KIRK: DISCUSSION

DISCUSSION 47

DAVID KIRK'

T IS difficult, after having listened to Mr. Menzies' excellent 1 paper, to know what observations of mine miBht stand the best chance of making some further contribution to this discussion. The general approval of the institutions and techniques which have been built up in Canada around the marketing of the western wheat crop, as expressed by Mr. Menzies, is an approval that I share, and which is shared by the member organizations of the Canadian Federation of Agriculture.

In the minds of western farmers there are, today, many questions concerning wheat marketing-but none of them concern the sugges- tion that the wheat marketing business in Canada might be returned to a system of open market buying and selling. Among producers, this is not a controversial topic. The basic principles of a national marketing system as represented by the Wheat Board are regarded by them as both sound, and essential for the economic and social good of western agriculture. The acceptance by the government of Canada of such a system is, in fact, felt to be a measure of the achievement of years of organized demand on the part of western growers for a better way of marketing their wheat.

By way of supplementing Mr. Menzies remarks, I would like to take just a moment to mention one or two of the special character- istics and functions of Wheat Board marketing, as I believe it is viewed by producers.

First, it is the means of equalizing per bushel returns among those producers marketing wheat within any one crop year. T h e uncertainties and inequities inherent in freely fluctuating market prices have always been disliked by most producers. I would venture to say that, if all other things were equal, this equalizing feature of 100 per cent pooling would alone be thought, by many, to be suffi- cient justification for it.

Second, government Board marketing is considered by produc- ers to be the best way of combining the necessary degree of security and stability in the wheat industry with acceptance, by the producer himself, of a considerable degree of responsibility for his own wel- fare. Producers consider the Wheat Board to be in a very real sense their Board. Their returns are directly dependent upon the returns to the Board from its operations-and returns to the Board directly

ICanadian Federation of Agrlculture, Ottawa.

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reflect, the results of the operation of whatever international agree- ments and commitments are entered into by the government in con- nection with wheat marketing. Producer representatives have par- ticipated, with the government, in all International Wheat Agree- ment negotiations. In short, in a truer sense than at any previous times, wheat producers feel they are in a position to take a hand in running their own business, in a way that seems to them to offer the best possibilities of success-that is, by co-operating with the federal government and with other nations. I say this while fully appreciat- ing that final responsibility and decision rests with the Board and government, while the right to criticize and suggest remains with the producer.

A third function of the Board is that of providing a means for, if necessary, establishing minimum guaranteed levels of returns to the producer at the expense, as the phrase goes, of the taxpayer. Producers firmly believe that given proper international co-opera- tion, assistance should not be necessary. They don’t think you sell much more wheat through massive price cuts, on the one hand: and on the other hand they don’t think experience teaches that a surplus of wheat need be a burden, given proper programs for holding it and selling it in an orderly way. These are the premises upon which they base their policy.

Clearly, we are now at a testing time for the world wheat trade, and farmers are naturally apprehensive about the danger of encount- ering a period of competitive international price cutting. Each of the major exporters is faced with problems of marketing policy. Price cutting is likely to occur as a result of individual countries attempting to enlarge their share of a limited market, and the nature and severity of the pressures to do so vary from country to country. The actions of the other exporters are not within the control of Canada, of course, except insofar as they are affected by knowledge of Canada’s own policies and attitudes, and the severity of the competition it offers. In the present situation, Canada’s policy should be to remain competitive with other exporters, but not in such an aggressive manner as to invite, or force, retaliatory, or shall we say, defensive, price cuts. Present prices are not in any way excessive, and the effectiveness of price cutting in enlarging sales is very problematical.

The physical lack of storage space, both on and off farms, and problems of providing farm financing, are likely for a period of time

KIRK: DISCUSSION 49

to become increasingly serious problems in Canada, and it would seem likely to me that appropriate government policies will need to be developed to meet them.

In any case the producers’ record of responsible support for the policies pursued by the government during and since the war- policies which have been strongly in the national interest, and which were accepted by farmers as part of a continuing long-term program of orderly marketing-justify a firm adherence by the government at this time to an equally responsible and long run view regarding the handling of the present surplus.

Finally, just a word about International Wheat Agreements. Though by and large I would refer you with a clear conscience to Mr. Menzies remarks, I would like to make an observation or two regarding his statement that one condition of an effective aFreement is that the price range shall not be significantly out of line with current market prices.

It seems to me that the position we find ourselves in today points up very sharply the problem involved in the phrase “current market prices”. Given a period of scarcity prices will be high, and Mr. Menzies has pointed out the sound reasons for limiting such a rise by agreement. All the wheat that is available for sale will be sold as it can be moved to market, and because of this a current market price is capable of being roughly gauged for purposes of negotiating agreements.

In a period of surplus, however, more becomes involved than simply limiting by agreement what might be called a free fall in the market in response to supply and demand. With exporting of wheat entrusted, in one way or another, into the hands of the state in all the major exporting countries, a free fall does not, and should not, take place. In a position such as the present one, it would simply not be possible to negotiate an International Wheat Agreement with a price range that could be said to be “in line with market prices.“ No such measuring rod exists.

International agTeements we must have, or the situation will not be tolerable for either exporters or importers, in the final analysis. But the problem must be approached in a more basic way, it seems to me, than the setting of a price range “not significantly out of line with market prices.” It does not seem to me that market price guideposts are either altogether essential, or even available, for the negotiation of satisfactory agreements.

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Excessively high wheat prices are punitive on importers, and they are inclined to overstimulate production in both exporting and importing countries. Exessively low prices hurt producers, create real problems for that majority of importers who have wheat pro- ducers of their own to think about, and are a very real threat, as Mr. Menzies has pointed out, to the maintenance of high employment and trade-things in which all countries have an over-riding interest. These things must be the considerations which lead all nations to enter into international wheat agreements, and they must operate sufficiently powerfully to enable agreements to be fairly and effec- tively negotiated in the future.

I t would be foolish to belittle the accomplishment represented by the international agreements already negotiated. But it would be more foolish to fail to continue to explore, negotiate, and discuss both widely and exhaustively, possible avenues for improvement.