that is, an arrangement whereby all the milk can be pooled so that the discrimination will be removed. In this way the whole industry from coast to coast could be handled under the auspices of the national dairy commission. This should remove many of the anomalies.
We should be able to accomplish something in this manner and probably this would give the minister some encouragement to go forward from the present situation to one which, with the pooling of milk, he could arrange a meeting with the provincial officials as well as the farm organizations so that the matter could be clarified to the satisfaction of all parties concerned, and so that finally an arrangement could be arrived at whereby the duplication may be eliminated. I hope the minister will ask for the co-operation of the various departments of the provincial governments which will have to be involved in this, so that in the near future a policy may be arrived at which will provide for the pooling of all milk no matter which market it is geared to.
Mr. Chairman, I think this theory in respect of the pooling of all milk in a single pool certainly is something which should be aimed at. When the manufacturing milk industry is in good shape and when the proportion as between fluid and manufacturing milk is such that it is in the interests of the fluid and manufacturing milk producers to pool, I think undoubtedly this will be the solution. I believe most people in Canadian agriculture would agree with this principle.
I do not believe, however, that this will be achieved overnight. Some of the people in the dairy organizations have indicated that they look forward to a period of possibly ten years before this can be achieved. I think we should move in this direction. I believe that manufacturing milk, on a quality basis, should be brought up to the standards of the fluid milk before this could be possible. The questions which were posed in respect of the removal of fluid milk from the support policy are valid. I should like to point to the arguments made by prior ministers which I think were valid at 23033-978J
that time, and probably still are valid, to the effect that economically the worst circumstances by and large in the dairy industry were in the manufacturing segment. I believe such probably is still generally the case.
When government funds are available in respect of the manufacturing industry, historically the federal government has taken the responsibility to see that everything possible is done to improve the standards in the manufacturing milk industry and the income of the manufacturing milk producer. As both the ministers I quoted earlier stated, we must attempt to see to it that their income position is brought closer to that of the fluid producer generally.
e (12:40 a.m.)
You might well ask why we paid a subsidy to fluid milk producers last year. In the announcement at that time it was made clear and manifest that we were paying a subsidy to fluid milk producers of over and above 120 per cent of their quotas, because we foresaw that there might be a shortage and we wanted to increase production. It was made very clear that this might be a temporary thing because production was needed last year. I think the views of the experts were borne out by the fact that last year the consumption and production very nearly matched. Surely that should be the object of the game. There was no great surplus accumulated. We disposed of the product and we were not in a situation such as that which existed in 196162, where the price structure created such a great surplus we could not dispose of the product. Clearly that was the right thing to do last year.
This year, with the added incentive of the higher price, the best estimate we can get is that production will be adequate without encouraging further production of surplus fluid milk in order to meet the required need. I think it was made clear last year that the policy announced then was for one year to encourage production and that it would not necessarily be continued. This year it is not deemed that we will need an additional supply of fluid milk to meet the demand of our manufacturing milk market. Let me point out that the policy as envisaged, and to be carried out by the Canadian Dairy Commission, is that the support program will be applied to a global quota to meet the domestic market. In other words, the whole plan is that we will support and pay subsidy on the basis of the estimated requirement to meet domestic needs. I think most Canadians will agree that
April 26, 1967
this is the proper approach, and quotas are set accordingly. .
Some questions have quite properly been asked in respect of quotas and their purpose. The purpose of quotas is, of course, to arrange things so that we may do what has been done previously in the fluid milk industry. The complaints which have been voiced about the fluid milk producer and his position in respect of quotas can be answered by the fact that he is in exactly the same position as the manufacturing milk producer, and always has been. The manufacturing milk producer cannot get a quota in the fluid industry. We are providing quotas in the manufacturing industry in order to create a situation in which the supply and the domestic demand are as close as possible, and quotas will be established on that basis.
Let me point out further that the entire idea, which I suggest in the long run will improve the situation in the industry, is to use quotas economically to rationalize the industry. Quotas will be used to help the small producer. The hon. member for Rosthern chose to make light of the situation by cracking jokes about the fellow with ten cows. I do not think there is anything funny about this at all. The small producer is the man we want to help the most and that is what this policy is intended to do. It is intended to bring that small producer up to a position where he will ultimately have some 200,000 pounds of quota which will give him a decent income. I think the announcement makes it very clear that the quota will be used for the purpose of bringing the small producer to the point where he has a larger quota and can make a decent income. This has not been possible, as indicated by the figures I cited, when some 65 per cent of our producers today produce less than 100,000 pounds.
I realize that some of the very big producers probably are not too happy about this program because it is not meant to encourage further production or the establishment of huge corporate entities such as those which produce more than 300,000 pounds, as announced by the commission.
The quotas as they become available will be used to encourage the small producer to get bigger, so he can get the kind of income we would like him to have. I know this has never been tried before but I suggest that the experience in other countries and our own experience indicates that this is the best way, by the use of quotas, to bring the small producer into the economic areas.
Then there is the question of the value of quotas. I think this point was very properly made. I want to assure the committee, because I thought it was a very valid point and one that should be answered, that the question of making the quotas the property of the commission rather than the property of the individual is to prevent this trafficking in quotas. This value in the quotas themselves, which in some areas of the fluid market has merely upped the price of getting into the fluid business and has ultimately upped the price of milk to the consumer, and the only person who benefits is the quota holder who gets the cash value of the quota.
The purpose is to have the commission deal with quotas at their discretion in the event of dispersal or sale, apart from the immediate family as pointed out in the release. The quotas will be used not to enable the person selling the product to get an extra buck for his quotas but to enable the small producer to become bigger and get himself in a position where he has an economic unit and can make a good income.
There has been some criticism that there are fewer producers. Of course, the dispersal of the herds is quite obviously, again, in large measure due to other producers becoming bigger and creating economic units. The cattle have not dissappeared or been shot. The fact that gross production has been maintained for the country quite clearly indicates, I think, that dispersal has largely been carried for the creation of larger and more economic units than has been the case in the past. With regard to the question of fewer producers, I know no answer to this problem. I do not know any way in which we can have just as many or more people than are in the industry today and still have them all making the kind of income we want them to make.
I think it is an immutable law of agricultural economics that the more prosperous a nation becomes, the higher becomes its standard of living, the more we expect to have in income return, the smaller is the percentage of the population producing the food for the rest of the country. The agricultural producers become more efficient; it is as simple as that. The agricultural producers in Canada in the past decade have been increasing their productivity by some 5.6 per cent per year, which is something like double the rate of increase in productivity in the industrial sphere, and even there it has been very good.
If one wants to go back to having more and more producers or just as many producers on
April 26, 1967
the farm as were there in the past, we have only to look at the situation in less developed countries which have a far lower standard of living than ours. In those countries 30 per cent or 40 per cent of the people are on the land producing the food for the rest of the population, but I do not need to tell hon. members that the standard of living for the farmers and others in that type of economy is far lower than ours. So if we are to have a higher standard of living and a better income, there will be a smaller percentage of the people in the dairy business, with larger units, and making the kind of income we want them to make.
You cannot make this kind of transition painlessly. You cannot make it without the price of change. I think that price should be nullified to the greatest possible degree in those areas where people are going out of the industry. We must do everything possible by way of ARDA programs, manpower training programs and location of secondary industry in those areas where a smaller percentage of the people will be concerned with dairy production. But I do not think we can ever attain the kind of progress we want by saying we have to leave things just as they are and keep the money pouring in and have no incentives or encouragement to create the kind of economic unit which will by its very efficiency give the kind of income to dairy farmers that we want them to have.
I think it is only fair to deal with the criticism of the price structure itself. I believe it is certainly the duty and responsibility of farm organizations to fight, as they have done, for higher prices and returns for those who support their organizations. Farm organizations must have a lobby, just as trade unions. They must work to improve prices for those who are their members and whom they are representing. Our farm organizations have done just this.
[DOT] (12:50 a.m.)
I would point out that it is quite proper for them to try to approach the $5 level, which is what they are after. I certainly do not think it is in any way irresponsible. When one considers that I have stated as an objective to be worked for in the very near future that the economic unit will have some 200,000 pounds per annum. This is the production of, say, 20 to 30 cows. Even at $5 that is only a $10,000 a year gross income, and when one takes all the expenses, taxes, cost of feed, fertilizer, and the capital cost of the establishment, surely this is not too high a figure for which to
strive, and it is not irresponsible to say that the efficient dairy farmer should have a gross income of $10,000 per annum. However, this cannot be achieved overnight. It is something toward which we should work.
Someone asked what happened to the 11 cents. Again, this being a responsible program as I have said, it is geared to pay a subsidy and to support the dairy farmer for the domestic consumption. Canadians, by the price they pay on the marketplace, and by the subsidy they pay through their taxes, would I am sure want to see that the dairy farmer received a just return for what he sells domestically.
What is sold in world markets must be sold at prices less than our farmers can get in the domestic market. It is a two price system, if you like, and the 11 cents are used to dispose of that surplus product in world markets. It is the farmer's money. As you know, this year we did the same thing. According to my information it was not necessary to spend the whole of the hold-back this year, and there will be a return to the farmer of the portion that was not spent in putting the product in the world market. I would point out that the dairy organizations asked for $5.10. We have achieved $4.64 net, or $4.75 with the export subsidy. In the industrial area we see very sophisticated and highly skilled workers seeking parity of wages with their counterparts in the United States.
Let me point out that the price received by the American producer of manufacturing milk is less than $4 per hundredweight. According to my information prices have dropped even below that. This is why there is trouble in the United States in respect of manufacturing milk prices today.
Again I do not claim that we have achieved the millenium, but it is surely an indication of the fact that we have achieved a responsible price structure in Canada when the price received by the Canadian producer of manufacturing milk is 75 cents higher than that received by his counterpart in the United States. Some of those in the New Democratic Party who laugh should realize that they have not been able to achieve this for some of their industrial workers who are fighting for parity with their American counterparts. Here we have done better than parity in respect of our manufacturing milk farmers.
I do not deny for a moment that there is a great deal to be done, and there is much to be achieved. I suggest that what has been accomplished in four years is an improvement
April 26, 1967
of some 70 per cent in the gross returns to the farmer. Certainly this far outstrips his increased cost of production in that time. I do not think anyone would suggest that his costs have gone up by an equivalent 70 per cent. The fact that our prices are higher than United States counterparts is surely an indication that we have moved a long way toward bringing the manufacturing milk farmer into the economic position he deserves. However, we should strive to do more.
I have great hopes for the dairy commission, though there are those who criticize it editorially. This commission was formed as a result of just the kind of conclave that hon. members have suggested-provincial people. Dairy organizations formed a committee which suggested a dairy commission of the type we have set up. To my knowledge all farm organizations support the idea of quotas. They appreciate it is the only way to bring stability to the industry.
In addition to this we are attempting to bring the industry, which obviously has been in bad shape, into better economic condition and adopt new approaches to maintain incomes during the period of transition. I suggest we have taken a very responsible step in this direction, and that this program brings the manufacturing milk farmers into a sounder position than ever before.
I admit there is more to be done. I hope we will shortly have a middle or long term plan to lay before the dairy farmers in Canada in conjunction with this year's program in order to show where we are going within the next five years. Our general direction is toward larger units where a decent income can be had. A better price must be offered in the marketplace. The dairy farmer wants a fair return from the marketplace, as does everybody else, and this policy is geared to that end.
In the meantime, while we are rationalizing the industry through the use of the dairy commission and quotas, we have put the dairy farmer into a far better position than he was when we took office. We have improved his income, his returns and his way of life in considerable measure.
whether there is any way that a producer just commencing operation can enter the market under the quota provisions either by establishing a dairy unit or the purchase of an existing one, other than from a close relative? There does not seem to be any provision made for this in the statement of the dairy
commission, and I am wondering whether any provision is made.
My understanding of the administration of the quotas by the commission is that they will be used at the absolute discretion of the commission. The point they made about sale to immediate members of the family, and so on, is to assure the dairy farmers that in those situations quotas will be transferred automatically. You must still go to the commission, but the quotas will be transferred automatically.
[DOT] (1:00 a.m.)
In other cases quotas are used to rationalize the industry and to ensure that after the quotas have been in vogue for a reasonable period a large proportion, if not all, of the people in the industry have the kind of unit which will give them a good income. They have absolute discretion in this regard. I feel certain if someone were selling out and two producers, who had been too small, were living next door, that those producers would have the priorities in the quotas. The commission would have absolute discretion to grant them any excess quotas there were, always bearing in mind that the total, global quotas available to the commission are based on the domestic consumption in Canada. That determines the quotas available for distribution from time to time by the commission.
The general purpose of what is done and the general idea is to put the industry in good shape so that 65 per cent of the people do not have less than 100,000 pounds five years from now. The commission has wide authority, and the transfer of quotas will be at the discretion of the commission.