GENERAL ARTICLES

Agriculture and Imperial Trade

F. W. CRAWFORD July 1 1932
GENERAL ARTICLES

Agriculture and Imperial Trade

F. W. CRAWFORD July 1 1932

Agriculture and Imperial Trade

Agreements to sell, agreements to buy —both are essential to the success of the Ottawa Conference, says this writer

F. W. CRAWFORD

TAKING the extensive trade years of 1928 and 1929 as a basis, we find that over eighty per cent of Canadian exports to the United Kingdom were of an agricultural nature. With the lower level of prices for farm products and the altered trade conditions exerting a very definite influence, the exports for the calendar year ending December 31, 1931, were still sixty-five per cent agricultural. A return to normal conditions would no doubt restore the percentage to its former position. In so far as the trade features of the Imperial Conference are concerned, those facts in themselves place the Canadian delegates very largely in the position of bargaining the sale of our agricultural surplus against the purchase by Canada of such other products as .our Government may see fit to admit into this Dominion at a preferred rate, although when discussions involving trade with the other Dominions take place, the boot may be on the other foot.

The position so outlined reveals the importance of agriculture in the coming trade negotiations. Yet the voice of agriculture in connection with this question is very largely the voice of Western Canada. This is mainly because of the fact that it is in that section of the Dominion that the great wheat surplus is produced, and all Canadian thought is directed again and again to the producing and selling of wheat. The domination of wheat is accompanied by the voice of a section of agriculture that is more articulate than voices from other parts of the country. The East is bestirring itself, and the vast agricultural production of Ontario, Quebec and the Maritimes may be an important factor in our export trade if satisfactory agreements are made at the forthcoming conference. Beef, bacon, poultry and dairy products could all be provided in quantities for the British market. British Columbia is always greatly interested in a market for her fruit, and her people will be somewhat concerned about a satisfactory outlet for both poultry and dairy products.

This diversity of interest in the' Dominion itself indicates that the effective interpretation of Canadian agricultural opinion on this question is difficult. Accordingly, I am only aiming to set down some of the hopes and expectations of the farm people, as well as some of the responsibilities that will devolve upon them if those hopes are to be even partially realized through the outcome of the forthcoming Imperial Conference.

On this question of export trade there are two schools of thought among agricultural leaders. One school accepts the principle that agriculture must be rebuilt upon the basis of export market values for our agricultural products. The

other refuses to accept that position as final and holds that agriculture should be rebuilt with our home market as the basis and with our exportable surplus organized and controlled so that it may be removed to relieve the home market. Particularly with products other than grains, this school contends that the excitable surplus should be sold abroad for what it will bring, and, further, that it should not be allowed to set the price for the bulk of product which is consumed at home.

The first mentioned school is by far the larger, but whether or not it is the wiser or more intelligent is a matter for my readers to decide.

Recently I asked a Western agricultural leader who subscribes to the principle that the price of farm products must continue to be based on export values, what he thought of the prospects of some definite achievement for agriculture at the coming conference. He replied:

"In my opinion, the coming Imperial Conference is the one bright spot on the agricultural horizon today.”

This statement

was repeated to the editor of a leading farm magazine having a very extensive circulation in the prairie country, and he commented : ‘‘I agree with him one hundred ¡>er cent.”

I then turned to a well-known leader in the marketing field who is more directly concerned with farm products other than grains, and his remarks had special reference to the relationship of those products to the British market. He did not expect much immediate benefit to agriculture from the Conference, but he admitted that the possibilities of the British market were unlimited if it could be successfully developed. It was his opinion that we should organize and control exports for the punx>se of removing our surplus and relieving the home market, and not simply sell it to fix the price of the remainder of the product.

A few days after my discussions with those agricultural leaders 1 was obliged to make a business trip across the prairies, during which I met many farmers and livestock men. I returned again and again to the question of the Conference, only to find that, almost without exception, those who have their money invested in land, cattle, hogs, sheep and other products of the farm felt that the July Conference will be the one outstanding opjxjrtunity that Canadian agriculture has had to secure a trade agreement that would be really worth while.

If the ho|>es of a large section of the farm people are high, it would seem to me to be a proj>er time to examine the prospects for the realization of those hopes. My subsequent remarks are a review of the situation in an endeavor to throw some light on the question.

Exchange Stabilization

VJL7HILE we are told that the ConW ference is to deal with economic questions, I feel that the stabilization of exchange between Empire countries on a parity basis is of first importance. This matter has been repeatedly emphasized during the past eight months. Parliament is alive to the situation, and the farm people certainly hope that some way may be found whereby the dollar will be tied to the British |x>und and the currency of the other Dominions. It is not only because of the millions lost to Canadian farmers through the depreciated value of the British pound that this matter has been so strongly emphasized. Several of

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Agriculture and Imperial Trade

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our farm products, notably live cattle, are sold after arrival on the British market, and under present conditions the exporters are not only speculating on the market, they are taking the risks of unreasonable fluctuations in the relative value of the dollar and the pound. This hazard in itself has a very depressing effect upon prices, and if it is possible to eliminate it, the Canadian producer stands to benefit.

Whatever may be said to the contrary, the successful marketing of her surplus wheat is Canada's most important agricultural problem. It should therefore be1 our aim to sell the United Kingdom as much wheat as possible consistent with fairness to other parts of the Empire. At the time of writing it seems that the wheat question will be dealt with on a quota basis, and while any suggestion of what that basis will be is largely conjecture, we may say with safety that some indication has been given as to the opinion of the British Government.

The latest proposals suggest that the Government of the United Kingdom has in mind a quota plan calling for twenty per cent home-grown wheat, thirty per cent foreign, and fifty per cent from Empire countries outside the United Kingdom. If such a quota should be adopted it is possible that Canada would not find any greater outlet for her wheat in the United Kingdom than she has in the past. The United States Department of Commerce has listed a sixyear average of United Kingdom imports of wheat and flour, wherein it is indicated that Canada had thirty-two per cent of the trade, the United States twenty-five per cent, Argentina eighteen per cent and Australia twelve per cent.

While everyone is aware of the fact that much wheat enters United Kingdom channels of trade that is eventually sold elsewhere, the report referred to indicates that Canada and Australia, supplying the bulk of the wheat from Empire countries, would normally supply forty-four per cent of the United Kingdom imports. It is, therefore, conceivable that if the quota from Empire countries is not set above fifty per cent, Canada will not have much to gain in that direction. The position that should be taken by our delegates on this question is surely obvious.

Meats And Other Products

WHILE there is a possibility of Canada gaining something of immediate benefit from broadened outlets for her wheat, her farmers cannot receive effective immediate assistance from preferences for her other farm products in the British market unless it be by the removal of restrictions imposed on shippers of live cattle. There is, however, an opportunity to develop markets that will lx1 of great assistance in the future, providing that the proper measures are adopted by those who will guide the destiny of Canadian agriculture at the coming conference. A brief examination of the present position of the products of the farm other than grains will reveal my meaning.

At the present time sixty-five per cent of the beef consumed in the United Kingdom is home killed, but of course there is included the live cattle that are shipped from Ireland and Canada for immediate slaughter or for finishing on the farms of England and Scotland. Argentina supplies thirty-two per cent of the total, and the remaining three per cent comes from New Zealand and Australia. At the moment Canada does not enter the picture in connection with this product, but if she joins the other Dominions in demanding a large beef quota or a duty against foreign beef entering Great Britain, her people must accept certain responsibilities in connection with supply, and that they are definitely not in a position to do.

The live cattle trade is an important matter to Canada, and if arrangements are possible that will facilitate the movement of live cattle in greater numbers and with less

restriction it will benefit our cattle producers to a great degree. An active live cattle trade has a beneficial effect in that it is competitive with the home market and may stimulate prices all along the line. Last year we shipped over 26,000 head of cattle to Great Britain, and with improved conditions the trade would be vastly expanded. Ireland is Canada's competitor in this field, and her cattle are not subject to some of the annoying restrictions that make the Canadian cattle trade difficult. It is obviously the duty of our Minister of Agriculture to see that Canadian cattlemen are placed in the same favorable position as Ireland in respect to this trade.

British farmers produce forty-eight per cent of the lamb and mutton consumed in that country, twenty-six per cent comes from New Zealand, nineteen per cent from South America, and seven per cent from Australia. It will therefore be seen that, while Canada is not particularly involved in so far as this product is concerned, the other Dominions will be vitally interested in an arrangement with the United Kingdom. Canada will do well to support an agreement that will keep the market available to her products for the time when her farmers may find themselves in a position to enter the export lamb trade.

During the past two or three years Canada has been almost out of the bacon export trade, but her farms and packing plants are equipped to supply a large part of Britain’s demand for this product. While Canadian agriculture will wish to maintain for itself the right of entry into the United Kingdom markets for all of its products, farmers generally will be hopeful of some real development in the bacon business. At the present time, of the total consumption of pork and bacon by the United Kingdom, thirty-eight per cent is home grown, fortyone per cent comes from Denmark, about six per cent from Holland, about five per cent from Sweden and the United States, about three per cent from Ireland and Canada, and about seven per cent from all other countries. A bacon quota is proposed and it is suggested that the basis will be the record of bacon shipments into the United Kingdom for the past three years. That would only permit Canada to supply 1 Vi per cent of the pork and bacon consumption, and it is apparent that such a quota would be of little value to our farmers. On the other hand, our record of export during the past three years places us in an unenviable position. If wfe want the market we must produce the goods and organize the marketing machinery.

In both the dairy and poultry business Canada has equipment with great possibilities. Butter exports to all countries have increased from a little less than 1 H> million pounds in 1930 to a little over 10,000,000 pounds in 1931, largely because of the very low price of butter in Canada. Even in the face of that development, we find the National Dairy Council asking the Minister of Agriculture for Canada to announce that an emergency has arisen in the dairy industry in Canada. Exports of poultry products have been irregular and ineffectively organized. These are vast industries, and their successful development will mean much to every Canadian citizen. The high standard of product that has l>een developed by the grading systems that have been followed for some years makes it possible for Canadian producers to place an acceptable guaranteed product on the markets of the United Kingdom. Moreover, both industries could make most effective use of that market if export organization were improved.

An effective and satisfactory agreement may call for the discard of some of the

policies of the National Dairy Council in so far as those policies affect the attitude of that body to the home market. The modification of those policies would not, in the opinion of many leaders of agricultural thought, imperil the industry at home. In fact, there are many who believe that the modifications which might be necessary would be beneficial to the industry generally, and they are hoping that this Council will meet the Dominions in the same spirit as they will expect the delegates from the United Kingdom to meet Canada.

The foregoing shows that our exports to the United Kingdom of farm pnxiucts other than grain are small. Furthermore, we may say that there is not any considerable volume of agricultural exports going elsewhere that might be diverted to Empire markets. Nor is there reason to believe that we may expect rapidly increased production in those lines. Sane agricultural opinion is unanimous in its belief that it would be folly for Canada to attempt such rapid expansion in agricultural production. It will be apparent, therefore, that with products of the farm other than grains it will be a case of developing export organization and growing slowly with demand rather than plunging into extensive schemes of production that would only result in more grief for agriculture.

Trade With Other Countries

OF VITAL importance to agriculture is our trade with the other countries of the world. We must not overlook the fact that we are a great world-trading nation and that we need the world’s markets for our products. Even when we enter an interimperial Economic Conference, that fact should be kept continually before us. During the fiscal year ending March 31, 1931, Canadian exports to the United States amounted to $349,660,563. To countries other than the United States and the United Kingdom the total was $230,835,605, and to the United Kingdom $219,246,499. In other words, during that year Canada sold $2.60 worth of goods to other countries as against $1 to the United Kingdom.

The figures for the fiscal year just closed may show that the position is altered considerably, but the fact remains that Canada requires the world as a trading ground if she is to continue to expand. Therefore we cannot allow her zeal to secure the lion’s share of the British market for her agricultural products to carry us into reckless demands that will imperil our interests in other quarters. Our people do not forget that those foreign exports are possible because of credits that Canada has created in favor of other countries by her purchases abroad, and they will wish to see those exports continued.

A National Spirit Essential

IT IS reported that the British delegation will seek an improved outlet for textiles, steel and probably coal, although the position of many other products will no doubt be examined, lie the position of Great Britain what it may, to give such products unrestricted entry into Canada would create serious problems for the particular industries concerned. On the other hand, if we would sell our surplus of agricultural products we must buy some of the goods that our prospective customer has for sale. Spokesmen for the textile industry have already proclaimed its right to immunity from interference on the ground that it employs 120,000 people, that it represents an investment of many millions of dollars, and that the cost of production is higher in Canada than it is in Great Britain.

Agriculture does not seek the overthrow of industry, but in reply to those claims it may be asserted that many more people than the number stated find employment in agriculture, and the investment in agriculture is, after all, more than the investment in the great textile industry of this Dominion. The people of Canada from the Atlantic to the Pacific realize that if we are going to make a bargain with the other countries of the Empire that will give us a preference for our agricultural surplus, it must be a two-sided agreement.

The interests of agriculture and industry in this country are not opposed. They are interdependent, and for that reason sane agricultural opinion will rejoice in the successful growth of industry. Industry will be expected to approach the Imperial Conference in a national and not a sectional spirit. The representatives of agriculture must take a similar attitude, because without doubt there will arise questions affecting the exclusive right of the Canadian agricultural producer to his home market. In the general interest of Canada and in the interest of agriculture itself, the restricted view that has been taken on trade questions by some of the Councils which have represented agricultural opinion in the past must be banished from the Council chamber, and the Canadian delegates must be given a free hand to negotiate trade agreements that will move Canadian products of the farm and factory in great quantities to all parts of the Empire.

Now to sum up the situation. There is a prospect of some immediate advantages in connection with the marketing of our wheat and live cattle. There is an opportunity to keep the Empire markets open to our products, and to develop those markets in accordance with our necessities. It appears to me that there will be some justification for the hope that exists in the hearts of the Canadian farm people, if in addition to the many other matters with which they have to deal, our delegates are able to achieve:

First, monetary stabilization between Empire countries. If Empire countries are able to devise some method whereby they may get within a managed exchange group, our people may hope to develop trade with satisfactory security.

Second but of equal importance, agreements to buy as well as sell. We must buy extensively from the United Kingdom and the other Dominions if we would sell our products to them. The purchase of goods by us in any of the Empire countries creates credits in favor of those countries that will be used to purchase goods which their people require. Preferences for our agricultural products will be of no value to us if we do not give preferences that will enable other Empire countries to sell in our markets.

Third, the organization and direction of our exportable surplus of agricultural products. This may mean the appointment of an Exports Control Board such as has been advocated for two or three years by several leaders in the marketing field. In any case, it will involve the erection of some machinery to give intelligent direction to the export of our agricultural products. If we would succeed in the British market, the present haphazard method must be discarded and competent organization must replace the mismanagement that has made the satisfactory development of export markets impossible in the past.

Fourth, but in my opinion of great importance to our development, would be a decision to avoid any scheme proposing to bonus our agricultural surplus. A bonus at best is a makeshift. Let us get down to economic realities and endeavor to establish agriculture soundly in order to prevent, in so far as that is possible, a recurrence of the difficulties that now beset us. Government subsidy places industry or agriculture in the same position as the snake that swallows its own tail ; it will ultimately consume its own body. The End