WORLD WHEAT CHANGING PATTERN HAS IMPORTANT IMPLICATIONS

Press, Volume CVI, Issue 31152, 31 August 1966, Page 12

WORLD WHEAT CHANGING PATTERN HAS IMPORTANT IMPLICATIONS

(Bp

DANIEL GREEN

in the “Daily Telegraph”, London)

(Reprinted by arrangement)

The world wheat position is generally considered to offer reliable information about the world food situation. There has recently been an unexpected, and probably long-term, change in world wheat supplies.

Surpluses in the producing countries have declined sharply, and a large portion, not only of this year’s harvest but of harvests for up to three years ahead, has been contracted for.

China and Russia have emerged as large-scale, and at least medium-term, buyers in world markets. The underdeveloped countries increasingly exert pressures which, if they are not commercial, are at least political, on available supplies. The iarge increases in productivity in Western agriculture. which are associated with improved techniques, are now probably levelling out. And. perhaps more important than any of these, America’s farm policies have succeeded and Russia's have failed, and both success and failure have produced a common result—a rapid shrinking of the world's wheat stocks. Harvests Bespoke Canada’s wheat harvest is now bespoke for the next three years, as is that of Australia, probably. Even France has just disposed of the last of her wheat stocks to Russia. American stocks, which in 1962 stood at the embarrassing total of 1400 million bushels, are unlikely to exceed 250 million bushels by the end of this harvest year—a figure well below what is considered a safe carry-over.

The American Government has already released 15 per cent of extra wheat acreage under the “land bank” legislation, and is hinting at further increases. But it is possible that, unless world wheat prices harden even more than they are doing, the extra acreage will not be fully taken up. The development of hybrid maize has made this a more profitable crop than wheat for the American farmer.

Ever since the Depression years in America, there has been a certain amount of “managed” farming and “managed” marketing. As the productivity of American farmers increased so did the degree of intervention. President Kennedy described his agricultural policy as one of planned and subsidised under-production. The Federal Government’s approach has generally been ad hoc and empirical—an attempt to solve farmers’ existing problems rather than an attempt to plan a new agriculture. Nevertheless such policies as Land Banks, Storage Loans, Rural Renewal, Food Relief, together with the systems of dual pricing and stock-piling have all, in the end, added up to an agricultural policy of considerable scope. It has, above all, been success-

iful. America has maintained i her very important world trade in food. She has not allowed her often expensive surpluses to damage either the trading or farming patterns of other nations. American Surpluses America has. instead employed those surpluses in a Food for Peace programme which has, at various times, stood between the Indian, the Egyptians, or the Algerians and famine. We are unused to magnanimity in world affairs, so it is probably best to describe Food for Peace as an example of enlightened self-interest, carried out in a large and expensive way. But. while America has been restricting her food production, Europe has been increasing hers. There is some danger, therefore, that in the end America will be left with most of the aid to the underdeveloped countries but will have lost an important part of her trade with the developed ones. There now comes a suggestion, however, that the Common Market countries might be prepared, in the coming Kennedy Round, to offer some limitation to wheat growing and wheat prices in Europe. This would offer America at least a slice of her traditional markets. If she can agree with the French about how much constitutes a slice, there might also be agreement on the other mooted proposal for a World Market Intervention Agency to handle all wheat surpluses as part of an international effort to bring systematised help to the underdeveloped countries. Russia’s recent contract to buy, over the next three years, nine million tons of wheat and flour from Canada is not, of course, her first appearance as a large-scale buyer in Canadian markets. It is, however, the first time she has contracted to remain a buyer over a period of years. This seems to formalise her emergence as a longterm net importer of wheat. To any agriculturist this must seem a surprising development. There are no technical reasons why Russia should not be as she was in Tsarist days, a net exporter of food. The fact that she is not must present her with considerable political and economic problems. Russian Handicap

If she were able, without restricting food consumption at home or having to buy wheat abroad, to operate a Food for Peace programme on the American scale (and there are no technical reasons why she should not be able to do this and more) then how much stronger her position would be in relation to India, Egypt. Cuba, and even China. Russia has had considerable scientific and industrial

jsuccess. But it is doubtful whether the peasants of the ,uncommitted countries have :been impressed by these as much as by her agricultural inefficiencies. The peasants may or may not be impressed by “luniks" and steel mills, but they do understand food production. The system that produces the most efficient system of agriculture is likely, in the long run, to make the strongest appeal. There is at least a suggestion of a connexion between Western capitalism and a successful agriculture, and of something rather less in Marxist countries. On the whole anything that increases normal trade between Russia and the West is to be welcomed. But it is hardly normal for Russia to emerge as a long-term wheat buyer. This points to a structural weakness which must be a threat both to her organisation as a Marxist State and to her long-term influence in the world.

Experience seems to show that it is when Russia's weaknesses are most obvious that she becomes most intransigent. Since few of us now accept the need for any deepening of antagonism between Russia and the West, we should not rejoice too much over the apparently inevitable weakness of her agriculture. On the other hand it is difficult to see how she could now strengthen her agriculture and remain Marxist. To allow her peasants to return entirely to production for entirely private profit, which is probably the only step that would allow her to develop her agricultural potential, must be. for many years, too deviationist a course for her to contemplate. Chronic Problem Finally we should, perhaps, consider Britain’s own position as a country with a chronic balance of payments problem whose food imports cost £lOOO million a year, and faced with the probability that the terms of trade, at least in food, will now move against her. There is still considerable productive slack Britain could take up in its agriculture. Britain should, perhaps, decide how much of it it can now afford to ignore. Britain should also, now that it is probably too late to correct it, admit that it might have been wrong in its opposition to the agricultural policies of the Common Market. The French kept assuring Britain that, within a decade, there would be no cheap food left in the world, so that the price levels set in Europe were only of transitory importance. They may still prove to have been right. In which case, Mr Wilson’s description of those policies as “monstrous, autarchic and Schachtian” might seem slightly too emphatic.