THE WORLD SUPPLY OF CEREALS.

New Zealand Journal of Agriculture, Volume XVIII, Issue 4, 21 April 1919, Page 248

THE WORLD SUPPLY OF CEREALS.

SOME ESTIMATES AND FORECASTS.

The following matter consists of extracts from recently received reviews by Sir J. Wilson, K.C.S.I., who until lately represented New Zealand in the International Institute of Agriculture, of Rome. It contains much of great interest and import in, the present extremely unsettled state of international affairs, centring so largely round the food-supply. ■ The first part is dated 23rd December, 1918, and the second 22nd January, 1919. •

THE WHEAT POSITION.

I have estimated that on 1st August, 1918, Britain, France, Italy, and Spain had, taken together, a carry-over of old wheat larger than their pre-war average, that the United States and Canada had only a minimum carry-over, and that there was on that date in the Argentine, Australia, and India, taken , together, an exportable surplus of old wheat amounting to something like 100 million quintals.* I have also estimated that the “ open ” importing countries (including France) have had a crop this year 29 million quintals greater than last year, but 24 million quintals less than their pre-war average, and that the “ open ” exporting countries have had a crop this year 54 million quintals more than they had last year, and 86 million quintals more than their pre-war average. Taken together, the “ open ” importing and exporting countries (which on the pre-war average produced 57 per cent.’of the world’s total wheat crop) have a yield of wheat this year 83 million quintals more than last year and 62 million quintals above their pre-war average yield.

I have roughly estimated that, now that peace seems ■ assured, all the importing countries in the world are likely to import, during the year ending July, 1919, not more than 162 million quintals (as compared with their pre-war average net import of 167 million quintals), this estimate being made up of 135 million quintals for the countries hitherto open and of 27 million quintals for the countries hitherto closed. The latter part of this estimate can only be a rough guess, as so little is known of the yield of last harvest in Germany, Austria-Hungary, Turkey, Serbia, Belgium, Rumania, and Russia, and as it is very uncertain how much wheat those countries will wish to import and be able to pay for, and how much wheat they will be permitted or aided to import by the Allied Governments, which are likely to retain control of this import for some months to come. In comparing their probable import this year with their prewar average import the main considerations are (1) that their recent harvests are certain to have been much below their pre-war average in yield, (2) that the population they have to feed is much less than their pre-war average, (3) that they have become accustomed to consume much less wheat per, head than before the war, (4) that the resources of the masses have been much reduced, (5) that the price they will have to pay for any wheat they import will, when measured in their depreciated paper currency, be. much higher than the prices they have recently being paying for home-grown wheat, and that therefore their effective demand for wheat from abroad is likely to be much below what it would be if the pre-war standard of consumption were suddenly resumed. While they will no doubt require a large import of food grains from abroad, they are likely to content themselves to a greater extent than , before the war with the cheaper grains, such as maize, rye, barley, and possibly rice, of which large quantities are available in one or other of the exporting countries, and to keep down their consumption of wheat. Moreover, the Allied Governments, in so far as they retain the control of the transport of food grains, are likely to encourage, the

import into those countries of the cheaper food grains and to discourage the import of wheat, because (i) it will cost less to import the cheaper grains, and (2) the cheaper grains are more likely to reach the starving poor than would be wheat, which, in the absence of efficient government, is more likely to be intercepted and consumed or hoarded by the rich and powerful.

As regards the exporting countries of the world, which before the war had on the average a net export of 170 million quintals, I have estimated that, after allowing for their probable consumption on something like their pre-war scale, the countries hitherto open will be able to spare from this year's harvests 147 million quintals, making altogether, with the 100 million quintals of exportable surplus of old wheat which they had on 1st August last, a total of 247 million quintals available for export, before 1st August next ; , and as my estimate of the world’s net imports this year is 162 million quintals, it would follow that on 1st August next these open exporting countries will have some 85 million quintals of old. wheat still available for export-enough to meet the normal demand of all the importing countries in the world for six months, and a much larger carry-over of exportable surplus than the world ever possessed on • the corresponding date in time of peace. This, estimate includes 20 million quintals as the exportable surplus from India after the harvest of next May, but does not include anything from Rumania and Russia, which between them on the pre-war average exported net 60 million quintals, and which may quite possibly have some net export before next August.

All countries, both importing and exporting, are making great efforts to increase their sowings of wheat for their next harvests, and in several of the more important countries the Governments have stimulated these efforts by the promise or the prospect of high prices ; and it seems certain that, if the weather conditions are on the whole not very unfavourable, the yield of the harvests of 1919 will, in the open countries, be much above the pre-war average, and probably that, even if allowance be made for a general resumption of the pre-war average consumption per head in all countries, the world's wheat harvest of 1919 will be larger than the world’s consumption during the year 1919-20, so that there will be a still larger carry-over of exportable surplus on 1st August, 1920, than on 1st August, 1919. The probabilities seem to be, therefore, that from now onwards for the next two years there will be a great and growing accumulation of wheat in the exporting countries, taken together.

In my note on the world’s merchant shipping, dated 23rd November, I have estimated that the world’s steamer tonnage will soon be equal to what it was before the war and will continue for some time to increase rapidly, and that therefore the rates of ocean freights , may be expected to fall rapidly to something like double what they were on the average before the war. War-risk insurance, which has been very high, will no longer be charged on the transport of wheat.

: Now that military considerations no longer occupy the foremost place, all dealings in wheat, whether by Governments or by private individuals, will be mainly regulated by financial considerationsthat is, by the general law of demand and supply. The demand is no longer so urgent, and all holders of wheat in all countries who have been holding it up in view of the possibility of a continuance of the war and of still higher prices will be anxious to get rid of it now that prices are likely to fall. The largest individual holder of wheat is the Australian Government, which will soon have more than 50 million quintals of wheat to sell abroad, and which seems ready to sell -a large, quantity of it at 38s. per quarter f.o.b., the price at which it sold to Britain last year 30 million quintals of wheat, much of which is still in Australia. If, as seems likely, it will soon be found possible to obtain tonnage at a rate double the pre-war averagesay, 12s. per quarter— allowing for ordinary marine insurance, handling and profit, it may soon be possible and profitable to bring Australian wheat to Europe and . sell it at less than 60s. a quarter. The Argentine also will soon have some 40 million quintals to sell abroad. The present price of wheat at Buenos Aires is 48s. per quarter, and if it -will soon be possible to obtain tonnage at something like 6s. a quarter Argentine wheat also may soon be selling in Europe at less than 60s. a quarter. ■ India is out of the running at present owing to the drought. and the action of Government, but after next May may be in a position to spare 20 million quintals of wheat, and if the weather should be normal the internal price of wheat may fall as rapidly as it has risen, and come down to about 47s. a quarter, the Karachi price of last July. At double the pre-war rate freight would be about

8 s. a quarter, so that next summer Indian wheat may also be obtainable in Europe at about 60s. a quarter. The competition between these three countries to sell, and the eagerness of holders of wheat in them to reduce their embarrassing stocks, may even lead them to accept lower prices than those above mentioned,, which are considerably above the average prices they were glad to take before the war (Australia 31s., Argentine 33s., Karachi 29s.); If the result of the competition to sell were to induce them to accept something like their pre-war average prices, wheat from those countries might in a few months be selling in Europe at less than 50s. a quarter.

The United States Government have guaranteed to farmers a minimum price of 75s. per quarter at Chicago on all wheat grown in 1918 and 1919, and will be reluctant to sell, or to see wheat sold, at less than this price. But if Europe can import wheat from Australia, the Argentine, or India at 60s. a quarter or less it will not pay more than this for American wheat, and export from the United States will cease, and there will be a great and embarrassing accumulation cf wheat in that country, unless the price in America comes down. ’ There is a suggestion that the United States might form a large wheat reserve, but that would be costly and unsettling, and seems unlikely to be adopted in view of the very large acreage likely to be under wheat this year. It seems probable, therefore., that the Government will be forced to allow the holders of wheat to sell at what price they can get, and to pay them the difference between the guaranteed price and the price at which the wheat is actually sold, the United States taxpayer thus having to shoulder the loss which would otherwise fall on the United States farmer and wheat-merchant, just as the British taxpayer has had to shoulder the loss which would otherwise have fallen on the British consumer had the price of the loaf been allowed to go above qd. If wheat from the other exporting countries can soon be landed in Europe at less than 60s. a quarter and freight from America soon goes down to 3s. a quarter, then the price in New York may soon go down to below 57s. a quarter and in Chicago to not much over 50s. a quarter, as compared with the pre-war price of 30s. If the other exporting countries find it to be in their interest to accept prices not much above pre-war prices and their wheat reaches Europe at a total cost of 56s. or less, the price at Chicago may go down to about 40s. a quarter, more especially if the present prospect of something like a record harvest in the United States next July becomes assured.

The condition of things in Canada is similar, except that the Canadian Government have not yet guaranteed a price for the wheat to be reaped in 1919.

In Britain the Government is still selfing foreign wheat at 80s. a quarter, although, according to Mr. Hoover, it has till recently cost 107s. a quarter to import wheat from America ; the difference being paid by the British taxpayer as part of the cost of supplying the British consumer with a loaf at gd. per 4 lb. By the Corn Production Act the Government guaranteed to the British farmer a minimum price of 55s. a quarter on ah wheat grown in 1918 or 1919, but it has not yet had to pay anything under that guarantee, because the British farmer has been able to obtain a much higher price for his wheat in the market. He has been prevented ■ from obtaining a higher price than 75s. 6d., because that price was fixed as a maximum for home-grown wheat, and because foreign wheat , was obtainable from the Government at 80s. a quarter. These conditions still prevail; but if, as seems possible, wheat from Australia and the Argentine, and perhaps from India and America, can soon be landed in Britain at a total cost of less than 60s. c.i.f. they cannot last much longer. It might be argued that, in justice to the taxpayer, the consumer, who has for so long been. supplied with wheat at much below its actual cost, should now for some time pay something more than the new cost, so as to make up to the taxpayer part of the loss he has paid, but such a course is obviously impracticable. The price of wheat in Britain must soon be allowed to fall to the level established by the law of demand and supply, and it therefore may soon (say,' by next June) fall to 60s. a quarter, or even, if the prospects cf a very large world's wheat harvest next year become assured, to less than 50s. a quarter. By September xEnglish wheat' may be selling at 40s. a quarter. .

THE GENERAL CEREAL - SUPPLY.

In my note on the world’s supply of wheat dated 23rd December, 1918, I estimated that on 1st August next, after supplying the probable needs of all the importing countries in the world up to that date and retaining enough to maintain their own population till their next harvest and to provide the usual carry-

over, the exporting countries of the world would still have an exportable surplus of old wheat of about 85 million quintals. ; According to my present estimate for- the five cereals (wheat, rye, barley, oats, and maize), they will have on 1st August only 17 million quintals of the five cereals taken together. At first sight these estimates seem inconsistent with each other, but they are really reconcilable. If the estimate for the five cereals be analysed it may be stated as follows (in millions of quintals)': —

This means that while wheat, taken by itself, would show an exportable ..surplus of old wheat on 1st August next of 85 million quintals, there would be a deficiency of the four inferior grains (rye, barley, oats, and maize) of 68 million quintals, and if this had to be drawn from the surplus of exportable wheat the exportable surplus on 1st A.ugust of all the five grains taken together would be reduced to 17 million quintals. But- this is not likely to happen. In .the first place, I have not taken into account the exportable surplus on 1st August last in the United .States of oats and maize, which must have been considerable . after their excellent yield in 1917.. In the second place, I •have made no allowance for. a possible net export of the five cereals from Bulgaria, Rumania, and Russia, .which between them on the pre-war average exported 145 million quintals .of the five cereals. In the third place, I have not taken into account the probable exportable surplus from the coming harvest of maize in the Argentine to be reaped next April. The reports regarding the prospects of this harvest are so far very- favourable, . and as on the pre-war average the Argentine exported 29 million quintals it is probable that at least that quantity will be available for export from the new harvest, in addition to the 20 million quintals of maize I have estimated as at present available for export from the produce of the last harvest. In the fourth place, if the exporting countries find that there is a demand for the inferior grains at suitable prices, they can easily meet it by reducing by a small percentage the home consumption of those grains by live-stock, and will probably .prefer to do so rather than export wheat instead. Therefore although my estimate would, as it stands, mean a reduction in the 85 million quintals of wheat I have estimated as the exportable surplus of old wheat on 1st August next there is no reason to reduce it on this ground. -

However, since I made that estimate on 23rd December the harvest weather in the Argentine has been bad, and the official estimate of this year’s wheat-yield is only 51 million quintals, as against my rough estimate of 57 -million quintals; and in India the winter rain is still holding off, which reduces the prospect that, after the coming harvest in May, India might be found able to spare 20 million

quintals of wheat for export. I would therefore'now. on these grounds reduce my estimate of the world’s exportable - surplus of old wheat on ist August next from 85 million quintals to 70 million quintals, which is still a much larger quantity than the pre-war average exportable surplus on that date in excess of the usual carry-over. Such a surplus would be sufficient in itself to meet the pre-war average demand for wheat of all countries for nearly five months without drawing on the produce of the harvests to be reaped after ist August next.

These estimates, and especially those . for the closed countries, are necessarily mere conjectures as to what seems most likely to happen. In framing them I have assumed that in each country the weather conditions from "now up till next harvest will neither be very favourable nor very unfavourable, and that in a few months general peace conditions will be secured and, some progress made in evolving order out of the present chaos in many parts of Europe. A great deal will depend on the action taken by the Supreme Council of Supply and Relief. In ordinary times of peace it may be presumed that practically all concerned — producers, dealers, consumers, - and Governments will be mainly influenced by purely financial considerations, their desire being on the one hand to make as much profit as possible out of the sale or handling of the grain, and on the other to obtain what grain they require as cheaply as possible ; and a more or less reliable estimate can be framed, on the basis of a study of‘the past, as to what is likely to be the general result of the action of masses of men . determined almost entirely by motives of self-gain. But in time of -war, when peoples and Governments are dominated by military considerations, and many of them willing to make' great sacrifices of their own interest or convenience in order to secure victory, and to . obtain the necessary supplies of grain at whatever cost, it is difficult to estimate what the final result of their action will be on the world’s grainmarket. So again, in times of famine, when motives of charity determine the action of many people and Governments and lead them to sacrifice their own pecuniary interest to the desire of saving their fellow-men from starvation, it is difficult to estimate how far these charitable motives will lead them to go. From reports in the newspapers it appears that the Supreme Food Council propose to undertake famine relief operations on a large scale, and at all events to feed the peoples of the liberated countries and Armenia until next summer. It is estimated that £80,000,000 will be required, and it seems probable* that the United States Cong-ress will provide a , fourth of this amount. The population to be relieved is estimated by Mr. Hoover at 125 millions. It is not clear whether it is intended to expend the whole of this huge sum without return; but presumably an endeavour will be made to obtain payment .for part of the food sent from any Government, or local body or private consumer who may be in a position to pay for it.

According to our long experience of famine relief in India, the best policy is to provide the famine-stricken with the cheapest grain available in quantity sufficient to maintain them in health' and vigour. In the first place’ this costs less than if they are provided with dearer food, or, in other words, it makes a given sum go further in the relief of starvation; and, in the second place, there is less likelihood of the inferior grain being intercepted on its way to the poor by the rich and powerful— consideration of great importance in the absence of ordered Government able and willing to enforce a fair system of distribution. At present the cheapest grain in the world to be obtained in any quantity appears to be maize, of which there are probably at this'’moment in the Argentine about 20 million quintals available for immediate export, with the prospect of. another 30 million quintals after the' next maize harvest in April. According to Broomhall, the price of wheat for ' February shipment at Buenos Aires on 18th January was 10-40 paper dollars per quintal. (about 42s. per 4861b.), while the corresponding price of maize was only 4-95 dollars per quintal (about 20s. per 480 lb.) ; so that, in proportion to its nutritive qualities maize is at present in the Argentine much cheaper than wheat. The United States, again, with its splendid crop of maize in 1917 and its average crop in 1918, could easily spare almost any amount of maize by simply reducing the number of pigs, which seems to, be embarrassingly large. ' The present prices at Chicago are wheat, 226 cents per bushel (say, 75s. per 4801b.), and maize 136J cents per 50 lb. (say, 55s. per 4801b.) ; so. that in the United States also maize could probably be bought in large quantity at a

cheaper price than wheat, with due regard .to the comparative life-saving potentialities of the two grains. India, too, had it hot been for the failure of, the monsoon, could probably have spared for export some 50 million quintals of rice, and may possibly still spare a considerable quantity at a lower price than wheat: The Supreme Council, therefore, may perhaps find it advisable, in its operations

for famine relief, to supply the liberated countries with maize from the Argentine and the United States, and with rice from India, rather than with dearer wheat, and for similar reasons may encourage the importation of maize and rice , into Germany and Austria in preference to wheat.

Further, in many of the distressed parts of Europe there is a. greater scarcityof butcher-meat and' fats than of grain, and it may be found advisable in the interest of the poorer classes to import meat, or even live animals, and so reduce the import of grain. Some parts of Russia have probably a large surplus of livestock, some of which might be within reach of means of transport.

If, as seems probable, there are in the troubled parts of Europe many farmers and peasants who are in possession of stores of grain larger than they themselves can consume before next harvest, one of the most efficacious means of relieving famine in the towns and elsewhere might be to import, instead of grain, gold, silver, and copper coins, and paper money which they could trust, and agricultural machinery, cloth, and other articles of which they stand in need, and which they would be glad to accept in exchange for their grain. The difficulty would be to arrange an efficient system • of distribution, but probably this could be done to some extent through the local channels of trade. Next to the restoration of a general feeling of security, which will. largely depend on the success of military operations, perhaps the greatest need is the restoration of communications, on which, as well as in the fields and factories, there must be a great amount of urgent work to be done ; and, according to our Indian experience, one of the best means of affording relief in famine is to offer useful work to the famine-stricken at a wage sufficient to maintain them to buy enough food of the cheapest kind available to maintain themselves in health. Even the laziest man will work, for a. mere pittance if otherwise he would starve ; . and the eater of wheat or rye will rather buy maize or rice if his resources are reduced and he can get more of those grains for his money. It may be found possible to organize to some extent famine-relief measures of this useful kind, more especially if trustworthy money and credit can be made available ; and experience shows that if the famine-stricken are enabled to earn good .money food will come to them in the ordinary course of trade if it is anywhere within reach.

Most of these measures would tend to reduce the necessity of importing grain, and it may be found that, even if motives of charity are allowed to have full sway, the actual net import of grain into Europe up to next August will not be larger than I have estimated.

My principal study has been the question of the world’s supply of wheat, and- while it is impossible to forecast the future with any certainty, present probabilities seem to be that on i st August next the exporting countries will find themselves in possession of exportable surpluses of wheat aggregating something like 70 million quintals.

* Ten quintals are approximately equal to one ton.

. ' — ■ Import. Available for Export. Estimated Exportable Surplus on 1st August, 1919. Wheat Open countries Closed countries . . 135 27 247 + 112 - 27 Total all countries. . 162 247 + 85 ' Four inferior grains— Open countries . . . . - Closed countries . . . . 86 56 . 74 ' ■ — 12 - 56' Total all countries. . 142 74 • - 68 Total five cereals — Open countries Closed countries . . 221 83 ■ 321 4-100 - 83 ' Total all countries. . .304 321 + 17

ESTIMATE FOR THE YEAR ENDING JULY, 1919.