At the top of page 5 a change should be made, and in this regard I ask the committee's opinion. I understand that there is a grain exchange at Vancouver which is on much the same lines as the exchange at Winnipeg. It might therefore be well to add after the word "Winnipeg" in the first line the words "and Vancouver," and make the word "exchange" "exchanges."
I do not think so; I believe there is only the grain exchange at Vancouver. Then, instead of the word "with" in the first line on page 5 there should be the word "in"-"their dealings in wheat." I move these amendments.
What will be the position of the board when it takes over the contracts of Wheat Producers Limited if the words at the beginning of (b) in section 8 be struck out, "to market from time to time all wheat or contracts for the purchase or delivery of wheat?" Would the board still have an opportunity of dealing with these contracts and disposing of them?
In paragraph (f) of section 7, the hon. gentleman will observe, power is conferred upon the board to acquire from Canadian Cooperative Wheat Producers Limited not only wheat but their contracts to purchase or take delivery of wheat in respect of which the government of Canada has given a guarantee.
section 8 lies apparently the direction given regarding the sales policy of the board. I
might not have thought it necessary to mention this at all were it mot that the hon. member for Shelburne-Yarmouth (Mr. Ralston), quite rightly, stressed the importance of this particular clause and' gave his interpretation of its meaning and the intent of parliament with regard to it, and the direction conveyed by the clause to the board in respect of its sales policy. I have no desire whatever to misinterpret in any sense the gist of the hon. gentleman's remarks, nor am I competent to enter his mind to know exactly what lay behind the argument he used. But certainly I gathered this impression from his interpretation-and after all interpretations may become serious if they become part of governmental policy at a later date-that a distinct change was to be expected as a result of this clause in the policy of the board as compared with the policy which had been carried1 out by Wheat Producers Limited through the operations of Mr. McFarland, and that a policy of much greater activity in the sale of wheat and the pushing of that commodity on the markets of the world was not only anticipated but expected. I think that is putting it fairly and not in any sense misquoting the hon. gentleman. It seems to me that the clause may be interpreted in that way if it is intended to carry out the objects stated, that is, if the sole object which shall actuate the board in exercising discretion as to what it considers a reasonable price shall be that indicated in the last clause:
-with the object of promoting the sale and use of Canadian wheat in world markets.
That is a most desirable object, but if it is the only factor to be considered when the board is determining what is a reasonable price, and if the price to be received is to be governed wholly by that consideration and need have no relation either to the intrinsic value of the wheat or the cost of production, or to the effect of ito sale on the producers and on the country, then it 'becomes a serious matter. I believe that .in this clause discretion is given the board with regard to the question what shall constitute a reasonable price, and I am simply stressing at the moment my belief that any board which took this as its direction, that a reasonable price was merely to be the best price that could be obtained, .and at the same time endeavoured to make the greatest sale possible in world trade, would be falling far short of its objective. The only proper interpretation, if .the bill is to be of value, would be that the abject should be to promote the
greatest, possible sale and use of Canadian wheat in world trade consonant with a reasonable price being paid having relation to the intrinsic value of the wheat, the cost of producing that wheat and the price which the producers might thereby ultimately receive. I think that would have to be kept very firmly in mind by the board, and while the board itself has discretion in this regard; while no statement is made as to approval by order in council or any suggestion made that the government itself shall have any voice in that price, I think we can take it for granted that a government which has made itself responsible for the financing, one that has been consulted in regard to and made itself partly responsible for the initial price, will be a somewhat effective influence with the board as to the price at which the wheat will be sold. I am simply pointing out again that the purpose of the bill could be defeated and the price to the producers put down below any reasonable limits if the board had1 in mind in ' carrying out these instructions only the sale of the greatest quantity of wheat which it could sell on the world's markets.
It so happens that to-day the Liverpool market broke four cents. I do not know whether that break in the market has any connection with paragraph (c) of section 8 which is the selling policy indicated by this bill. Lest it be thought-and I do not think this is in the mind of anyone in this chamber -that the wheat board intends to dump the stocks of wheat on the markets of the world, I think the other meaning of .paragraph (c) of section 8 should be given some emphasis. It reads:
To sell and dispose of stocks of wheat and contracts for the delivery of wheat acquired from Canadian Co-operative Wheat Producers Limited and the wheat represented by such contracts as speedily as may be reasonably possible, having regard to economic and other conditions.
I desire to refer particularly to those "economic and other conditions," because it would be a very bad thing if any thought went out from this bill or from its clauses that we in this country were going either to dump our wheat on the markets of the world, or on the other hand unduly to withhold it from those markets. Therefore it might be interesting to mention some of the difficulties, some of those things which would prevent us from dumping our wheat on the markets of the world at this time. I desire to make a short quotation from the evidence of Mr. John I,
McFarland before 'the banking and commerce committee on March 22, 1934. He said:
Looking back at the problems that have confronted Canada, as well as other exporting countries, we find France with an 85 cents per bushel duty, with restrictions on milling and quotas, protecting their farmers up to the hilt so that they will get big prices for their wheat and encourage them to raise more; and that has been going on for three years. Germany with $1.62 duty doing the same thing. Italy with $1.03 duty and doing the same thing, their farmers all protected behind great tariff barriers, barriers that it is impossible for our farmers to climb over. Then there are other lesser countries doing the same thing to a smaller degree but to a considerable extent increasing the prices to the native farmers in those countries. Then we look at Australia. Australia is -bonusing her farmers. This year they are paying $1,500,000 to their farmers. The Argentine has virtually got a wheat board, giving their farmers a good deal more money for their wheat than what they are selling it at overseas. The United States during this period have spent I don't know how much of that $500,000,000 in support of wheat farmers, in all probability $150,000,000 or $200,000,000 of it has gone to American wheat farmers. Not only that but now they are paying them a processing bonus of so much per bushel in order for the American farmer to get through these trying times of depression. Japan protects her farmers to the extent of about 40 cents a bushel. China protects her farmers against our cheap wheat to the extent of nine cents, I think. These are all the difficulties that our farmers have had to face in these trying times.
Then further down;
I forgot to mention the United Kingdom. Like all other countries, they are helping their farmers to the extent of $1.35 per bushel.
In view of the fact that for the time being at least the selling of wheat will be continued by the same agency, I think I might very well quote from Mr. Mclvor's evidence a paragraph indicating also some of 'the difficulties in regard to selling wheat at this time, and some of the reasons perhaps why we have not sold more. I refer to his evidence as set forth on page 376 of the minutes of proceedings and evidence of the special committee on Bill No. 98. Mr. Mclvor said;
There are still those who say, however, that Canada might have done better, and this suggestion prompts me to place before this committee a few relevant facts:
(1) All exporting countries, including Canada, have been affected by the reduction of imports into France, Germany and Italy. Broadly speaking, such decreases as have taken place in the other importing countries have been offset by increased requirements in the United Kingdom. Netherlands, Belgium, et cetera.
Let us examine the situation in France, Germany and Italy. From 1924-25 to 1928-29 these countries imported an average of 215,900.000 bushels annually. From 1929-30 to 1933-34 these countries imported an average
of 95,000,000 bushels-an annual reduction of 120,000,000 bushels in the latter period as compared with the former_______
Assuming that we received 40 per cent of the imports of these three countries prior to 1929-30 (a moderate percentage) a market was afforded for about 85,000,000 bushels of Canadian wheat. Last year if we had secured the entire market of these three countries (and we did receive a very large share) we had an outlet for only 26.000,000 bushels. This is one phase of the export problem which must be realized.
(2) It has been repeatedly stated before this committee that Canada should have lowered her price and sold more wheat. Mr. Richardson stated that he could have sold more Canadian wheat if the price had been 70 cents per bushel. I cannot agree with that type of reasoning. Those *who hold that Canada could have sold more wheat by lowering prices must at the same time demonstrate, first that such action would have resulted in the lowering of the spread between Canadian wheat and other wheats, particularly Argentine; and secondly that a narrowing of the spread betwreen Canadian wheat and other wheats would have curtailed the movement of competitive wheats- chiefly Argentine wheat.
Let us briefly deal with these two points. In regard to the first point, namely the possibility of narrowing the spread between Canadian wheat and other wheats, I wish to point out that price as such may not be significant. It is not the absolute price of Canadian wheat which is important but rather the relative price; that is, the relation between the price of Canadian wheat and the price of other wheats.
If we dropped our price ten cents and the Argentine dropped ten cents the relative positions would not have changed and both countries would lose. Actually that is what happened last fall.
Then he goes on to quote the figures in that regard. In addition, without quoting more of the evidence, I think it is interesting to look back to the debacle of 1933, to indicate that the sales agency at that time made large purchases; particularly they purchased on one day 15,705,000 bushels. They have been criticized for that purchase. But from the facts given to the committee, it was very evident that at that time the Chicago exchange had closed, and consequently it was necessary for Mr. fyloFarland to step in and make purchases lest the whole market itself within this country be destroyed. He did that at that time; he made heavy purchases later even though the price was fairly high, but in spite of the purchases which he made, the market continued to decline. It was in the technical phrase a "thin market." Consequently those purchases had to be made. Therefore I think at this time owing to the fact that we do to a degree outline a selling policy, it must be made very evident that there is no intention on the part of anyone
in this country to dump our present wheat supply on the markets of the world. Nor is it the hope of anyone in this house that we should withhold from the markets of the world that wheat which we can sell at prices which will give to the producer some return for his labour.
Just one point in connection with the sales policy in disposing of that surplus. I think that the last speaker (Mr. Willis) is perfectly correct; there is no man in this house who would advocate such a foolish policy as a species of fire sale to get rid of the wheat, knowing its effect on the finances of the country and the price of the crop that is coming .on. That is why I was disturbed by the phraseology used .by the hon. member for Shelburne-Yarmouth (Mr. Ralston). The average man not being acquainted personally with the hon. member might not set the same value upon his sanity and wisdom that I might, and without 'that knowledge it is almost impossible to avoid the deduction that this wheat should in effect be forced upon the market regardless of price. My reason for that fear is no't only the language used in connection with this particular item; I am bound to couple that with the suggestion that this should be looked upon as emergency legislation to carry on for one year with the right of extending it for a further year by order in council. The language would indicate that it was at least the hope if not the expectation of the hon. .member that this entire surplus would be wiped out within one or at most two years. I think it is impossible to avoid that deduction from his words. Yet I think every hon. member familiar with the situation and knowing the prospective crop which now faces us will realize that to dispose of this entire surplus in the face of world conditions and the coming crop would be a fire sale policy and absolutely destructive of wheat prices in this country.
Just a word in regard to the first subsection of section 8, the power of the board to fix a minimum .price. I say on1 behalf of the producers that I think the great majority of them have sold their wheat below cost of production for four years. I hope when this board in consultation with the government comes to set .this price they will bear that in mind, as well as the price that our competitors in the Argentine and Australia are receiving. In that connection I would point out that in the June 1 issue of the Commercial Intelligence Journal there is a dispatch from our trade commissioner in Australia in which he deals wilth the question of wheat there, and he says that the price to the grower at country sidings is approximately three shillings per bushel. Hon. members will realize that that is a price above that which our producers have been getting even with the support that has been given to the market.