Mr. D. V. Pugh (Okanagan Boundary):
Mr. Speaker, I should like my first words in this house to be words of congratulation to you on your election to the high office you hold, and may I extend the same compliment and my good wishes to the Deputy Speaker and the hon. member for Spadina (Mr. Rea). I wish also to congratulate the Minister of Finance (Mr. Fleming) on his budget. It was a delight to me not only to have been present at its delivery but to have felt that in some small measure I was a part of it. I say a part of it because the budget sets out judiciously and exactly those things which I, as a Conservative member, support.
In the budget speech there were two statements which struck me forcibly, the statement on distress selling and that on fair value for duty. In these two clear, concise statements of broad principle may be found the hope for a solution of a long-standing problem in my constituency, that is the plight of our fruit and vegetable growers.
Before dealing specifically with these two budget statements I would like to sum up a few points which apply to my riding. To me, Okanagan Boundary is a lovely part of the world with fertile valleys, forests, lakes and rivers, all set in the heart of the mountains in the interior of British Columbia. I like to call it home. As other members speaking of their constituencies like to call their own places home, so also do I.
As for industries, we have mining, lumbering, ranching and fruit and vegetable growing. We also have a well-established tourist industry. In one respect at least, the province of British Columbia has taken a back seat to no place on this continent and that is in providing campsites and picnic grounds. These are readily available along the highways and beauty spots of the province. They are well laid out camps, with all the facilities provided. Here I would like
The Budget-Mr. Pugh to commend the federal government for the financial assistance they have given to the provinces aiding construction of such camps.
In Okanagan Boundary there is one further aid to our tourist business which I hope the government will take into consideration. We have a great need for the building of small boat harbourage and launching sites. Not only will this be of benefit to people locally but in general to the many visitors throughout British Columbia, the rest of Canada and from the United States. Visitors bring all types of craft and boats to our lakes. To understand this need it is necessary to know that Okanagan lake provides no safe anchorage in the form of natural bays. In each case the construction of a breakwater is necessary as a protection against strong winds. The building of breakwaters is a federal responsibility but it might well be worked out with provincial or local authorities. Here I would like to say a word of thanks for the recent action of the government in extending and modifying the present breakwater at Penticton.
While commenting on tourism, I would like to draw the attention of the government to the development of highway No. 97 which starts in California and runs up through my riding of Okanagan Boundary and the ridings of Okanagan-Revelstoke, Kamloops and Cariboo and farther on up north. Of great importance to the future is the fact that this highway, if developed further, will provide a logical link to the north. It is the shortest route with the best gradients available and apart from the tourist business, has tremendous trade and military value.
Let me say a few words on flood control. The government has, in conjunction with the province of British Columbia, done extensive work to control flood conditions on the Okanagan river. The worth of this project is shown by the additional acreage made available. Previously the river had snaked its way through the valley and now many miles have been cut off its course. Flooding of a large acreage has been cut to a minimum. However, there is need of a further study in the Similkameen valley and on both forks of the Kettle river. In the mountains fertile land is at a premium and each year erosion is taking place at an alarming rate, particularly so in those parts which I have mentioned.
I would like to turn to some of our industries. Historically, mining has played an early and important part in our growth and economy. Present-day prices for metals have forced once profitable operations to close and I regret the decision to close the mines at Copper Mountain, Hedley and Greenwood.
The Budget-Mr. Pugh This stoppage has been felt keenly through- These industries, along with fruit and vegeout my riding. We live in hopes that more realistic local legislation and higher world prices will lead to further exploration in the area.
There is one point that I might mention at this time and that is the number of young men who have completed their university courses and are prepared to go into the mining field, but mining is being curtailed in my riding and also throughout the rest of Canada, which means that there are no positions available for them. I would suggest to the government that long-needed surveys be carried out to provide work for those people to keep them here in Canada. We have had far too many moving out of our country to get jobs elsewhere.
I should like to say a few words on lumbering. Lumbering flourished in the early days. Perhaps the word "flourish" is an unfortunate one but at the same time I think it is sufficient to say that our mills have grown, that the forests are being utilized and that many men are being employed. Because of weather conditions- and I might say here that we have an ideal climate in Okanagan Boundary-our mills were able to operate with little interruption throughout the year. However, the bulk of our product must be sold to the United States and a poor market there price-wise means stocks of lumber lying unsold in our yards.
And now a word about cattlemen and poultrymen. Our cattlemen and poultrymen are producing under considerable hardship. We have plenty of room for furthering both these industries in the Okanagan Boundary area. However, our main trouble is the laid-down cost of feed grain. It is more than a little hard to know that our competitors can obtain feed grains for one-half the cost that it is available to us. For instance, we pay approximately $60 a ton; our competitors elsewhere in Canada obtain the same feed grains for $20 a ton. I would recommend that where grain is required by cattlemen and poultrymen for feeding purposes it be obtained through the wheat board at the prevailing door-to-door price in the wheat board area. It does seem to me ridiculous that our great overload of feed grain cannot find its way to a legitimate market such as this. May I here commend the prompt action the government took earlier this year to protect our poultrymen against the United States invasion of turkeys at distress prices.
I have mentioned mining, lumbering, cattlemen and poultrymen, Mr. Speaker.
tables, suffer from our position in the mountains. The common problem to all our industries, and indeed to the future location of any industry, is one of freight rates. Not only must we ship to distant markets but the necessities coming to our area suffer from a heavy rail bill, a heavy additional toll. This adds to our cost. We are in a somewhat different position from that of eastern Canada because we are a long way from a large population centre. For instance, Vancouver is 300 miles away from the Okanagan valley. We have to ship a long way. We have no market close at hand and it means the rail bill is a heavy one. The resulting costs of transportation are nothing less than a slow process of strangulation.
May I now refer to our fruit industry. My remarks will apply equally to the vegetable industry. We grow wonderful fruits and vegetables but in order to avoid any argument I will simply say this: they are second to none. Over the years our fruit industry has expanded and improved its product. Every effort is being made to keep up to date in quality and variety. We have an industrywide marketing agency. By-products have been developed and in this respect a great deal of credit is due to the experimental farm at Summerland. Perhaps a few words here will give the house an idea of the tremendous behind the scenes work which has helped our industry keep up to date.
In the beginning we planted our whole area entirely to fruit and fruit designed for the fresh fruit market; that is, fresh fruit for the consumer but we soon developed annual surpluses and we had to look elsewhere. The fruit and vegetable processing laboratories of the dominion experimental farm went to work with the full support of our industry. This forward looking has paid off. We now process roughly one-third of our entire apricot, cherry, peach, plum and Bartlett pear crops. We now have products which we hope will utilize all our surplus apricots not required by the fresh fruit market. These are worth-while outlets from a remunerative standpoint.
Apple processing has remained a large problem but we actually process approximately one-third of our crop, or 33,000 tons. Apple cider, which has been newly introduced, is another feather in the cap of the farm; that is, of the dominion experimental farm. Here extensive research work in the laboratories has resulted in a fine product. The B. C. fruit processors co-operated to the full in providing material, equipment and encouragement. Of greatest importance, of course, is the fact that the industry hopes
lower grade surplus apples will be used here leaving the better grade apples to the fresh market.
The experimental farm also has provided its worth by its work on new varieties. Another important function is their fight against plant pests and disease. Here ruthless measures have to be taken and the industry supports them through the Palmer memorial research grant. It allows large scale experimentation in the orchards and gives a form of insurance against loss through such experiments. Effective sprays are developed quickly. We back our experimental farm to the hilt. It has proved its worth and brought dollars to the industry.
Now, Mr. Speaker, may I summarize the major problems facing our fruit industry. Through its chief spokesman, the industry has stated that it requires consideration on four major points and, indeed, more than consideration if it is to survive. These four major points are: First, stability of returns from year to year; second, protection specifically aimed at distress selling; third, relief in freight rates; and, fourth, farm financing and farm credit.
To enlarge on these four points and deal with them in a slightly different order, I would point out that I have already made mention of freight rates and stated the necessity of an overhaul. With regard to farm financing and farm credit, to understand this need it is necessary to understand the problem of weather in relation to orcharding. The orchardist accepts normal hazards of weather. Troubles arise through early frost, poor weather when the crop is setting, improper humidity at thinning time, rain when the cherries are being harvested. All these and many more take a tremendous toll. But this is an annual problem and in all forms of farming an accepted hazard. We accept it. There is, however, a weather condition which has in many cases caused widespread disaster. I refer to the tree-killing winters commencing in 1950. This has meant a heavy drain on our resources. It has meant replanting and in many cases new trees planted have been severely damaged in the years following 1950.
The situation requires long term rehabilitation financing. This is not available through the banks. The only other source, the Canadian farm loan board, is not available either as this type of rehabilitation loan does not meet its requirements. It is a straight question of rehabilitation and I would ask the government to give immediate consideration to this urgent problem.
On the short term basis credit has been cut as a result of the poor return in the
The Budget-Mr. Pugh last five years. But the combination of winter kill and poor returns has been more than the average orchardist can stand. The position has deteriorated until now many are in serious difficulty. Financing through the banks has been curtailed in many cases. Poor annual returns are the sort of thing that make any banker, even if he is a friendly type, think twice. The result has been that a large percentage of growers now work out part time or full time. This, of course, makes it impossible to maintain the orchards properly. From the foregoing you will see that our credit position needs overhauling on both a long and short term basis.
Let me deal now, Mr. Speaker, with the remaining two major points brought up by the industry, namely stabilization and protection against distress selling. We welcome the stabilization act and we look for a measure of relief under this legislation. We appreciate its intention and feel that an honest effort based on the intention will aid in partially providing the answer to stability. But this act alone will not provide the stability that the industry needs. We require the benefits of the stabilization act certainly, but we also require an effective stoppage of United States distress selling.
Let me digress for a moment. Our fruit industry is twofold, first, apples and, second, soft fruits. There is a basic difference. Our apples are an export product and sell well in the United States market. In fact, we have a premium product and we consistently get a better price than the same type of United States fruit does in its own market. That goes for both quality and grade. There is no question of our ever having tried to undersell the American producer in his own market. We do not now ask fair value for duty in this instance. It is sufficient to state that we suffer tariff-wise. But here we can rely wholly upon the stabilization act to balance costs of production in order to provide a fair return.
With regard to soft fruits, that is, peaches, pears, apricots, prunes and cherries a different situation exists. In Canada we do not produce sufficient for our own needs and that is an important point. We do not export and we annually fill our extra requirements from the United States. The problem is one of the price at which United States fruit enters our market and also the timing. United States soft fruits reach maturity well ahead of ours. Their market is saturated before we commence to pick. When the United States market is saturated their prices begin to drop in their own country and they are faced with a disposal problem. Highly perishable fruit still in great quantities must be sold. This fruit is dumped in the United
The Budget-Mr. Pugh States market. I would ask hon. members to note that they dump their own fruit in their own market and they do so at distress prices, at prices designed to clean up the crop, at salvage prices or, if you will, fire sale prices and, of the utmost importance to us, at prices that bear no relation to the United States cost of production.
The importance of these prices is seen because it is at this stage that our own production comes on our own market. Here you see the chronic disability under which we suffer. The United States fire sale price is the price at which we must begin to sell, a price at which no self-respecting United States producer would produce, let alone sell. Much more important, this distress selling becomes the controlling factor in our price structure. These imports do occur but, believe me, fruit does not have to come across our border to dominate our price structure. The threat of import is sufficient. A quotation f.o.b. any point in the United States will do the trick.
As the Customs Act now stands we are powerless. With distress imports, that is, actual imports coming into our country before relief can be obtained, the damage is done. But over and above this there is no power in the act which can stop the harmful, in fact, disastrous results of a United States f.o.b. quotation. That is our picture. It is from this set of circumstances that we seek relief. Hon. members will now see why we have taken heart at the expression of policy with regard to distress selling and fair value for duty. Here is what the Minister of Finance said while referring to unfair trade practices and I quote from Hansard of June 17, page 1246:
During the past year many representatives of Canadian industry, large and small, and agriculture, have discussed their problems with members of the government. We have been impresed by the serious difficulties that have been created for many of them by the dumping of foreign goods in the Canadian market. Such dumping may arise from a variety of causes and may take many forms. The present dumping duties section of the customs tariff together with the valuation provisions of the customs act are adequate to deal with some forms of dumping. However, they do not deal with cases where goods are being imported into Canada at less than their cost of production and are also sold in the country of export below cost.
That is precisely what I was saying before. Later the minister went on to say:
-have examined this problem with the utmost care and am satisfied that this unfair trading practice is in fact occurring, with a harmful impact on Canadian producers.
He went on to say:
Most countries which carry on substantial foreign trade have laws to protect their domestic producers against dumping. Indeed the right to take effective measures against dumping has long been a standard provision of international trade treaties including
the GATT. The government intends to defend Canadian producers against the practice of dumping, whatever form it may take. This will require the strengthening of the present valuation provisions of the Customs Act and their effective enforcement. To this end my colleague, the Minister of National Revenue, will shortly submit a bill to parliament amending the valuation provisions of the Customs Act to add a provision to section 35 along the lines of the legislation in effect prior to 1948, requiring that, where appropriate, the value for duty of imported goods shall not be less than the cost of production plus a reasonable advance for selling cost and profit.
Furthermore may I suggest that in the proposed amendments to section 35 of the Customs Act, the representations of the Canadian horticultural council be given the full hearing and respect to which they are entitled. We should remember that this council is the Canada-wide voice of the fruit and vegetable growers and their representations should be treated in the light of the words I have quoted which were spoken by the Minister of Finance. Let them also be treated in the light of the words of the hon. member for Carleton (Mr. Bell) when he stated that in his view Canada made a grave mistake in 1948 in amending the then provisions afforded by the key valuation section of the Customs Act. He might well have said that at that date we sold the safeguards of our producers.
There is nothing new in fair value for duty. We had it once and we lost it, or gave it away. The Canadian horticultural council fought for this principle in the twenties. They received it in 1930 and from 1930 until 1935 the fruit and vegetable industry had a measure of protection unequalled before or since that time. I say since! Look what has happened. In 1935 the gradual whittling away of protection began both on specific duties and on minimum fair value for duty. Year by year concessions were given and lost until finally in 1948 the Customs Act was emasculated and we sold out to GATT.
Regarding fruit and vegetables, there are difficulties in the proposed amendment to section 35 of the Customs Act. The amendments will be based on cost of production. The Canadian horticultural council, realizing the difficulty of fixing costs of production on fruits and vegetables, has suggested an additional amending clause as follows:
Sec. 35(13) Notwithstanding anything in the Act, whenever duty ad valorem or specific is imposed on any fresh or processed fruit or vegetable of a class or kind produced in Canada, where the market price in the country of export has, as the result of the advance of the season or the marketing period, declined to levels that do not reflect, in the opinion of the minister, their normal price, the minimum value for duty shall be the amount determined and declared by the minister to be the average price for the same or similar products entered at customs during the immediately preceding ten calendar years.
(14) The operation of the value for duty fixed pursuant to the last preceding subsection may be suspended by the minister in the case of such fruit or vegetable imported into any specified region or part of Canada.
There is merit in this suggested clause because in the clause the price at which imports of fruits and vegetables enter Canada is a known amount and is easily ascertained. It is a matter of record in the dominion bureau of statistics. Such a clause would settle our difficulties to a great extent. Stability should follow as result of crop disposal at higher average prices; the government would not be called upon to subsidize the soft fruit portion of the industry under the stabilization act; United States dumping or distress selling would be curbed. It might well be that growers would become taxpayers. These advantages make sense. To my mind there is a further common-sense factor. As it now stands, when payments are made under the stabilization act the government will be subsidizing United States fruit imports. Would it not be better to provide the opportunity for the grower to stand on his own two feet?
Once again, I agree with the forthright statements of the hon. member for Carleton. May I state without reservation that the fruit industry of British Columbia is an industry of long-standing growth and is properly situated. We can face reasonable and proper competition from imported goods; we are not asking to be pampered and petted by excessively protective measures. What we want is the benefit of the amendment to the Customs Act so that foreign dumping is eliminated. And I reiterate and expand the sentiments of the hon. member for Carleton -surely there is no member of this house who wants Canadian agriculture to be compelled to compete with foreign agricultural goods sold at less than their cost of production and normal profit.
I further concur with him-I too, so long as I have a vote in this house, will not vote to compel Canadian growers and agricultural workers to compete with dumped foreign fruits and vegetables.
Topic: THE BUDGET
Subtopic: ANNUAL FINANCIAL STATEMENT OF THE MINISTER OF FINANCE