—-Lancaster Farming, Saturday. Sept. 14. 1974
26
[About 2,300 years ago, when asked
for the proper time to eat, the Greek
cynic Diogenes replied, “If a rich
man, when you will; if a poor man,
when you can.”
These words are just as applicable
now in describing the harsh realities
of the world food market, where the
poor are firstjto suffer in times of
tight supplies.
In the view of one ERS official, the
tumultuous events of the past couple
of years drive home an important
point: world food demand hinges not
only on population growth, but also
to a large extent on the desire of the
developed countries to upgrade and
protect their diets.
Their diets rely heavily on pro
tein, particularly protein from live
stock products. Since the billion peo
ple in the developed nations use
practically as much cereal grain as
feed for livestock as the 2 billion
people in less developed countries
use directly as food, such priorities
obviously have worldwide implica
tions.
Soviet grain purchases. The Soviet
Union’s decision to maintain the
pace of its livestock production ef
forts in the face of a poor grain
harvest in 1972 provides a striking
example of how a major country’s
actions can affect everyone’s food
supply and prices.
Instead of waiting out the short
age, as they have done during pre
vious poor harvests, the Soviets
made huge grain purchases on the
world market. They imported nearly
one-fifth of the total U.S. wheat sup
ply in the 1972-73 crop year, includ
ing production and beginning-of
the-year stocks.
U.S. supplies normally available to
other countries dropped sharply, and
the price of the remaining wheat was
bid up to record levels.
Purchasing power gome. At this
point, the low purchasing power of
the poor countries severely re
stricted their ability to compete for
needed food imports. So long as
overall cereal production is rela
tively responsive to needs, effects on
the poor are minimal, especially over
time. But when demand greatly ex-
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World Food: Prices and the Poor
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ceeds supply, market impacts can be
harsh —especially in those countries
unable to insulate their poor from
the market through aid programs
such as food stamps.
For example, India's food grain
harvest also slumped in 1972-73. In
the tug-of-war between closing the
gap with imports and saving foreign
exchange, diets lost out and food
prices were allowed to increase. In
some areas food grain rations were
cut in half in shops serving the low
est income Indians. Per capita con
sumption dropped to critical levels.
The. widespread suffering in the
drought-stricken African Sahel pro
vide an even more tragic example of
how low levels of wealth have not
been able to command even a mini
mum diet, much less one similar to
those here and in other developed
nations.
Food gap continues. Consequently,
while an optimistic outlook for the
next several years calls for an up
ward trend in worldwide per capita
food production, only modest nutri
tional improvements are forecast for
the masses of people in the develop
ing world.
Even if food production keeps
pace with population growth, or
gains on it, as projected, an over
whelming number of poor people in
these countries will be inadequately
fed for decades to come. .
Unpredictable food markets. Just
how the U.S. will approach this situ
ation in coming years is still open to
question. Not the least of the uncer-
tainties overhanging future world
food balances is the effect of weather
variations and energy shortages and
costs on food production dnd prices
both here and elsewhere in the world.
Prospective import levels of the
Soviet Union, China, Japan, and
other major traders are unpredicta
ble, yet their decisions will have a
profound impact on the price and
availability of food to the less devel
oped countries.
And finally, changes which have
recently occurred in the relationship
between our domestic food markets
and international markets add a• new
>|]
Phone 717-299-2571
level of instability to the outlook for
prices and the poor.
Grain price stabilizers. In the past
years, the U.S. has generally been
able to moderate price swings both
at home and abroad by maintaining
large stockpiles of grain.
When international shortages de
veloped—through increased demand,
reduced supplies, or both—the avail
ability of U.S. stocks has dampened
price fluctuations in the interna
tional market while at the same time
discouraging domestic price in
creases.
When grain harvests were plenti
ful, the accumulation of stocks,
along with export subsidies and with
holding land from production, has
prevented domestic prices from
slumping sharply.
However, the past couple of years
have seen this situation change com-
pletely. Bad weather cut world crop
production in 1972, and coupled with
successive devaluations of the dollar
and continued expansion of demand
for livestock products in Europe, Ja
pan, and the Soviet Union, the
shortfalls produced a demand for
GRANOX-
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U.S. agricultural exports that vir
tually wiped out the government-held
grain stocks.
Stock estimates for the end of
this crop year reflect a sharp down
turn from the peak year of 1961
when 38 million tons of wheat and 80
tons of feed grains were in storage.
Depleted government slocks. The
1974 outlook calls for 7 million tons
of wheat and 19 million tons of
feed grains. Very little will be owned
by the government, in contrast to
earlier periods when practically all
stocks were government-owned.
Since the export surge of 1973-73,
importers have generally continued
to be free to buy any quantity of
food from U.S. traders, and the usu
al shock absorbers of government
stocks and export subsidies have not
been around to hedge the impact on
domestic and international prices.
Nor are they likely to be on the
scene in the near future. Last year’s
farm legislation deliberately set
price support loan rates much lower
than prevailing market prices for
key commodities —providing an in
centive for fanners to market their
goods.
FOR WHEAT. OATS, BARLEY, RYE,