June 5, 1950

CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. M. J. Coldwell (Roselown-Biggar):

Mr. Speaker, like the hon. members who have preceded me, I regret that the agriculture committee is sitting at this hour, because of necessity many members who are interested in this problem and who represent wheat growing areas are attending that committee

and consequently are unable to be here. This problem is one of the most important that has come before the house, from the point of view of those who represent prairie constituencies.

I agree with what has been said by hon. members who have preceded me, and shall not repeat their argument that the farmers are entitled to more consideration in regard to initial price. All of us support the wheat board method of marketing, and I do not think there is a member from a prairie constituency who will take any other view. We want to see it continued, and our supporters want to see it continued. We believe it is the proper method of dealing with this particular matter.

I believe a vast majority of the producers would like to see all grains marketed through marketing boards which would be more representative of the producers than is the wheat board.

I want to say something this morning about the initial price. The bill leaves it to the governor in council to set the price. I quite agree with the statement that has been made that the initial price which is to be set is too low when we consider the contributions that the farmers have made over the past number of years, particularly during the war. I also want to express my regret, as I did when the minister made his announcement on May 30 as to the new United Kingdom agreement, that the agreement is not for a longer period of time and for an adequate price, as I think our producers expected it would be.

The hon. member who has just taken his seat (Mr. Fair) has made the point well that at the present time the cost of living is at the highest figure in the history of our country, and that this is reflected in the cost of production of farm products. The costs of production of all farm commodities have reached unprecedented heights. Consequently I think that the initial price this year should be different; and it should be set out in the bill now before us, instead of leaving the fixing of the price as provided in the bill. Of course no one can say what the price of wheat is going to be in the next year. The minister made an optimistic prediction the other day, but no one can tell. Indeed, the prognostications that economists, members of parliament and others have made over the past few years as to the price of wheat and the manner in which the economy would develop in the course of a year or two, have in many instances proven to be wrong. Consequently it is very difficult to make any prediction as to the future.

1 remember, when the British wheat contract was before the house on August 15, 1946, the conflicting views that were expressed sometimes by the same speakers.

I have Hansard for that date before me. I remember Mr. Bracken, then leader of the opposition, making various predictions. He said, for example, at page 4822 of Hansard for August 15, 1946:

. . . Britain is expected to pay more for our wheat two years from now than the world price when it may be lower, I say that as an insurance that this will be done, it is valueless.

Again on the same page he said very much the same thing:

This, Mr. Chairman, is the end of the government's policy of selling cheap wheat to the hungry nations of the world other than Britain, and it will be a handicap to us in trying to build up a market in all these other countries which so interpret this arrangement.

Again he said:

I predict that in two years, or a little more, this agreement will blow up, when the advantages to Britain are gone and when her own people will be wanting to get food at the world price, as they have always wanted to, and when the world price will probably be lower than it is now.

That merely illustrates how very difficult it is to predict what is going to happen over a period of time. I thought that perhaps the opposite might happen, and that wheat might go up. I certainly thought that the cost of production would rise. We have no guarantee now that the cost of production will fall. At that time I said, as reported at page 4825 of Hansard:

I believe the government would be well advised to consider this suggestion that in the event of the costs of production rising for the next few years, as they will do largely because of the government's failure to maintain the ceilings, any difference there may be between what the farmer receives for his wheat and the increased cost of production should be made up out of the consolidated revenue fund of Canada.

Let us remember that at that time, when we were discussing the price under the British contract, the Minister of Agriculture (Mr. Gardiner) thought that the price then being negotiated was fair because he put the parity price at $1.41 or $1.42, and not $1.55, which some of us were suggesting. Today, with the cost of production where it is, if we are going to consider a parity price for wheat the initial price Should be very much higher than the $1.40 which the government proposes to set. Indeed the minister's own statement the other day, when he thought that the average price we might get this year for wheat might not be less than the price we got last year, would also warrant a higher initial price.

I regret very much indeed that the government set a lower initial price, because, as

Canadian Wheat Board Act was stated by the hon. member for Battle River (Mr. Fair) a few moments ago, that seemed to be an invitation to our customers to bid a lower price than we might otherwise get. That is one of the great difficulties of the bill and the whole arrangement. I am not going to try to estimate the wheat growers' losses; some have been suggested this morning, although you could argue that if Canadian wheat had been thrown on the market the United States price might have been considerably lower than it was, and therefore when we made a comparison the loss would not have been as great. .

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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SC

Robert Fair

Social Credit

Mr. Fair:

People have to have wheat, anyway.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. Coldwell:

The hon. member for Souris (Mr. Ross), the hon. member for Assiniboia (Mr. Argue) and the hon. member for Battle River may be quite right when they give the figure of the losses as some $600 million. We do not know about that, but it is certain that there was a considerable loss. It is also certain that farmers of Canada assisted the government in maintaining price ceilings and took a great loss as to the amount of wheat consumed on the domestic market. I think that cannot be gainsaid. Consequently I regret that the initial price is not in the bill and for a longer period. I regret that the amount of wheat we are likely to sell to _ Great Britain is so much less than many of us had hoped. It is only 100 million to 120 million bushels. With a hungry world all around us we should be able to get rid of any surplus that our farmers produce. Unfortunately, however, economic conditions are such that Canada has to trade, and unless we can get something in return for our wheat we cannot trade. The nations that need it often cannot give us anything for our wheat. We are in a difficult position with a sale of only 100 million or 120 million bushels of wheat to Great Britain.

I do not want to prolong the discussion. I have heard the views of the hon. members for Souris, Assiniboia and Battle River. I hold similar views myself, and I believe that if the hon. members who are attending the meetings of the standing committee on agriculture were here they would express similar views. I want to move an amendment which I believe is wholly in line with amendments we moved earlier on somewhat similar marketing measures. I believe the amendment to be thoroughly in order because it expresses a view contrary to the principle of the bill. The principle of the bill is that the governor in council should set the initial price. I believe that parliament should decide on the initial price. We in this parliament have the obligation of doing justice

3184 HOUSE OF

Canadian Wheat Board Act to the group of producers who contributed so largely to the maintenance of our own price ceilings and to the feeding of the world during the war years.

I therefore move, seconded' by the hon. member for Saskatoon (Mr. Knight):

That Bill No. 252 should not now be read a second time but that it be resolved that in the opinion of this house consideration should be given to the provision of an initial payment, for the periods covered by this bill, of $1.75 per bushel for No. 1 northern wheat basis in store Fort Wil-liam/Port Arthur or Vancouver.

Those, of course, are the points. I wish we could include Churchill as well. In any event I think the house should express its opinion on this matter. I believe the amendment is quite in order, and that as a parliament we should see to it that something better is done than simply to leave the fixing of the initial price to the governor in council, and particularly, to permit the comparative low initial price already announced to go into effect this year. This will not in any way delay the progress of the bill. It is not our purpose to delay it, or to interfere in any way with its passage. We believe in the wheat board method of marketing, but we do want the house to express an opinion on the initial price.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Right Hon. C. D. Howe (Minister of Trade and Commerce):

I think I should say a word ' on the amendment in reference to the discussion that has taken place. First I should like to refer to the quotation from a statement by the Minister of Agriculture read by the hon. member for Souris (Mr. Ross). From his remarks I had understood that he was referring to a statement of general application to the marketing of wheat, but on looking up the quotation I find that the reference is to only twelve and a half million bushels of wheat for which delivery is being deferred.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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PC

James Arthur Ross

Progressive Conservative

Mr. Ross (Souris):

I believe I stated that in my opening remarks.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

I do not think you did so.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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PC

James Arthur Ross

Progressive Conservative

Mr. Ross (Souris):

Yes; I was referring to lumber and salmon and other commodities that were taken out this year.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

The hon. member is quite correct if his remarks are limited to the twelve and a half million bushels of wheat which the Minister of Agriculture stated would be paid for at the United Kingdom-Canada contract price. As a matter of fact the arrangement with the United Kingdom provides that an order will be placed for the twelve and a half million bushels at the contract price for delivery in August; therefore no adjustment arises under that item. I just want to make it clear to the house that remarks of the Minister of Agriculture on that occasion had no relation

to the marketing of wheat other than the twelve and a half million bushels to which he was then referring.

Now I come to the question of the so-called losses. I find it hard to understand the reason why people who have so little use for grain markets should be so confident that the price quoted on a United States grain market must be the world price, notwithstanding the fact that Canadian wheat is denied access to that market. We are told that the Chicago price of wheat throughout the whole speculative period during the 1940's was the world price. I would point out that far more wheat was sold for cash under the United Kingdom-Canada agreement than was sold under the so-called world price, the price quoted on the Chicago market. Practically everything exported by the United States at that time was either given away for military relief or sold under the Marshall plan with funds furnished by the United States to buy wheat from the United States. It seems to me the price at which the bulk of the wheat is bought and paid for might well be regarded as the world price, and I therefore suggest that it would be much more reasonable to call the price under the United Kingdom-Canada agreement the world price than the price quoted on the Chicago exchange. The latter was merely a domestic price which the government paid the trade for wheat shipped for military relief or sold under credits established under the Marshall plan.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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PC

James Arthur Ross

Progressive Conservative

Mr. Ross (Souris):

What about Canadian

class II wheat?

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Canadian class II wheat was

sold at any price that could be obtained. We speak of the loss of markets. In 1946 and 1947 we lost in nearly all markets except the United Kingdom, for the reason that we had contracted to sell practically all our exportable surplus to the United Kingdom. We had a few bushels extra, and we sold those to old customers at the prices that those customers were paying others for wheat at that time, which was the price that they were willing to pay us. For the wheat we sold outside the United Kingdom we received the class II price then prevailing; but I would point out that the class II price for which we are selling wheat today is by no means the Chicago price. It is about 30 to 40 cents under that price; but it is the price which customers outside the international wheat agreement are willing to pay for our wheat. However, there are so few customers outside that international agreement today that the class II price is not very important in so far as the marketing of Canada's crop is concerned.

What is a fair price for Canadian wheat? Well, we sent to Washington to discuss the

proposed international wheat agreement a group as representative of the wheat growers of western Canada as I thought could be found. It included at least one representative from each of the three pools, one from the United Grain Growers, and at least two independent farmers, chosen for the prominent part they had played in Canadian agriculture. What did those men recommend to the government as a fair maximum price for Canadian wheat? First they recommended $1.70; which was later, through negotiation, increased to $1.80, which our advisers obviously considered a fair maximum price for western Canada's wheat crop. The minimum price also was established on their recommendation. As hon. members know, that is on a sliding scale. For the current year it is $1.50. For the next crop year it will be $1.40; for the following crop year, $1.30; and for the year following, $1.20. That was the recommendation of a carefully selected group of representatives of the wheat growers of the three prairie provinces. The significant figure to which I want to call the attention of the house is the maximum price they recommended to the government, which finally was $1.80 in United States funds. The counterpart of that maximum price today in Canada is $1.98 in Canadian funds.

Then we come to the question of an initial payment. I think those who believe in pooling wheat believe that pools should stand on their own feet. Certainly that is the theory on which pooling was established in this country by the Alberta wheat pool back in 1923. Certainly that is the theory upon which pooling was carried on during the period in which it proved to be practicable. It was a departure from that principle that wrecked pooling in this country in 1929 and plunged the pools into debts which they have only now succeeded in paying off. The year after those debts were financed by the provincial governments a further departure from that policy brought about the ultimate collapse of pooling, and resulted in the taking over of the marketing of wheat by the federal government.

Those who believe in pooling should for that reason believe in sound principles of pooling. It is suggested now that an initial price be established that might very well lead to the bankruptcy of the 1950-51 pool in its first year under this amended wheat marketing act. Why would we do that? It seems to me that if pooling is sound policy then sound pooling principles should prevail. Why does the amendment provide that the government shall establish the initial price? Because the government hopes to be able to vary the initial price during the year in favour of the farmers,

Canadian Wheat Board Act as it has done in working out the five-year pool. The five-year pool started with the initial price of $1.35 per bushel. After a period that was raised to $1.55 per bushel, and it was raised again to $1.75 per bushel. When we speak of the initial price for the five-year pool, we should remember that that price was raised from time to time as conditions within the pool made possible, and always under conditions which gave the government reason to believe that the new initial payment represented a safe price. In other words, when the government fixed the price at $1.75 it fixed it at a time when the pool could not have been made bankrupt by any circumstance that could then be foreseen, arising out of known conditions of completing sales of all pool wheat. The initial price was always a safe price.

We have set the price at $1.40 for the crop year of 1950, and we have done that because it is the minimum price under the international agreement for that year, stated in United States funds. It is true at the moment Canadian funds are at a ten per cent discount from United States funds, but that may well be a temporary situation. The historic position of the Canadian dollar is at par with the United States dollar. How long the discount situation will continue, I do not know. It may continue for five years or ten years, but there is also the possibility it may not continue for very long. There are certain factors that raise a doubt in my mind as to whether that period may not be shorter rather than longer. That is another element that has to be considered in fixing the minimum price. However, if by next February the pool has accumulated a considerable surplus through paying a low initial price, certainly the initial price will be increased, payment made for past deliveries and a new initial price established for future deliveries. It has never been the policy of the government to accumulate large sums in the pool, when these sums can with safety be paid to the growers.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. Coldwell:

Will the minister permit one short question?

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

Yes.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. Coldwell:

I believe he has missed my point. My point was that, owing to the sacrifices made by the farmers at a previous time, the initial price should now be set at $1.75. If necessary, compensatory adjustment should be made from the consolidated revenue fund of Canada, just as we do for certain other agricultural products.

Canadian Wheat Board Act

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

If my hon. Mend is suggesting that his amendment may cause a drain on the consolidated revenue fund of Canada, and I was about to suggest that this is so-

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. Coldwell:

I am not suggesting that, but should the price of wheat fall, it could be done that way, as for other agricultural products.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

The hon. member's suggestion may lead to a drain on the public purse and that would make the amendment out of order.

I believe the mover of the amendment has made a suggestion which puts his amendment out of order.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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CCF

Major James William Coldwell

Co-operative Commonwealth Federation (C.C.F.)

Mr. Coldwell:

No.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

I do not wish to prolong the argument, Mr. Speaker. I suggest to you that the amendment in out of order, because it threatens a drain on the public purse, and for that reason cannot be moved by a private member. If there is any doubt about it, I am quite willing to let the matter go to a vote of the house.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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PC

James Arthur Ross

Progressive Conservative

Mr. Ross (Souris):

Will the minister say something about the proposed basis of settlement under the "have regard to" clause in the contract? When he made his statement the other day he did suggest we could discuss it when this bill was before the house.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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LIB

Clarence Decatur Howe (Minister of Trade and Commerce)

Liberal

Mr. Howe:

I do not see anything in the bill that refers to it, but I should be glad to have anyone discuss it who wishes to do so.

Topic:   CANADIAN WHEAT BOARD ACT
Subtopic:   AMENDMENTS RESPECTING CONTROL OF ELEVATORS AND RAILWAYS, ETC.
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June 5, 1950