Mr. VICTOR QUELCH (Acadia) moved:
That, in the opinion of this house, the government should submit for consideration of this house such legislation as may be necessary in order to guarantee a minimum price, based upon cost of production, plus a fair remuneration to the producer, on wheat, oats and barley, as a permanent measure.
He said: Mr. Speaker, I realize that this resolution deals with a difficult problem, and no doubt it will be asked how can we guarantee a price based upon cost of production when we have a variety of grades and costs of production vary throughout the country. Of course I realize that it would be impossible to set a minimum price that would cover the cost of production and be equitable to all farmers, but on the other hand we must remember that by harvest time the bureau of statistics is in a position to make a fairly accurate estimate of the yields of various grains throughout the country and to arrive at an approximate cost of production based upon averages. If this minimum price were to apply in the first place, say to No. 1 grade, and if the spreads on other grades were shortened to the extent considered advisable, I believe that would be as satisfactory a method as any.
Eastern interests and some hon. members from time to time have criticized legislation introduced to give financial assistance to agriculture and to relieve the distress in agriculture, especially in western Canada. But we must realize that the success of agriculture Ss not of interest to farmers alone, but of vital interest to the whole of Canada. In order to stress this point I should like to quote a few figures mentioned by the Alberta wheat pool in a broadcast on November 27, 1935. In the course of that broadcast it was stated that Canadian agriculture is a five billion dollar industry which supports nearly five million of our population directly and many more indirectly. Canadian agriculture supplies practically half the domestic market for factory products. Nine thousand factories are engaged in the processing of agricultural products. They report a total capital value of close to $700,000,000; they employ 125,000 people; they pay out annually in wages $125,000,000, and they produce products annually to the value of $750,000,000. In themselves I think those figures are sufficient to indicate the tremendous importance of agriculture in Canada, and to justify the statement that until
Wheat, Oats and Barley-Mr. Quelch
agriculture is put upon a sound business basis there can be no permanent prosperity in this country.
I do not believe anyone would be so foolhardy as to claim that to-day agriculture is on a sound business basis. How can any industry be said to be on a sound basis when it is forced to produce below cost of production, and that has been the case in the past in connection with agriculture? To substantiate that statement I should like to quote a few figures taken from the Canada Year Book, 1934-35. We find the total value of field crops, live stock and dairy products in 1926 represented by the figure of S2,078,760,079. Six years later, in 1932, we find that the value of these agricultural products fell to $986,600,033, or a decrease of over a billion dollars. We might well say that if we could restore that billion dollars of lost purchasing power to the farmers we would be well on the road out of the depression. At page 862 we read that between August, 1929, and February, 1933, Canadian farm products fell 60-7 per cent, while fully and chiefly manufactured goods fell only 29-3 per cent. Again, at page 866, taking the 1926 index figure as 100, the index figure for grains in 1932 was 41-1, while the index figure for manufactured goods of mineral origin, such as farm machinery, stood at 84-8. In other words, while the index figure for grains fell by 58'9 per cent the index figure for manufactures of mineral origin fell only by 15-2 per cent. This means that a farmer in 1933, paying a debt incurred in 1929, would find his purchasing power reduced from $1 to 39-3 cents, while the price of manufactured goods had increased by 31-4 per cent and the price of machinery to the farmer had increased by 43-7 per cent.
In dealing with the question of the cost of production, according to bulletin No. 159 of the Department of Agriculture, published in 1932, a survey was made of a number of farms in order to arrive at the cost of producing wheat. It was found that the average cost of producing w'heat on summer fallow was seventy-eight cents per bushel and on stubble $1.12 per bushel. The lowest recorded cost was fifty-three cents; the highest recorded cost was $1.46. According to reports from the experimental farm, taken over a period of ten years, the average cost of producing wheat was sixty-nine cents a bushel, yet from 1930 to 1933 the average price of wheat in Canada, according to the Canada Year Book, 1934, page 257, was forty-three cents a bushel. In 1932, during threshing operations, No. 1 wheat fell to the low figure of twenty cents in the Calgary district. Therefore it is obvious that from 1930 to 1933 farm products were being
produced very considerably below cost of production. At the same time taxation increased. Costs, as represented by wages, of course fell, but on the other hand it must be remembered that according to the 1931 census only 38-6 per cent of the farmers employ help, so in view of this fact the saving in labour costs was very slight.
It is useless, therefore, to talk of permanent prosperity in agriculture until steps have . been taken to guarantee prices for farm products commensurate with prices of other commodities. We are only too familiar with the statements of many prominent business men to the effect that we cannot guarantee prices for agricultural commodities above world market levels. On the other hand, however, when you take into consideration the fact that all real wealth comes out of the soil I think it is absurd to make the statement that you can guarantee minimum wages in industry; you can guarantee the wages of civil servants and you can guarantee the wages of politicians but you cannot guarantee the prices of the very commodities that have made all these services possible.
By guaranteed prices of course I do not mean prices sufficiently high to include large profits, as that would be a direct incentive to the increased production of agricultural products.
I refer to a just price, a price sufficient to return to the producer the cost of production and at the same time be commensurate with prices of other- commodities. In addition to low prices farmers have had to fight drought, grasshoppers, hail, frost and soil drifting, -with the inevitable results that agriculture to-day is in a precarious position. Farmers who by 1929 had built up a fair reserve have seen it vanish; they have not been in a position to replace their machinery; farm buildings have become dilapidated and the inside of the homes in many cases is in dire need of refurnishing. And what of the families? Living in a climate of extremes of heat and cold, the children often have to travel three or four miles to school, undernourished and insufficiently clothed. Yet in spite of that we hear such statements as that of the senator from Rougemont, Hon. Rodolphe Lemieux: "Surely the farmers throughout Canada are not so wholly ruined as to have the right to claim that they should not pay."
We find at the present time a determined effort being made to do away with the existing debt legislation throughout the provinces. In that regard we should remember the statement of Major Douglas, "Show me any concern that does not recover cost out of prices, and I will show a concern headed right for
Wheat, Oats and Barley-Mr. Queleh
bankruptcy." That is why to-day the farming industry is fast becoming bankrupt, because it has not been in a position .to recover costs out of prices. And so before we can hope to put agriculture on its feet by such measures as debt legislation it will first of all be necessary to remove the cause of these debts. When one considers the actions of the majority of the great nations in spending many millions of dollars in maintaining high internal prices for agricultural products, then I think we can fairly say that Canada has not been overconsiderate or over-generous in her treatment of agriculture. The action of the government last year in establishing a wheat board and a minimum price for wheat to a very large extent restored the confidence of the grain farmer. It is to be earnestly hoped that the board will be kept in operation as a permanent institution.
I referred to the fact that the nations of the world have spent many millions of dollars in maintaining high prices for agricultural products in their own countries. In support of this statement I should like to quote from a speech made by John I. McFarland at a luncheon at the Palliser hotel, Calgary, on February 14 of this year. Dealing with this subject, he said:
I have shown you there is no world price, professional and non-professional speculation has been down close to zero in almost every line where there is a risk which must be carried. It is no longer considered sound business ethics for our business men to assume speculative risks. Governments in other countries have been expending and' diverting enormous sums of money to producers Australia paid over 60 millions of dollars in direct payments and indirectly 25 per cent in depreciated currency. The United States have paid about 200 million dollars in stabilization of wheat alone, and hundreds of millions in processing taxes have been levied on consumers to provide benefit payments to wheat farmers. Argentine contributed indirectly 25 per cent through depreciated currency, while controlled' foreign exchange has added to consumers' burdens of that country for the benefit of their producers. England, a country which produces only about 60 million bushels per year, has collected from consumers for the benefit of their wheat farmers about $100,000,000, while other importing countries of Europe and elsewhere have imposed high tariffs against wheat, which have maintained fantastically high prices in various importing countries, thus exacting from consumers enormous sums of money for the benefit of home production.
Now I think we are agreed that the producers should recover cost of production out of prices. But on the other hand I am very much opposed to many of the measures referred to by Mr. McFarland, because they ignore the very root of our present economic evils, namely, that owing to certain practices
under the present system industry fails to distribute sufficient purchasing power to buy back its own production. The last time I spoke in this chamber I dealt with this subject somewhat fully; therefore I shall not take the time of the house to deal with it again, but in view of this fact it is obvious that if you tax the consumer in order to raise the price level of any commodity you are placing a very heavy burden upon the consumer and are merely transferring the burden from one part of the community to another. Therefore I take the stand that in the event of world market prices of grains falling below the cost of production the dominion government should create the necessary financial credit in order to stabilize the price of these commodities at a level that would at least cover the cost of production to the Canadian producer. The futility of attempting to accomplish this by borrowing money from the banks is well emphasized by a statement from one of the greatest commercial organizations in the world, namely, the London Chamber of Commerce. The article was in reference to financing a government expenditure and read in part as follows:
It is quite evident that this cannot be done by the old method of asking the banks to create new money by the not very arduous activity of writing figures in a ledger, the state then borrowing the result from them at interest. In order to repay the capital and' interest more money must be recovered from the community by taxation than has been issued to it. since the banks did not lend the interest, so that the last state of that community is far worse than the first. The entry of figures in a ledger, by means of' which the banks create new money "out of the blue" under the present system, cannot be held to justify the claim to repayment, with interest by the community. The sacrifice on the part of the banks to create this new money involves but a few seconds of a clerk's time.
The justification for this argument of course rests upon the fact that the banks create this credit not out of anything they possess, but against the real credit of the borrower. This action by the government would become necessary only in the event of grain prices becoming deflated below cost of production, and therefore this action instead of causing inflation would cause reflation, a process that would be very necessary if Canada is to be saved from the disastrous results of the low prices of 1930 to 1934. This issue of financed credit would be cancelled automatically by the farmers meeting cost of production plus living expenses, and in the event of any part of this credit becoming redundant it could be recalled by an income tax.
We still hear a good deal of talk about over-production, but in the majority of cases it is in reality a matter of under-consumption
Wheat, Oats and Barley-Mr. Fair
rather than over-production. If the purchasing power of the people were increased up to the full capacity of industry to produce and deliver goods the bogey of over-production would to a large extent disappear. At the present time we hear a good deal about increased immigration, and placing more people on the land. The hon. member for Champlain (Mr. Brunelle) advocated the conscription of the unemployed and placing them on farms. But would not this cause greater production of agricultural products and so tend to bring about lower prices unless the government is prepared to guarantee a minimum price?
In the drought area we have many farmers w'ho are very anxious to move to better districts. In many instances these men moved into the areas with a little capital, good health and plenty ambition. To-day they have lost their capital; in many cases their health has suffered and they are fast losing their ambition. Surely before helping to settle foreigners on the land in Canada we should help these Canadian farmers to become reestablished. To-day it is costing thousands of dollars to ship in feed and seed to these families and to keep them on relief. In the long run would it not be cheaper to finance them to a new start in a good district? Then, provided prices of grain were maintained at a just level they would soon become self-supporting.
The main principle behind the resolution is that farmers should be guaranteed a fair price for wheat, oats and barley, or a price sufficient at least to cover cost of production and a fair profit. Even if this means a slight increase in the price level of commodities to the people of Canada I would ask this question: Have Canadians any right to expect
that a large body of the Canadian people should produce below cost of production in order that they may be in a position to buy more cheaply the goods they require. Personally I would say that that should not be the case.
If the resolution were agreed to it would possibly involve an amendment of the act establishing the wheat board, so that paragraph (a) of section 8 would read as follows:
To fix a price, based upon cost of production plus a fair remuneration to the producer, to be paid to the producer for wheat delivered to the board as by this act provided, subject to the approval of the governor in council.
Then the act would be made to apply to oats and barley in the same way that it applies to wheat. It applies only to grain produced in Saskatchewan, Manitoba, Alberta and British Columbia because grains produced in other parts of Canada to a great extent are used for feed.
In offering the resolution I wish to stress the principle that the price of an article should be based upon cost of production, a condition which does not obtain at the present time. To-day the price of an article is governed by what it will bring, and then, after deducting certain fixed charges and commissions, the primary producer gets what is left. In some cases that means he receives nothing, and in many others it means an amount altogether inadequate to meet costs incurred in the production of the article. In closing may I observe that I hope hon. members, instead of being too critical of the resolution, will be prepared to admit the justness of the principle expressed therein.
Topic: WHEAT, OATS AND BARLEY PROPOSAL THAT GOVERNMENT SUBMIT LEGISLATION GUARANTEEING MINIMUM PRICES