For the sake of argument

If Ottawa can’t sell our wheat, let farmers do it

J. PURDY SAYS October 12 1957
For the sake of argument

If Ottawa can’t sell our wheat, let farmers do it

J. PURDY SAYS October 12 1957

If Ottawa can’t sell our wheat, let farmers do it

For the sake of argument

J. PURDY SAYS

Farmers today struggle in the relentless grip of a cost-price squeeze that threatens our entire national economy. To some degree their problems are self-inflicted. However, major responsibility rests on the shoulders of the spineless, short-sighted, expedient - minded politicians who have imposed unrealistic marketing controls at the specific request of well-meaning but inept farm leaders. These groups between them have succeeded in creating utter chaos, particularly in respect to the marketing of our wheat.

While politicians and farm leaders grope blindly trying to extricate themselves from their self-imposed dilemma, our wheat remains unsold. They try to find an answer for two distinctly different problems. In their language two and two does not make four. But, neither have they been able to prove it makes three—or five!

As Canadians we are proud of the fact that in a few short decades we have established extremely high national living standards. Politicians, industrialists, professional and educational leaders proudly and rightfully proclaim our achievements on every occasion—with one exception.

On the subject of wheat marketing they tacitly indicate that our national living standards are little better than those existing within depressed nations of the world. In effect, they say that Canadians, enjoying high incomes and living standards, cannot afford

to pay more for wheat than depressed and starving peoples. And that isn’t the complete story.

Both Canada and the United States are nations whose people lead the world in salesmanship and merchandising ability. We produce and market by the millions, automobiles, refrigerators, radios, television sets, cartons of soap flakes and toothpaste, but say we cannot market food! Yet, millions throughout the world die each year because they haven’t enough to eat.

Why have we failed?

The compromise that won't work

We have failed to market our agricultural produce because we have ignored every tried and proven principle of good merchandising practice we have used so successfully to distribute other types of goods and services. We blindly try to compromise by establishing a commonly controlled selling price, which we hope will satisfy both domestic and export markets. It cannot be done.

Slowly but surely farm leaders, politicians and governments have moved to destroy the very foundations of the free-market system, which could have solved our marketing problems. They deliberately ignored the fact that under a freemarket system neither a “surplus” nor a “scarcity” can exist. Only by tampering with the basic laws of free marketing are conditions created

continued on page 80

RALPH PURDY, A FORMER LIBERAL AND NOW VICE-PRESIDENT AND TREASURER OF THE SASKATCHEWAN SOCIAL CREDIT LEAGUE, IS THE ADVERTISING MANAGER OF THE FARMER AND STOCKMAN.

continued from page 7

“We should encourage people to remain on farms . . . when out of work, they’re not liabilities”

that bring about “surpluses” and “scarcities.” To the detriment of our entire economy, governments have accomplished such an objective with admirable success.

It is time the man .on the street, and those in public office charged with shaping the destiny of our national future, forthrightly answered the following questions. First: How important, to the wellbeing and prosperity of our nation, is a healthy and prosperous farm population? Second: Are expedient-minded politi-

cians, professional economists, union and farm leaders, newspaper editors and editorial writers leading us into economic chaos?

Agriculture provides many of the raw materials for our manufactured products. Continued industrial expansion and increasing domestic and export sales depend on the successful, and profitable production of these farm products. No one will dispute the fact that industrial expansion creates jobs and payrolls. Therefore, it follows that a healthy agricultural economy is vitally important to labor and industry.

National living standards are directly tied to the degree and proficiency of the agricultural production we attain. A modern refrigerator is useless without food to store in it, or the money to buy the food. A shiny new automobile with graciously upswept tail fins and a twohundred-odd-horsepower motor under its hood has very little sales appeal to men and women with empty stomachs.

Less than a hundred years ago, eighty percent of our population earned their living through agricultural production. By necessity they were self-sufficient, and lived almost entirely from what they produced. Surpluses were sold or traded to the remaining twenty percent who lived in urban centres. Today only about thirteen percent of our population earn their living from agricultural endeavor. Three main factors are respons¿ble for this change:

1. Inventive genius.

2. Development and application of steam and electric power.

3. Better equipment and machines.

Inventive genius was strong within our agricultural pioneers. Machinery and tools were designed to help the farmer or farm laborer produce more and more with less and less work. Men were absorbed in the industrial manufacturing that developed. Living standards boomed upward.

As industrialization swept into our economy the exodus from rural to urban centres increased. Farm population plummeted from its eighty percent to the present thirteen. Reliable authorities predict it may go as low as five percent by 1975 if present trends continue. The question is: Can five percent of our population produce the grain, beef, pork, fowl, vegetables, etc., required to feed the other ninety-five percent?

Automation is just around the corner for many industries. It would seem that now is the time to encourage people to

remain on farms. Natural increases and immigration should be able to supply the labor force required by industry. Another factor enters the picture at this point. Men and women living on farms usually own their own property. They do not pay rent and they live of! their land. They do not become liabilities of the state and use up the taxpayers’ dollars through being on relief during offseason periods when they are out of work. These are all factors that should be considered before encouraging much greater movement from farms to industry.

In the meantime, our capacity to produce has exceeded our ability to consume. The answer is to expand into world markets. But, under present restrictions and controls, we have priced ourselves out of these markets. With our high living standards we cannot compete unless we increase production per manhour worked.

Agriculture, through industrialization, has greatly increased its output per manhour. This is evident in the fact that today about thirteen percent of our population does what it took eighty percent to do less than a hundred years ago. Many of our troubles arise because other sections of our society fail to bear their share of the load.

More cash, less profit

t

Highly unionized labor demands and receives more income without substantial production increase. Between 1926 and 1953 wages, salaries and supplementary labor income increased 494.5 percent. During the same period, net farm income fluctuated badly. From 1926 until the early 1940s net incomes decreased. However, between 1944 and 1951 an increase of 177.7 percent was noted. By 1953 the net farm income had again dropped, and registered a loss of 21.7 percent from the peak year of 1951.

Ironically, during most of these periods cash farm income steadily increased. Why has net farm income been depressed? A look at labor’s 494.5 percent increase supplies the answer. The farmer has worked successfully to produce more and increase his cash income. But labor has forced him to pay more for the machinery, tools and services he uses. Add to this burden an inadequate and unrealistic marketing system which fails to market his produce, and it is obvious why farm incomes are depressed.

Farm credit is exhausted. Some of the experts will not agree, but it is true in respect to about fifty percent of our farm population. This seriously affects machinery dealers and small-town merchants. Cash advances on farm-stored grain are useless. The people who really need cash have no farm-stored grain. The others who do have stocks on hand can finance through normal channels.

Industrial production is relatively easy to control when compared with that of agriculture. Farming methods become a factor in agricultural production, but forces of nature affect output to a much greater degree. The problem

is to devise a distribution system that will level out and cope with periods of shortages and surpluses as they appear. Finding an answer to this problem is as vitally important to those engaged in industry as it is to our farm population.

Now is no time to think in terms of curbing farm production. Instead, we should use our resources and know-how in an all-out effort to increase production and lower unit cost. Wc should then go out on the world markets and actively sell our produce. Put salesmen on the job. Take it out of the bungling hands of politicians.

Another factor must be considered. The very big farmer is not necessarily the most efficient. Under certain conditions he may produce at less cost per bushel, but he is seldom more efficient than a well-financed and well-managed smaller family - type farmer. Neither does a big farmer, farming many sections of land, offer the market potential to industry that several smaller familytype farmers would offer, operating the same total acreage. A large operator can only wear one pair of shoes at a time; drive one automobile, one tractor or one combine at a time. Several operators, if they receive adequate returns from their labor, farming the same total acreage offer a much larger market for labor and industry.

What are the final results of government tampering with our marketing system? Artificial measures introduced to control distribution of farm produce have failed on every count. With a modern and thoroughly mechanized agricultural industry, cash farm incomes increase each year. Yet, net farm income decreases. This happerjs during a time when industry and labor ride the crest of a booming economy.

Through government tampering, subsidies in one form or another are paid out of the public treasury from tax funds collected from taxpayers. The taxpayer, who is after all the consumer, might as well have paid more for the produce in the first place. He would have avoided the extra costs of government administration, interest, insurance, wastage and all the other costs resulting from extra handling.

Some Canadians blame American marketing policies for our failure to market Canadian wheat. This is a smokescreen to hide deficiencies in our own

policies. Attempting to build up public sympathy against the Americans indicates a callous contempt for the intelligence of the Canadian farmer and general public. How much sympathy would the public generate for Imperial Oil if a big competitor came up with a marketing plan to top the market? Very little! Imperial would be expected to find an alternate answer and continue in business. And that is exactly what they would do.

The first objective must be to establish a sane and logical marketing system based on tried and proven merchandising policies. Farm produce sold on the domestic market must bring returns to the producer relevant to current national living standards. Consideration must also be given to the farmer’s fixed production costs. Farm incomes at various levels of operation must be placed on a basis where adequate profit can be shown by an average operator.

To achieve these objectives actual production and final sale must be distinctly separated. Farm operators arc primary producers. They cannot expect retail prices. It takes as much money, time and effort to promote, advertise and market wheat as it does to market refrigerators, for an example. No one objects to the forty percent that goes into the retail price of a refrigerator, and makes up the retailers’ commissions and selling costs.

The government doesn’t set the selling price of a refrigerator. In fact, the government took away from manufacturers the power to control retail selling prices. Have fewer sales been made? Not on your life! Sales volume for most merchandise has gone up. Companies cannot combine to set prices. Yet. the same government fathers the greatest combine in Canada today—the Canadian Wheat Board. What is the result?

Manufactured merchandise — without governmental controls — sells in everincreasing volume. Our wheat — under governmental control — piles up unsold in company elevators and farm granaries. Labor working in industry — without controls — forges ahead with income increases of nearly five hundred percent. Farmers — under controls — receive reduced net incomes.

It is time all sections of our economy woke up and realized the shackles must be removed from agriculture. ★