BUSINESS ABROAD: Canada’s Wheat Crisis

Ever since a band of Scottish settlers discovered in 1812 that early-maturing varieties of wheat from their native highlands would grow and ripen in Manitoba’s short summers, the wheat crop has made the difference between prosperity or hard times for Canada’s three prairie provinces. Last week, with bins and elevators brimming from the fourth fine harvest in five years, the threat of acute financial crisis hung incongruously over the prairies. Reason: the inability of Canada’s National Wheat Board to sell the accumulated surplus at a price the farmers are willing to take.

Bin-Busting Crop. The trouble began to develop two years ago, when Canada exported only 41% of its bin-busting 614-million-bushel wheat crop instead of the usual 55%-60%. Rust and harvesttime rain cut last year’s crop to 309 million bushels, but exports again fell off sharply. Britain withdrew from the International Wheat Agreement, India and France began to grow more of their own grain as a matter of national policy, and Argentina, bouncing back from a year-long drought, stepped up its sales in Latin America. The U.S., burdened with a giant surplus of its own, made other inroads into the world market through a series of bargain-price sales and disaster-relief gifts to such dollar-shy countries as Italy, Japan and Israel. Canada’s traveling wheat salesmen, unwilling to meet the competition with fire-sale price cuts, had tough going. When the 1954-55 crop year ended last July 31, Canada’s stocks of wheat on hand stood at 494 million bushels—as much as the country could consume in three years, and 28% more than it had ever exported in its best year.

The National Wheat Board, the only agency permitted by law to export wheat or ship it across provincial boundaries, in August 1954 placed a limit of 300 bushels on the amount of new wheat it would accept from any farmer during the harvest season. But the harvest could not wait. In the finest autumn weather in years, giant combines cut wide swaths through fields of standing wheat, spewed out rivers of top-grade grain. Commercial elevators were soon chockablock. Farmers braced old sheds to withstand the fluid pressures of loose wheat, built new barns to hold the flood, and when all the sheds were filled, piled their wheat in amber hillocks on the ground. When the harvest was in, Canada’s supply of wheat on hand stood at 992 million bushels.*

Stopgap Plan. All across the prairies, farmers dug into savings for cash to meet their taxes, payments on land and farm machinery. In Sanford, Man., the local credit union closed its books when the outstanding loans reached the legal limit. In Alberta farm towns, barter in livestock began to replace cash sales. In Saskatchewan, idle farmers swamped the National Employment Service with job applications. Last week the government offered a stopgap plan for the government to guarantee bank loans to farmers with stocks of unsalable grain. The scheme disappointed many farmers, who had hoped for straight cash advances on their crops. Meanwhile, Ottawa prepared to send a delegation of trade experts to Geneva this week to fight for renewal of the International Wheat Agreement and its system of orderly marketing. If they fail, the international fire sale in wheat may start in earnest.

*The U.S. stock on hand: 1,279,000,000 bushels.