Articles

TOO MUCH WHEAT

Mike Stanko has $100,000 worth of wheat on his farm but can sell only $350 worth. Other western farmers still have last year’s grain stored in rinks^ houses and old schools. The cause is a three-year backlog of big crops and tightening markets; the cure is under fierce, uneasy debate

FRED BODSWORTH November 1 1954
Articles

TOO MUCH WHEAT

Mike Stanko has $100,000 worth of wheat on his farm but can sell only $350 worth. Other western farmers still have last year’s grain stored in rinks^ houses and old schools. The cause is a three-year backlog of big crops and tightening markets; the cure is under fierce, uneasy debate

FRED BODSWORTH November 1 1954

TOO MUCH WHEAT

Mike Stanko has $100,000 worth of wheat on his farm but can sell only $350 worth. Other western farmers still have last year’s grain stored in rinks^ houses and old schools. The cause is a three-year backlog of big crops and tightening markets; the cure is under fierce, uneasy debate

FRED BODSWORTH

AS THE combines roared back and forth across the vast yellowing wheat fields of the Canadian prairies this fall, western wheat growers were again in the middle of an increasingly familiar paradox:

Too much wheat means too little money.

The nation’s wheat farmers have faced misfortune before. But the cause has always been obvious drought or depression or rust or a lack of ocean ships. But now, in a period of world prosperity, abundant yields and normal shipping, they have mountains of wheat they cannot sell. Commercial and pool elevators across the prairies are jammed almost to bursting; to store the overflow harasse^ farmers are using the naked earth, hockey arenas, vacant schools anything up to and in some cases including the kitchen sink.

Under delivery quotas set up by the Canadian Wheat Board, the government agency which has full control over the marketing of all prairie wheat, farmers have delivered and been paid for only about half of their 1953 crop. Under a much more restricted 1954 delivery quota, they face the prospect of selling a trickle of about $350 worth per farm this winter, unless the Wheat Board’s export business rapidly improves. On big farms that $350 will cover no more than half a day’s expenses for harvesting operations.

While farmers combed the prairies for any roofed structure that was empty to store their growing surplus of unsold grain, the Wheat Board for reasons it believes to be sound has refused to cut prices, a step which would move wheat more rapidly into export channels. Britain, our main customer, and a number of lesser customers are tightening their belts and buying as little as possible, hoping that before long the world-wide wheat surplus will force Canada and other exporting countries to lower prices.

The winner in this gigantic game of showdown will l>e the country that can sit tight and wait longest. The Canadian Wheat Board is confident importing nations must soon step up their purchases, whatever the price, and it believes that Canadian farmers, most of whom had a number

Continued on next two pages

As wheat piles up some farmers say “Give it away ... Cut the price ... Abolish Ottawa contro

TOO MUCH WHEAT (continued)

* of prosperous years until a year ago, can afford to wait.

Many farmers aren’t so sure.

Bill Perry, a husky 32-year-old with a small farm ear the hamlet of Chin in southern Alberta, told )e recently he had grossed only $1,500 during the last year and a half, since selling his 1952 crop, and has only $1,000 in sight for this year. At that, he considers himself lucky because he has and will be permitted to sell about $700 worth of barley in addition to his $300-plus wheat quota.

Early in 1953 when (he demand for wheat was still good, Perry built himself a new stucco bungalow that ate up all his savings. Now his wife, a former schoolteacher who gave up her school seven years ago, has returned to teaching. “If it wasn’t for her teaching salary we’d be eating wheat to live,” Perry said. He had to leave unfinished a machine shed he started to erect for his tractor —“I ran out of dough”— and now he is parking his tractor outdoors and using the uncompleted shed for storing five hundred bushels of 1954 wheat, because he can’t afford to build proper granaries.

When a series of bumper crops and a slowdown in exports plugged the grain elevators in 1953, the Wheat Board cut the wheat delivery quota back to seven bushels per cultivated acre. This means about fourteen bushels per acre of crop because most farmers keep about half their land lying idle in summer fallow. Big farmers were better off than small ones under this system, for their expenses per acre are lower and the bigger deliveries they were permitted made selling easier, since a single big farm’s quota was enough to attract a buyer and close a deal.

With the wheat movement even slower this fall, the Wheat Board decided that elevator space would be so limited that it might as well put every farmer

lut most farmers insist the world will keep eating bread and will buy their wheat eventually

on an equal basis, letting everybody realize a bit of cash regardless of farm size. The Board is letting each farmer deliver a thousand bushels of oats or barley (because these are in greater demand as livestock feed) and three hundred bushels of wheat —if he can find the elevator space in his district for it. Most prairie farmers grow only wheat, so for thousands the oats and barley quota might as well be rice or coffee beans.

Under this present quota system the situation of 1953 has been reversed. Now it’s the large farmers who are hit hardest. -

Mike Stanko of the Readymade district southeast of Let hbridge had ‘¿.tient acres in wheat this year. He also had arounr )() worth of unsold 1952

and 1953 wheat seo a guy >rage on his farm when he began his harvel he’s 'ith the 1954 crop in he expects to have cica rad$l 00,000 worth of wheat on hand and he faceeryoneota that, for the prssent, will let him get rid of only $350 worth. ? /e’re in the worst mess ever/’ he said. “All I cff/.^lo is keep building more and more granaries and ’.hope something will break soon. That 300-bushel quota is nonsense. It won't pay my harvesting costs for two hours.”

Bill Fisher, a greying, heavy-browed farmer with eight hundred acres south of Swift Current, Sask., paused from turning over rain-soaked hay long enough to comment: “I’m not broke, but if I

didn’t have a nest egg from the good years I would be. Last year I sold half my crop which just let me break even. With last year’s carryover and the new crop of this year I’ll have 10,000 bushels, maybe $12,000 worth. It’s like having a fat. bank account you can’t draw on.”

In a 2,500-mile air and motor tour of the west in September I found unsold grain being stored not only in skating rinks, old homes and schoolhouses and on the ground but in chicken coops and woodsheds. Ina land where wheat has always meant money, wheat was everywhere, yet there

was also talk ofjÿl.rd times. I found “No Credit” signs popping up in village store windows.

R. E. Walker, manager of the Saskatchewan Retail Merchants’ Association, said more than four thousand retail stores in Saskatchewan were operating on a strictly cash basis. Roy C. Marler, president of the Alberta Federation of Agriculture, said farmers were in a precarious financial position and he doubted if many could continue borrowing enough from banks to tide them over the next few critical months unless some form of government credit assistance was instituted.

In a normal year wheat puts close to half a billion dollars into the pockets of the west’s 240,000 grain producers dollars that play a big role in keeping the nation’s industries humming and nourish Canada’s second largest export industry, exceeded only by newsprint.. When tins was written, there were no statistics to show' exactly where our wheat stocks stand this year, for the size of this year’s crop was still not definitely

known. Heavy September rains and the worst outbreak of rust since 1935 had cut the yield back considerably from the big crop promised early in August. But in spite of the rust and rain loss, the prospects were that Canada would l>egin the winter with around 900 million bushels of wdieat on hand. Whatever the 1954 crop, it could only pile higher on an unsold 1952 and 1953 carryover that already had supply lines plugged right back to the farm granaries. Whatever the final inroads of rust and rain, this year’s final inventory will show either the biggest or second-biggest early-winter wheat stock in Canadian history.

With every elevator from Lake of the Woods to the Rockies plugged, farmers can deliver and receive t heir initial payment from t he Wheat Board only when the loading of a railway car at an elevator makes space for new grain. Across the west this fall they are watching the elevator sidings for trains to drop off empty cars as they watched for rain clouds in t he Continued on pafte 67

Too Much Wheat

CONTINUED FROM PAGE 11

drought years of the 1930s. But the trains rarely stop. E. C. McNeely, manager of an Alberta Wheat Pool elevatorat Bow Island, Alta., that is filled to the rafters with 112,000 bushels, shipped the last of his 1951 grain only a month or two ago. Carlo DeMaria, Wheat Pool agent at the southern Alberta hamlet of Carmangay, told me he had loaded only one car of wheat in the last four months.

A community dance at Grassy Lake, Alta., earlier this year broke up almost in a panic when a train stopped and unexpectedly spotted six cars — two each at the village’s three elevators. No cne paid much attention as the train’s whistle signaled its approach, for a train hadn’t dropped a grain car at Grassy Lake in many weeks. But ir. a few minutes there was sound of shunting, brakes squealed, and the news flashed around the dance floor that the train wasn’t speeding right through.

Several men left hurriedly to find out what was happening. Then the news came back that not just one car was being dropped off, but six! In a matter of minutes only the orchestra and a handful of villagers remained at lite dance; the farm population loft en masse as sons and daughters rushed home to tell their fathers that there would be elevator space next day.

Midnight Rush for Space

Around midnight that night the farm lights were flickering on for miles in every direction from Grassy Lake and the rural telephone lines buzzed excitedly. Farmers, their sons and in many cases their daughters jumped into overalls, set up the loading augers and began filling trucks with grain. In another hour or two the prairie side roads flashed with the lights of grainladen trucks cron verging on the Grassy Lake elevators. Long before dawn the trucks were jockeying for position in front of the elevator loading ramps. At dawn a hundred trucks were lined up with 20,000 bushels of wheat. The six railway cars when loaded made eleva tor space for only 12,000 bushels.

'Phe storage problem is most acute from Regina west into Alberta. East of Regina, rain and rust cut the 195-1 yield so seriously that most farmers were able to find storage space of son e kind on their farms for the new crop. But in western Saskatchewan and southern Alberta every unused building that will hold grain now has wheat in it.

Good times for wheat growers started after the war and continued unt il less than two years ago. Many western farmers have built new homes. Those who left their old houses standing are now finding them invaluable for wheat storage. Several times on our recent trip photographer Mike Kesterton and 1 stopped beside abandoned houses, which stood like greying ghosts on the empty prairie, and peered between cracks in the boarded-up windows. There were always vast piles of wheat gleaming yellow in the shimmering streaks of sunlight inside.

Decaying architectural white elephants like old wartime airplane hangars and condemned schools have suddenly assumed great value. At a former RCAF base at Mossbank, south of Moose Jaw, Kesterton and I found three abandoned hangars with mountains of wheat inside. The hangars were rented by the Saskatchewan Wheat Pool. Each one contained about -100,000 bushels, enough to bury three

city bungalows completely in wheat. J. E. McArthur, assistant director of the Pool at Regina, told us two of the hangars were filled when the wheat surplus first began developing in the fall of 1952 and the third late in 1953. At current prices, they contain more than a million and a half dollars worth of wheat.

Another abandoned RCAF hangar east of Swift Current, Sask., was being used by the provincial government for hay storage under a livestock feed assistance program when the government decided it was more urgently

needed for wheat. The hay was moved outside and the Wheat Pool moved wheat in.

But we found our strangest story at the village of Barons, north of Lethbridge. Last year a Barons community committee headed by hotel proprietor Harper Parry and service-station owner Roy Lyon started soliciting funds for new skating and curling rinks. Then wheat deliveries came almost to a standstill; money was scarce and the rink campaign bogged down at $9,000, far short of what the committee needed.

Parry and Lyon got an idea. They

put a proposition to several grain companies: if the community borrowed

money and built the two rinks, would one of the companies rent one rink for grain storage to get the committee out of the hole? Before they were finished they had five companies bidding against each other for the rink that didn’t yet exist. Citizens of Barons and district built two Quonset-type rinks side by side, accepted an offer of a half-cent per bushel per month for storing grain in one of them, and last December 150,000 bushels were piled twenty-eight feet deep in what will

eventually be the skating rink. They have refused to rent the second arena the curling rink for wheat storage. With wheat-storage earnings from the one rink they plan this fall to put an artificial ice plant in the other.

A few' years from now when both rinks have artificial ice and are joined by dreasing rooms and a rotunda, the little prairie village of Barons, population four hundred, expects to have a civic ice centre worth $85,000, one of the finest in southern Alberta. In addition to getting a new civic centre, the imaginative people of Barons have

ms Y it possible for district farmers to deliver and get paid for an extra 150,000 bushels of wheat a $180,000 contribution to local prosperity.

1 found two other southern Alberta communities following Barons’ lead. Nearby Nohleford was renting its existing rink for grain storage and saving the proceeds for an artificial ice plant. And at Bow Island, druggist Elmer Bergh, secretary of the community centre committee, said the new rink just completed was soon to be filled with wheat and the town would eventually have an ice arena much

costlier than if could otherwise afford.

At Carmangay, another southern Alberta community, a condemned, two-story, 45-year-old school is earning $1,200 a year from wheat storage. The money is being applied on a new school Carmangay built a year ago.

Some farmers argue that if the Wheat Board cannot sell wheat it should reimburse farmers for storage. Crain put in storage when it is hard and dry can be held several years without damage. The main hazard is dampness. This causes spontaneous heating which attracts hungry grain

beetles. Dr. Chris Farstad, a Dominion government entomologist, told me that in one survey sixteen out of every twenty bins sampled in southern Alberta had beetle larvae. “The hazard is there,” he warned, “and with neglect it could explode into a beetle outbreak. But farmers know the hazard now, and 1 think they will keep insect damage down.”

By drawing samples of storage wheat from the heart of the piles, farmers and grain agents keep close watch on the grain’s temperature and moisture content. Occasionally when spontaneous heating begins the wheat has to be “turned over” into another bin and the act of shifting stops the damage. Since shifting grain in storage places like rinks and hangars is virtually impossible, only the hardest, driest wheat can go into such storage.

Most of Canada’s astronomical grain surplus is in adequate storage and no significant fraction is in danger of being damaged or destroyed. In every abandoned building I saw being used for storage the roof had been made leakproof. Some wheat was being dumped on the ground outdoors this fall but it was only a small percentage of the crop and in most cases a temporary measure. On Sun Dance Farms, leased from the Blood Reserve south of Lethbridge, 1 saw one large outdoor pile of 10,000 bushels but right beside it carpenters were raising new granaries to gel the wheat under cover.

Three Phenomenal Yields

What caused Canada’s big pile-up?

Several factors are involved, but the chief cause is that for three years running 1951, 1952 and 1953 the prairies had phenomenal wheat yields, and produced the equivalent of five normal crops. During those years rainfall was far heavier than normal. The average wheat yield is 16 bushels per acre, but in 1951 it was 22 bushels, in 1952 it went over 26, in 1953 it was 23. Never before has the over-all prairie wheat yield exceeded twenty bushels an acre for three years running; only rarely has it done so two years in succession.

Looking back now, these three crops rank as fourth largest, largest, and second largest in history—all in a row. The 1952 crop of 664 million bushels represents the only time the prairies have produced more than 600 million bushels of wheat. An average crop is 350 million.

Last year, on the heels of the three big crops, came a sharp slump in wheat exports, a drop of 130 million bushels —from 386 millions down to 256 millions.

The Korean deadlock and the unsettled nature of world politics in 1951 and 1952 had induced many wheat importing nations, notably Britain, to begin stock-piling. Selling wheat in 1952 and early 1953 was as easy as selling life preservers on a ship that seemed about to sink. But the demand dropped when, about a year ago, the international situation improved and wheat importers began dipping into stock piles. Many normally heavy European importers also had big 1953 crops at home, reducing the demand still more. Britain, Canada’s best wheat customer, dug deeper into its stock pile, postponing purchases, because it expected or hoped the Canadian and U. S. wheat price would have to drop. Canadian sales to Britain in the year ending July 31 were lower than in any year since 1921-22 with the one exception of 1937-38.

Some farmers contend we would be exporting in volume now except for government bungling during the summer, which saw the Dominion Bureau

Britain won't buy our surplus wheal because it finds the price loo hi¿»li

of Statistics predict ing another gigantic Canadian wheat yield for this ye ir. DBS was still predicting a huge crop in August, many weeks after it had become obvious to western farmers that rust was destroying a good deal of the crop. Britain refused to buy, its buyers pointing to DBS figures and claiming that another big yield must inevitably push down price. “We’ve got wheat-surplus troubles enough, without Ottawa making the surplus bigger than ever on paper,” said Gordon Brown who farms 2,800 acres at Riceton, southeast of Regina, one of the biggest wheat farms in Saskatchewan.

Four suggestions for reducing the surplus have been made: 1. Give it

to the hungry peoples of Asia and Africa. 2. Reduce the price. 3. Abolish government control of marketing, on the theory that the open market did a better job. 4. Enforce a reduction in wheat acreage.

Philanthropy is Costly

Opponents of the first solution argue that farmers have already invested something like fifty cents a bushel to produce the wheat, that shipping costs might be another fifty cents a bushel and therefore that it would cost Canada around a dollar a bushel to give its wheat away.

I heard a few farmers argue that the Wheat Board’s basic price of $1.72 per bushel for No. 1 Northern was unrealistic, that a lower price would sell more and encourage acreage reduction.

Under the International Wheat Agreement, renewed last year, some forty importing countries agreed to buy specified amounts of wheat each year from four exporting nations—Canada, Australia, the U. S. and France. But the importers are obliged to take their quotas only at the minimum IWA price of $1.55 a bushel. With exporters holding out for $1.72, the agreement for all practical purposes is void. Britain had already withdrawn from IWA last year, because it felt prices under the agreement were too high.

The present price is not entirely

Canada’s creation, but results from an agreement among IWA exporters which draws its main support from a U. S. government price-support policy.

It is now lower than it has been at any time since 1946 and Canada’s Wheat Board regards it as fair and reasonable. If Canada started underselling, it would reap bitter antagonism from other exporters, most of all the U. S.

Many experts are of the opinion, anyway, that a price reduction would neither induce farmers to cut their wheat acreage nor alter the long-term export situation. They argue that the history of western wheat growing shows farmers will expand acreage when prices go up, hut won’t decrease acreage when prices go down. Wheat is the pacesetter of agricultural economics and when it goes down other farm commodities usually go down with it, so there is no incentive to grow something j else. The wheat trade is also peculiarly slow to react to price changes, because it is governed in the long run by the rate of bread consumption, a matter of habit that is not materially inflaj enced by price. Wheat Board officials j admit that a lower price this year would move more wheat but only, they insist, at the cost of moving less next year, because price never affects the basic demand.

The third most commonly suggested solution is the abolition of governmentcontrolled marketing under the Wheat Board and a return to the open wheat market which operated through the Winnipeg Grain Exchange until 1943.

In free-market days grain prices fluctuated sharply, responding quickly to changes in the world’s agricultural, economic or political scene.

Often, opponents of the free market point out, the fluctuations were artificially imposed by speculators. Farmers began to distrust the open market in the 1920s and set up the three prairie Wheat Pools to market their own grain outside the Winnipeg Exchange. With the crash of 1930 the pools found themselves $24 millions in debt, their world marketing organization folded, and they now survive only as the

“Wheat in store is like money in the bank. Someday the world will need it**

grain-collecting and storing co-operatives. They agitated for governmentmanaged wheat selling and in 1935 the Canadian Wheat Board was set up, although farmers could still market wheat on the Winnipeg Exchange if they wished. With the shipping shortage and wheat surplus of the early war years there was agitation for the total removal of wheat from the free market, and in 1943 farmers were compelled to sell wheat through the Board. Canada now had full state-controlled marketing and price-setting, and it came about primarily as a result of demands from the producers.

Although the Board has smoothed out price fluctuations, Stanley Jones, president of the Winnipeg Grain Exchange, contends that this has been done only by accepting a wheat price

considerably less than farmers would have averaged on the open market, especially between 1946 and 1952 when it was a sellers’ market.

Gordon Brown, the big Biceton grower, is among the farmers who agree with Jones.

“Canada can grow wheat in open competition with any country, be said to me. “We don’t have to hide behind a government-set price. Let the price find its own level and we would have no surpluses as we have today.

But it is an undeniable fact that a vast majority of western farmers still prefer government selling to the open market. In a score or more prairie towns 1 asked elevator agents and farmers the question: “What propor-

tion of district farmers support the Wheat Board?” I received estimates as high as 95 percent; the lowest I heard was 75 percent.

The fourth suggestion for reducing the wheat surplus—an acreage reduction plan—is regarded by most farmers as haphazard. In a land where yields can easily go up 100 percent or down 50 percent from one year to the next, tampering with acreages to the order of 20 percent or so often becomes futile, they insist.

Of the suggestions, then, for getting rid of our surplus wheat—give it to the hungry, cut price, return to an open market, reduce acreage —not one is likely to he tried, at least this crop year. If we merely sit tight, and it looks as though we shall, what are the prospects for the future?

It is not hard to find the west today who are sure that nature and the Wheat Board, between them, have put Canada in a jam. Gordon Brown said: “When Canada

accumulated a large wheat surplus in 1943 no one worried. The cause was

shipping, and everyone knew that when the war ended there would be a vast market to fill.” Now, according to Brown, we have an even bigger surplus in a period of prosperity, and there is no vast vacuum to fill. At this writing exports are still slowly decreasing. And hanging over our heads like a huge I black storm cloud is a U. S. wheat surplus almost twice as large as our own.

“Washington might get panicky, pull its price supports and let the wheat price drop out of sight,” Brown warned. “Britain is waiting, expecting that to happen, and Britain knows a thing or two about wheat economics.”

But the Canadian Wheat Board and,

1 believe, a majority of western farmers are optimistic.

“Wheat in store on the farm is like money in the hank,” said Woodrow Wagler, an official of the Alberta Wheat Pool and a farm owner. “Someday the world will need it. Farmers are hard up hut they can ride out this storm. We’ve had good years since the war, everybody has new machinery, farms paid for, no debt. And the brightest feature is that under the Wheat Board it. is a controlled surplus; there won’t he any panic-selling and a crash.”

A Wheat Board spokesman told me: “Nature has a way of correcting surpluses, whether they are rabbits or wheat or whatever you choose. As sure as night follows day, poor crops must follow good crops. But wheat consumption changes little; the market may appear to go up and down, hut in the long run it is a constant thing. People just don’t stop eating bread.”

For the immediate future, the Wheat Board claims there are promising signs. The Board believes Britain has used up its stock pile and must soon return to normal buying. Wheat stocks of importing countries, especially Britain’s, are closely guarded secrets, hut the Board claims that Britain’s current wheat-buying policy indicates that, as far as wheat is concerned, it is living hand to mouth. Britain can obtain wheat via the all-sea route from Vancouver slightly cheaper than via Fort William and Montreal, although it. must wait twice as long for the Vancouver shipments. But the small amount of wheat it is buying this fall is all through Montreal. “It is paying more to get wheat faster,” a Board official said. “We believe this means its reserves are gone.”

Another factor expected to boost Canadian sales is the poor grain yield this fall in Europe. Heavy rains destroyed much of the British crop; West Germany had the lowest wheat yield in thirty years. Europe harvested lowgrade wheat which will increase the demand for Canada’s high-protein wheat as a mixer to keep flour up to standard.

For these reasons, the Wheat Board is confident exports will increase this winter.

The last-minute reduction in the* 1954 crop caused by rust and wet weather has given the Board a breathing spell. The wheat surplus may he reduced somewhat by next harvesttime. Then, if the 1955 harvest is average, we could be back to normal. If it is another thum-yy; 25-busn^' an-aeftr Ó/öp' the western farmer will be right back where he is this fall: rich in wheat, poor in dollars.

As always, the prairie farmer’s erratic and crotchety partner, an unpredictable Mother Nature, will play the deciding card, iy