November 25, 1966 (27th Parliament, 1st Session)

PC

Richard Elmer Forbes

Progressive Conservative

Mr. Forbes:

Mr. Chairman, I wish to make a few brief remarks while the estimates of the Department of Agriculture are before us. In view of the excellent speeches which have been made on the subject of agriculture this afternoon I will confine my observations principally to the aspect of rising costs within the industry. I am prompted to do so owing to the inequitable position in which agriculture finds itself at the present time because of the spiralling costs of production.
The average farmer is concerned about conditions under which he can receive fair recompense for his labours and for his investment in land and equipment. But when he finds his profit margin less and less each year, he becomes concerned about the profits accruing in the field of retail distribution. And as the producer of the nation's food, he has every right to expect the government to do something about it.
We hear a lot of comment about efficiency in agricultural production, but farmers have always been efficient producers. The inequitable position in which they have been placed compared with other industry has compelled them to operate economically.
Now a word about costs. Increased wages of organized labour are having an inflationary effect upon the whole Canadian economy and are the main reason why farmers' income is not keeping ahead of costs. Labour unions are very aggressive and nearly always request a 15 to 20 per cent increase in wages, and recently as high as 30 per cent; I refer to the longshoremen and dock workers.
Farmers take the brunt of inflation because over 30 per cent of the products they sell are sold at world prices-the percentage is much higher in western Canada-while everything farmers buy is based on a domestic price.
According to statistics provided by the Dominion Bureau of Statistics and the Federation of Agriculture, between 1949 and 1963 the average net income in constant dollars of farmers in Canada increased only 7.8 per cent; yet average weekly manufacturing wages increased 42.8 per cent, and if we had the figures for the past three years I am sure the disparity noted would be much greater. I do not want my remarks to be interpreted that I am faulting labour for demanding a rate of pay commensurate with a decent standard of living. But I do emphasize that we must have a policy to ensure the purchasing power of farmers and labour if we hope to have a prosperous economy.
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The time has arrived for an agricultural policy to attain this objective. The best customer of industry is the farmer because farmers are consumers as well as producers. But I ask this question: Is the government concerned about a price for agricultural products that will enable the farmers to stay on their farms and enjoy an equal standard of living? In other words, has the government an agricultural policy that is forward looking, especially with respect to prices for agricultural products?
I was particularly interested in a speech by the Minister of Finance in Toronto on November 10. He was speaking about the recent federal-provincial conference. I will just quote one paragraph.
The measure to stabilize provincial revenues will enable the provinces to harmonize their fiscal actions with those of the federal government in the event of a recession, and at the same time we have made it clear that the federal government will continue to use joint federal-provincial measures where necessary to ensure economic growth and stability, and to achieve other important national objectives.
What is the policy of the Minister of Agriculture to provide stability for agriculture at the present time and in the event of a recession? I am certain the farmers would like to know. In order to buy the necessary machinery to work their land in this technological age and, in some cases, purchase more land for what is called an efficient unit, farmers have been borrowing a tremendous amount of money. According to the chairman of the Farm Credit Corporation, demand for credit has risen sharply with 11,238 loans amounting to $208,984,900 being approved in the fiscal year ended March 31.
[DOT] (4:40 p.m.)
In my province of Manitoba 899 Farm Credit Corporation loans were advanced for a total of $14,879,500. This does not include loans made by the provincial farm loan board, which I am advised came to approximately $7 million. Farm improvement loans for the past year totalled $71,112,489, and farm machinery loans approximately $900,000. In addition there were loans made by credit unions, but I do not have any figures for them. If these figures indicate anything it is that farm income is too low to enable farmers to buy the necessary machinery and add to their holdings from revenue received from the sale of farm products.
I now wish to say a word about farm machinery. We acknowledge the prices of farm machinery are responsible for a large part of

November 25, 1966
Supply-Agriculture
farm operating costs, and we know that the minister has appointed a commission to inquire into the rapid rise in machinery prices. While I have every confidence in the personnel of the commission, I am wondering what action they could recommend in order to lower prices. It may be a year or more before the commission submits a report and in the interval farmers will be required to pay the prices asked by the machinery companies. In the event that we have two or three short crops in succession the results will be disastrous. The state would own most of the land and we would be headed for a system that is not conducive to a democracy.
Let us take a further look at costs. The minister of agriculture for Saskatchewan gave a fair illustration of the rapid rise in cash farm operational costs. He said that the increase was 20 per cent in Saskatchewan from 1961 to 1964 and if depreciation costs were added it was 24 per cent. The records of farm management clubs show that from 1960 to 1964 the operating costs per cultivated acre increased from $8.40 to $10.20. Depreciation costs increased in that period from $1.87 to $2.17, and investment costs increased from $3.14 to $4.01 on land at $39 per acre and, adding the labour costs of the operator and his family at $1 per hour, total farm costs per cultivated acre rose from $18.74 to $21.36.
To cover total costs a farmer would need to get an average grain yield of 24 bushels per acre at $1.75 per bushel, or 28.5 bushels per acre at $1.50. The yields suggested as necessary to cover the costs are considerably above the long-time average. Hon. members will note that he based his figures on land at $39 an acre. I do not know where you can buy good farm land at that price. In Manitoba it is priced at $100 and over per acre, and of course this would increase the costs of operation considerably. I would also remind the committee that these figures I have given do not include the increases in costs that have taken place during the last two years. The point I wish to make is that when you take into consideration the costs of farm operation and the price received for farm produce, farm loans are not a solution to the cost-price problem.
I now wish to put on record a resolution passed by Riding Mountain Farm Union Local 70 to indicate to the minister the thoughts of farmers on this problem. I shall not read the

full preamble to the resolution which reads as follows:
Be it resolved that an annual acreage payment of $2 per acre up to 200 acres be paid to every farmer with less than 501 acres listed in his 1965-66 Wheat Board permit book.
These farmers in this local by this resolution indicate their own thoughts and the thoughts of others in the province that the time has arrived because of the present cost-price squeeze that they need something in the form of a subsidy. I realize that the minister will be a little hesitant about recommending a subsidy to his colleagues in the cabinet. I for one would much prefer to see increased prices for agricultural products rather than any form of subsidy, but in this connection I would like to quote from a comparison report written by C. Knowlton Nash which appeared in the Canadian Farm Digest last spring, dealing with agriculture in the United States and in Canada. It reads in part as follows:
Canada has a widespread agricultural price support program, but it is a midget program compared to what Washington hands out as subsidies to farmers. Total U.S. government payments in 1964 amounted to $2,170 million, not counting extensive export subsidies on key agricultural products which amount into the hundreds of millions of dollars.
For wheat alone, the U.S. government provided domestic subsidies of one form or another last year amounting to well over $400 million and not a bushel of U.S. wheat is sold abroad without a heavy U.S. government export subsidy.
In the light of that report I can understand why a director of the Manitoba pool elevators said at their annual meeting last spring that surely the government could not expect the farmers of western Canada to compete with the treasury of the United States.
In the Liberal party farm program announced by the Prime Minister on Wednesday, October 6, 1965, the Prime Minister states:
The goal of the government's farm policy is that the family farm should be able to produce a living as good as the average industrial wage which is at present about $4,200 a year.
This ties in with my remarks about farm costs. What I would like to know is what the government proposes to do to implement that commitment in the present situation. I ask the minister, what steps has the government planned to fulfil this commitment? I suggest to the minister that his department should carry out research into production and marketing and be in a position to advise farmers on the prospect of markets for their products. I refer to Climax timothy as one example.
November 25, 1966

Over the years the government has endeavoured to induce farmers to diversify their production into such things as forage crops, chickens, etc. As part of this diversification farmers in Manitoba have gone into the production of forage crops. A few years ago there was a good market for these crops but at the present time the market is very low. I do not know if the minister is aware of this situation, and for his benefit I shall quote from an agricultural report published by his department on October 14, 1966:
Timothy: A crop of nearly 25 million pounds is forecast with the variety Climax accounting for nearly half of it. If the estimated amount is realized, the crop will exceed that of 1965 by about 8 million pounds and will top the previous record crop of 1960 by 2 million pounds. The estimated production is also 64 per cent greater than the ten-year average of 15,234,000 pounds. In addition to the 1966 production there was a carryover at June 30 of 4.6 million pounds-nearly four times that in 1965 and more than double the ten-year average carryover.
Surely, Mr. Minister, farmers are not in a position to inquire into the needs of the market. This is a service your department should give them. Had these farmers in Manitoba known last year that there was going to be such a huge surplus of Climax timothy they would have broken up their land and planted it with flax or some other remunerative crop. Last year certified Climax timothy sold in the Winnipeg area at 23.5 cents per pound. This year the dealers are offering 8 cents a pound. Surely there should be some guide lines from the department to indicate to farmers what they should produce and to indicate the needs of the market.
[DOT] (4:50 p.m.)
In concluding my remarks on this occasion I suggest to the minister that there are certain considerations which should be taken into account in an effort to keep farm costs under control. First there should be a review of the Agricultural Stabilization Act, keeping in mind that this act now is ten years old. It has not been updated and farmers are suffering in this regard. It should be reviewed in an effort to bring it more in line with present day production costs.
The next matter which should be considered is the Crowsnest freight rates. They should remain as they are. There should be no increase in the St. Lawrence Seaway tolls. The 11 per cent sales tax on building materials should be removed. Let me cite one case. I know of a young fellow who built a machine shed last year. It cost a little over $4,000. In addition to the problem in respect of the
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shortage of money and the low prices for his agricultural products he was obliged to pay $440 in sales tax on the material which went into that shed. The time has now arrived when the government should announce a policy for agriculture that will ensure to the farmer a price for his products which will bear a fair relationship to the cost of production plus a reasonable margin of profit.

Topic:   DEPARTMENT OF AGRICULTURE
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