Hon. Alphonse Fournier (Minister of Public Works):

Mr. Speaker, I wish to add a few words to the statement I made respecting the accident to the Burlington bridge.

A meeting was held in Ottawa today between the acting minister of highways for Ontario, the Hon. George Dunbar, and myself, and it was agreed that the first step in connection with the solution of the replacement of the Burlington canal bridge, which was wrecked by the steamer W. Fitzgerald on April 29, would be the replacement of the structure with a temporary non-movable bridge which would be started and carried to completion as early as possible.

Preceding this it will be necessary to remove the wrecked bridge, which work will be started immediately. It is expected that the removal of the wrecked bridge and the construction of the temporary bridge will be completed within the period of a month.

This is the first step in connection with what might be called the solution of the joint navigation and traffic problem.

Mr. W. J. Major (Glengarry):

I should like to direct a question to the Minister of Agriculture. Has the Ontario cheese producers marketing board accepted the minister's offer of assistance in the sale of cheese under the agricultural co-operative marketing legislation of 1939? If the offer is not accepted by the Ontario cheese producers marketing board, is the minister ready to make recommendations that the government support cheese?

Right Hon. J. G. Gardiner (Minister of Agriculture):

Mr. Speaker, I have bad no further communications from the cheese producers in Ontario, so I am not in a position to say whether or not they intend to accept

the suggestions which were made. I am discussing the question with council tomorrow, but I am not in a position to say what the results of that discussion will be.

The house resumed, from Monday, May 12, consideration of the motion of Mr. Fournier (Hull) for committee of supply.

Mr. P. E. Wrighl (Melfori):

When the house rose last night at eleven o'clock, Mr. Speaker, we were discussing the matter of floor prices under agricultural products, and dealing more particularly with the floor prices relating to animal products and their decline as a result of the outbreak of foot-and-mouth disease. I was discussing also what measures the government was taking with regard to that. I had pointed out that when this floor price legislation was introduced in 1944 the minister had made certain promises to the house and to the agricultural industry, concerning the basis on which those floor prices were to be established. I had gone on to point out that in my opinion, and I think in the opinion of the agriculture industry, these floor prices are too low, and that even these inadequate floor prices are not being paid the farmers, owing to the failure of the purchasers of farm products to co-operate fully with the government in maintaining them.

I should like to place certain figures on the record with respect to the adequacy or otherwise of these floor prices and whether or not they really cover the cost of production of agricultural products. Anyone who understands agriculture will agree that there are three or four main cost items entering into it. First, there is the cost of living of the farm family; second, the wages paid; third, the cost of farm machinery, and finally, farm taxes. I think probably those are the four main costs in connection with agricultural products.

With regard to farm living costs, I have in my hand the Canadian Statistical Review for April, 1952. At page 22 It indicates that in April, 1951, the index of farm living costs stood at 197-1. In January of 1952 it stood at 215-8, so in just a few months it had risen by 18-7 points. The cost of living index for

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Agricultural Products-Floor Prices Canadians as a whole has declined, but the index of farm living costs has not had a proportionate reduction.

With regard to farm wages, this morning I got in touch with the bureau of statistics, who were able to give me certain figures. These show that in 1940 the average wage paid on the farms of Canada was $41 per month, with board. By 1945 this had risen to $72, and by 1950 to $101. It has continued to rise, and I venture to say that at the present time it probably stands closer to $110. So in that period there has been a substantial rise in that item of cost to the farmer.

Then take farm taxes. Taxes on owned lands and buildings in Canada in 1939 amounted to $19,200,000. By 1945 these taxes had increased to $39,100,000 and by 1950 to $58,500,000. Again I am sure that if the figures were available for 1951 and 1952 they would show a further substantial increase.

As to operating costs on the farm, I asked the bureau what farmers spent in operating costs for tractors in that same period. I was astonished to find that in 1939 the operating cost of tractors was $22,800,000. By 1945 this had risen to $47,900,000, and by 1950 it had increased to $97 million. Of course more tractors are being used today than in 1939. But if we take farm machinery repairs, another large item of farm costs, we find that in 1939 the farmers of Canada paid $19,200,000 for farm machinery repairs. In 1945 they paid $31,100,000, and by 1950 these costs had risen to $58,500,000, or more than three times the cost in 1939.

Then take farm machinery itself. Using 1935-39 as a base of 100, we find that in 1939 the farm machinery index stood at 103-6. By 1945 it had risen to 115-1 and by 1950 to 186-8, and that increase is continuing. That is not the whole story, either. If you look over the prices of farm machinery you will find that the greater increases are in the prices of the newer types of machinery, the kind we are buying today. Those increases are greater than the increases in the prices of some of the older machines which enter into the cost index but are not being used as much today. For instance, in 1945 a ten or twelve-foot self-propelled combine cost about $2,800. Today the same combine costs just over $5,000, so it has almost doubled in cost in the last six years. That is why farmers are alarmed today. They see the prices of the things they have to sell going down while the cost of the things that enter into their cost of production continues to rise.

Just what has the drop amounted to in the prices of things the farmer has to sell? I am not going to give the figures on grain, though there has been a serious drop in price owing to the increase in the value of the Canadian dollar. There has been a drop of at least twenty cents in the price of wheat. Take animal products. In July of 1951 the index stood at 358-9. By February of this year it had dropped to 297-3, or a decline of 61-6 points in just a few months. And that was before or just at the time of the outbreak of foot-and-mouth disease in western Canada. Since that time there has been a further serious decline in the prices of agricultural products. It is no wonder that members of this house protest when they see that situation beginning to appear in Canada, with a serious decline in the purchasing power of the agriculture industry and no decline in their costs of production. That must inevitably result in less purchasing power for the farmers, and that reduced purchasing power sooner or later must result in unemployment in the industries in eastern Canada and elsewhere which supply the machinery industry for agriculture.

I hope hon. members from eastern Canada will not think that we in the west are simply making a plea for ourselves. We are not. We believe the best way to stop a decline or a depression in this country is to maintain a reasonable basis of prices for agricultural products, which will bear a fair relationship to the cost of what the farmer has to buy. That is the only way we can maintain a prosperous Canada. So I say every member in this house, whether from eastern Canada or western Canada, should be vitally interested in maintaining a reasonable floor price under agricultural products that will represent something near the cost of production. I must say that in my opinion the floor prices that have been established today do not nearly represent that cost.

Unless something is done by the government to see that these floor prices do represent the cost of production, and that when they do set a floor price it is payable to the producer, not to the processor of those products alone; that he shall have all the guarantee and that the industry itself shall be guaranteed only through the competition which the minister says must result from the present floor price-unless this is done, the farmers will not be satisfied. I do not think that competition has been sufficient to guarantee to the farmers the result which the minister I am sure desires. It certainly has not been enough; there has not been enough competition to maintain a reasonable floor price under eggs or under some of the other

agricultural products. Figures produced in this house and sent to the minister by individual farmers, by farm organizations, have I am sure proved that to him.

I think the government should take immediate steps to see that these floor prices, even though they are inadequate, are paid to the producers and not to the processors.

Mr. Victor Quelch (Acadia):

The question under discussion is the government's price support program and the failure of certain packing plants to pay the support price. With regard to the second point, I hope the minister will be in a position to assure us that conversations are now going on with the packing plants and that that difficulty will soon be eliminated.

It was on the other point I wanted to speak chiefly. Today is probably an opportune time to discuss the whole question of floor prices, because I think it is correct to say that this year is the first time that a real test has been made of the efficiency of operation of the government's floor price program.

I believe that to operate efficiently this program must have public opinion behind it. Moreover, I am satisfied that if the people of Canada realize the basis of the program they will be prepared to support it. Therefore I think it is unfortunate that at this time certain Canadian organizations should see fit to attack the government's support program. I have in mind the March news letter of the Canadian Chamber of Commerce, printed in part in the Alberta wheat pool budget of March 28. I want to quote briefly from it, and from a short statement by the wheat pool in reply to it, and then make my own comments. It is under the heading: "Where do we stand?" and reads as follows:

Under the above heading, the March news letter of the Canadian Chamber of Commerce prints the following:

"Do we as Canadians believe in the principle of the free market, or do we not? Do we or do we not believe in a competitive economic system based on the law of supply and demand? These questions arise as the result of the action of the federal government in establishing a floor price for marketing of hogs-in fact pegging the price at the prevailing level.

"Here we have the rather anomalous situation of the Canadian people clamouring for a lower cost of living, and when the price of one of the primary factors entering into that cost of living-meat- starts to decline, the government steps in to make sure that prices won't go any lower. The completely astounding thing about this is the thunderous silence of Mr. and Mrs. Consumer.

No doubt the reason for that is that the general consumer and the public apparently have a far better understanding of the situation than the Canadian Chamber of Commerce have. I would just like to quote a

3, 1952

Agricultural Products-Floor Prices reply given in the wheat pool budget, which deals objectively with the question of free competitive enterprise:

It is easy to talk about free enterprise and the free market. But the same is more honoured in the breach than in the observance by Canadian business interests. In support of that statement we draw the attention of the chamber of commerce to the monopoly investigations into bakery establishments, flour milling, the making of dental and optical supplies, match manufacturing, etc., and those investigations, we believe, touched only the fringe. Those boys didn't practise free enterprise and abide by the free market!

Government assistance and government support of measures that have led to monopoly have been the rule ever since Canadian confederation.

I want to go on with the statement of the chamber of commerce:

The explanation which was given for the government's action, according to the press, was that if farmers took a heavy loss in hogs this year, they would not raise any next year. Then a shortage would develop and prices would again skyrocket. The other side of the situation of course was not mentioned at all. With a guaranteed price for hogs, producers will merrily continue to raise hogs beyond the desire or the capacity of the market.

The farmers of this country, Mr. Speaker, could, if they so decided, so adjust their operations as to increase prices under the law of supply and demand; that is to say, the farm organizations could organize and reduce agricultural production so that the prices would rise. Does the Canadian Chamber of Commerce, or anybody else, think for one minute that that would be to the advantage of the Canadian people? Would it be to the advantage of the other nations of the world? Would it be to the advantage of those nations which at the present time have many people on the verge of starvation? Surely a country like Canada, which is hoping to give a certain degree of leadership in the world, could not justify a reduction in production at this time. And yet the Canadian Chamber of Commerce criticize the government for supporting a program which helps to maintain production, and as a result they say it means higher prices. They apparently argue that it would be better to let the prices fall so that the production would be reduced.

I think we have an obligation to the world today to do everything possible that we can to maintain production at a high level, and I would suggest that one of the most logical ways to do that is to maintain a floor price under agricultural products. By that I do not mean an excessively high price; I mean a price that will bear a fair relationship to the prices of other commodities. I would say the program can be fully justified in many ways. First of all, let me give some background.

It will be recalled that in the depression years the prices of farm products fell very

Agricultural Products-Floor Prices much faster and very much farther than the prices of other commodities. While the prices of commodities of the secondary industries fell only 25 per cent, the prices of farm products fell over 65 per cent. And when time and again during the 1930's farmers and farm organizations would complain about the low level of agricultural prices they were told that nothing could be done about it because we were an exporting nation and therefore our prices internally had to be governed by the export prices. But it is interesting to note that that was not the policy of the secondary industries at that time. Many of those secondary industries maintained a two-price system. They sold at high prices in Canada, and then they sold at a lower price in the export market.

I recall that in the 1930's you could buy a Massey-Harris binder cheaper in Britain than you could buy it in Canada, so they were not maintaining their price on the export market; however, that was the policy at that time. True there were one or two minor exceptions, but generally speaking the prices of agricultural products were maintained at the prices that obtained in the export market. When the war came on and prices rose we adopted a price control policy in this country and price ceilings were placed upon agricultural products. The farmers then found themselves in this somewhat difficult position. During the ten years of the depression they had had to accept world market prices, prices that were far below cost of production, and many farmers went heavily into debt; many of them went bankrupt. Well, if an industry has to accept world prices when prices are low, surely it is justified in expecting to get world market prices when they rise, because that is the only way they can make up the losses they suffer during the time they are selling at prices which are far below the cost of production.

The government apparently realized that and said to the farmers: We are going to maintain a price ceiling on your products, but that is part of a general stabilization program. In return for that we are going to see to it that in the future the prices of your commodities are not allowed to fall below a fair level. And so the Agricultural Prices Support Act was put into operation. We commended the government when that legislation was brought down. I thought it good legislation then, and I think it is good legislation today. Certain changes need to be made, but the general principle behind the Agricultural Prices Support Act in my opinion is absolutely sound. When that act was put into operation, for the first few years it was not necessary to use it because prices were high. However

in 1950 the prices of certain commodities began to fall out of line. Agricultural organizations took a great deal of interest in the manner in which the act was to be used to ascertain what the support prices should be.

At the convention of the Canadian Federation of Agriculture held at Niagara the minister dealt in a general way with the basis of the formula, and stated that prices for farm produce would be maintained at a level which would afford the same relationship to the prices of other commodities as existed from 1943 to 1945 at the time the Agricultural Prices Support Act was put into operation.

The interesting point today is to compare the prices of farm products on the basis of that formula. With that in mind I wrote to the bureau of statistics asking them to give me what prices of farm products should be today on the basis of that formula, so that the prices of farm products today would bear its same relationship to the prices of other commodities as existed in 1943-45.

According to the figures they have given me, in some cases the floor is a little higher; but in most cases it is lower than it should have been. This table is prepared under four columns, and I should like to place it on Hansard. Before doing so however I shall read the items because, as I go along, I shall comment upon them.

The first item concerning which I asked information was wheat No. 1 northern, per bushel, delivered at Fort William, Port Arthur or Vancouver. I realize that wheat does not come under the Agricultural Prices Support Act, but I asked for those figures only to find out what the price of wheat would be if it had been under the act. It is interesting to note that the average price for 1943-45 for No. 1 northern wheat, basis Fort William, was $1,391. In column 2, which relates to the general wholesale index today, the price would be $2,306. On the other hand, if we compare that price with the price that farmers have to pay for other commodities today the price of wheat would then be $2,530. The actual price for wheat today is about $1.80, under the international wheat agreement. So actually the price the farmer is receiving today under the international wheat agreement is 70 cents less than the price he should receive under the formula of the Agricultural Prices Support Act.

The next item about which I asked was hogs, grade B-l, dressed, Winnipeg, per hundredweight. The actual average price in 1943-45 was $16,341. Column 2, in relation to the wholesale price index today, shows a price of $27,093. Under column 3, which

shows the relationship to prices that farmers have to pay for other commodities, the price would be $29,724. The actual price at the time of this report-January, 1952-was $25,390. So that the farmers were receiving around $4 less than the support price should be under the formula of the Agricultural Prices Support Act. I believe the floor price is somewhere in the neighbourhood of $25; therefore the price I have indicated here is about $3.50 per hundredweight under the formula.

The next item refers to good steers, up to 1,050 pounds, Winnipeg, per hundredweight. The average price in 1943-45 was $11,265. The price under the general wholesale index would be $18,677, and as related to the prices the farmers pay for other commodities it would be $20,491. The price at the time the report was issued in January was $30,670. The support price now is about $23.35, so that the support price is actually about $2.85 above the formula.

With regard to eggs, grade A large, at Winnipeg, the actual average price 1943-45 was $[DOT]404; the figure in column 2 is $-670, and in column 3 $-735. The price in January of this year was $-405. So the price of eggs at that time was about 33 cents a dozen less than it should have been under the Agricultural Prices Support Act formula. However I understand that the price of eggs today in many parts of western Canada is far below 40 cents. Indeed, I heard one member mention 10 cents a dozen. But even if 40 cents was being paid, that would be 30 cents less than it should be under the formula.

The next item is Cheddar cheese No. 1 white, per pound, f.o.b. Montreal warehouse. The actual average price in 1943-45 was $-205; the figure in column 2 is $ [DOT] 340 and in column 3 $-373, with the January price at $-440. So the price of cheese at that time was above the price to be paid under the formula-approximately 7 cents above that price.

Then we come to creamery butter, per pound at Winnipeg, and we find that the average price for 1943-45 was $-352. The figure in column 2 is $-587 and in column 3 $*640. The January price in this year was $[DOT]670. So that that price is slightly above the formula.

Mr. Gardiner:

May I ask a question? Do I understand that the hon. member asked the bureau of statistics for certain facts-the price of hogs at a certain date-and did his own reasoning?

Mr. Quelch:

No, it is all worked out in the table.

Mr. Gardiner:

Or did he ask them to work out the formula?

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Agricultural Products-Floor Prices

Mr. Quelch:

Yes. On the basis of 1943-45, as a base year, I asked them to show what the prices would be this year.

Mr. Gardiner:

I am not going to say that the hon. member is wrong, but I am going to say that he asked the wrong authority for the information.

Mr. Quelch:

I first of all wrote to the-

Mr. Gardiner:

They are not the people who figure that out.

Mr. Quelch:

Well, perhaps I had better read the letter from the bureau of statistics. It says: Dear Mr. Quelch:

Your letter of April 7, addressed to Mr. W. G.

Morris of this bureau, has been relayed to this office for reply.

We are not sure exactly which commodity group you desire to compare with the commodities you have specified, and have prepared the enclosed table which provides the following information:

1. The 1943-1945 actual average price of the items specified in your letter.

2. These prices times the percentage increase between 1943-1945 and January, 1952, in the general wholesale index.

3. These prices times the percentage increase between the same dates as shown by the index of commodities and services used by farmers.

4. The January, 1952, actual prices.

I shall put the table on Hansard-and the letter too, if it is desired.

Mr. Gardiner:

The point is that they do suggest that they are not too sure what you are talking about-and I can imagine they would not be.

Mr. Quelch:

It is quite clear; and the letter shows that they understood, because they wanted to know whether it should be compared with the wholesale price index or the price the farmer pays for the commodity. And in order that there should be no disagreement on the point they put the information in two columns, one based upon the wholesale price index, and the other based upon the price index of the things the farmer buys today. I think of the two the second one is the one which should count.