A World Awash in Grain

Barbara Insel

From Foreign Affairs, Spring 1985

Article preview: first 500 of 7,142 words total.

Summary:  This is a strange and painful year to talk about grain. Our televisions bring us pictures of starving African children, but world grain stocks exceed 190 million tons?a record surplus. Federal subsidies for agriculture will total nearly $19.5 billion in 1985, but U.S. farming is in a historic recession. Ironically, the most important customer for U.S. grain exports is the Soviet Union; the United States and its allies now must compete for the privilege of selling to our chief adversary. It is a curious year indeed.

Barbara Insel is an International Affairs Fellow at the Council on Foreign Relations. The author wishes to thank David Swanson of the Continental Grain Company for his assistance in the early stages of this study.

This is a strange and painful year to talk about grain. Our televisions bring us pictures of starving African children, but world grain stocks exceed 190 million tons?a record surplus. Federal subsidies for agriculture will total nearly $19.5 billion in 1985, but U.S. farming is in a historic recession. Ironically, the most important customer for U.S. grain exports is the Soviet Union; the United States and its allies now must compete for the privilege of selling to our chief adversary. It is a curious year indeed.

It is time to put to rest many of the myths we have long cherished about agriculture. We had come to believe that America could feed a hungry world, and we debated how much leverage this power would give us. We believed that we not only should, but could, protect farm incomes and rural lifestyles through public policies that manipulated supplies and demand. We believed, moreover, that these differing goals could be achieved at the same time?and, with little effect on our other interests, economic, financial and diplomatic.

What happened is that American agriculture?and that of many of our friends and neighbors?has succeeded all too well. The heartbreaking scenes of famine in the Sahel notwithstanding, the world is learning how to feed itself. And, like the United States, the world has also learned how to protect its farmers by supporting grain prices artificially, stimulating still higher levels of production. As a consequence, we have entered an era of permanent grain surpluses, of a buyer?s market for grain exports, where the United States can no longer set the rules. We now find ourselves in a world awash in grain, with ever-increasing bills for producing, maintaining and storing the unwanted product of our labors.

How did we get here? Why is the world?s new ability to feed itself not an opportunity but a crisis? What does this mean for the United States and its allies? One thing is certain: agricultural policy will never again be only a domestic issue?or only an agricultural issue.

II

To begin to understand the problem, let us see what has happened to world agriculture over the last decade.

Table I tells much of the story. It gives us a picture of a growing number of exporters, a shrinking set of food-importing nations and, despite repeated efforts to reduce them, a growth of surplus stocks to nearly insupportable levels. What is most interesting about these trends is not the absolute change in numbers but the market shifts they imply: a redistribution of who produces, who buys, who sells and who holds stocks. The United States is essentially competing with its close friends to sell to a smaller number of less-good friends. We are losing, perhaps inevitably, in that competition, and as a result are paying the bills for the world?s grain surplus.

Worldwide production of wheat and feed grains has grown 20 percent since 1974, 100 percent since 1964. Between 1960 and 1980, food production grew slightly faster than population, yielding ...

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