MONDAY, JULY 11, 1966. Grain Booms In Canada

Press, Volume CVI, Issue 31108, 11 July 1966, Page 12

MONDAY, JULY 11, 1966. Grain Booms In Canada

A striking change, from surplus to shortage, appears to be coming over the world wheat market Both China and Russia have learnt that Communist theory, mentally nourishing as it is supposed to be for the masses, is no substitute for food, nor even a reliable basis—with mechanisation and collectivisation thrown in—for a successful farm policy. Russian agriculture in particular—more, perhaps is known about it than about China’s—has in recent years far from justified the hopes of the planners. In wheat alone the Russians expect crop shortages to persist at least into the 19705. The Seven Year Plan (1959-65) was based on a 1964 grain delivery target of 65 million tons, rising to 90 million tons in 1970. Last year’s yield, approximately 60 million tons, was about 12 million tons short of the minimum requirement. In this context renewed purchasing by Russia in Canada has not surprised brokers, although the magnitude of the deals recently concluded may well have done so. It is apparent that wheat acreages in both Canada and the United States may safely be expanded for the next few years for a market reflecting the rising needs of Russia, China, India, Pakistan, and, in lesser degree, East Europe and Egypt. The Canadian economy might benefit startlingly. The latest deal, involving 800 million dollars—to be paid in hard currency—raises the total Soviet purchases of Canadian grain in the last three years to 1000 million dollars. This year Canada is selling 120 million dollars worth of grain to China, with the nearcertainty that a great deal more will be sought, and some seven million dollars worth to East Germany. Canada’s balance of trade, especially with the United States, should benefit from this “ windfall ” trading. Also, the prospect of an increasing rather than a diminishing demand for grain is expected to check the departure of labour from the great growing provinces, Saskatchewan, Alberta, and Manitoba, to meet industrial demands elsewhere.

The United States is in rather a different position. American wheat has been sold to Russia, but dealings with China are ruled out and Washington is believed to have been far from pleased by the Canadian trade with China. Nevertheless, United States stocks have been steadily shrinking—Food-for-Peace shipments, for instance, are absorbing some 650 million bushels this year, with 350 million going to India—so that the timing of the acreage increase may be seen as more than fortunate. It is currently reckoned that the United States carry-over next year will be no more than 250 million bushels, the lowest figure for nearly 20 years and some 100 million bushels below the reserve thought necessary for defence and as an Insurance against domestic crop failure.