HC Deb 25 July 1946 vol 426 cc227-32
The Minister of Food (Mr. Strachey)

A contract has been signed between the Government of the United Kingdom and the Government of Canada for the purchase by the former of Canadian wheat over the four years beginning 1st August, 1946.

The Agreement provides that the United Kingdom will purchase and the Canadian Government will supply the following quantities each year:

  • 1946–47— 160 million bushels.
  • 1947–48— 160 million bushels.
  • 1948–49— 140 million bushels.
  • 1949–59— 140 million bushels.
The Canadian Government have undertaken that in the event of good harvests larger quantities would be provided in the first two years.

Part of the quantity of wheat specified in the contract will be supplied in the form of flour to the following amounts:

  • 1946–47— 500,000 tons.
  • 1947–48— 400,000 tons. In each of these two years there will be an additional quantity up to 140,000 tons, dependent upon the outturn of the crop.
  • 1948–49—A minimum of 300,000 tons, actual tonnage to be negotiated by 1st July, 1947.
  • 1949–50—A minimum of 300,000 tons, actual tonnage to be negotiated by 1st July, 1948.
The price which the United Kingdom Government undertake to pay for the wheat supplied is as follows:
  • 1946–47—a fixed price of $1.55 per bushel.
  • 1947–48—a fixed price of $1.55 per bushel.
  • 1948–49—a minimum price of $1.25 per bushel, the actual price to be negotiated by 31st December, 1947.
  • 1949–50—a minimum price of $1 per bushel, the actual price to be negotiated by 31st December, 1948.
The contract provides that its terms and conditions shall be subject to any modification or amendment which may be necessary to bring it into conformity with any international agreements or arrangements later concluded to which both Governments are parties. Nothing in the pro- posed Wheat Agreement will affect decisions which may be taken on the basis of recommendations of the International Emergency Food Counpil.

The contract is based upon commercial considerations of mutual interest. It ensures to the United Kingdom substantial quantities of wheat during the expected period of shortage at prices below those which would be payable were there to be a free market at the present time. The price specified in the contract for the first year is 30 per cent. below the current United States price and still more below the open market price in Argentina. This is the commercial advantage which the United Kingdom secures. In the later period of the contract Canada receives the advantage of a guaranteed market, and a minimum price. In determining the actual price in the last two years regard will be had to the extent to which the agreed price for the first two years falls below the world price for that period. Her farmers are, therefore, protected from crippling losses should there be a world slump in wheat prices. This is the commercial advantage which Canada secures. The full text of the contract will be published in due course.

Mr. W. Fletcher

Is it not possible, even now, to see that some form of maximum price in the last two years of the running of the contract is achieved? Otherwise there is an unlimited liability on the Government of this country, and the food subsidy will increase with leaps and bounds if the maximum price is too high.

Mr. Strachey

No, I do not think that we could possibly alter the terms of the contract now, and, in any case, I think the fears expressed by the hon. Member are quite groundless. I should be most surprised if the world price of wheat was of any such character in those second two years.

Mr. Boothby

May I ask the Minister whether his attention has been drawn to a statement by the Secretary-General of the International Emergency Food Council that this agreement can be overruled by the Council, and will he state whether there is any truth in that statement?

Mr. Strachey

I would like to say two things about that. In the first place, 160,000,000 bushels — the maximum annual figure mentioned in the contract —is well within our essential import needs and, in practice, I should think that the contingency of any conflict between the contract and the International Emergency Food Council's opinions or discussions was extremely remote. Secondly, if I may, I would like to say a word about the International Emergency Food Council procedure in this matter, because I think it is important. It is, first, vital to understand that the International Council has no overriding authority. In the case of all commodities, this Council can only make recommendations. It is for the member Governments to take action on those recommendations, and there have been cases—though they are cases to be deplored—where member Governments of the old Combined Food Board, of which this is merely the successor, have not seen their way to implement those recommendations. That is true of all commodities, but in the special case of cereals, the International Emergency Food Council does not even make recommendations. This arrangement was reached to meet the special wishes of the United States Government, the Canadian Government, and the other exporting Governments. In the case of cereals, the cereals committee of the, International Emergency Food Council simply meets and discusses, and the exporting wheat countries programme their exports in the light of those discussions, but without even any recommendations from the cereals committee of the International Emergency Food Council. As to this contract and its relationship with the International Emergency Food Council, as I say, I believe there is no question of conflict between the two, but, of course, clearly the only people who could vary the terms of the contract are the two parties to it—the United Kingdom and the Canadian Government.

Mr. Stokes

Will the flour supplied be the same as the white poison put out by the millers' combines before the war, or will it be the present extraction ruling in this country? May I have an answer to that?

Mr. Strachey

I could not admit the description which the hon. Member gives of flour of lower extraction rate, though the one ruling at present—

Mr. Stokes

But what is it going to be?

Mr. Strachey

It will be probably a rather lower extraction rate than that ruling in this country today.

Mr. R. S. Hudson

While welcoming the announcement as being of advantage to both countries, may I ask two questions merely for information? First, is a similar agreement to be negotiated with Australia, our other big provider of cereals? Second, how does the amount of 160,000,000 bushels tally with the proportions that were originally agreed in the International Wheat Agreement that was signed some three or four years ago between ourselves, the Argentine, the United States and Canada?

Mr. Strachey

On the first part of the question, we have not been approached by the Australian Government at the moment for any such agreement. As the right hon. Gentleman knows, we have long-term agreements with the Australian Government for both meat and dairy produce, but in the matter of wheat we have not been approached by them. In regard to the second part of the question, there is no conflict between this amount and anything under the International Wheat Agreement.

Mr. W. J. Brown

Could my right hon. Friend give any estimate as to what the effect of this very welcome announcement is likely to be on the duration of bread rationing in this country?

Mr. Strachey

I would say at once that the agreement in itself has no direct bearing on the duration of bread rationing— that is much more a question of the final outcome of the Canadian and, indeed, of other crops, which we shall know in a few weeks now. However, I would say this, that these arrangements, which I believe to be of the greatest importance both to ourselves and our Canadian friends—and what firm friends they have been to us— I believe that this agreement has an enormous bearing on our determination never to get back again into the difficult situation which faces us today.

Mr. Wilfrid Roberts

Would the Minister say what the proportion of the quantity to be imported as flour is to total figures? Could he say why it has been agreed to import flour and not the whole wheat, to the great disadvantage of our livestock?

Mr. Strachey

I am afraid I cannot give the hon. Member the actual percentage, but it is a very small one. In the past we have always imported considerable quantities of Canadian flour. At the moment, in the first two years it is convenient for us to do so and, as the hon. Member will notice, in the second two years the amount of flour to be imported drops.

Mr. Baldwin

May I ask the Minister if, in future, when giving out these commodity prices, it will be possible to give us the figures in hundredweights and tons rather than in bushels, which vary in weight from country to country and do not give us the right idea of what we have got? Would he say the price per ton of that wheat delivered in this country?

Mr. Strachey

The bushel is defined actually in the contract, as follows: A bushel shall be of the weight of 60 lbs. avoirdupois. I could not agree with him more that bushels are a most confusing measure, and I should like to see them avoided in this matter.

Mr. Drayson

Can the Minister say whether this contract is to be satisfied in U.S. dollars, and what proportion of the American Loan will be used to pay for this wheat?

Mr. Strachey

The wheat will be paid for in Canadian dollars, and no quantity or proportion of the American Loan will, therefore, be used in paying for it.