May 4, 1939 (18th Parliament, 4th Session)

Mr. GARDINER:

This is not like the
1929 advance. I was going on to say that when you drive into an elevator with a load of grain, the elevator company decides in the light of its experience what it is prepared to pay to any farmer in cash as an advance, and it does not matter whether it is a pool or not a pool elevator. If I drive into an elevator with a load of grain and ask the elevator operator what is the price of grain, he tells me. If I am not satisfied I may say "I think I can do better later." But I have to pay my expenses of operation from seed time to harvest, and so I ask him, "What advance will you give me on my grain?" In a rising market the elevator companies have been in the habit of advancing up to about 60 per cent of the market price on that particular day. In a falling market they will probably not go so high as 60 per cent, perhaps only 50 or 40 per cent; and in years of low prices perhaps very much lower than that. But they have always been prepared to make an advance which they thought to be safe. Farmers in the area who have carried on their business over a long period of years with a particular elevator company have usually been able to get a higher advance than those just driving into the elevator irregularly to sell a few loads of grain. So that the regular customers of the elevator can sometimes get an even higher price than I have indicated.
But the advance made by the elevator company was always subject to three conditions: (1) you must pay interest on it from the day you got it; (2) you must pay storage on your grain after it has been in the elevator fifteen days; (3) when the price advanced to you, plus the elevator storage charge, plus the interest, came anywhere near to what the market price was on a certain day, the elevator company had the right to sell your grain at the day's market price. That is the way the advances always operated under the system of marketing grain in western Canada.
Now, what the government is actually saying under this bill is this. Based upon the experience of fifty years, in only one year has No. 1 northern wheat been below 60 cents at Fort William on the average throughout a crop year; and the government is saying to the farmers of western Canada that we are

Cooperative Wheat Marketing
prepared, because of that experience, to guarantee that initial payment of 60 cents. This means that when the guarantee is 60 cents on the basis discussed at the beginning, where possibly storage charges and interest and other charges are taken into consideration before the initial payment is made to the farmer, up to the 60 cents no further interest is added, no storage charge is added, and even if wheat drops for two or three days or a week or a month below 60 cents, the farmer is not sold out. He still has his wheat, and that wheat carries on into the succeeding months. If there is finally an accumulated surplus over and above the 60 cents, the farmer will still get his part of that accumulated surplus. In other words, there is an advance guaranteed of 60 cents, which the government considers to be a safe guarantee, the basis from which we can work in order to establish in western Canada not only an effective guarantee, but from which our financing can be done.
The greatest weakness of the financing in western Canada has been associated with the fact that wheat has been the one cash product which we have been selling from the greater part of the west; that we get that crop only once a year, and that it is impossible, or has been up to date, for farmers to finance storage capacity on their own land to take care of the wheat which they produce. The result is that about eighty per cent of the crop has been rushed to market in the three or four months of the fall, that such wheat as is not sold is stored in storage facilities, and that of necessity elevator companies must charge from three-quarters of a cent to a cent a bushel every month it is kept in those storage facilities. Being in that position, farmers have had in most years to sell out their entire crop immediately they delivered it in order to pay their expenses of operation.
What we are suggesting under this policy is that we lay down something which farmers throughout western Canada can operate towards and operate from. They can say: We have a fairly safe guarantee that if we market our wheat in a certain way, we can get 60 cents a bushel for it at Fort William, and we can-have that paid to us the day we are in a position to deliver our grain to any elevator anywhere in western Canada. Then they can say, in addition to that, under the other bill which we shall be discussing later, that that 60 cents per bushel is fairly well guaranteed up to a crop of about 12 bushels to the acre. In other words, they can figure in advance where the bottom limit of their financial position is, and during that part of 71492-224J
the year which precedes August or September of every crop year they can carry on in such a manner that they will know they can finance when they come into the harvest season. If it turns out that they get a good price, they are in a position to do what farmers have been able to do in every other part of the world; they can do the things which they have been inclined to do previously by going into debt. As a result of having got a better crop than they figured on getting, or of having received a better price than the bottom price which experience has taught us we can get any year over a fifty year period, they can finance to better advantage.
I believe that in five or ten years time, operating under a system of that kind, western Canada can put itself on a sounder basis than it is to-day. It can operate its farms in much the same way as farmers elsewhere have been able to operate theirs because they are selling their product over the whole year instead of selling it once a year. In other words, farmers can put themselves more nearly on a cash basis than they have ever been able to put themselves in the past. Through the operation of this bill, combined with the acreage payment plan, I believe that many farmers in western Canada who have financed up to the crop period in the hope that they would have a crop, and then, finding themselves without one, had to go on financing through the next year in the hope that they would have a crop, with the debt of a previous year piled up behind them, will in future be able to finance in the current year from what they have already in hand. Thus they can enter the next year in the hope, of course, of being able to take a crop off their land of the bountiful kind which they have reaped many years in the past, but with the assurance that if they do not, and if they finance in a reasonable way, they will not be adding unduly to the debt charges against their land. I believe that when all this legislation which we are going to discuss in the next day or two is placed on the statute book, we can a least start to work towards that end.
I suggest that this bill be placed on the statutes as the first of a group which will, I believe, make possible the objective I have outlined. When it is on the statute book, and when the measure is enacted which I hope to take up next, leading with the general cooperative marketing on a similar basis of other farm products, I think we shall be able to establish the basis of a farm policy which will be helpful to producers from one end of Canada to the other.
Cooperative Wheat Marketing