March 13, 1934 (17th Parliament, 5th Session)

CON

Richard Bedford Bennett (Prime Minister; President of the Privy Council; Secretary of State for External Affairs)

Conservative (1867-1942)

Right Hon. R. B. BENNETT (Prime Minister) :

Mr. Speaker, I promised the hon.
member for Weyburn (Mr. Young) that at an early date I would endeavour to make a statement with respect to the wheat agreement. As the provincial legislation in connection with this matter will be introduced to-day or to-morrow I think it desirable to make a statement at this time. During the last few months the dominion government and the governments of the three prairie provinces have been Considering the action which should be taken to make effective the London wheat agreement so far as it relates to Canadian interests. Legislation has been agreed upon by the four governments and will be introduced to-day or to-morrow in the legislatures of the provinces of Manitoba, Saskatchewan and Alberta.
The proposed legislation empowers the lieutenant governor in council in each of the provinces to set up what is termed an emergency wheat control board, with power to licence and restrict within the province sales and deliveries of wheat. Provision is made also that in addition to or in lieu of such board a joint board may be established by the three prairie provinces or by one or more or all of the provinces in conjunction with the dominion. Such a board, if created, will be clothed with all the powers usually vested in what is commonly described as a "wheat board." The provisions dealing with the
Wheat Agreement-Mr. Bennett

licensing of sales and deliveries of wheat within the several provinces can, of course, be enacted by the legislature of a province, but legislation of this parliament is required to permit control of sales and deliveries outside the provinces. With respect to a wheat board, parliament will be invited to enact the necessary legislation to enable the government, in the event of the four governments being of the opinion that the necessity for same exists, to cooperate with the provinces in establishing a board, with all the necessary authority and powers to deal with any situation which may arise. It will be observed that the proposal contemplates the enactment of enabling legislation so that problems that may arise by reason of an unexpectedly large crop or from any other circumstance can be effectively dealt with.
The bills introduced to-day or to-morrow- I believe it is possible that they may not all be introduced to-day-into the legislatures of the several provinces will provide that the lieutenant governor in council shall, on and after the date upon which the act founded on the bill is assented to, and prior to the date of the establishment of the board or joint board, as therein provided, have power by order in council to make all such orders, rules and regulations, and do all such acts and things as in the opinion of the lieutenant governor in council may be necessary and requisite to bring the production of wheat in the province concerned in the year 1934 into proper alignment with the estimated current export demand for the crop season 1934-36 and normal domestic requirements in the same period, having regard to the quota applicable to the Dominion of Canada as provided. by article 2 of the London wheat agreement.
I may add, for the information of the house, that officials of this government have been in the past few weeks in consultation with the governments of the three prairie provinces. The steps already taken, together with the contemplated action, as provided by the proposed legislation, will, in the opinion of the governments concerned, fully implement the undertakings of the dominion under the London agreement..
Some time ago the hon. member for Wey-burn asked a question which I promised I would answer more full}'' when I had obtained further information which I was then securing. Hon. members will recall that negotiations and consultations among the four overseas wheat exporting countries had been in progress under the auspices of the League of Nations for some time before the London w'heat agreement was signed. As a result of

those discussions it was possible to allocate among the overseas exporting countries quotas for the crop year 1933-34 within the terms of article 1 of the agreement. At the time of the signing of the agreement, no quota had been agreed upon for the U.S.S.R., nor had a final agreement with respect to such quota yet been concluded but it is expected that at the meeting at Rome next month a satisfactory arrangement will be reached.
The four overseas exporting countries agreed, by article 2 of the London agreement:
to limit their exports of wheat during the crop year the 1st August, 1934, to the 31st July, 1935, to maximum figures 15 per cent less in the case of each country than the average out-turn on the average acreage sown during the period 1931-33 inclusive after deducting normal domestic requirements.
The determining of the quotas under the provisions of this article is, in the main, a statistical operation. In the case of the four overseas exporting countries, the three years 1931, 1932 and 1933, are used for computing the average acreage, and the yield per acre is determined over a ten-year period.
It is to be borne in mind that the purpose of the agreement is to raise the price of wheat, which can only be done when the surplus carryovers have been removed from the market. In this regard we must distinguish between formal obligations contained in an international agreement and collateral measures of domestic policy which may have to be taken to give effect to the provisions of the agreement. The measures of domestic policy taken by the signatory countries will not be identical. Argentina and Australia have, for instance, stated that they are not in a position to agree to any precise acreage reduction although they are willing to reduce their exports by the accepted figures and to take the necessary action to prevent the accumulation of further surplus stocks. The United States has definitely decided to reduce acreage by 15 per cent and has put into effect a wheat adjustment program for that purpose.
So far as Canada is concerned, having accepted an export quota for the period ending 31st July, 1935, it becomes a matter of national interest that our production in that period should not exceed the domestic requirements plus the export demand. The measures necessary to ensure this have been determined by the appropriate Canadian authorities. It is obvious, of course, that there is no international agreement determining the methods to be adopted by the governments of Canada and the several provinces to give effect to the agreement.

Wheat Agreement-Mr. Bennett
It might be well to refer to a statement made in this house as to the influence of government purchases of wheat in recent years in increasing normal carryovers. The use of the words " government purchases " is, of course, inaccurate, for what the government has done is to guarantee the obligations created by the purchasing agency, namely, the
pool agency at Winnipeg. The following table gives the Food Research Institute figures for world carryovers for the past six years, as of August 1, together with the Canadian carryovers on the same dates, and the 'Percentages which the Canadian stocks form of the world totals:
(In millions of bushels)
Percentage which
World Canadian Canadian carryover
Year- carryover carryover forms of world carryover
1928
705 92 13%1929
970 127 13.1%1930
922 127 13.8%1931
1,007 140 13.9%1932
996 136 13.7%1933
1,106 219 19.8%
Owing to the abnormal crop of 1932 the world carryover in 1933 had reached 1,106 million bushels, the Canadian carryover being 219 million bushels or 19-8 .per cent of the whole.
Most of .the increase in world carryovers of wheat has been due to the inability to absorb the huge wheat crops of 1928 and 1932. The record world crop of 1928, which amounted to 4,712 million bushels or to 3,905 million bushels-ex Russia-caused the major rise of 265 million bushels between August 1, 1928, and August 1, 1929. There was then no great increase in carryovers until the large crop of 1932 caused ani increase of 110 million bushels between August 1, 1932, and August 1, 1933. There will be a decrease on August 1, 1934.
Canada was carrying 13 per cent of the world's supply on August 1, 1928. It increased to 13-8 per cent by August, 1930. It remained at the 1930 level throughout 1931 and 1932. From 1928 until 1932 there was only a fractional variation in that five-year period. That ratio was not disturbed until August last, when it reached 19-8 per cent. We need not search far to discover the cause of the increase. The crop of 1932 in this country reached the huge .total of 443,000,000 bushels from a record of 27,200,000 acres. Our exports from that crop reached the very large total of 264,000,000 bushels, or 43 per cent of the total export trade of the world for that year, as compared with the ten-year average of 37 per cent. I particularly direct the attention of the house to these figures. There can surely be no complaint when our share of the world available trade reached such large proportions, and yet, in spite of such unusually large exports in that year, there was left
from .that crop some 80,000,000 bushels to be added to our carryovers from past years, dating back to 1928.
Prices have not been maintained at a fixed level but rather they were supported, particularly during the seasons of the year when farmers were, from necessity, forced sellers of their production in order to meet the demands and needs of their creditors. Export demand, at such times, was utterly inadequate to absorb the farmers' sales, as it always had been throughout past years, and owing to world excessive supplies, speculative as well as investment buyers, who in normal times were purchasers of wheat, were practically non-existent. Under these circumstances, the government has enabled the Canadian Cooperative Wheat Producers, Limited, to purchase all grain that was not otherwise- sold. Had it not done so, what would have been the position of the wheat market to-day? The farmer would have hauled his grain to the elevator, would have been unable to sell it and there it would have remained and finally would have been baoked up on to his farm; and you would have had absolute chaos, which would have been destructive .to the whole economic life of Canada. There has been no speculation in wheat, and the wheat that has been .bought is now being held and sold as demand offers, not for speculation but for export. It would therefore appear that any criticisms that the action of the government in preventing chaotic marketing conditions has brought about an increased surplus are not founded on facts.
The London agreement sets the world quota of wheat exports in the 1933-34 crop year at
560,000,000 bushels. The following table shows

Wheat Agreement-Mr. Bennett
the division of this world quota among the different exporting countries, the export movement from the first of August to the end of
February, and the balance of the quotas remaining to cover shipments in the remaining five months of the crop year:
Argentina
Australia
Canada
Danubian countries.. ..
United States
Others, including U.S.S.R
Totals
Balance of quotas
Export quotas Export movement for exportAugust-J uly, 1933-34 August-F ebruary (million bushels) March-July, 1934. 110.0 65.0 45.0. 105.0 54.0 51.0. 200.0 121.0 79.0. 54.0 27.0 27.0. 47.0 19.0 28.0. 44.0 26.0 18.0560.0 312.0 248.0
The other countries, including the soviet union, had an export quota, as then fixed, of 44,000,000 bushels, although it is subject to final determination at Rome or sooner if an agreement can be reached. As the table shows, 26,000,000 bushels of this had been shipped to the end of February and there remains a balance of 18,000,000 bushels.
The advisory committee set up under the provisions of the London agreement is holding a meeting at Rome on April 5 next, when the matter of increasing the consumption of wheat will be discussed by the countries affected and such measures taken as, in the opinion of those present, will result in the diminution of the surplus carryovers that threaten the wheat prices of the world.
The question of endeavouring to settle the final quota for Russia will also be brought before the advisory committee and, if possible, disposed of.

Topic:   WHEAT AGREEMENT
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