Use of U.S. food resources for diplomatic purposes, an examination of the issues

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Use of U.S. food resources for diplomatic purposes, an examination of the issues
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vi, 85 p. : 24 cm.
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English
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Galdi, Theodor W
United States -- Congress. -- House. -- Committee on International Relations
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Food industry and trade -- United States   ( lcsh )
Food supply -- United States   ( lcsh )
Foreign relations -- United States -- 1974-1977   ( lcsh )
Foreign relations -- United States   ( lcsh )
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CIS Microfiche Accession Numbers: CIS 77 H462-6
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At head of title: 94th Congress, 2d session. Committee print.
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prepared for the Committee on International Relations, U.S. House of Representatives / by Theodor Galdi, Janice Baker and Leo Mayer the Congressional Research Service, Library of Congress.

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Full Text





94th Cnes COXXITTEE PRINT ~8~XL









USE OF U.S. FOOD RESOURCES FO t- k4A c

PURPOSES-AN EXAMINATION OF THE ISSUES







PREPARED FOR THlE

COMMITTEE ON

INTERNATIONAL RELATIONS U.S. HOUSE OF REPRESENTATIVES BY THE

CONGRESSIONAL RESEARCH SERVICE

LIBRARY OF CONGRESS












JANUARY 1977T






Printed for the use of the Committee on International Relations


U.S. GOVERNMENT PRINTING OFFICE 80-611 WASHINGTON : 1977


For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 Price $1.10)
Stock No. 052-070-03858-6
























COMMITTEE ON INTERNATIONAL RELATIONS
THOMAS E. MORGAN, Pennsylvania, Chairman
CLEMENT J. ZABLOCKI, Wisconsin WILLIAM S. BROOMFIELD, Michigan
L. H. FOUNTAIN, North Carolina EDWARD J. DERWINSKI, Illinois
DANTE B. FASCELL, Florida PAUL FINDLEY, Illinois
CHARLES C. DIGGS, JR., Michigan JOHN H. BUCHANAN, Ja., Alabama ItOBERT N. C. NIX, Pennsylvania J. HERBERT BURKE, Florida DONALD M. FRASER, Minnesota PIERRE S. Du PONT, Delaware
BENJAMIN S. ROSENTHAL, New York CHARLES W. WHALEN, Ja., Ohio LEE H. HAMILTON, Indiana EDWARD G. BIESTER, JR., Pennsylvania
LESTER L. WOLFF, New York LARRY WINN, JR., Kansas
JONATHAN B. BINGHAM, New York BENJAMIN A. GILMAN, New York
GUS YATRON, Pennsylvania TENNYSON GUYER, Ohio
ROY A. TAYLOR, North Carolina ROBERT J. LAGOMARSINO, California
MICHAEL HARRINGTON, Massachusetts LEO J. RYAN, California
DONALD W. RIEGLE, Ja., Michigan CARDISS COLLINS, Illinois STEPHEN J. SOLARZ, New York HELEN S. MEYNER, New Jersey DON BONKER, Washington GERRY E. STUDDS, Massachusetts




JOHN J. BRADY, JR., Chief Of Staff LEwIs GULICK, Staff Consultant GEORGE Ml. INGRAM, 8taff Cons8ultant
(II)




















FOREWORD


HOUSE OF REPREETATIVES,
COMJWYMrE ON INTERNATIONAL RELATIONS, "Washington D.C., January 1977.
In view of the considerable public discussion concerning the use of U.S. food resources for diplomatic purposes, the Committee on International Relations is publishing the following study in the belief that it will be helpful to Members of Congress and those in the executive branch and among the public at large who are interested in this subject.
Publication of this document is not to be construed as endorsement, by the committee or any of its members of the views expressed therein.
The study was prepared for the committee by the Congressional Research Service of the Library of Congress, by Theodor Galdi, analyst in international relations; Janice Baker, analyst in environmental policy; and Leo MNayer, senior specialist in agriculture.
THOMAS E. MORGAN, Chairman.
1IIa)



















Digitized by the Internet Archive
in 2013













http://archive.org/details/sfoodresouOOu nit











CONTENTS

Page
FOREWORD -------------------------------------------------------I. THE ISSUE OF U.S. FOOD POWER ------------------------------ 4
II. BACKGROUND AND HISTORICAL STATISTICS ---------------------- 7
A. Wheat ----------------------------------------------- 7
B. Feed grains and soybeans ------------------------------ 8
(1) Feed grains ------------------------------------ 8
(2) Soybeans ------------------------------------- 10
111. POTENTIAL INSTANCES OF U.S. MARKET CONTROL FOOD POWER: 1972-75 --------------------------------------------------- 12
IV. SHORT-TERM PROSPECTS FOR U.S. GRAIN AND SOYBEAN ExPORTS-- 15
A. Major importing countries ----------------------------- 15
(1) The European Community --------------------- 15
(2) Japan ---------------------------------------- 17
(3) The Soviet Union ----------------------------- 17
(4) Developing countries --------------------------- 18
B. Major U.S. competitors -------------------------------- 19
(1) Canada -------------------------------------- 19
(2) Australia ------------------------------------- 20
(3) Argentina ------------------------------------ 20
(4) Brazil ---------------------------------------- 20
V. U.S. FOOD AID ACTIVITIES SINCE WORLD WAR 11 -------------- 22
A. U.S. efforts to provide food relief during and immediately
after World War 11 --------------------------------- 22
(1) GARIOA ------------------------------------ 22
(2) UNRRA ------------------------------------- 22
(3) Marshall plan --------------------------------- 23
B. Public Law 480 (the Food for Peace program)------------ 24
(1) Size and impact of Public Law 480 -------------- 26
(2) Major Public Law 480 recipients ---------------- 26
(3) Political problems arising from Public Law 480
activities ----------------------------------- 28
VI. FOUR BASIC MARKET TYPES FOR U.S. GRAIN AND SOYBEAN ExPORTS ---------------------------------------------------- 30
A. The different market types ----------------------------- 30
(1) Developed market economies (DME's) ----------- 30
(2) Third World countries ------------------------- 31
(3) Fourth World countries ------------------------ 32
(4) The nonmarket economies ---------------------- 32
B. Diplomatic leverage in the four basic markets ------------ 33
(1) Developed market economies ------------------- 34
(2) Nonmarket economies -------------------------- 35
(3) Third and Fourth World countries --------------- 36
VII. U.S. ExPERIENCES WITH TRADE RI-STRTMON'S ----------------- 39
A. Previous U.S. embargoes of all trade -------------------- 39
(1) The People's Republic of China ----------------- 31)
(a) Impact ()f the China embargo ----------- 40
(b) Effectiveness of the China embargo ------ 40
(2) The U.S. trade embargo of Cuba ---------------- 41
(a) Impact of the Cuba embargo ------------ 41
(b) Effect i %-eriess of the Cuba embargo ------- 42
(V)







VI
Page
VII. U.S. EXPERIENCES WITHi TRADE REsTRIcIONs-Continued ae
B. Recent U.s. controls on agricultural exports -------------- 42
(1) The 1973 U.S. soybean embargo ----------------- 42
(a) Foreign consequences of the soybean embargo ------------------------------- 43
(b) Domestic consequences of the soybean embargo-- -------------------------- 43
(2) The 1974 and 1973 Soviet and Polish grain sale
moratoriums_ ---------------------------------- 45
(a) Foreign consequences of the 1974 and 1975 grain sale moratoriums --------------- 46
(b) Domestic consequences of the 1974 and 1973 grain sale minoratoriunms .. ...----------- 47
C. Effectiveness of previous limitations on U.S. exports ------ 49 I). Costs and benefits of long-term supply agreements..---. 51
VIII. INTERRELATIONSHIP BETWI-EN U.S. TRADE POLICY AND GROWTH
OF U.S. AGRICULTURAL EXPORTS ---------------------------- 53
A. Legislation affecting commercial agricultural exports ------- 54 B. Agricultural trade, the ITO and the GATT -------------- 55
(1) GATT and section 22 .-------------------------- 56
(2) GATT and section 32 -------------------- 57
C. Recent issues in agricultural trade policy 58
IX. I)OMESTIC PoLITICAL CoNSIDE1RATIONS IN THE USE OF U.. FOOD FOR DIPLOMATIc Puroses -60
A. Food power and agricultural pl icymaking-- .111. .. 60
B. Potential impact of the use of food power on U.S. farm and
agricultural marketing structures ------------------------- 62
X. POsSIIIEI GovERNMENT ALTERNATIVES FOR MAN AGING U.S. FOOD
EXPORTS -------------------------------------------------- 64
APPENDIXES:
I. Description of Export Administration Act ---------------------- 67
II. Tables ---------------------------------------------------74












SUMMARY


This study examines issues surrounding the concept of food power and its potential use by the United States. Food power is the diplomatic influence that a food-exporting country exercises over the decisions and activities of other nations either because of the control (whether actual or perceived) that the exporting country has over a specific market or segment of a market, or as a concomitant to the ability of the food-exporting country to provide food aid to needy countries.
The exercise of food power can take a number of forms, including diplomatic negotiating positions on terms of commercial agricultural trade, entering into long-term supply agreements, unilateral restrictions on or embargoing of exports to specific countries or regions. or various forms of food aid transfers to individual countries.
Food power can be based either on market control or on the dependence of specific countries on food aid imports. For an exporting country to have food power based on market control with respect to a particular commodity and a particular importing country, the following four conditions must generally exist: (1) The importing country must require sizable quantities of the product; (2) the required quantities must constitute a significant percentage of the country's total consumption; (3) no readily available alternative source can exist or be quickly developed: and (4) no satisfactory substitutable commodity can be available or quickly developed elsewhere.
For an exporting country to have food power based on food aid. it is enough that it have surplus food that it is willing to transfer on confessional terms, that other potential suppliers not be able or willing to make comparable concessional transfers on the same scale, and that an importing country he in a sufficiently weak financial or foreign exchange position that it cannot meet its domestic food requirements without seriously sacrificing its economic, and/or defense programs. The prerequisites for the existence of this type of food power are relatively independent of world market conditions.
With regard to the recent position of the United States in world markets. this study finds that:
(1) As a result of its recent paramount position in world food markets fo- wheat, feed rains, and soybeans, the United States has had, in recent years, opportunities to exercise food power over specific countries based on market control. It is possible that such opportunities will recur with some frequencyv in the coming decade.
(2) Recent onportunities for the exercise of food power based on market control by the 1United States have resulted primarily from world weather patterns that led to temporary scarcity conditions in
(1)





2

wheat and feed grain markets. Only to a very limited degree have these opportunities resulted from U.S. administration policies or legislative action.
(3) In contrast to the shortage conditions during the 1972-74 period, world agricultural markets during most of the period since 1920 have been characterized by surpluses that have led to producer country policies of trade protection, commodity dumping, excess commodity stockpiling, and for some countries, large scale foreign food aid programs.
(4) With few exceptions, past limitations on exports of U.S. agricultural commodities have not proven to be effective mechanisms for exercising food power. In some cases this has been because conditions for effective market control did not exist; in others because the goal of the effort was not to extract specific policy changes or actions but rather to express American displeasure or to safeguard U.S. supplies at reasonable prices.
(5) Limitations on U.S. agricultural exports have had a major impact on key domestic economic sectors. By depressing farm prices, they worked to the disadvantage of agricultural sectors through lowering farm income. They also added a new element of unpredictability to a business that must cope with great uncertainty. The reaction of U.S. farm groups to recent limitations on U.S. agricultural trade has been uniformly negative.
(6) To use U.S. market control food power effectively in the future would require a major restructuring of existing mechanisms for the conduct of U.S. foreign agricultural trade in order to increase governmental control over the availability, pricing, and disposition of commodities. To adapt the Federal role in agricultural trade in a way that would facilitate the coherent exercise of food power would generate a major debate in the United States because of the domestic economic and political ramifications that such a change would entail.
(7) U.S. food aid programs have provided the opportunity for the exercise of one form of food power since the end of World War II. These programs undertaken for economic, political, and humanitarian reasons, have provided basic sustenance to millions of people but not without generating controversy within this country, with competitors in agricultural export markets, and even with the recipients. The exact role of food aid in overall U.S. foreign policy has been in a state of uncertainty for some time.
(8) When the preconditions for the existence of market control or food aid food power exist, the amount and type of diplomatic leverage available to this country from the exercise of such power may vary considerably from country to country because of similar or different political, economic, social, or cultural ties. In some instances these factors tend to make the use of food power unlikely. In other instances, they tend to validate its use.
(9) Because of the growth of U.S. agricultural exports in the last 20 years, U.S. foreign agricultural trade policy has tended to enmIhasize free trade in agricultural products and the removal of barriers to agricultural trade. Any general use of U.S. food power as a diplomIatic weapon would run counter to this trend and perhaps engender trude retaliation in other areas.






3

Questions raised by this study include the following:
(1) To what extent, if at all, ought the U.S. Government be prepared to implement comprehensive and coherent food power policies?
(2) What would be the extent and character of governmental control over agricultural trading required if such policies were to be implemented?
(3) Is the current export control legilation an appropriate vehicle for authorizing the sort of comprehensive control over U.S. agricultural exports that may be required by such policies?
(4) In light of the current positions of spokesmen for U.S. farm groups, wha ste ips would be necessary to assure their support if it were decided to use U.S. food power to a greater extent?






































80-611-77-2












1. THE ISSUE OF U.S. FOOD POWER
world grain markets
For Most, of the -24 years from 194S to 1972, t5
'Welle plag-tied by surlAuses and low prices. Government interN-ention wtis common, both to suj)port grain prices aiid to deal with, grain surpluses. Villike the period followiiicr World War 1, -when the volume of U.LS. g raili exports fell dr-,iniaticalIv. the level of U.S. gram expoits was inaintahied after World War 11. This initially was dolie -NI-ith food aid through -;,everal temporary aid progM ins. After 19,54. these tentporary aid prorranis were consolidated, into the Food for Pezice program (Public Law -180), which became an important N-ehicle for expoi-ts of Ameriezin grain. Over 80 percent of V.S. wheat, exports were, fii-lai-iced with food aid funds as, Lite as fiscal year 1965. These export s had III iportaiit effects on the Anportincy comitries, where graiii SlIpplies ivere a ugrii lei ited and the developed countries, wbere the 1)1'01)1(,iiis of e\-ei-productioll. and declillill(r grain prices were partially .111eviated.
fn one year. 1979, the loiirr history of farm surpluses abruptl-% ch:m are l. A ; a re -iilt of sex-eral conditions the 1971 devaluation of IIIe dt)llar. flie severe droi.io-lit InAf I-] ea, the failure of the rice C rop i li '- otifhe:t,:4 atid Korea, tl)e decline in anclioN-v Catches off Perli, ail(I Ille desire of the '* 40vlet. I-nioil to prevent slailgiiter of livestock herds
-ifter mas.,- ive drotight-the world food picture changed, froin price d(1)I-eS<'IIr siirplits es to food shortarres, particularly of graiii.
Ifaviii(y endured 24ve.irs of often-sui-plus coiiditioiis and i)ossessiiio,111 11 1 Itural sector fliat had. become bio-hiv productive and efficient, the 1-inted States found it ;elf in a coriii-ii(midiiicr position in flie Avorld
11)(1117ket. Wliik there, loi(l been earlier discussiotis ahwit. the 11IT11OPMate context, for providiii(r food to ivorld market, folloNN-111(r I lie. Arab oil boycott, of 197.3, denn-m(ls be(,,ime f requeiit that the Umted St'Ites Ilse its avriclilhinfl exports to establish a similar kind of eco11011110 "HI(I diploill"Iti(I. POIN'(11'. Oftell tll(,S(, dellmilds were not Nlsv(l oil mi analysis, of t1w iiecessal-Y condition-, that lind to be Illet, if food expolls Nvere to sel-ve -,I pirpose simil',11. to those of exports.
This ex.1111111es t1le fe-isihilitY ()f usliig- food in a diplonizitIC
context. Affi l- setting- ont t1w shatisfical tui(l historical back(ri-miml
()f recelit, :11-(ri-IcIlItill-al export am] trade, policy. it,
-11tvillpts to Ille "llid ecolloillW c()I ISNI Ile lick's fliat, ]III(dif
,krise froill the. iis( bN- t1le I llile(l St"Ites of its predollillialit, position III W0111d gl-all) an(] 'SoYhvall 111:11-k0 s. TNvo, pl-ellillillary is',lies 110("ki pl-1011 'M elltloll' 11mvex-el.. Flr I" it. is 1111pol-tallt, to he clenl- about 1N-11,It food pmvel- is all(I jlwx it, can I)v exen-Ise(l. "- ecoll(l. the conditiolis tiltat 11111st be Illet, if f(K)d pm ver is fo, be f()I. a --"(l-"1to(rN- III dIp]()111"Itic relat-ioll -; s1loll](I he set oilt.
First, AN'llat, ) foo(l pmvcr 111 tills context-, food power I's tll(' diploIlint W 111flilence that :1 1*()()(1 expol-t I'Y (1XVIVIse- over tll(, deci(4)




5

sions and activities of other nations either because of the actual or perceived control that the exporting country has over a- specific market or segment of a market, or because that country is able to provide food aid.
The exercise of this power encompasses a range of policy options, most of which are not unique to food, but would be the same for any commodity over which a government attempted to exert oligopolistic control. The range of options includes normal diplomatic negotiations over commercial agricultural matters, with the knowledge that the buyer's dependence is a major factor in the discussions; the conclusion of long-term supply guarantee arrangements to favor certain countries as a quid pro quo for political or economic support or concessions; the imposition of partial restraints or embargoes of food exports to indicate very serious concern over certain political or economic steps taken by the country or region whose imports are restricted: and those instances in which food aid is given to political allies with the expectation that the aid would influence recipient policies or actions in favor of donor coimtrv interests.
Second, for a country to be in a position to exercise food power based on market control over a given commodity, four conditions must exist simultaneously. These are: (1) The importing country must require large quantities of that commodity: (2) the required quantity must comprise a significant percentage of the country's total consuinmtion:
(3) no readily available source other than the country desiring to exercise food Power can exist or be quickly developed: and (4) no satisfactory substitute commodity can be available in adequate quantities from other sources. If any one of these conditions is absent, the only effect of a denial of U.S. food exports to the recipient country would be to force it to obtain its needs from other sources and 'or cut back on its consumption.
Whether a country can obtain sunplies from other sources becomes a key question in determining whether this type of food power exists. If world supplies are so short that no alternate source of supply is available, the degree of market control food power wielded by the UTnited States could be significant. If supplies of food are so abundant that surplus stocks overhang the markets in a number of other countries, then the degree of market control food power available would be near zero.
While the amount of food power available to the Tnited States based on market control is heavily dependent upon world supply conditions. the amount of diplomatic leverage that is available through the ability to provide food aid is not directly dependent on market conditions. This is so because in surplus market conditions developed or wealthy countries will purchase their food from the most advantageous source, whereas food-poor LDC's will continue to he constrained by their poverty to obtain their food where the food is made available. Thus. for food-poor LDC's, the issue is not whether there is a surplus or shortage in world markets, but whether there is concessional food available. Because of this, the country with food available for aid may possess significant diplomatic leverage against some countries regardless of world market conditions. In one respect. however,





6

market conditions do indire-ctly influence the amount of food aid food power that might be available because during periods of surplus, alternative suppliers of concessional food are more likely to exist.
Two points should be emphasized at this juncture. First, for the United States to exercise food power based on market control will require much greater government intervention in U.S. foreign agricultural trade than is currently the case. Second, the presence of the material conditions for the existence of food power is not synonymous with its exercise. Chapter VI of this study examines some of the factors that will determine whether and to what extent food power might be used.












II. BACKGROUND AND HISTORICAL STATISTICS
Three U.S. agricultural commodities could be considered as potential tools in any diplomatic use of U.S. food exports: wheat, feed grains, and soybeans. In each the United States holds a predominant position in world export markets. This section sets out the statistics that describe world production and trade, and the U.S. share of trade in these commodities.
A. WHEAT
While most of the world's wheat is consumed where it is grown, a significant share moves in world trade. Over the last 5 years, exports of wheat as a percentage of world production have ranged from 16 to 20 percent. (See table 1.) In addition, the amounts exported are large, and the portion of overall consumption in several countries that is met through imports also is large. Exported wheat usually is consumed directly by human beings as processed grain products, although some is converted into animal feed in developed countries. Overall, though, only a small portion of the wheat in international trade is used as livestock food.
Since 1945, the United States has been the single largest exporter of wheat in the world, except for 2 years, 1953 and 1954.1 In the immediate post-World War II period, exports to Europe and Japan helped forestall serious famine. But by late 1948, agricultural recovery accelerated in the major war areas, and U.S. wheat production exceeded domestic demand and anticipated exports. Then, from 1948 to 1972, the main characteristic of world wheat markets was surplus, though there were intervening sets of circumstances that often masked the fact-Korean war stockpiling by other countries, large Public Law 480 sales in the late 1950's and early 1960's, serious shortages in India in 1965 and 1966, intermittent purchases by the Soviet Union and increased purchases by the People's Republic of China. Because of continuing surplus conditions, wheat prices tended downward during most of the period and in terms of real purchasing power, wheat prices fell considerably (table 2).
As a result of maintaining high wheat production levels, the U.S. Government was obliged to assist the export of a large portion of the U.S. wheat crop. While export subsidies on commercial sales played a role, the major device used to dispose of surplus wheat was food aid, especially the Food for Peace proarain. In 19 of the 23 years shown in table 3, more than 40 percent of U.S. exports of wheat and wheat flour
I The U.S. share of world wheat and wheat flour exports has ranged from slightly less than one-fourth of total world exports. to 45 percent of world exports. ThoR average for the 26-year period was 35 percent. Quantities exported generally have increased, but 20 percent variations have been common from one year to the next.
(7)






8

V"Cre 1111der food aid programs; and for lialf of Ole years shown, More thall tNvo-t1lirds of U.S. ivheat exports ivent under food aid procri-an-is.
As t',,e Nvorld supply Situation tivlitened 111 1972-7,3 Wheat prices
I Side rably. In fis(-.al year 1973, the slilpment of some 31.7 million metric ioii of NN-lieat and flour earned the United States $2.3 billion (table 4). In fiscal year 1974 31.1 million metric ton's-'of wheat and 11(mr earned the United States exactly tivice as much because of lilcrlier

An ;,Malysis of the pattems of U.S. ivLeat exports (table 5) over the [,I d(,(-z),d(: prompts several 1111expected oh- ervations: (1) During eaeb of the la, t .5 Japan eitljej- t1le J -%j,(rCSt or second kirgest, 1111portev o i wlieat and wlioat flour; (--)) dumig 3 Of flie, last 5 years,
tlle ()viet T-moji ivas .1111OD" the t()I) fliree importers of U.S. wbeat 111M rlw pc(mle% Rcpublc of China Nvas ainong the top t1iree in 1974fiscal year 197.), India lias returned to its former position as J.so
mie ()f tl!e nlikjor impot-tel f V.S. ivheat zltnd flour. In the last 20 years, 11101,0 T-. S. iv')cat has ilweii .,',r*t)ped to India tImn to any otlier sincyle o-mllitm-, m,,1;lI]v tlirouo-li Piil)ll(- Law ISO programs.
"Fle cco!lomle an(l poiltleal cl,,aracteri ,tlcs of the major purcliasers of Avlieat liave varied cmisiderabl v from year to year. In fiscal
Vears "I'lld 197 ), the 1"ti-vest m vc] Iase I'S of V.S. whe"It amt
11olli. 111cluded d"re" develoj)('d ni'll-ket ('('OIIOIIIV countries. JAI f1se'd
i- -6 1 ?_ 1 -4 purcliasers of V.S.
V(mars 197- 194-5. Illid 191 ). SOVVII of eVilit laiw( vlleat fuld flo'll. vere 0,thet. d(,vMot)1).l(,- colintries or 110111-11'arkef ecolloas ,I (rrmip. tiv, le.-- -i developed countries contlillic, to 01(: 1,11-gest .1moujits of wheat. In the last 10 fi,,cal venrs, O)e auwimf of total U.S. Nvheat an(I flour exports slipped to less developed countries luq ; railov(l from 78 pei-cent in fiscal year 196S domi ko percent In fiscal year 1913. avera mo- sli lit1v than 70 per(.011t for Ole ('11tire period.
E 4
x( ej)t for comitrips such a.:,- Venezuela, South Koiea, Pakistan, :i!,(l Taimmi, Nvidel-i liave reol-ularly received predictable aniounts, vli(,at -m(l floiir sale ; to individual less developed Countries have varied
from vear to ve"Ir. Tn flie 10-year period indicated in taNe
Ti)(11.1, for example, re -eive"'l 'U.S. IN:Iieat exports r-111(rinur from 7.1
71 Z11 iscal year 1973.
1W iml tollc; ill fi (-al vem- 1966 to 3S2.000 tons i i

B. Fviii) GPAEI,- .;
Exchidill thost, direAl v cotisumed as food. the
1W1111 for sm])eall sm-heall 111val alld feed (rrallls is livestock feed. The 111,1 Im. Im rcl 1:11-41 I's 01' 1 ]Iese feed produCts are IN-All a feNv excelMolisl
coullt rie" rich to affm.d the relat ivel v Illeffivient t\vo-S1v1)
C01IV(1l"_;l()l1 process wherebY ammals an, first fed the grraill alid 4).Vlw'llls, alld fliell t1le ment proolliced 1'12 (1011SHIM'd by "I'lle 1!1(*ICIi O ill livestock _(1jl(,()Ijj',,Iire(1 1)v o-relater per caj)ita
m l of 111e, 11, 1 j m ( 1, -it :u I ce.-I (1 111,1 -1 ar"Icterisl 1c of Ole :urricul-001... of Hie devel(qwd i!)duAr]:Ijized colliltries sillve the 1111(1alld fvc( 1111.v ()f the developed Cmullmillst coulltries.

( 1 ) I 'I !. 1) (.! I % I N -I ( ('()!. N. (), \T.S. 1 1,. \ I k' 1, Y. Y, () 1 1, G I I I' N1 S )
Ol It ):1 11141 1 () w h(- It n ?I ev('',l (rrenter percellt :Ige ()f wm -hl feed ills d)-1:111(ld N"!wr(, I jw.v :if c grmvil. Ovel. I )I(, last ) N,(,:Il.s, eximl-ts of




9

feed grains have ranged from 9 fo 11 percent of world production. But, like wheat, the quantities exported are large, and for.a. few. countries feed grain imports have provided significant proportions of total consumption.
The United.-States has been the world's largest exporter of feed grains for most of the period since the end of World War II (table 6 has data for fiscal years 1951-76). Like wheat, the market for feed grains was often in surplus. Average prices for corn (shown in table 2) were low and -irregular. Unlike wheat, however, most feed .grain exports were through commercial channels rather than as food aid (see table 3). Their value has increased annually, with a few exceptions. since the end of World War II. This trend became particularly pronounced in the late 1950's and early 1960's as the industrialized countries began to import increasing quantities of feed grains and soybeans to meet the growing demand for livestock feed.
During the last 19 years the position of the United States as the largest exporter of feed grains has been even more secure than its position as the largest wheat export2 (table 6). The trend of U.S. feed grain. exports during the last decade mirrored that of wheat exports: high quantities exported in fiscal year 1966, falling gradually to a low in fiscal year 1969 a slow increase to fiscal year 1972, then a sudden large increase from fiscal year 1972 to the present. Since fiscal year 1973, U.S. feed grain exports have been quite large, averaging some 39 million tons a year-well over half of world feed grain exports.
If one examines the largest buyers of U.S. feed grains (table 7) over the last 5 crop years, some useful observations arise: (1) In 4 of the 5 years. Japan was the largest purchaser of U.S. feed grains. and was second in the fifth; (2) in 4 of the last 5 years, the Soviet Union was among the top three purchasers of U.S. feed grains: (3) in 2 of the last 5 years, Poland and the People's Republic of China were among the eight largest purchasers; (4) while a significant amount of transshipment took place, in all 5 years the Netherlands was among the top four purchasers of U.S. feed grains.
In each of the last 5 years, not less than 40 percent of all U.S. feed grain exports have gone to the three largest buyers-Japan, the Netherlands, and the Soviet Union-and not less than two-thirds to the eight largest buyers. The percentage of the eight largest buyers has increased from 67 percent in fiscal year 1972 to 77 percent in fiscal year 1976. While there is no guarantee that these trade patterns will continue, the statistics do indicate a substantially concentrated market for U.S. feed grain exports.
Except for Mexico and the People's Republic of China in fiscal year 1975, and South Korea in fiscal years 1971 and 1972. the major purchasers of U.S. feed grains have been developed(l countries (table 7). In fact, the situation with feed grain exports has been almost exactly the inverse of that for wheat during the last 5 years: developed countries brought an average of 85 percent of U.S. feed grain exports, ranging from 81 percent in fiscal year 1974 to 94 percent in fiscal year 1976.
SSince fiscal year 1958, U.S. exports of feed grains have averaged 47 perent of totat world exports, ranging from a high of 56 percent in fiscal year 1974 to a low of 38 perceut in fiscal year 1969.





10

(2) SOYBEANS
The market for soybeans is actually three interrelated markets: one for soybean oil, one for soybean meal, and one for whole soybeans. The primary uses of the three forms of soybeans vary considerably, as do the characterist-ics of their purchasers. When whole soybeans are crushed, soybean meal and soybean oil are created. Except in the Orient, whole soybean products do not compromise a significant end use for soybeans. Soybean meal is used primarily in animal feed, while soybean oil is used primarily as a food or in the preparation of food. In the United States, for example, soybean oil accounts for over 60 percent of the edible oil market.
In the world soybean oil market, the main importers are less developed countries (table 8) where the oil is used in cooking. Soybean meal imports (table 9) are used almost entirely as a high protein livestock feed. Since feed grains by themselves are generally low in protein, livestock feeding is more efficient when soybean meal is used to supplement forage or feed grain rations. Most countries also produce and utilize other oilseed crops or fish meal. However, in Japan and Europe. demand for oil seeds and meal as livestock feed far exceeds local production, necessitating substantial imports. The rising demand in these developed countries is due almost entirely to consumer desires for greater meat consumption.
A country can meet increased soybean meal requirements by importing soybean meal or by importing whole soybeans (table 10) and crushing them to obtain the meal. Since the ratio of oil to meal from each soybean is nearly fixed, as increased quantities of meal are needed, increased quantities of oil are produced. This leads to a situation (shown in table 8), in which countries which produce no soybeans, such as the members of the European Community, but require large amounts of meal, end up exporting significant quantities of soybean oil. This phenomenon also explains why minimal amounts of soybean oil are imported by these countries even though soybean oil plays a maior role in their domestic edible oil markets.
For the United States, soybean oil often has been a glut on the market since the large-ccale expansion in UT.S. soybean production took place in the mid-1950's. Much like wheat, two-thirds of all TU.S. soybean oil exports have lenll financed by food aid funds (table 3). In addition, as table 8 imlndicates there has been no real increase in the amounts of sovhean oil exported since 1965. On the other hand, there have been only very small exports of whole soybeans through food aid programs and, of course,, no meal. U.S. commercial exports of whole soybeans and sovbean meal have risen steadily since 1953.
Compared to wheat and feed rains. a very large proportion of world soybean production is exported. Over the last 10 years, on a meal basis, an average of 46 percent of world soybean production has been ex)orted. This figure has ranged from 40 percent in 1965 to 54 percent in 1975. The percentage exported has increased in the last 5 years, mainly beeamse of the entry of Brazil into the export market.
Since the end of World War II. the United States has completely dominated the export market for soybeans and soybean products. Esentiallv. T.S. soyhean exports grew as the world market for soybeans grew. The real growth in UT.S. soybean exports began in 1952. By 1955,






U.S. soybean exports had doubled; by 1961. they had doubled again;
ndby 1968, they had doubled a third" time." A plateau was reached in 1970, and total exports of whole soybeans have ranged from 1.9 to 14 million metric tons a year since then (table 11).
Except for 3 years in the earl 'y 1950's, more than 75 percent of world soybean exports have originated in this country since 1949. This figure rose to over 90 percent annually from 1962 to 1974. Since 19 72, Brazil has become a. major competitor-the only major competitor-in world soybean export markets. Brazilian exports of soybeans have grown extremely rapidly. In 1971, the Brazilians exported only 213,000 tons of -whole soybeans. The following year, 1 million tons, and for 1975, 3.5 million tons were exported. The latter figure comprises over 20 percent of the world whole soybean export market. Brazilian exports for 197 6 are projected to increase again, to 4.6 million tons.
An examination of U.S. soybean buyers over the last 10 years (table 11) yields straightforward results: Europe and Japan have taken at least 7J- percent of U.S. whole soybean exports each year during this period. Except for rTaiwan, all major purchasers of U.S. soybeans are dev-eloped countries. If one looks at U.S. exports of soybean Mealshown on the bottom half of table, 11-an even greater predominance of European buyers is evident. Over the last 10 years, no less than 843 percent of U.S. annual soybean cake and meal exports has been to Europe. Compared to the whole soybean market, two characteristics stand out : (1) East European countries figure quite prominently in the meal market, but not in the whole bean market. and (2) the Japanese purchase no soybean cake or meal from the United States, while they are consistently the single largest importer of U.S. whole soybeans.























80-011-7-VT 3











III. POTENTIAL INSTANCES OF U.S. MARKET CONTROL FOOD POWER: 1972-75

On the basis of the four criteria outlined earlier and the data shown in table 12, below, one can evaluate whether the United States could be described as having been in a position to exercise market control food power through its grain exports against some countries during the most recent period of grain shortages. The evaluation does not imply that the United States intended to exert such food power. The concise evaluation is as follows:
In feed grain exports, the potential for market control food power existed with regard to Japan and the Soviet Union in fiscal years 1973 and 1974; the Netherlands and Japan in 1975; and the Soviet Union, the Netherlands, and Japan in 1976; and as a group, non-Communist Western Europe met the four required criteria. For wheat, the following countries met the four criteria for U.S. market control food power: in fiscal year 1973, the Soviet Union, and in that tight market, perhaps Japan; probably none in fiscal year 1974; in fiscal year 1975, Ind(lia, and in fiscal year 1976, India and perhaps the Soviet Union.

TABLE 12.-U.S. WHEAT AND FEED GRAIN EXPORTS TO SELECTED COUNTRIES

Consumption U.S. exports U.S.
Fiscal year and country (million tons) (million tons) percent

Feed grains:
1973:
Japan................................................... -------------------------------------------11,908 8,009 67.2
Soviet Union.............................................. 76,873 4,199 5.4
1974:
Japan.................................................. 13,770 10,217 74.1
Soviet Union........-------------98,725 5,163 5.2
1975:
Japan-....-....................................13,382 8,010 57.5
Netherlands.............................................. ----------------------------------------4,006 14,974 1 100.0
1976:
Japan.................................................... 13,568 7,704 59.0
Soviet Union. ..................................-----------------------------------. 82,099 10,080 12.2
Netherlands.............................................. ---------------------------------------3,780 14,625 1100.0
Wheat:
1973:
Japan--------------------------------------------.................................................... 5,558 3,397 61.1
Soviet Union--------------------------------------.............................................. 99,593 9,468 9.5
1975:
India......----------------------------------------.............................................. 24,048 3,834 14.0
1976:
India.................................................... -------------------------------------------29,235 4,500 15.3
Soviet Union.............................................. --------------------------------------81,644 4,560 5. 5

Figure- exceed 100 percent because of very large transshipments.

For soybeans, the situation is different. The principal importing COltries for soybeans grow no, or practically no, soybeans themselves. Thus, import figures for soybeans are, transshipmients aside, close to tiial 1consumptn fig tles. Vhereas, for exami)ple, the Ellurfopean Comnmunity (EC) countries meet a large portion of their wheat and feed rain needs fIoill 111internal EC producton, they et practically n
I erp (~~in hymeet patclynone
of rIe srOe 111 IIilllents from domestic prodictioI. This presents
the United States with a special situation.
(12)






13

Notwithstanding the entry of Brazil into the market, the four criteria stated earlier for potential market control food power have been met with regard to soybeans for practically all the major customers of the United States. There is, for example, little likelihood that the Japanese could obtain the other 80 percent of their soybean imports from Brazil since this would involve setting aside about 90 percent of Brazil's 1975 exports for this one country alone. Western Europe as a whole occupies the same position as Japan.
In attempting to determine the potential effectiveness of U.S. market control food power over a given country as a result of feed grain and soybean imports, one should consider the impact of an x percent reduction of the import of these commodities on total livestock feed availabilities in that country rather than to view the situation solely in terms of the impact of the denial of these two specific commodities. If there 'are large amounts of alternative forage or oilseed crops for livestock feeding. this would reduce the overall effectiveness of any U.S. restriction of its imports.
In essence, supply conditions in the particular market will determine the effectiveness of any U.S. use of market control food power. The U.S.-U.S.S.R. grain trade in fiscal years 1973-74 is a case in point. If the United States had denied wheat to the Soviet Union in the tight market that existed in fiscal year 1973, the 9.5 million metric tons of American wheat eventually imported by the U.S.S.R. that year would have exceeded the total exports of Australia and Argentina combined, and would have been the equivalent of two-thirds of Canada's wheat exports in that year. On the likely assumption that these countries would not have overturned their regular customers in this tight market to provide wheat to the Soviet Union, a denial by the United States would have meant that -the U.S.S.R. would have obtained less wheat than desired. Exactly how much would depend on the actions of other exporting countries. On the other hand, in fiscal year 1974, the Soviet Union was able to enter a surplus market and import a total of 9.7 million metric tons of wheat, relying on the United States for only 2.7 million metric tons of the total. It is quite possible that, had the sale of 2.7 million metric tons been refused by the United States, this amount would have been available elsewhere. Thus, it cannot be assumed that a country denied wheat, soybeans, or feed grains will be ultimately denied the total amount requested from the United States. Depending on market conditions, s6ome, in tight markets-or all, in surplus markets-of the exports denied by the United States could be obtained from other sources. And, of course, the country may choose to reduce consumption, as the Soviet Union did several times prior to 1972.
It should be reemphasized that a major characteristic of the farm sector of the developed market economies over the last 25 years has been the tendency to overproduction and, as a result of this, the need to provide some type of floor for agricultural prices. Overproduction could occur again, generated by acreage increases in this country and the other grain-exporting developed-market economies, combined with 1 year or 2 of average or above-average crops in the nonmarket economies and Third and Fourth World countrise. It is possible therefore that grain prices in the world could fall in the near future.
In any case, it should be clear that whatever diplomatic leverage the United States might possess as a major grain and soybean supplier






14

in a period of worldwide tight supplies and high prices would be considerably less in a period of depressed prices and surpluses. To some extent this has already happened in the case of soybeans. And, in surplus conditions our major competitors in grain markets, the Canadians and Australians, could undercut attempts by the United States to control exports to most single countries, if they found that to their advantage.
As a matter of conjecture, if the United States, Canada, and Australia were to coordinate their grain export policies for political ends, this would create a market situation very much like that of OPEC in oil.1 However, the possibility of this coordination taking place in the near future is probably remote. It should be remembered that during muc h of the period when the United States imposed a total embargo on trade with the People's Republic of China, Canada, and Australia continued to sell grain to the Chinese. Canada has also been a major supplier of grain to Cuba. The increasing nationalism of Canada at this time is another factor which would work against the development of any sort of cooperative effort with the United States to increase the diplomatic leverage of major grain exporters.
If the United States denied food exports to a major customer, it would probably have to lower production, store that amount or otherwise keep it out of world export markets. If it did not, the target of the denial would either purchase it through proxy buyers or go to other exporting countries whose buyers had purchased the U.S. grains or soybeans originally intended for the target country. This stored grain and soybeans would tend to depress prices. Storage and its effects on prices and future production would be a major cost of any exercise of market control food power.
Finally, to date, weather has been the major factor in creating the conditions of scarcity that are necessary for market control food power to exist. The possession of food power under these conditions is a sometime thing, depending on conditions over which the United States has little or no control. If the United States wishes to have market control food power on a continuous basis, the required conditions of scarcity would have to be established in a more permanent manner through delberate U.S. Government policies.
I Interestingly, in October 1975, Lester R. Brown, now president of Worldwateb Institute, proposed that the United States and Canada coordinate their grain export policies in order to force Third and Fourth World countries to take serious ste s to Improve their own agricultural output and to control their population growth. See The Politics and Responsibiliti of the North American Bread Basket, Worldwatch paper No. 2, Washington, October 1975.












IV. SHORT-TERM PROSPECTS FOR U.S. GRAIN AND SOYBEAN EXPORTS
Key elements in any analysis of possible future opportunities for the exercise of U.S. food power are the likely patterns of demand for American soybeans, feed grains and wheat and the strategies of conpeting suppliers. In exploring these topics, one must consider not only demand patterns, but also the market structures of individual countries, for these are important factors in determining the capacity of governments to shape agricultural export and import policies.

A. MAJOR IMPORTING CouNTRms
The major importers of U.S. grain and oilseed products have differing types of market structures, with differing degrees of government involvement in agricultural trade. The European Community (EC), for example, has an agricultural trade system based on the concept of a customs union. Similarly, the major competitors of the United States in world markets operate under different types of policies. Canada and Australia, for example, depend on government control of all export trade in grains. The Argentine and Brazilian systems include government involvement through trade promotion and subsidies.

(1) THE EUROPEAN COMMUNITY
U.S. farm exports to the European Community represented onefourth of total U.S. agricultural exports in 1975. Feed grains, particularly corn, accounted for 75 percent of the Community's imports through the variable levy system established under the common agricultural policy (CAP).' The major EC markets for U.S. feed grains have been West Germany, the Netherlands, and Italy. Two-thirds of EC imports of nonvariable-levy items are soybeans, mainly froin the United States.
The EC demand for agricultural imports remains strong despite the impact of recession on some member countries. Demand was boost ed
'The common agricultural policy (CAP) is a single system of farm support and trade regulation for all member states of the European Community (EC). The first regulations for agricultural products, announced in 1962 covered grains and several other products. In 1967 fats and oils came under regulation. The basic concepts of the CAP are common financing, common pricing, unlimited production, and EC preference. Common pricing regulates EC farm prices so that restrictions on trade between member countries are eliminated, while the movement of goods is promoted from main producing areas to main consuming areas. Unlimited production is encouraged because the Community Is a grain deficit area. The concept of EC preference calls for regulation of imports from non-EC countries. This is accimplished by setting a minimum import price or "threshold" price and charging a variable levy equal to the difference between the actual Import price and the threshold price. The variable levy is more protective than a tariff because it varies whenever the world price of grain or the EC target price varies. Common financing requires that the EC pay whatever is required to meet the cost of unlimited production. No restraints are placed on production because they would discourage the development of trade among members.
(15)






16

by a drop in the 1975-76 crops of wheat and coarse grains and by a shortfall in potato production. Non-EC countries in Western Europe also suffered a decline in wheat production, though not in coarse grains. While stocks in Europe have offset the major effects of a poor harvest, the market for U.S. wheat and feed grains remains strong.
The outlook for U.S. soybean exports to the European Community is less encouraging. The European Community trade represents 70 percent of U.S. soybean meal exports and 65 percent of European Con unity imports of soybean meal. European Community regulations instituted in March 1976 require the incorporation of nonfat milk powder into all animal feed until the feed includes 5 percent milk. This protein supplement will displace about 400,000 tons of U.S. soybean meal during 1976. To alleviate American displeasure at the loss of the market, the EC announced plans to build up a stockpile of 250.000 tons of vegetable protein, much of it soybean meal.
The United States has indicated that the stockpile plan does not speak to the real issue: Erection of trade barriers in violation of the General Agreement on Tariffs and Trade. The United States also pointed out that the burden does not fall equally on all suppliers of animal feedstuffs. Although other soybean suppliers, such as Argentina. Brazil. and Peru, will be affected, the heaviest burden will fall on U.S. producers.
It is possible that the temporary livestock feed enrichment requirement could become a permanent feature of the Common Agricultural Policy. Recently the average price support levels for agricultural produnets. including dairy products, were increased by 7.5 percent. This increase will encourage larger production, and the problem of surplus dried milk stocks could continue or even becme more. serious. Unless the current policy is altered, the outlook for U.S. soybean exports to Europe in the near future is not nearly as promising as it has been in the past.
In addition to the constraints imposed on U.S. grain imports by the European Community policies on livestock feed use, another set of )policies also affects European C(ommunity demand for U.S. grain supplies. The European Community grants preferential treatment to imports from most countries in Western Europe, the Mediterranean, Africa, and its former colonies.2 Preferences usually take the form of reduced customs duties. The European Community has given urnilateral tariff preference to developing countries since 1971 on selected agricultural products. The European Community grants a preferential Intariff reduction of 40 percent of the common external tariff on goods

S From 1965 through January 1975, the Yaounde Convention governed European (nnmnnity trade with I8 slb-Saharan Afrienan nations and Mauritiua. On February 28, 1975, the Lome Convention replaced the Yaonnde Convention. The Lome Convention grant free entry into the Europenn Community for 96 percent of the agrienultural exports from 46 developing eointrieo in Afria. the Caribean. and the Pacifle area (AC). No treds preference are granted for European Commnity produfets entering ACP markets tboug i the European Community has "most favored nation" status. Trade with the EuIronevn Community is pajirtienlarly important to ACP countries; : the Community buys 55 percent of their exports and provides 44 percent of their Imports.
The Convention alan creates a .4K2 million find to stabilize ACP export earnings by eoar-ntatlng for ftietuations In world market pr1en of agricultural exports. The fund
-liplie only to a commodity export that brinss In a set percentage of total export revenues. Countries enn request enmpensation when export receipts drop below a certain percentage of the avrnue earning from that prodnet's exports to the European Community over the previous 4 years. The poorest nations will not have to reimburse the fund.








subject to tariffs or a similar reduction for goods subject to variable levies.
What the exact effect of the various European Coimnunity policies
-ll be on U.S. grain exports is unclear. Offsetting this trend and largely hiding it have been the massive increases in U.S. grain exports to the nonmarket countries. As the degree of European Community dependence on U.S. grain supplies declines, however, the potential for American influence on European Community policies also diminishes.
(2) JAPAN
Japan has been the single largest market for U.S. agricultural commodities since the early 1960's. As a result of Japanese policy reevaluation in 1975, Japan is considering expanding short-term stockpiles of grains, soybeans, and sugar. Much of the supply would come from the United States. To finance the program, Japan would impose an import tax on soybeans. The accumulation of stocks from this plan would be gradual, from October 1976 through 1980.
In order to avoid the high costs of stockpiling in Japan, Japan is also exploring the idea of stockpiling wheat, feed grains, and soybeans in the United States. For the United States, this could mean additional farm sales and additional jobs in storage and transportation. The problem is Japan's need for assurance that it could secure these commodities at any time regardless of U.S. trade embargoes or restrictions then in effect.
Prior to 1973, the trend in Japan was toward increased dependence on food imports, with the United States supplying 90 percent of Japanese imports of soybeans, 70 percent of imported feed grains, and 67 percent of imported wheat. The soybean embargo imposed by the United States in July 1973 convinced the Japanese of the necessity to find new ways to assure a reliable food supply.
In 1975 the United States assured Japan that it would receive top priority of access to U.S. crops even if U.S. crop production should decline. In the near future, as the result of an informal agreement with the Japanese, the United States expects to supply Japan a minimum of 14 million tons of grains and soybeans each year. In fiscal year 1975 Japan purchased $3.2 billion worth of U.S. farm products. The figure reached $3.3 billion in fiscal year 1976.

(3) TIlE SOVIET UNION
In the early 1970's the Soviet Government committed itself to a policy of upgrading the diet of its citizens, primarily through increased production and consumption of meat and other livestock products. To accomplish this, large investments were made in livestock facilities and agriculture. Poor grain harvests in 1972 and 1975 presented the Soviet Government with a major policy decision: to import grain or to reduce livestock inventories. The Soviets decided to import grain.
During 1975 the Soviet Union imported at ]east 25.6 million metric tons of wheat and feed grains from other countries. Of the total 14.,5 million metric tons came from the United States. Mclud inc 4 million metric tons of wheat and 10.5 million ietric tons of feed grains. Other








major suppliers to the U.S.S.R. were Canada, Australia, Argentina, Eastern Europe, and Brazil.
In early 1976, the U.S. Department of Agriculture announced additional wheat, corn, soybean, and rice sales to the Soviet Union for fiscal year 1976. These additional sales included 2.7 million metric tons of corn for delivery before September 30; 2.6 million metric tons of corn for delivery- after October 1, 1976; 1.2 million metric tons of hard red winter wheat for delivery after October 1, 1976; 1.5 million metric tons of soybeans and 64,000 metric tons of rice.
The sales for delivery after October 1, 1976, totaling 4.4 million metric tons, were the first reported sales under the 5-year grain agreement signed October 20, 1975.
The Soviet economic plan for 1976-o80 places more emphasis on increasing grain production than on increasing livestock production. The plan sets grain production targets at 215 to 220 million metric tons a year. That is about 21 percent above the average of 1970-75. Meat output is planned to be 9 percent above the previous 5-year average. The Soviets may be contemplating more reliance on meat imports in order to reduce their reliance on world grain markets.
Weather conditions will continue to be the key in Soviet rrain production. If normal weather prevails, Soviet grain production could nearly satisfy feed requirements. In that case, the Department of Agriculture believes, the 1975 grain agreement "probably strengthens the U.S. position for maintaining sizable sales."

(4) DEVELOPING COUNTRIES
In the near future, several groups of developing countries will remain heavily dependent on U.S. supplies of agricultural commodities. While nations such as the Philippines, Pakistan, and India have made real agricultural progress within the past decade, limited arable land and increasing population pressures present a bottleneck to future expansion. These less developed countries will have large grain import requirements in the near future.
Other developing countries such as Kenya, Rhodesia. Thailand, Burma, Mexico, and Brazil have traditionally produced food surpluses. The farming sectors of these countries need modernization in ord1(ler to increase production to keep pace with growing demand.
A third group of nations includes those with food deficits but adequate funds to pay for imported goods. South Korea, Taiwan, and me OPEC nations are examples. Other examples are the resourcerich countries such as Morocco and Tunisia with phosphates, and Bolivia with tin. The foreign exchange earned from their exports provides sufficient funds to allow these nations to import needed food.
The nations presenting the least potential for U.S. commercial agricultral trade are those which also present the most difficult world food prol)lems: th poorest countries with serious production restraints. Nations such as Haiti, Bangladesh, and U'pper Volta do not produce suffIcient food for their populations, and they lack the financial resources to import required amounts. Their economies are particularly vulnerable to high prices of essential grains, agricultural inputs, and fuels. In the short rimun, these countries will depend more on I '.S. food I iI ( n on con merclial trade.





19

B. MAJOR U.S. COMPETITORS
The major competing exporters of wheat and wheat flour 'are Canada, Australia, Argentina, Western Europe, and sometimes the Soviet Union. In fiscal year 1975 these countries produced 171.2 million metric tons of wheat out of the world total of 352 million metric tons. They exported 34.1 million metric tons of the world total exports of 64.1 million metric tons.
In feed grains, the major competing exporters are Canada, Australia, Argentina, South Africa, Thailand, and Western Europe. In fiscal year 1975 these nations produced a total of 134.9 million metric tons of rye, corn, barley, oats, sorghum, millet, and mixed grains. The world total production was 626 million metric tons. These countries exported 23.8 million metric tons out of a world total exports of 62.8 million metric tons.
The major competing exporters of soybeans are Brazil and the People's Republic of China. In calendar year 1975 it is estimated that these countries produced 16.6 million metric tons of seed and 9.5 million metric tons of soymeal. Estimated exports in 1975 were 3.1 million metric tons of seed and 3 million metric tons of meal. Brazilian exports are forecast to rise 19 percent in 1976 as a result of strong government programs to encourage exports of agricultural products.

(1) CANADA
The Canadian Wheat Board was established in 1935 as a quasi-government trading organization that handles the marketing of wheat, oats, and barley in interprovincial and export trade. The board is the sole buyer and seller of grain in Canada. The Canadian Government finances various operations of the board and appoints its five commissioners.
The three objectives of the board are (1) to market as much r' in as possible at the best possible price, (2) to provide price stability for Canadian markets, and (3) to assure each producer a fair share of available markets. Each producer is assigned a share of available marketing opportunities through a delivery quota system. Delivery quotas are stated in terms of the number of bushels per acre that a producer can deliver. The producer may allocate his quota acres to any grain. The wheat board issues delivery permit books indicating the farmer's allocation of deliveries. Quotas may be adjusted by the board as export needs vary.
The board requires that producers market their grain through the board. Although the board has no marketing facilities of its own, it negotiates agreements each year to use privately and cooperatively owned grain elevators. 'When the farmer delivers his crop to the elevator, he receives an initial payment, or support price. A final payment is made after wheat deliveries have been completed for the year and the marketing expenses deducted.
The Canadian Wheat Board is the sole supplier of wheat for export from Canada. This places the board in a strong position to maximize profits from overseas sales. The export price is set at levels that insure the competitiveness of Canadian commodities, but there has been a tendency over the years to attempt to hold grain prices at levels higher
80-611--77----4






20

than those set by the competitive export companies operating from the United States.
( 2 ) AUSTRALIA
The Australian Wheat Board (AWB) is a Government-authorized monopoly with authority for marketing wheat within Australia and for exporting wheat and flour to foreign countries. The Government does not participate in the daily operations of the AWB, but is responsible for establishing guaranteed farm prices and home-consumption prices.
Farmers are guaranteed a set price for a specified quantity of wheat that the AWB expects to export. Each farmer receives an initial payment on the delivery of quota wheat to a storage or port facility owned b)y the AWB. A final payment is made after the wheat is exported.
The AWB has sole authority over export sales. Australia traditionally has followed a destination pricing system to make sure that its wheat remains competitive in overseas markets. This system varies prices according to distance to destination and differing freight costs. Generally the AWB sells c.i.f. to foreign governments and private users, and f.o.b. to developing markets and large international trading firms with offices in Australia. The AWVB may sell directly, or through ag ents, or through private traders.

(3) ARGENTINA
The Argentine National Grain Board (NGB) was established in 10!(; as a semiautonomous agency under the Secretariat of Agriculture and( Livestock. As established, the NGB had broad regulatory powers over grain trading, and operated terminals and port elevators. It exercisedl considerable influence over wheat exports through a license system but was not actually a marketing agent. It did. however, handle direct sales to other governments. while commercial sales were handled by private dealers. Export pricing was largely in the hands of private t ra(e rS.
In the last 4 years the NGB has increased its control over marketing and prices. Argentine producers are required to sell their grains to the NGB. and the NGB sets prices and markets the grain. The post-Peron military government announced in late March 1976 that it. planned to reduce government control over the grain trade and to return the trade to private firms. This change is scheduled to occur at the end of the 1975-76 marketing year. It would eliminate pricing and marketing funt ions and return the NGB to its original status as a regulatory

(4) BRAZIL
The Brazilian Government is not directly involved in marketing and1 exporting. Private traders control the marketing structure althouLrgh the Government promotes trade through subsidies and tax incentives. The United States has become increasingly concerned about the use of tax incentives to promote Brazilian soybean exports. Currentiv, the Brazilian Government maintains a tax incentive program for exports of soyeans, soybean meal. and soybean oil. A value-added






21

transaction tax is levied on soybeans and soybean oil in the domestic market; soybean meal is exempt to encourage domestic usage. When whole soybeans are exported, the full value-added tax, currently 12.5 percent, must be paid. Soybean meal exports, on the other hand, must pay a value-added tax equal to 5 percent, and soybean oil exports are not taxed at all as an incentive to crush soybeans in Brazil. Soybean oil shipments also receive a tax credit to encourage sales, and any profits earned from soybean oil exports are exempt from the income tax. Also, producers of meal and oil may take advantage of loans at preferential interest rates to finance production for export.
On May 11, 1976, the Brazilian and the U.S. Governments negotiated a trade agreement related to soybeans and some nonagricultural products. The Brazilian Government agreed gradually to decrease its export tax incentive for soybean oil and to end the program entirely by December 1977. The export tax system will be phased out in four stages, with the first reduction taking effect on July 1, 1976. Reduction of tax incentives will put Brazilian prices more in line with prices of United States and European soybean oil.












V. U.S. FOOD AID ACTIVITIES SINCE WORLD WAR II
This chapter presents the history of U.S. food aid efforts since World War II. Subsection (b) (3) of the next chapter will examine S)iMne of the specific characteristics and uses of food power based on the provision of food aid to needy countries.

A. U.S. EFFORTS To PROVIDE FOOD RELIEF DURING AN-D IMMEDIATELY ArrER WORLD WAR II
Since the middle of World War II, this country has continuously given food aid to needy countries through one program or another. I)nring World War II, slightly over $6 billion in agricultural coinindities was shipped through the lend-lease program. More than 60 percent of the lend-lease commodities was food, mainly meats and (aidrY products. Grain exports were a very small portion of lend-lease aid. In the immediate post-World War II period, the United States gave food aid through 'two separate channels: The bilateral Governinent and Relief in Occupied Areas (GARIOA) program, and the multilateral United Nations Relief and Rehabilitation Adininistratin (UNRRA).
(1) GARIOA
The GARIOA program was begun in 1949 in order to meet the overhea-d costs of U.S. occupation forces and the costs of providing suppI)lies to be distributed to civilians in Austria, Germany. Japan, Korea, and other occupied areas to forestall starvation and severe physical hardship. Unfortunately, because GARIOA aid was financed through regular Department of the Army appropriations, prior to fiscal year 1947, separate totals are not rea-dily available for the amount of agricultural commodities provided during the period of especially severe food need in Europe and Asia immediately after the end of the war. On the basis of other data, however, it would appear that (GARIOA food exports for fiscal years 1945 and 1946 were about 20 o 5 percent of those shipped through UNRRA.

(2) UNRRA
TNRRA was created as an international organization in November 1943 by the United States and 42 other countries, but did not begin to provide significant amounts of material until the first half of fiscal year 1946. Essentially the program was an outgrowth of lend-lease activities whereby material assistance had been provided to support all portions of the recipient's economy, not just certain sectors. UTnlike lend-lease, INRRA was totally a grant program with the United States eventually contributing 73 percent of the $2.9 billion in aid distributed by UNRRA. Foodstuffs and animal feed comprised over
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$1.2 billion of the U.S. contribution. U.S. support of UNRRA was terminated in early 1947 mainly due to the onset of the cold war. GARIOA and UNRRA aid were especially significant during the severe winter of 1946-47 in Western Europe when the United States shipped over 81/2 million tons of grain to forestall famine there.
In fiscal year 1948, the United States gave over $1.5 billion in agricultural commodities through seven separate aid programs: the end of UNRRA, $11 million; the beginning of the Marshall plan. $115 million; U.S. foreign relief, $205 million; the International Refugee Organization, $12 million; GARIOA, $830 million; Greek-Turkish aid, $79 million; and the interim aid program, $317 million.
For the purposes of this study, probably the most significant fact about the immediate postwar period was the reemergence of wheat as a major component of U.S. exports. From a level of only 56 million bushels of wheat and wheat products exported in fiscal year 1945, exports jumped to 318 million bushels in fiscal year 1946, 367 million bushels in fiscal year 1947, 479 million bushels in fiscal year 1948, and peaked at 505 million bushels in fiscal year 1949.

(3) 31ARSHALL PLAN
Much of the wheat was provided through the European Recovery Program or Marshall Plan. The European Recover- Program was formulated when it became obvious that European recovery from the Second Vorld War would not be accomplished in a few years. The severe winter of 1946-47 and the withdrawal of the United Kingdom from its role in Greece acted as immediate catalysts in the formulation of some sort of American response to the political and economic situation in Europe. In early June 1947, in a speech given at Harvard University, Secretary of State Marshall proposed, in general terms, a joint program for the economic recovery of Europe. Following the receipt in late 1947 of a number of reports on the European economic situation by several U.S. Government groups and agencies, and of joint proposals from the Europeans, the Truman administration proposed legislation which became the Economic Cooperation Act of 1948 in April 1948.
The primary aim of the program was twofold: First to help Europeans recover from the direct effects of the war. and second to assist all sectors of the European economy to become self-sustaining within the projected 4-year life of the program. The slow rate of recovery of agricultural production combined with the effects of bad weather made food imports a high priority in the first 15 months of the program. Of the $4.2 billion in aid actually furnished during this initial period, 39 percent consisted of food, feed, and fertilizers. By 1951. food consumption in Europe had virtually reached prewar levels, but sirificant food imports were still required. During the entire Marshall plan program, some $13.5 billion in aid of all types was provided. Of that $13.5 billion, 29 percent consisted of food, fertilizer, and feed.
The impact of aid on U.S. agricultural exports during this period was very great. Available data indicate that for both fiscal years 1949 and 1950, ECA and GARIOA funds financed over 60 percent of total U.S. agricultural exports. For grains, the percentage financed through






24

the two programs was even higher: in fiscal 1950, 87 percent of $930 million in grain exports. Extremely high percentages of other U.S. agricultural exports were also financed through these two programs inll this period (see table 3).
In 1950, and again in 1951, the Congress passed special bills to earmark Marshall plan funds for food aid. The first bill, the Yugoslav Emergency Relief Assistance Act of 1950, authorized the use of $50 million in previously appropriated Marshall plan funds for famine relief in Yugoslavia. The funds were requested by President Truman at a time when the Yugoslav-Soviet split was a pressing issue. The second bill, the India Emergency Food Act of 1951, authorized the President to lend India $190 million in Marshall plan funds in order to purchase 2 million tons of U.S. grain to forestall a famine. President Truman had originally requested that the $190 million be made available as grant aid but was turned down by Congress.
The actual contribution of the several U.S. food aid programs to the stability of Europe in the immediate postwar period was substantial. In addition to humanitarian considerations it seems likely that without the $9 or $10 billion in agricultural commodities provided during this time, the political situation in Europe would not have evolved nearly as favorably for the continuation of democratic government.

1I. PUnuc LAw 480 (TimE: D oo) FOR PEACE PROGRAM)
In 1953, three bills were passed which directly related to the future Public Law 480. In June, Congress passed S. 2112, authorizing the gift Of 1 million tons of surplus wheat to Pakistan to avert a famine. In July, S. 2294, authorizing the President to give $100 million worth of surplus commodities for worldwide famine relief, was passed. Also in July, section 550 was added as a floor amendment to the Mutual Security Act, authorizing the provision of surplus U.S. agricultural conmmiodities to needy countries in exchange for the local currencies of the recipients.
On July 8. 1953, the Senate Committee on Ariculture and Forestry reported a bill entitled the Agricultural Trade Development Aot of 1953. This bill gave the President authority to sell surplus U.S. agricultural commodities for foreign currencies similar to the authority in the newly enacted section 550 of the Mutual Security Act. The Senate passed the bill in July 1953, but the House did not act on it during the remainder of that session. The bill was considered during the secand session of the 83d Congress and passed as Public Law 480, the A cultural Trade Development and Assistance Act of 1954. As the titlo indicates, the law had two basic purposes. 'The first was to expand U.S. t ade in order to reduce large stocks of agricultural commodities which were expensive to store, and which acted as a damper on farm prices. The second purpose was to use U.S. agricultural abundance to assist other nations. The goals specifically stated in the act were to develop new markets for American farm products, to dispose of surplus U.S. agricultural conunodities, to combat hunger and ~malnutrition, to encourage economic development in developing countries, and to promote the foreign policy of the United States.
Titlo I of Public Law 480 provided for sales of U.S. agricultal coanmno(itiis for the national currencies of the recipient countries.





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Title II provided for grants of surplus agricultural commodities to friendly nations for famine or disaster relief or directly to needy peoples of countries without regard for the friendliness of their governments. Title III authorized the barter of surplus agricultural commodities for strategic and other raw materials produced abroad. Between 1955 and the end of 1965, the United States sold over $9.3 billion worth of agricultural commodities for local currencies. Since 1954, the act has been extended, amended, and reorganized many times. The 1959 extension authorized long-term dollar credit sales to friendly nations 'and the 1966 extension was called the Food for Peace Act.
Mainly as a result of problems with rapidly accumulating amounts of local currencies from a few major Public Law 480 recipients, the act was completely restructured in 196. Although the basic purpose of the amended act was no longer disposal of surplus agricultural commodities, the emphasis was still on developing markets and expanding agricultural trade. As the policy section of the 1966 act stated:
The Congress hereby declares it to be the policy of -the
United States to expand international trade; to develop and expand export markets for U.S. agricultural commodities; to use the abundant agricultural productivity of the United States to combat hunger and malnutrition; and to encourage economic development in the developing countries, with particular emphasis on assistance to those countries that are determthed to improve their own agricultaural production; and to promote in other ways the foreign policy of the United
States.
In addition, major structural changes were made in the arrangement of authorities contained in the various titles of the bill.
In keeping with the policy changes that were made in 1966, section 103(b) of Public Law 480 was amended to direct the President to assure a progressive transition from sales for foreign currencies to sales for dollars or convertible local currency credits. The transition from local currency sales was completed by the end of 1971. The amendment of section 103 (b) changed the thrust of Public Law 480 from a program which had generated large quantities of local currencies from cash sales to a program which generated mostly dollars from long-term credits. Except for amendments concermng permissible local currency uses under the act and establishing a legislativeexecutive advisory committee, there were no significant changes made in Public Law 480 itself between 1966 and 1975.
However, as the first of what were to be several chances in Public Law 480 policy, significant amendments affecting Public haw 480 were included in foreign aid legislation in 1973 and 1974. In the 1973 Foreign Assistance Act, section 40 forbade the use of Public Law 480 local currencies for common defense purposes without specific congressional approval. In section 55 of the Foreign Assistance Act of 1974, the President was directed to allocate not more than 30 percent of U.S. concessional food aid in fiscal year 1975 to countries other than those on the United Nations list of countries most seriously affected by the current economic crisis, unless he could demonstrate that the food assistance was solely for humanitarian purposes.






26

In 1975, Ptiblic Law 4SO itself Avas aiiiended in several respects by the International Developinent and Food Assistance, Act of 197:5 (Public Law 94-161). Among the most important chango-es -were: (1) additioil. of a reqiiii-eiiieiit that the President gli-e priority coilsideration to inakii-io- avail-,Lble the inaximuni. feasible volume of food commodities to those countries affected by food shortages and unable to nieet their immediate food requirements on a commercial basis; (2) the creation of a new section 111 mandatino-, with a. possible exception, that 7 5 percent of title 11 food aid be allocated to countries whicli have a per capita GNP of less than $300 a year and are unable to sectire their iii-imediate food requirements through. commercial channels or their own production; (3) the establishment of a legislated minimuln of 1.3 million tons of agricultural commodities to be distributed through title II errant pro(rranis; and (4) the incorporation of the "New Directions .1 policies from sections 103 and 104 of the Foreign A.ssistaiiee Act in Public Law 480 local currency iise and self-help coi-isiderations.

(1) SIZE AND 131PACT OF PUBLIC LAW 480
From fi (-al vezir throti.(rh the end of caleiidar year 1975, niore th'til ".2-1.2 1).Illoll ill farin pi-odticts haN-e been shil)ped throucrh Ptiblic LaNN- 41,So pro-ocri-aiiis. About $10.9. billion, aljiiost olie-lialf by vallie., of tile C03111)10ditics s1j*j)pc(t cwlslst( d of wheat and N\-!)( at i)i-odiiets. Another
hillinii was (,xpen(l( dt for i-ice aiid $1 billioji for
corn durlmr this pei-lod. Ill tile, fii-st 12 fiill yeai-s of the proaraiii, Pill)lie Law -Iso coi,.ii)-loditie,--; nveraged, by i-aliie., niore, than oiie-qiiarter of all V.S. -lo-l-Willt-111-al exj)orts. Clcai]y, food aid coiitimied, thoiipli at lowcr pc)-c( nta,(res ofm-ei-all agricifltiu-al tnad(, tl)aii in the iiiiiiiediate y(,ai-s. to haN-e .i larwo. lnil)aet oii V.S. acyricult-tiral ex1)oi-ts. It ivts ,lot iijitil fis-cal year 1969 that 11tiblic Law 480 exl)oi-ts coil) pris('(1 ]( Ss th"111 I.-) J)elveid of tile, total i-alm of U.S. a cri-ictilbiral ex1mi-ts. Sliic( fisc,d -vcar 1973 less thall 5 Percent of the v"Ille of T7.,I ftO'CiCtlittiral ( xpoi-ts hai-e becii siij)l)lled by Public Law 480-1)artly becaiise of lliiiitatloiis ijiij)osed by Ptiblic Law 480 biidcrets. Receilt total I)i-orrrani costs for Piil)ll(- Law 480 haN-e raii(red fi-oin '$1.2 to S1.4 billioii a v(,ar. The total cost of the i)i-o(rraiii, which inchide.- the acqiilsitioll cost--, of tile cowillo(litWS, oceall trallspol'tatioll costs, storaov cha I. 111telv4. .Illd oth(,r expciises, caiiie to approxiinately S31.8 billioii foi, t1w 1)ci-iml fi-oiii t1ii-migh 1974.

(2) MAJOR. PUBLIC 1,AAV 4 ;O IH-'1(-'1l'lf:NTS
IeN-( 11 cmlilt I-iv-, accooWed foi- $15.6 billion or 64 livi-coiit of tot'll Pliblic L:INN ASO sale all(l (lojifitioiis inade froiii 195-1 throiirh the NI(I (J 197--) (total (l(,i-1\-c(1 fi-mn inconiplete 1975 data). Othei- flian, ])( ilvr t'le 1,11-(,-(-A recil)Wiik ()I* Ptiblle Law 480 aid, they haN-e little ill coi-imion. T]w i-angr(, fi-mn cmijiti-i(,s t-liat, an, still N-ery Pool-, slich as
:111(l to tll() e, "11ch as jsnacl alld Poland, that could be



Tndl;i 1,; I'ar thc P111dic 1,:I\N, TS() ahl 1-ccil"Wilt. 11 was tile
W La\\- ISO a*d e:lch \,ent. h-olll fi,- cal 19.5's






27

through fiscal year 1971. Deliveries during that 13-year-period were never less than $200 million a year. Particularly large amounts were shipped in fiscal years 1960, $017 million; 1965, $415 million; aid 1966, $595 million. Because of good grain crops in the late 1960's and for domestic political reasons, the program was relatively small for fiscal years 1973 and 1974. The fiscal year 1975 program was over $275 million.
2. Pakistan: Total Public Law 480--$1,833 million; Title I, $1,610
million; Title II, $223 million
Public Law 480 shipments have been made to Pakistan every year since 1954. Even though $1,055 million of the $1,833 million total was shipped prior to fiscal year 1965, the program has averaged about $90 million a year for the last 9 years except for fiscal year 1974.
3. South. Korea: Total Public Law 480--.l768 million; Title I, $1,266
million; Title II $502 million
Like Pakistan, South Korea has benefitted from Public Law 480 every year since the program began. Except for fiscal years 1959, 1960, and 1974, shipments have been at least $60 million a year since fiscal year 1958. The program was relatively large between fiscal years 1968 and 1973. Over $950 million in Public Law 480 commodities have been shipped since fiscal year 1968.
4. South Vietnam: Total Public Law 480--$1,768 million; Title I,
$1,184 million; Title H, $327 million
Virtually all Public Law 480 deliveries to Vietnam took place after fiscal year 1962. The program in South Vietnam was similar to security supporting assistance in that it was a budgetary support measure that freed South Vietnam's foreign exchange reserves for uses other than importing food. The program in South Vietnam was also unique in that the United States granted back practically all of the title I local currency receipts to be used for common defense purposes until Congress legislated an end to this use of local currencies. For fiscal year 1974, the program for South Vietnam amounted to $231 million.
5. Yugoslavia: Total Public Law 480--$1,133 million; Title I, $864
million; Title 1I, $268 million
Essentially all Public Law 480 shipments to Yugoslavia were made from 1954 to the end of fiscal year 1966, when the United States was actively supporting Tito's independence from the Soviet Union.
6. Indonesia: Total Public Law 480-$934 inlion; Title I, $830 million; Title II, $104 million
The program for Indonesia is unusual in that the majority of the commodities have been delivered since fiscal year 1966-a period during which U.S. food aid was declining. In fact, over 70 percent of the total has been delivered since fiscal year 1968. For fiscal year 1975, $46 million was programed for Indonesia.
7. Jrazil: Total Public Law 480--$859 millWin; Title I, $547 million;
Title II, $312 million
Brazil is the largest recipient of Public Law 480 aid in Latin America, having obtained almost one third of the program's deliveries to that region. Of the $859 million total for Brazil, 62 percent of Public
80-611-77-5






28

Law 480 commodities were shipped prior to fiscal year 1965. From fiscal year 1966 through fiscal year 1971, the program fluctuated between $10 and $80 million annually, averaging about $50 million a year. Since fiscal year 1972, the program has been less than $10 million a year.
8. Egypt: Total Public Law 480--$89 million; Title I, $625 million;
Title II, $204 million
Of the $829 million in Public Law 480 deliveries to Egypt since 1954, $G30 million worth was shipped during fiscal years 1960 to 1965. There was a small program in fiscal year 1966, and the rupture of diplomatic relations following the 1967 Arab-Israeli war effectively marked the end of Public Law 480 until fiscal year 1974. For fiscal year 1975, a $117 million program was established.
9. Israel: Total Public Law 480-4625 million; Title I, $563 million;
Title II, $62 million
Israel received Public Law 480 deliveries from the beginning of the program until fiscal year 1973, with a variation in deliveries from $19 million in fiscal year 1964 to $60 million in fiscal year 1973. Less than $2 million in title II funds were programed for fiscal year 1974, and only $8.6 million of title II deliveries took place in fiscal year 1975.
10. Turkey: Total Public Law 480-4-8561 million;, Title I, $419 million;
Title II, $142 million
Of the $561 million in Public Law 480 commodities shipped to Turkey since 1954, almost $380 million, or over two-thirds, was sent in the first 10 years of the program. Except for $121 million in commodities delivered in fiscal years 1969-71, the program in Turkey has been quite small since 1965.
11. Poland: Total Public Law 480-$519 million; Title I,
Title II, $76 million
Except for a small title II program which ran from fiscal year 1968 through fiscal year 1970, all of the commodities shipped to Poland under Public Law 480 were financed on a dollar/zloty payment schedule which amounted to a 100-percent dollar repayment. Also, the United States did not grant back any of the currencies involved in the transaction as it did in other Public Law 480 countries. Shipments made under the dollar/zloty arrangement were completed in fiscal year 1964.
(3) POLITICAL PI IOBLEMS ARISING FROM PUBLIC LAW 480 ACTIVITIES
From the beginning, the fact that the primary objective of the program wa s to export surplus stocks of agricultural commodities acquired through Commodity Credit Corporation price support operat ions worked against the diplomatic success of the program. The secon(Idary objective, to provide food aid to combat famine and malnutrition was sometimes overlooked. Countries competing with American food exports complained that the program was subsidized dumping in Third World markets. A different type of complaint was that the large scale Public Law 480 deliveries allowed the recipient countries to avoid






29

devoting the needed resources and attention to development of their
own agricultural sectors. The policies of many less developed countries favoring cheap food for urban dwellers at the expense of rural agricultural development have been cited as examples. Another problem involved political and economic difficulties arising from U.S. accumulations of excess local currencies in the early years of the program. Some of these excess local currencies are still being held by this country.
Even in recipient countries, problems and controversies have arisen. In India, for example, the reality of food needs notwithstanding, there has been resentment at being dependent upon the United States for such a large portion of its critical grain needs. The Indians have felt that the dependency relationship was demeaning. Also, the huge amounts of local currency indebtedness to the United States caused by title I local currency sales--over $3.2 billion by fiscal year 1972becanme a political issue in India as fears of "U.S. control over the entire economy" were expressed. In some countries, the U.S. surplus commodities available did not coincide with the food requirements of the recipient. For example, a recipient country may have wanted rice when the United States had surplus wheat, or vice versa. Under those circumstances, recipient countries could claim that the surplus disposal aspect of the program rather than their needs governed what they received. Finally, recipients have complained about the various legislated requirements in the law (self-help, local currency limitations, etc.) as preconditions for receiving aid. These preconditions were seen as Auierican meddling in their internal affairs.
The high price/tight supply situation in fiscal year 1974 brought forth a completely different set of problems regarding Public Law 480. Because of the limitations of section 401 of the act, the "availability" of most Public Law 480 commodities was determined to be low. The surplus to be channeled into Public Law 480 had suddenly disappeared. Now the primary consideration was adequacy of the program in light of worldwide short supply conditions and famine in some areas. The severe program cuts made in fiscal year 1974 were extremely damaging diplomatically since many less developed country recipients were simultaneously experiencing food shortages and increasing costs for fuel, fertilizer, and food imports. In addition, the provision of a large portion of the program to South Vietnam and Cambodia, political clients, led to congressionally initiated changes in Public Law 480 directing that specified portions of the commodities sold under title I go to countries which were most seriously affected by food shortages. With the disappearance of the surpluses upon which the existence of Public Law 480 was predicated, the program was forced to compete directly with other U.S. aid efforts for Government financing and with U.S.,Government agricultural exports for available commodities.








VI. FOUR BASIC MARKET TYPES FOR U.S. GRAIN AND SOYBEAN EXPORTS
There are four distinct types of markets for U.S. agricultural comm1oditics. While there are many characteristics of the markets for U.S. food exports, the most significant for an analysis of the costs and benefits of the use of food power are selected here. It should be noted that there are those who believe, either on moral grounds or because of ideological opposition to any interference with the operation of free markets, that short of war, food should not be utilized as a means to achieve a diplomatic or foreign policy purpose. While, in the final analysis, this view may affect decisions on whether or not food power should actually be used, this position is only one of several to be considercd in this study.

A. Tin:E DIFFERENT MARKET TYPES

(1) DEVELOPED MARKET ECONOMIES (DUIE-S)
liis category includes the countries in the OECD, that is, the Vinited States, Canada, Western Europe, Japan, Australia, Turkey, and New Zealand. In these countries one encounters relatively freely functioning market systems for most goods and a generalized commnitment to free trade. The DME's are members of the General Agreement on Tariffs and Trade (GATT) and are obligated to observe GATT regulations on trade matters. While the GATT has not been very effective in removing impediments to agricultural trade, the institution has been helpful in other areas and has acted as one of the many links among the DME's. The types of trading relationships that exist between the United States and the DME's are those between equals.
In terms of trade in grains and soybeans, this group contains the arrest exporters of these commodities (Canada, Australia, and the Ignited States) and some of the largest importers of livestock feed (Jap bn the United Kingdom, West Germany, and the Netherlands). Not withstanding the high grain import levels of some DME's, all have relatively efficient agricultural sectors. For example, the Japanese, adn:ittelly at high cost, have bwen self-sulfficient in rice since the early 1950's.
'lhe developed market economies inclu(le the major economic aid giving countries and, if one includes those acceding to the Food Aid conventionn of the International Grains Agreement, the major cont ril)utors of food aid(l to d(leveloping countries. The DIE countries also are the largest export market for U.S. commercial agricultural and nonagricult ural trade. Total I'.S. agricultural exports have recently increase( to over $22 billion a year. Of this $22 billion, over $10 billion is sent to the I)1E's. While the United States possesses great economic power. little that it exports to the DME's could not be obtained by tlhn- frequently at higher cost or slightly lower quality, and with loger deli very t ies-from other DME's.
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The developed market economies are also partners in multilateral security arrangements. For the West Europeans and Canadians, NATO is the focus of these security arrangements. For Japan, Australia, and New Zealand, there are bilateral security treaties with the United States. Finally, particularly with the West Europeans, social and cultural linkages have been established through the great migrations to this country in the 17th, 18th, and 19th centuries.
Because of the economic, cultural, political, and security linkages which exist between the United States and the DME's, the imposition by the United States of unilateral restrictions on agricultural exports to them for political reasons would be highly unlikely, and in the event they should be imposed, the DME's might well retaliate with trade restrictions of their own.
In dealing with the countries in this group, the United States can, and does, use control over U.S. exports to accomplish some negotiated changes in their agricultural or trade policies. However, the linkages to nonrelated policies are fairly tenuous. Thus, it would be unlikely that the United States would succeed in influencing German policy toward NATO or toward the Soviet Union through a threat to decrease grain or soybean exports.
(2) THIIIRD WORLD COUNTRIES
The second category of agricultural markets is the Third World countries. Countries such as Algeria, Mexico, or Brazil are characterized by relatively low per capita incomes, high rates of population growth, and low rates of literacy. Most have very large rural populations. The economies of Third World countries are characterized by the existence of some sectors that are capable of competing in international markets. They possess raw materials or manufactured products for which international markets exist. Their economic growth rates, as a group. have been reasonably high over the last 15 years. However, partly because of rapid population increases, per capita incomes have not risen rapidly. The agricultural sectors of Third World countries employ large portions of their total labor force, but inefficiently. And because of the rapid increases in population in the last 20 years, Third World countries as a group have been able to maintain their per capita nutrition levels only through increasing imports. The countries of Africa and Asia. net exporters of 3 million tons of grain a year in the period 1934-39. have in the last few years become net importers of over 43 million tons of grain a year.
While extremely varied, the economic philosophies of the majority of Third World countries have tended, in the last 15 years or so, to become increasingly Marxist or at least statist. In most of these conntries, the government sectors of the economy are quite large and some variant of socialism is the official economic philosophy. The trading structures of Third World countries are likewise extremely varie(1, though for the most part agricultural importing and exporting is conducted by government organizations. Third World countries. 1 p)a'rticularly Venezuela, Mexico, and Algeria. have been the most militant advocates of the New International Economic Order proposals in the United Nations and at UNCTAD. Because they possess primary commodity exports of some consequence in international trade "Ind finl(






32

their commodity-related income highly variable, they have supported proposals for indexation, producer cartels, and the other provisions of the New International Economic Order.
Growing Third W orld nationalism has manifested itself in widespread nationalizations or confiscations of property owned by developed market economy countries and in growing antipathy to outside investment. In trade matters, Third World countries do not generally support trade liberalization, but instead advocate nonreciprocal concessions from the DME's. Demands for nonreciprocal trade benefits and for the creation of many commodity agreements have not been supported by the United States, though the United States does maintain a generalized system of tariff preferences. The Third World countries show a combination of militant aggressiveness when dealing with commodity or trade matters in international forums and appeals to the moral and humanitarian traditions of the United States when asking for economic aid or negotiating for Public Law 480 purchases. Trade relations between the United States and Third World countries, GATT membership of some notwithstanding, are those between unequals.
(3) FOURTH WORLD COUNTRIES
The Fourth World countries are the approximately 45 countries whose per capita GNP's did not exceed $270 a year in 1974. Countries such as Bangladesh, India, Chad, Mali, and Afghanistan are characterized by extreme poverty, very high population growth rates, large rural populations, and low rates of literacy. Fourth World countries possess relatively few natural resources per capita upon which to build a base for development or from which to earn export revenues. Because of their high population growth rates and inefficient agricultural sectors, they have become large-scale importers of food grains in recent years. But unlike a number of Third World countries, they are unable to finance these needed food imports because of low foreign exchange earnings. As a result, they are heavily dependent on food aid. While Third World countries have provided the leadership and support in international forums for proposals to create a New International Economic Order, the Fourth World countries have generally been somewhat less concerned with such matters either because of their lack of resources or for ideological reasons. Many Fourth World counI ries. however, reflect the same statist or Marxist orientation as their Third World1 brethen in the economic organizations of their societies.
Finally, it should be noted that the kinds of social and cultural ties lthat exist between tlhe United( States and the European-developed market ecoiomies do not exist with most Third and Fourth World count ries.
(4) TIHE NONMIARKET ECONO-1IES
The last group of coullltries, I the 110nonmal-et economies, i1elides tlhe InIajor Conuiunist countries : the Soviet 1Union, the People's Republic of China, anld tle East European Coimmist states. This group presnls almost mirror image of the developed market economies. In 1110 nonmarket eonoles, opelln markets (1do not exist to help d(letermine )price/(lquant ity relationshilpS. Almost all economic activities are planned or controlled by the state. All normal trading relationships





33

with nonmarket countries involve dealing with state trading agencies. There are no private dealers in grain or other commodities. At the present time, except for Poland, Hungary, and Romania, the GATT does not apply to trading relations with these countries. And, unlike the developed market economies, there are no common ground rules and mores governing trading behavior. With four of the nonmarket economies, Cuba, Vietnam, Cambodia, and North Korea, all U.S. trade is currently embargoed.
Ideological differences between the United States and the nonmarket economies dominate their behavior toward each other. The Communist countries are potential military adversaries in Europe and Asia. As Vietnam and, more recently, Angola illustrate, they are quite willmo' to intervene or overtly support groups whose interests are antithetical to those of the United States. Without belaboring the obvious., the activities of the Communist countries are the main reason for the existence of NATO and the bilateral defense arrangements between the United States and other developed market countries. In economic philosophy, the Communist countries present themselves as the future alternatives to the market economies of the developed countries. Finally, and most significantly for this study, the collectivized agricultural sectors of the nonmarket economies, particularly the Soviet Union and Eastern Europe, are characterized by relatively frequent crop failures, inefficiency, and the need to devote large amounts of resources to obtain relatively low outputs. In the last 4 years, the nonmarket-economy countries have imported large amounts of wheat and feed grains from this country and other developed market economies.
Commercial dealings with the Soviet Union or Eastern Europe can be looked upon as a system of negotiations between equals. That is, unlike the economically weak position of Third and Fourth World countries, the nonmarket economies lay claim to economic equality with the developed market economies. Because of the adversary leadership which exists in military and political arenas and because of the lack of common values, steps by the United States to use agricultural exports in a political manner against non-market-economy countries would be much less controversial than similar steps against developin and developed market economy countries.

B. TDPLO MATIC LEVERAGE IN THE FOUR BA SIC MARKETS
Identification of the four major market types for U.S. food exports. leads to speculation on the costs and benefits arising from the use of U.S. food power in these markets in certain specified situations.
Starting with the most extreme case--a general war-U.S. goals would most likely be the same as in World War II: (1) To feed this country: (2) to provide as much assistance as possible for its allies, and (3) to deny all food supplies to the enemy. Under wartime conditions" it is most likely that the food needs of nonallied Third and Fourth World countries would be considered on a pragmatic basis. That is, once the other three goals had been met, their needs would be considered in light of the resources available. It should be noted that since the end of World "War IT. the less developed countries have moved from a position of self-sufficiency in food to one of quite high





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dependence on imports. Under general war conditions, the less developed countries would be much more seriously affected as a group than was the case in World War II.
More difficult diplomatic problems would arise under conditions short of war. In analyzing the potential for food power under these conditions, it is necessary first to examine the economic and political circumstances of the buyer of agricultural commodities or food aid recipient. Following this analysis, the effectiveness of a deliberate food policy of some kind can be evaluated.

(1) DEVELOPED MARKET ECONOMIES
The United States has not possessed food power based on the provision of food aid to the developed market economies since the early 1950's. However, the situation with regard to market control food power is significantly different. In the case of a wheat, feed grain, or soybean cutoff by the United States some of the developed market economies would be unable to obtain their supplies elsewhere. For exomple, on the basis of size of imports alone, Japan is the country most dependent on U.S. agricultural exports. In fiscal year 1974, Japanese imports of all U.S. agricultural commodities were $3.3 billion; the next largest single buyers, the West Germans, and the Netherlands each purchased $1.5 billion in agricultural commodities. These countries are perhaps the most vulnerable to U.S. threats to curtail its agricultural exports. But because of the many common trade, security, and cultural ties which exist, a serious conflict between the United States and the West Europeans and Japanese over food supplies is most unlikely in the near future. However, the desire of the Japanese to conclude an unofficial long-term supply agreement with this country (see chapter VII(D) for details) is one manifestation of Japanese awareness of U.S. market control food power.
In fact, because of the other linkages and close commercial relations that exist between the developed market economies and the United States, agricultural trade issues have in the past been the source of extensive but lower level conflict. Because the participants are all part of the same value system, they have not hesitated to raise agricultural trade matters for resolution. Witness the annual intra-European Community arguments over the common agricultural policy, the 1962 United States-European Community "chicken war," and most recently, the controversy over European Community moves to add some of its surplus dried milk to livestock feed in order to fortify it,--a process previously undertaken with U.S. soybeans. This substitution gave rise to complaints by U.S. interests that imports of soybeans were being unfairly limited. Here the issues have seldom been those of life or death ibut rather of relative economic gains or of satisfying domestic pro(dcer interests.
In addition, because of their healthy economies, the developed market economies could probably make arrangements to obtain most agricultural commodities from sources other than the United States in most years. The long-range results of the U.S. soybean embargo of 1973 are illustrative. Following the imposition of the covybean embargo, in June 1973, the West Europeans and .Japanese, the countries most seriously





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affected by the embargo, financed accelerated soybean development ill Brazil. The result of this financial support was the acceleration of the rapid growth of a Brazilian soybean industry that is threatening the virtual monopoly on the world soybean trade heretofore enjoyed by the United States.
Rece-lit trends in United States-European Community agricultural trade whereby theCommunity is purchasing a smaller percentage of overall U.S. agricultural exports, even though the dollar amounts continue to increase, could paradoxically be viewed as favorable to longer term U.S. interest. This is true because the inverse of the European Community's decreasing percentage is the increasing percentage available for other countries-including those, such as the Soviet Union and China, from which political concessions might be obtained. Also, because of high world demand and the increased diversification of U.S. buyers in recent years, United States-European Community agricultural problems now occupy a lower level of priority than when large grain surpluses existed and U.S. farmers were concerned about access to the European Community through the variable import levies of the common agricultural policy.
(2) NON31ARKET ECONOMIES
Recent ain trade with the Soviet Union and the People's Republic of China7hould be placed in a special category. The size of recent Soviet (and Chinese) grain purchases is unprecedented. As of May 5, 1976, the Soviet Union had purchased 16.5 million tons of the 1975 U.S. grain crop. This amount, to one buyer, is almost equal to all Canadian grain exports in fiscal year 1974. The shortfall in the 1975 Soviet grain crop meant that the Soviet Union imported more than 31 million tons from the developed market economies. Were this amount, equivalent to 15 percent of a normal Soviet grain crop, not available from the developed market economies, the consequences would have been very serious for the Soviet Union. The sheer size of these needs could provide the United States with substantial diplomatic leverage in its relations with the Soviet Union, if it should choose to exercise it.
If the United States were to decide to use its food power based on market control to pursue political goals in addition to economic gain, the issue would become that of weighing the probable reaction of the Soviet Union to a U.S. demand for linkage of grain shipments with other concessions. An analysis of the strong negative response of the Soviets to the Jackson-Vanik amendment to the Trade Act of 1974 could provide some indication of the limits of this type of linkage Politics. While the circumstances surrounding any future use of U.S. food power against the U.S.S.R. would -most likely involve a dif ferent set of conditions, the reaction to the Jackson*-Vanik amendment provides some indication of the response this country might expect in circumstances short of a general Soviet crop failu6.
In. recent years, the use of grain directly as human food in the V.&S.R. has been less than .50 million metric tons a year. When conipared with total Soviet grain production of from 140 million to -200 million metric tons a year, this I eaves significant amounts for livestock feeding and other uses. And, it should be noted that more than half of

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the recent, large Soviet grain purchases from the United States have consisted of feed grains. What this means is that if the U.S.S.R. did not want to pay the political price demanded by the United States in any food power bargaining situation, it would calculate the costs mostly in terms of reduced livestock production. This is a different situation than calculating the cost of failing to receive food grains in terms of human lives lost. It is also a situation which, because of past Soviet willinlgness to view meat consumption as nonessential, would present greater problems to U.S. policymakers in determining what value the Soviets might place on U.S. feed grain shipments.
A further difficulty arises in assessing the relative importance of grain imports to the Soviet economic system. Some American analysts have argued that agriculture should be considered one of the most important areas to the Soviet Union, as important as new technological developments, because it has been one area in which the Soviet economy has consistently been unable to perform adequately. By this reasoning, while grain is not a strategic commodity by developed market economy standards, it is by Soviet standards. Thus, if the United States wpre to calculate the weight to be given to U.S. grain in any negotiations with the Soviet Union, it should be considered quite important and worthy of important concessions in return. The inverse of this reasoning, that grain is of relatively low importance, could provide a different set of U.S. responses. Paradoxically it would be possible to use grain more readily as a diplomatic tool in dealing with the Russians if it were considered low priority. Then the United States could threaten to decrease its shipments of grain at the beginnina of a series of diplomatic steps in order to indicate U.S. seriousness about some issue, rather than later in the series.
Either use or failure to use agriculture in a bargaining situation with the Soviet Union would tend to cause controversy in this country. If the particular Soviet policy response desired in exchange for the grain were obtained, some would claim that the United States gave away its advantage prematurely or too cheaply. If, on the other hand, the Russians found the price too high and refused the deal by responding in some dramatic fashion, the accusation would be made that bargaining over grain should not have taken place to begin with. And, if the U.S. Government did not attempt to use food power at all it could elicit charges of ineffective government.
(3) THIRD AND FOURTH WORLD COUNTRIES
The diplomatic leverage that might be available to the United States from its use of food power against most Third and Fourth World countries is based on food aid rather than on market control. The reason for this is simple: Except for India, Bangladesh, and perhaps Pakistan, the total amounts of food shipped by the United States to any one Third and Fourth World country have been small enough so that a recipient could have obtained adequate quantities elsewhere had t he foreign exchange been available.
Because of the huge variety of U.S. food aid recipients, it is impossible to generalize about whether food aid food power is likely to exist. Instead, it is necessary to analyze the kinds of diplomatic leverae-






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if any-which might become available to the United States as a result of the giving of food aid to specific Third and Fourth World countries in specific circumstances.
For example, the position of a Third or Fourth World country during a drought or famine is extremely weak in material terms: People are hungry or actually starving, and the Government, for one or more reasons, is unable to provide enough food. However in terms of its ability to generate widespread international sympathy and support on humanitarian grounds, its position may be fairly strong. In a set of circumstances such as this, because of the country's weak material position, the United States would normally possess little or no food aid food power since it would wish to avoid the appearance of trying to obtain diplomatic or economic concessions from a country in dire straits. Were these conditions to continue, however, the U.S. position might change.
The case of India during the monsoon failures of the mid-1960s provides an excellent illustration of the influence of time and circumstances on the existence of U.S. food power. India had experienced chronic food deficits over a long period of time. These deficits had been significantly offset by continuous large U.S. food aid shipments which had been provided with few strings attached. But, taking into consideration the chronic nature of the food shortages and the failure of the Indian Govermnent to act to reduce them, the United States exercised its food power in 1966 to draw the attention of the Indian Government to the need for increased food production as well as for greater family planning efforts. This was done first, by letting it be known that Public Law 480 food shipments were not unlimited. Then, the U.S. Government established a policy of limiting future commitments of Public Law 480 commodities to a short term. This use of food power appeared to convince the Indian leadership of the necessity to redirect the resources Of that country toward activities leading to increased food production and improved storage. Later in 1966, Congress amended the Food for Peace law to include the requirement that nations receiving food aid must establish self-help programs in these areas.1
The streneth of a Third or Fourth World country's claim to humanitarian food aid can also vary depending upon such factors as the severity of the natural disaster, its own efforts to solve the problem, and the policies of the central government toward its agricultural sector. If Mozambique, for example, following the forced collectivization of its agriculture, experienced severe food shortages, the strength of its claim to unencumbered U.S. food aid would be low, compared to that of the Sahel or an area where the food shortage was not as directly the result of manmade causes.
Most Public Law 480 food aid recipients are not in the extreme position of experiencing famine or drought conditions. but. they still
I Section 109(c) of Public Law 480 requires that every title T agreement describe the program which the recipient country is undertaking to improve its production, storage. nnd distribution of agricultural commodities. Furthermore, this section of Public Lnw 4SO renuires the termination of the title I agreement whenever the President finds that the improvements are not being adequately developed.






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are economically unable to purchase all of their food requirements in the open market. This creates a paradoxical situation: if the Public Law 480 recipients were somewhat richer, the United States would )poess no food power since the aid recipients would be able to make their purchases in the open market with no strings attached. There is a logic to this situation. The assumption behind the provision of Public Law 480 aid is that the United States wants to insure that the food aid is effectively used to help increase food production in the recipient country. It will exercise its food power to try to achieve this. But, as noted earlier. if the recipient is experiencing an emergency, it is not considered proper to attach major conditions to aid under those circumstances.
Agricultural trade issues as well as food aid policies are currently significant in U.S. relationships with Third and Fouith World countrie-. Two major points of contention at this time are the creation of producer cartels following the successful example of OPEC and demands in U.N. forums and elsewhere for indexation of Third World raw material prices to the prices of their imports. Would U.S. food power of either type be effective here?
On the cartel issue, even if the U.S. Government were willing to take over all grain and soybean trading and establish strict antitransshipment rules, it would probably be impossible to oppose successfully any single cartel. Take OPEC, for example. There are only 11 countries in OPEC. If the United States were to cut grain exports only to those 11, they could obtain their relatively small grain needs elsewhere. The same thing might be said about any other single cartel-whether composed of producers of bauxite, tin, or rubber. Except for a few countries such as India, whose grain import needs are large. as the United States halted its grain exports to the particular cartel members, each could move to obtain its grain imports elsewhere. Also., if the members of the cartel were successful in increasing the prices of their product, they would have increased foreign exchange available to buy the alternate grain at higher prices.
On the other hand, there are some possibilities for using U.S. grain exports to counter attempts at indexation. Again, if the U.S. Government were willing to control all grain exports, differential pricing could be used when trading with countries with indexation schemes. As they increased their commodity prices, the United States could increase its grain prices. While the problem of alternative sources exists, the use of differential pricing is not as serious a step as a grain cutoff. In fact, a variant of differential pricing is already used by the Canadians and Australians in their current grain trading activities. l)ifferiential pricing could also be used to put indirect pressure on the indexation country or countries by charging their allies higher prices until the indexation scheme was abolished. Finally, the threat to create a counter-indexation arrangement could be a useful diplomatic tool to prevent the creation of indexation arrangements in the first place. The proposition could be put that "everyone plays by the market (more or less), or no one does."









VII. U.S. EXPERIENCES WITH TRADE RESTRICTIONS
A fairly wide choice of policy possibilities exists for regulating trade in agricultural commodities either for strictly economic or for economic and foreign policy reasons. They range from regulations and limitations on various aspects of agricultural trade to complete embargoes. This chapter will examine the U.S. experience with two of these policy possibilities-the embargo and the selective moratorium-as economic or foreign policy tools.
Since the end of World War II the United States has imposed embargoes on all trade with the People's Republic of China. North Korea, Cuba, and more recently, Rhodesia, North and South Vietnam, and Cambodia. In the summer of 1973, a short-term embargo on U.S. soybean exports to all countries was instituted, and in the fall of 1975, grain sales to the Soviet Union and Poland were prohibited for a period. The experiences with the People's Republic of China, Cuba, the 1973 soybean embargo, and the moratorium on grain sales to the Soviet Union and Poland are presented here to provide case studies of the benefits and costs of these policy alternatives for controlling trade in agricultural commodities.

A. PREVIOUS U.S. EMBARGOES OF ALL U.S. TRADE
(1) TIE PEOPLE'S REPUBLIC OF CHINA
From 1935 to 1945 the value of U.S. exports of all nonmilitary goods to China was less than $100 million a year. Agricultural products were the principal exports during this period. The United States was almost the sole supplier of China's tobacco, and ranked second as a supplier of cotton, wheat, and flour. From 1945 to 1949 the value of U.S. exports increased to an average $360 million a year simply because of large commodity aid shipments. With the creation of the People's Republic of China after the victory of the Communists in .1949, the value of U.S. exports dropped to $83 million in 1949 and $45 million in 1950. The major U.S. commodity imported in both years was cotton: $29 million worth in 1949 and $28 million worth in 1950.
After the Communists came to power in 1949, the United States began to control strategic trade with China more closely through its export licensing system. When Chinese troops entered the Korean war in December 1950 the U.S. Government issued regulations which effectively froze Chinese assets in this country and stopped all exports to China and all imports from China. In May 1951, the United Nations General Assembly recommended an embargo on exports of all weaponsrelated commodities to China.
Most industrialized non-Communist nations complied with the U.N. embargo until the end of the Korean war. But, by- 1956, except for those items on the Western strategic export control list, the Japanese and West Europeans began actively trading with the Chinese. The
(39)






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United States continued its embargo until July 1969, when the Nixon administration took the first steps to restore contact with the Chinese by allowing U.S. residents abroad to purchase limited amounts of Chinese goods. Further normalization of trading relations took place in 1970, 1971, and in 1972.
(a) Impact of the China embargo
Foreign trade has never been a major factor in Chinese economic relations. At the time of the imposition of the U.S. embargo in 1950, total Chinese foreign trade was only $1,210 million, or less than 21/ percent of its GNP. As noted previously, by then the U.S. portion had fallen to $45 million. Immediately following their consolidation of power, the Chinese Communists began to reorient their trade heavily toward the Soviet Union and Eastern Europe. In the 1950's, the Soviet Union became the primary trading partner of the Chinese, selling them machinery, manufactured goods, and entire industrial installations. By 1959, the Soviet Union alone accounted for 45 percent of Chinese trade, and other Communist countries accounted for an additional 20 percent.
The sudden withdrawal of Soviet technical assistance and equipment in 1960 forced another complete change in Chinese trade policy. While continuing to purchase parts and replacements for Soviet industrial equipment and transportation machinery, the Chinese began to buy largely in the West. From a level of $800 million a year in 1960, Chinese iml)orts from the Soviet Union were cut to slightly more than $200 million in 1965. Conversely, purchases of goods from non-Communist countries rose from $625 million in 1960 to $2.7 billion in 1965). In addition in 1961, China began regularly to import large quantities of grain each year. From 1961 to 1975, except for 1969 and 1971, the quantity of grain imported by the Chinese was never less than 4 million tons a year. In 1972 and 1973 over 7 million metric tons were imported.
(b) Effectiveness of the China embargo
It is difficult to determine whether the U.S. trade embargo had any significant economic effect on China. In the early years of the embargo, Chinese trade was quite limited and the goods that the United States exported prior to the embargo, such as tobacco and raw cotton, either were not critical to the Chinese or were available elsewhere. To the Chinese, the limited effects of the embargo did not act as an impediment to their industrialization and economic development. And, after 1955-50, when West European industrialized countries began to seek out sales in China, any potential loss of nonstrategic Western technolory was eliminated. The deliberate diversification in imports which took place after 190 was made easier, first because there was already some trade with non-Communist industrialized countries to build on and, second. bvcawuse the Soviet Union did not cut off all supplies of space parts n(l equipment as the United States was to (1do in the case of Cuba. After 1961, except for strategic commodities and large grain imports, the Chinese were in a position to purchase almost any desired equipment or commodity whenever they wished. And in the early 1960's, when the Chinese had a serious need for grain, the (nadians and the Australians easily provided the several million tons






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that was imported annually. Since this was a period of large world surpluses and depressed market prices, U.S. competitors were more than happy to make such large sales.
(2) THE U.S. TRADE EMBARGO OF CUBA
Unlike China, Cuba's pre-embargo economy was heavily dependent on foreign trade. Between 1956 and 1966 Cuba's imports ranged from 22 to 32 percent of its GNP. Because of its large investments in Cuba and because of its geographic proximity, the United States was Cuba's principal trading partner, taking at least half of Cuba's exports and providing 60 to 70 percent of Cuba's imports. In the post-World War I period, Cuba provided from 30 to 40 percent of U.S. sugar imports, and in 1958, the last pre-Castro year, sugar accounted for 78 percent of Cuba's export earnings. The $543 million of U.S. exports to Cuba in 1958 were highly diversified. The largest single category, machinery and vehicles, totaled $163 million. The next largest category, animal and vegetable food products, came to $137 million, and textiles and wood and paper came to another $72 million.
In January 1959, Fidel Castro became Prime Minister of a Cuban revolutionary government. During the following months immediate steps were taken to socialize the domestic economy, and a permit system was established to control the flow of exports. Following a series of anti-U.S. actions later in 1959 and in 1960, in January 1961 the United States and Cuba severed all relations with each other; in April 1961 the Bay of Pigs operation took place. On February 3, 1962, President Kennedy issued a proclamation under the authority of the Foreign Assistance Act of 1961, instituting a total U.S. trade embargo against Cuba.
(a) Impact of the Cuba embargo
By the time the U.S. embargo was instituted, the Cuban economy had already been reoriented from reliance on trade with the West to reliance on trade with Communist countries. In 1958, trade with the Communist countries had amounted to only $20 million out of a total of $1.6 billion. The next year, 30 percent of total Cuban trade was with the Communist countries; by 1962, the last year before the total embargo, it rose to 82 percent. From 1961 to 1973, except for 1 year, at least two-thirds of Cuba's foreign trade was with Communist countries.
The U.S. trade embargo had its greatest impact in the first 3 or 4 years of its existence when it was supported by the industrialized non-Communist countries and the Latin Americans. At that timely the embargo served to deny the Cuban economy replacement puts for its predominantly 1.S.-made industrial plant, equipment, and vehicles. Industrial and agricultural production and transportation were adversely affected during this period because of the lack of spare parts. After 1966, West European and Japanese producers of capital goods and equipment began to ignore the U.S. embargo. By 1970, and perhaps somewhat earlier, the U.S. embargo of Cuba had been almost wholly circumvented. The Soviets and East Europeans supplied oil ,ind certain types of machinery, the West Europeans and Japanese sold capital goods, and the Canadians provided grain. The Soviet Union and other





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Communist countries took over half of Cuban sugar exports, generally at prices much higher than the world market prices; the Japanese took another quarter, and the rest of the world took the remaining 25 percent.
( b) Effectiveness of the Cuba embargo
While it was not effective in bringing about a change in the Cuban Government, the embargo did serve several U.S. political ends. First, it and a July 1964 OAS resolution served as a focal point for hemispheric opposition to Cuban activities. The actions taken by Castro to export his revolution made it easier to maintain this unified opposition. Second, as long as the other industrialized non-Communist countries participated in the embargo, a significant cost in lost trading opportunities was imposed on Cuba. This loss increased the burden on the Soviet Union in its efforts to subsidize the Cuban economy. Third, the embargo was a nonmilitary form of retaliation against the confiscation of U.S. assets in Cuba. To date, some $1.8 billion in outstanding private and commercial claims have been recognized against Cuba by the Foreign Claims Settlement Commission.
The key to the failure of the embargo was the relative ease with which Cuba could obtain its small grain, petroleum, and machinery imports from Communist and non-Communist sources other than the United States, and the willingness of the Soviet Union to underwrite Cuban sugar exports at higher than market prices.
B. RECENT U.S. CONTROLS ON AGRICULTURAL EXPORTS
(1) THE 1973 U.S. SOYBEAN EMBARGO
Large U.S. exports of soybean and soybean products have been a relatively recent phenomenon. In the early 1950's, these exports totaled less than $150 million a year. Beginning in 1955, the United States entered a period of uninterrupted increases in exports of soybeans and soybean products, and by fiscal year 1970, soybeans were the single largest agricultural commodity, by value, exported by the United States. In that year $448 million worth of soybean oil and meal and $1,072 million worth of whole soybeans were exported. By comparison, in the same fiscal year, wheat and wheat products were valued at S942 million and corn exports at $825 million.
The 1971 and 1973 devaluations of the dollar, increased world demand due to drought in Africa, failure of the rice crop in Southeast Asia and Korea. the decline in fish meal production in Peru, and the large Soviet grain purchases in the fall of 1972, all combined to put pressure on soybean prices. Soybeans which were selling for $3.30 a bushel in July 1972 had risen to $4 a bushel by January 1973, continued upward to $6 in March 1973, and in early June went over $10 a bushel.
On June 13, 1973, President Nixon ordered a 60-day freeze on all 7.S. prices, but excluded unprocessed agricultural products at the farm level. At the same time he indicated his intention to request from Congress more flexible export control authority for food products, promising his guiding policy would be that the United States would keep the export commitments it had made as a nation.





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On June 27, 1973, under the authority of the Export Administration Act of 1969, the administration imposed an embargo on the export of soybeans and other oilseed products to all countries.' On July 2, a licensing system replaced the embargo. Licenses were to be issued for only 50 percent of the undelivered portions of contracts for soybean exports that were valid as of June 13, 1973; licenses for soybean oil cake and meal were to be for 40 percent of the undelivered contracted quantity. The license system was eased on August 1, 1973, to allow soybean exports on the basis of 100 percent of unfilled orders reported before June 13. On September 21, 1973, it was announced that the export licensing system would be abolished on October 1 as the 1973 soybean crop came onto the market. By the end of September, soybean prices had fallen to around $6 a bushel.
(a) Foreign consequences of the soybean embargo
The foreign reaction to the soybean embargo and export licensing system was immediate and overwhelming negative. The Japanese, highly dependent upon soybean products, were incensed. Not only were open market contracts that they had depended upon for livestock feed abrogated, but exports of table quality soybean products from Japanese-owned farms in the American Midwest were reduced the required 50 percent.
The consequences in the area of agricultural trade policy were equally unfavorable. The United States, which for several years had been attacking protectionism of the European Community's Common Agricultural Policy, had responded to a tight domestic supply situation by cutting off exports completely at first, then by limiting them to 40 or 50 percent of the contracted amounts. In addition, the Europeans and Japanese were able to argue that in the vital area of food supplies the United States was not a reliable supplier and that its future credibility as a supplier had been severely weakened.
A long range--and for U.S.,soybean interests more serious-foreign response to the embargo was the increased foreign interest and investment in the already rapidly growing Brazilian soybean industry. In 1972, before the embargo, the United States supplied 92 percent of the soybeans moving in world trade. By 1975, the U.S. share was down to 67 percent, primarily due to Brazilian compettition.
(b) Domestic consequences of the soybean embargo
The soybean embargo was imposed to prevent a domestic shortfaife of feed for livestock and to reduce both feed and food prices in tlie United States. John T. Dunlop, then director of the Cost of Living Council, stated that the embargo action "put first the dinner table of the American consumer."
U.S. farm organizations opposed the use of'the embargo. All stressed the disadvantage to the United States of breaking existing contracts with other nations and forcing those buyers to locate new sources of supply. They pointed out the importance of agricultural exports to the U.S. balance of payments, to the creation of jobs in the United States, to international efforts to reduce trade barriers, and to maiwtain adequate incentives for producers and traders of agriculturdl commodities.
I For a description of the Export Administration Act, see appendix I, p. 67.





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Seymour Johnson, Secretary of the American Soybean Association, testifying before the Senate Committee on Agriculture and Forestry on July 11, 1973, expressed the view that soybean farmers felt betrayed by the sudden embargo:
The administration used every tool at its disposal to encourage increased production of soybeans, and by yesterday's report we have a 24 percent increase in acreage for this year.
Once the beans were planted, however, the administration removed over 50 percent of the market. Naturally, the farmer is tied to his production commitment until after harvest.
Therefore, the administration's export embargo action was greeted with shock and complete dismay because it alienated
over 50 percent of the soybean market.
Ray Davis, then president of the National Association of Wheat Growers, stated before the same committee that the curtailment of exports threatened to destroy producer confidence in Government policies. Farmers found that "free market" principles applied only when supplies were excessive and prices low but not when supplies were tight and prices rising. Davis added that the farmer must have confidence in Federal agricultural policies; "incredible or unpredictable shifts in export policy are strong deterrents to increased production."
The 1972-73 soybean marketing year ended on August 31, 1973. The average farm price during the marketing year was $4.75 per bushel. The peak price was $10 per bushel, received by farmers in June 1973. Average monthly prices received by farmers around the time of the embargo were:
Per bushel
April --...------------------------------------------------ $6.14
May .....................------------------------------------------------- 8.27
June ......-----------------------------------------..... 10.00
July .........................................-------------------------------------------------..... 6.69
August............. -----------------------------------------------8.99
September ................--------------------------------------------- 5.81
October ---------------------------------------------------5.63
November -----.---------------------------------------------5.14
Prior to the embargo, farmers were receiving rising prices for soybeans. The price declined by one-third after the imposition of the embargo in June 1973. Following the announcement that the licensing system would be eased to allow shipment of 100 percent of unfilled orders, the price rose to $8.99 per bushel. 34 percent over the July price. By September the price had dropped below $6 a bushel as prospects for an abundant soybean harvest improved. The licensing system was abolished in October as foreign pressures on U.S. supplies deflined. By November, when the new soybean crop had been harvested, sol)ean prices were approximately half those of June.
The impact of the embargo on acreage planted( in soybeans in 1974 was modest although soybean acreage declined for the first time in 15 years. Still, plantings were the second highest on record. To what e(xt(nt the 5-percent decline in acreage planted can be attributed to the embargo and tlhe subsequent decline in farm prices is debatable. UnfitvoraI)le weather de(1layed planting in somlle areas of thile country. Late plantingrs because of the wet weather, pus dry summ111111er months111011111





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and early autumn freezes reduced soybean yields. Total production in 1974 was 1,233 million bushels, or 20 percent below the 1973 figure.
(2) THE 1974 AND 1975 SOVIET AND POLISH GRAIN SALE MORATORIUMS
Under the authority of the Agriculture and Consumer Protection Act of 1973 the U.S. Department of Agriculture had required the daily reporting of all grain sales for export over 100,000 tons within 24 hours of their completion. In early October 1974, the administration discovered through this reporting system that 2 grain companies had sold 3 million tons of wheat and feed grains to the U.S.S.R. On the grounds that U.S. supplies were tight and the ultimate size of the U.S. corn crop was still in doubt, President Ford and other members of the administration intervened and convinced the grain dealers to stop the sales "voluntarily."2
On October 7, 1974, the administration instituted a prior approval system for exports of soybeans and grain. The system required notification and prior approval for all sales over 50,000 tons to any country in a single day, or over 100,000 tons to any country in a single week. Later that month, Secretary of the Treasury Simon renegotiated a smaller grain sale to the U.S.S.R. The prior approval system was terminated in March 1975, but the export reporting system remained in effect.
On June 9, 1975, the U.S. Department of Agriculture issued the first of what was to become a series of downward revisions of projected 1975 Soviet grain. production. By late July, the Soviets had purchased over 9 million tons of grain in a number of separate transactions. On July 24, the prior notification system was reinstituted. Because of continuing uncertainty as to the size of the U.S. corn crop and the Soviet grain harvest, on August 3, 1975, Secretary of Agriculture Earl Butz announced a "hold" on further sales to the Soviet Union. This informal "hold" was to be lifted after the August 11 crop report was issued but was extended for an unspecified period because of fears that the drought in the Midwest would substantially decrease the U.S. corn crop.
On August 18, the embargo became tied with U.S. labor problems as American longshoremen refused to load grain already purchased by the Soviet Union unless the administration formulated a new grain export policy that protected the American consumer and the American shipping industry.
On September 9, following negotiations with AFL-CIO President George Meany, President Ford announced his intention to try to negotiate a long-term agreement with the Soviet Union on grain. At the same time, he extended the embargo on grain sales to the Soviet Union until mid-October. The longshoremen agreed to return to work loading grain already purchased by the Soviets.
On September 10, without any public announcement, the TT.S. State Department requested through the Polish Embassy in Washington that Poland suspend any planned grain purchases in the United States. Up to that time, the Poles had purchased 1.9 million tons of grain from the 1975-76 crop. On September ,29. 1975, Secretary Iiutz and Polish Agriculture Minister Ba.rcikowski coipletpd discussions on a long-term understanding that was to be signed in November. On





46

October 10, following U.S. Department of Agriculture estimates of record wheat and corn crops, President Ford announced the lifting of
the embargo on grain sales to Poland. Ten days later, the President announced the signing of a 5-year grain agreement with the Soviet Union and the lifting of the moratorium. On October 24, 1975, grain sales to the Soviet Union resumed after an 11-week suspension.
Under the long-term understanding, Poland agreed to purchase 2.5 million tons of wheat and corn each year for 5 years. This amount would be allowed to fluctuate 20 percent from year to year depending on Polish import requirements and the size of the U.S. grain harvest.
The long-termn U.S.-U.S.S.R. agreement concerned wheat and corn purchased for shipment after October 1, 1976-slightly less than 1 year after the signing of the document. Under the agreement, the Soviet Union promised to purchase, at market prices, a minimum of 6 million tons of wheat and corn a year for each of 5 years. The agreement permits the Russians to purchase an additional 2 million tons a year without further government-to-government consultations. If the estimated total U.S. grain supply were to fall below 225 million tons in any crop year, the United States could reduce the quantities available for export under the agreement.
(a) Foreign consequences of the 1974-75 grain sale wmoratorium
Prior to the moratorium, the Soviet Union had purchased 10.3 million metric tons of U.S. grains. Of the total, 4.5 million metric tons was wheat: the rest was feed grains. After the moratorium was lifted, the U.S.S.R. purchased an additional 5.8 million metric tons of feed trains.
During the period of the moratorium, the Soviet Union continued to purchase grain in other markets. U.S. grain farmers complained that other nations benefited from the higher market prices during the moratorium and that it was only after Soviet demand had cooled that the U.S. Government would allow additional purchases. It is estimated that the U.S.S.R. bought 7.1 million metric tons of grain elsewhere during the moratorium.
U.S. sales of wheat and corn for export to other nations continued during the moratorium on sales to the U.S.S.R. In fact, the largest quantity of wheat reported for export in any one month during 1975 occurred during the moratorium. Reported corn sales for export reached their peak the month after the removal of the moratorium.
Practically all of the controversy generated by the hold on sales to Poland and the Soviet Union involved domestic U.S. participants. U.S. farm groups opposed both the moratorium and the boycott action of the longshoremen as unacceptable interventions in the operation of the market. Probably because the restrictions affected only the Soviet Union and Poland, there was no major reaction or opposition from the Japanese or West Europeans. Evidently it was felt that this was a legitimate step for the United States to take, mainly because the targets were nonarket economies. While the point was not immediately raised by foreigners, the grain moratorium. like tlhe soybean embargo, may make it more difficult for the United States to maintain a strong position in the Multilateral Trade Negotiations underway in Geneva on proposals to insurIe world access to raw materials.






47

(b) Damestic consequences of the 1974-75 grain, sale mroratoriums
The 1975 moratorium on grain sales to the U.S.S.R. and Poland evoked strong negative domestic reactions. U.S. farmers claimed that the 3-month moratorium cost them an estimated $1 billion in grain sales, and perhaps another $1 billion in storage costs. Farm spokesmen pointed out that although the Export Administration Act provided legal authority for export control, the act was not used by the President.2 For this reason the National Association of Wheat Growers (NAWG) contended that the moratorium and negotiation of the U.S.U.S.S.R. grain agreement were illegal and should be challenged in the courts.
The argument of the grain farmers was that in response to the Department of AgTiculture's plea for all-out production they had planted "fence to fence," only to find their bountiful harvest cut off from a large buyer, the Soviet Union. They also recalled with bitterness the statements of President Ford when he vetoed the farm price support bill on May 1, 1975:
This year, despite very trying circumstances, most farmers
are again seeking full production. They have my support for a vigorous export policy for their products. I recognize that agricultural exports have been restrained twice in the past 2 years. We have now eliminated all restrictions on exports and we are determined to do everything possible to avoid imposing them again. Our farm products must have unfettered access
to world markets.
Farmers felt it unfair that they were denied assurances of an adequate minimum price and then were denied the chance to take advantage of high world prices.
The American Farm Bureau called the moratorium "capitulation to political bhackmail." The NAWG labeled it "a political step motivated by price levels and supply levels." The National Grange stated that the voluntary moratorium "slapped the lid on such sales just as effectively as an embargo on exports."
When members of the International Longshoremen's Association refused to load grain on ships bound for the U.S.S.R., the farm community was particularly irate. Spokesmen for wheat producers ridiculed the claim that the longshoremen's action was designed to prevent inflationary food prices in the United States. The NAWG argued that "the public should not be fooled into thinking that the longshoremen are protecting its interest * the loading refusal is being used as leverage to seek inflationary, self-interest concessions out of the Government which will significantly boost consumer costs." Great Plains Wheat, a federation of eight State wheat grower associations, claimed that the boycott was an effort to obtain an increase in the cost-of-living clause for labor, a substantial contributor to inflation. In an effort to remove misunderstandings about the sales, the Agriculture Council of America established a toll-free "hot line" to put rank and file AFL-CIO members in touch with farmers to discuss the importance of grain exports and the relationship of the boycott to agriculture.
2 See appendix I, p. 67.





48

In August 1975, President Ford called for cool tempers and negotiations to settle the longshoremen's boycott. In early September Don Woodward, president of NAWG, warned the President that farmers would "cool it" only so long. He added, "now we have the unions usurping the power of the Government by illegally and unjustifiably calling for workers to boycott ships loading grain sales to the U.S.S.R."
Farm groups were further angered by the extension of the embargo into October despite the September 11 crop report showing an abundant supply of wheat, corn, and soybeans. Farmers felt that the report effectively silenced any arguments or economic justification for the moratorium. In their view, its extension could be seen only as political capitulation to union demands.
Extension of the moratorium to cover grain sales to Poland drew strong language from farm leaders. Tony Dechant, president of the National Farmers Union, accused the Government of forcing a "price bust" and concluded "the market is free only on the way down." Woodward of NAWG labeled the ban on Polish sales a "double doublecross of wheat producers."
When President Ford announced the terms of the U.S.-U.S.S.R. grain trade agreement on October 20, he hoped that farmers would he pleased. The Soviet Union would now become a steady customer, buying 6 to 8 million metric tons of Tgrain each year for 5 years. But farm groups, except for the National Grange, were not pleased. As Woodward of NAWG stated, "producers view the agreement as a restrictive document which formalizes Government controls on exports to the IT..,S.R. for the next 5 years." He added that producers were skeptical over the terms of the agreement and doubtful about its benefits. A spokesman for Great Plains Wheat indicated that the anrcoment was more in the interests of the Soviets than the Americans. The National Farmers Union called the agreement the very opposite of an agreement to sell grain: it labeled it a "system of permanent export controls on grain to keep American farmers' prices down," for the next 5 years. In contrast, the maritime agreement with the I.S.S.R. NFU noted, gave the union a freight rate significantly higher than the current market price, a price equivalent to 300 percent parity for freight rates.
Angered by the moratorium and grain agreement, farm groups began to organize for action. The NAWG retained the services of a law firm to investigate the legal aspects of Presidential power to limit exports, and to make an analysis of recent Presidential action in lillght of existing legislation. Meanwhile, other farm groups were engaging in holding actions. North Dakota grain farmers agreed to stage a symbolic 10-day moratorium of grain sales to demonstrate their frustration. In Minnesota, members of the American Farm Bureau. National Farmers Union, and National Farmers Organization agreed to work together to formulate policy and to take joint action on mutual interests such as grain export controls.
Some farm groups propIosed amnendminents to the Export Admnistrat ion Act which was to expire on September 30, 197. NAWG amendmonts wold outlaw prior approval or exo sles of WO
require Senate approval of long-term gramin sales agreements, and would forbid the President to curtail or prohibit exports unless the S(N1iltary of Agricultture found sulplies int(adlequate for domestic





49

needs. The Secretary would be required to publish a notice in the Federal Register and take public testimony, including farm testimony, before making such a finding. The National Farmers Union proposed an amendment that would prohibit the President or the Secretary of Agriculture or Commerce from stopping farm exports any time that prices received by farmers were below 110 percent of parity.
When the first U.S. sales to the Soviet Union were announced in July 1.975, U.S. farmers were receiving an average price of $3.33 per bushel for wheat and $2.72 per bushel for corn. At the time of SeciVtary of Agriculture Butz' request to withhold further sales, prices had risen to $3.89 a bushel for wheat and $2.95 a bushel for corn. The price of wheat peaked in August at $4.11 per bushel. After the moratorium ended in October, U.S. farmers found their prices had declined to $3.58 per bushel for wheat and $,2.33 per bushel for corn. The monthly average prices per bushel received by farmers around the time of the moratorium were:

Wheat Corn
May 1975 --------------------------------------------------------------------- $3.47 $2.66
June --------------------------------------------------------------- 2.92 2.68
July ------------------------------------------------------------3.33 2.72
August ------------------------------------------------------------ 3.89 2.95
Seotember -------------------------------------------------------------------- 4.11 2.76
October ----------------------------------------------------------------- 4.02 2.62
November. -3.58 2.33
December ---------------------------------------------------------- 3.41 2.37

It is difficult to say exactly how much of the decline in farm prices was due to usual market,/harvest fluctuations and how much to the grain moratorium. Farm prices usually fall at harvest time. This explains the low price for wheat in June. for example. It is interesting to note, however, that the highest farm prices for both wheat and corn were received during the period of the moratorium. Although the rise in price that occurred prior to the release of the crop report of September 11 can be explained partially bv uncertainty about supply, it is also likely that traders continued heavy buying in anticipation of the end of the hold on sales.

C. EF7FCTIvENESS OF PREVIOUS LIMITATIONS ON U.S. EXPORTS
Of the various U.S. actions which have been discussed above, only the 1974 and 1975 Soviet grain moratoria could be termed generally successful. In the fall of 1974. the administration was able to renegotiate the Soviet purchase of grain to meet U.S. perceptions of what was appropriate in terms of U.S. prices and supplies. The use of the moratorium in 1975. regardless of whether its basis was concern over the size of the corn crop or the activities of the longshoremen. provided the U.S. Government with a tool to pressure the U.S.S.R. into an agreement to indicate the size of their longterm grain purchases sufficiently in advance for the United States to take these purchases into consideration in production and marketing plannin2.3 More particularly, the administration, including AgriS There Is evidence that the U.S.S.R. had sought a long-term agreement for some tine and that the United States agreed only when forced In that direction by donstic pressure.






50

culture Secretary Butz. finally negotiated a purchase guarantee that would support another 6 to 8 million tons a year of U.S. grain production-a point supposedly favorable to U.S. farm interests. While many U.S. farm groups were opposed to the moratoria,
the general response in the United States and foreign press was supportive of this action in dealing with the Soviet Union and Poland. This response, or at least the lack of a more unfavorable response. lends support to the contention that the use of food as a diplomatic tool against the nonmarket economies would be at least tolerated by the most political groups in this country and actually welcomed by few others.
On the other hand, because of the small contribution of foreign trade to the Chinese economy and the even lower share provided by the United States, the total embargo of China prior to 1969 cannot be described as successful in any economic sense. The task was too large, the leverage available much too small, and adequate alternative sources too readily available from the outset. Its effectiveness politically is also open to question since by 1956 most U.S. allies were actively seeking to trade with the Chinese and the embargo policy acted as a point of friction between this country and its allies.
The embargo of Cuba was more effective than that of China. Because of Cuba's earlier reliance on the United States as a trading partner and because of the large amounts of U.S. equipment, machinery. and vehicles already in Cuba, the embargo did impose significant economic costs on Cuba during the first years of its existence. In addition, as a political rallying point for the OAS, the embargo in its early years could be considered successful. However, with the passaLre of time Cuba, like China, began to trade with most nations, including U.S. allies, and the political and economic benefits of the embargo declined. Exactly when, and if, the costs of the embargo exceeded benefits is a question that must remain unanswered.
For both the Chinese and Cuban embargoes, the role of U.S. anricultural trade was not a critical element in determining the effectiveness of the embargoes. Whatever damage was inflicted through the embargoes was done through the totality of the actions takenand with Cuba specifically through the loss of spare parts and machinery. To generalize, one should not expect to be able to exert significant diplomatic pressure through the denial of commodities that are not really crucial to the recipient at the time of fltheir denial.
Of the attempts at controlling exports discussed here, probably 1he most damaging to U.S. long-term foreign policy and economic interests was the 1973 soybean embargo. While the concern of the administration over the domestic implications of the soybean price increases may have been genuine and well founded, it is difficult to Balance this concern with the extremely negative impact on U.S. economic and political relations with the Europeans and Japanese. This negative impact highlights the fact that the embargo was imposed for U.S. domestic reasons. It was not intended as a foreign policy tool and, in light of the strong negative foreign reaction to it. probably would not have been proposed as a foreign policy tool under the circumistancesI. I one sense, however, the reaction





51

of the developed market economy countries to the embargo was itself a recognition of the existence of U.S. market control food power.
For the United States to support the levels of wheat, feed grain, and soybean exports that it presently does, its strategy must be to develop new markets and to keep existing markets by maintaining its reputation as a reliable supplier. The soybean embargo directly attacked the second element of that strategy. In addition, as noted in chapter VI, exercising market control food power against developed market economies may result in attempts to locate and develop alternate sources of supply. This has happened with Brazilian soybeans. Finally, because the nations affected by the soybean embargo were also GATT members, its occurrence will seriously weaken U.S. efforts to attack agricultural trade limitations by other countriesparticularly the European Community.

D. COSTS AND BENEFITS OF TO.NG-TER-ME SUPPLY AGREEMENTS
Aspreviously noted, since the beginning of 1975, the administration has concluded a formal long-term supply agreement with the Soviet Union, an understanding with Poland, and an "informal" agreement with Japan.4 Because the potential impact of this form of trade arrangement is significant, some attention should be given to its impact on the U.S. economic and political relations. What are the costs and benefits of long-term supply agreements?
On the benefits side of the equation, in the case of the Soviet Union, the agreement to purchase a minimum of 6 million tons of grain a year will provide a figure for U.S. farmers and livestock growers to factor into their supply availability/price calculations. The dislocations caused by the massive Soviet purchases in 1 year and none the next may be remedied to a great extent. Also, the administration can argue that the agreements and understandings provide the underpinnings for high farm incomes and for keeping unit costs down because of large and long production runs. The 225-million-ton minimum U.S. crop figures and the consultation requirement may tend to make grain prices and output levels less unstable. For the Poles and the Soviets, the arrangements will mean an end to incidents such as the 1974 grain sale "renegotiation" or the 1975 grain sale "moratorium." For the Japanese, the informal agreement can be seen as a means to avoid any repetition of the type of dislocation that followed the 1973 soybean embargo. For all three countries, the arrangements provide a guaranteed or expected minimum of U.S. commodities that they may purchase. Finally it could also be argued, despite the demise of the term "detente" in tle heat of the 1976 Presidential primaries, that the grain agreements serve as another tie between the United States and the Soviet Union in the network of arrangements between the two countries that d6tente is sulpposed to foster.
IAt the time of the visit to the United States of the Japanese Agriculture Minister in Auguist 1975, U.S. Secretary of Azriculture Earl Butz announced that the two countries had reached "an understanding" that the United States would make available to thet Japan~ese at least 14 million tons of soybeans and grains a year for each year of the next years The 14 million tons is to be composed of 8 million tons of feed grains. 3 million tons of wheat and 3 million tons of soybeans. The Japanese, on their part, promised to purchase the commodities made available.





52

There are, however, several negative aspects of long-term agreements. First, in the case of the Soviet Union, the agreement appears to give a higher priority to a recent, and previously very disruptive, purchaser than to other buyers. While the long-term agreement does not exljicitly give that nation a priority, the agreement could result in prefeieiices for that nation during any future period of shortages. Other nations that might be excluded could be traditional U.S. allies with longstanding ties to this country and a dependence on U.S. agricultural exports. Second, the inverse of the argument that long-term agreeilents stabilize prices is that they keep prices artificially high. The less developed countries are concerned about both of these aspects since they are usually at the end of the purchase line (or receiving Public Law 480 commodities which would be reduced in tight markets by the need to service prior commitments). If they are in the commercial market they would suffer from higher prices. In addition, in the case of the Soviet Union, the long-term agreement provided a kind of guaranteed export level below which the United States cannot easily exert diplomatic pressure. In the absence of the agreement, if the Soviet Union wanted grain and the United States wanted certain political or economic concessions, the bargaining could star at zero tons. With the agreement, the bargaining starts at 8 million tons. Finally, some argue that long-term agreements and the privileged access they offer are distortions of the allocative function performed by the market.









VIII. INTERRELATIONSHIP BETWEEN U.S. TRADE POLICY AND GROWTH OF U.S. AGRICULTURAL EXPORTS
Agricultural trade policy around the world has generally been characterized by a high degree of protectionism. Until the last decade, U.S. agricultural trade policy had been no different in this respect. U.S. policy reflected the small portion of U.S. export trade represented by agriculture and the substantial competition from imports. More recently agriculture has become a major component of U.S. exports, and U.S. agricultural trade policy has changed accordingly.
Following the World War I boom in domestic and overseas demand, agriculture in the United States entered a period of severe depression that lasted well past the entry of this country into World War II. Agricultural trade declined along with agricultural production. U.S. agricultural exports fell from $3.8 billion in fiscal year 1920 to $1.9 billion in fiscal year 1922. From fiscal year 1922 to fiscal year 1930, agricultural exports averaged only $1.7 billion a year. In the aftermath of the Great Depression, U.S. agricultural exports fell even more. Trade in agricultural commodities averaged less than $750 million a yeair for the 1935-39 period, with cotton at $138 million a year and tobacco at $128 million a year comprising the major commodities exported. As an example of the decline in exports during this time, the U.S. share of world wheat exports fell from 22 percent in the period 1.924-28, to 8 percent in the 1934-38 period. Grain exports averaged less than $100 million a year during this period and soybean oils and fats exports averaged even less at $29 million a year. For the 1935-39 period, the United States was the fourth largest exporter of wheat in the world, averaging some 40 million bushels a year. This was far behind Canada's 139 million bushels, Argentina's 119 million bushels, and Australia's 104 million bushels.
From the beginning of World War II into early 1945, U.S. grain supplies could be characterized as adequate for U.S. needs but with little left over for aid or trade. Illustrative of this is the small contribution that U.S. wheat exports made to the allied war effort in the early years of the war. In 1943, for example, the U.S. portion of United Nations exportable supplies of wheat and flour was only 4. percent of the total. It was only after 1945 that U.S. exports of grain again became a significant portion of U.S. agricultural trade, and only after 1953 did soybeans become a major export item.
Beginning in 1947-48 the United States began to experience continuous grain overproduction, surpluses and falling grain prices. However, through the continuation of various aid programs the export market took significant proportions of domestic U.S. production. By 1953, for example, exports as a percentage of U.S. production were 66 percent for rice, 48 percent for wheat and wheat products, and 45 percent for grain sorghums. While grain and soybean export levels ha(I been rising irregularly prior to 1956-57, after this period they ceased
(53)





54

fluctuating greatly and began a continuous rise. For several years the main impetus for the increase in wheat exports was the Public Law 480 program, but over time commercial sales became the main element in the growth of agricultural exports. However, it must be kept in mind that while grain and soybean export lev-els rose steadily after fiscal year 1956, it was only after fiscal year 1970 that total U.S. agricultural exports exceeded $6G billion a year, and it was even more recently, in fiscal year 1972, that the $10 billion mark was reached. U.S. agricultural trade policy has in large part reflected the many years of low exports and high import competition and only recently has reflected U.S. domination of world grain and soybean markets.

A. LEGISLATION AFFECTING COi31ERCIAL AGRICULTUL AL ExroRTS
As a response to the onset of the severe post-World War I agricultural depression, the Tariff Act of 1921 provided for tariffs on virtually all domestic farm products. The Smoot-Hawley Tariff of 1930 fixed tariff rates at even higher levels. At times during the Great Depression, specific tariffs on certain agricultural products exceeded their selling prices. The passage of the Reciprocal Trade Agreements Act in 1934 shifted the locus of decisionmaking on tariff questions from Congress to the executive branch. Under the act, the President was allowed to reduce tariffs by certain percentages in reciprocal tariff negotiation. While successive extensions of the Reciprocal Trade Agreements Act were opposed by some farm groups, tariffs on agricultural products were substantially reduced during the next 28 years.
In 1933, the Agricultural Adjustment Act was passed. Two years later, in the 1935 amendments to the act, section 32 earmarked up to 30 percent of U.S. tariff revenues, for, among other things, the encouragement of exports through payments which would permit the sale of surplus commodities in foreign markets. Prior to World War II, section 32 subsidies were paid on exports of wheat, flour, and cotton.
Another section of the 1935 Agricultural Ad.justment Act amendments, section 22, authorized the President to impose quotas or fees on agricultural imports which were judged to affect adversely U.S. farm price or income support programs. The section was first used in 1939 when quotas were placed on certain cotton products. In 1941, quotas were placed on wheat, flour, and wheat products.
The passae of the Agriculltural Adjustment Act and the estAblishment of U.S. price support programs w:s followed by the buIldan of urpluses that made creation of section 22 and 32 programs logical. Domestic price supports tended to encourage overproduction since a farmer tended to maximize his income bv producing as much of the fixed price commodity as possible. With the supported U.S. price considerably above worll market prices, the equivalent of section 32 subsidies became necessary to move overpriced surplus U.S. commodities into word1 markets. A second effect of ,rice supports was an increase in foreiml imports of commodities to displace the higher price V.S. 'ommodities in U.S. markets. To counter this trend, tariffs were necessary on the imported commodities to raise the import price above the supported price. The equivalent of section 22 quotas became necessury under these circumstances in order to maintain the domestic price support system. Furthermore, the need for quotas was greater as tariffs were reduced over time in multilateral trade agreements.






55

Since the end of World War 11, -the primary source. of legislative authority to regulate U.S. exports, including agricultural exports, has been in what is now known as the Export Administration Act, first passed in its present form in 1949. Because the evolution of that act has shaped the basis for executive authority to constrain food exports, it is explored in some detail in appendix 1.

B. AGRICULTUL-ALTRADE, THlE ITO AND1 THE GATT
One of the group of international organizations planned by the U.S. Department of State for the post-WVorld War 11 period was to deal with, international trade matters. Following bilateral discussions withi U.S. trading partners, in the fall of 1946 the Department of State published a "Suggested Charter for an International' Trade Organization of the United Nations." The draft ITO Charter laid down principles and rules on subsidies, the reduction of tariffs, the ev-entual. elimination of quotas, the maintenance of full employment, standards for the creation of commodity agreements, and some of the elements of a code for private investment. Because of its broad scope, the Truman administration intended to submit to Congress any ITO Charter that was negotiated for approval as a treaty.
Four conferences were held to draft the ITO Charter: at London in 1946, New York and Geneva in 1947, and Havana in 1947-48. At the 1947 N ew York and Geneva meetings of the ITO drafting committee, a General Agreement on Tariffs and Trade (GATT) was negotiated simultaneously with the drafting of the ITO Charter. The GATT was to be a specified trade agreement within the larger context of the ITO Charter. This specific trade agreement would consist of a series of commitments on maximum tariffs which were to be accompanied by the "General Agre ement," much, of which was drawn from sections of the ITO Charter on commercial policy. Only such- articles from the ITO Charter as would normally be found in commercial treaties were included because the United States was negotiating the GATT under the 1945 extension of the Trade Agreements Act, which only authorized it to accept a "foreign trade agreement." Since the GATT, unlike the more comprehensive ITO Charter, was considered a trade agreement, it was acceded to by the United States as an executiv-e agreement in January 1948. This has been the basis of U.S. participation ever since.
The -final version of the ITO Charter was negotiated in Havana from November 1947 to March 1948. Almost 13 months later, in April 1949, President Truman finally submitted the ITO Charter to Concoress.
A~nost 1 year after that, in the spring of 1950, the H-ouse Foreig(n Affairs Committee held hearings on the charter but never reported a bill. In December 1950, the administration dropped the attempt to secmire congressional approval for the ITO Charter.
What remained was the GATT, which itself has been am-ended eight -times since its inception. The following quotation describes the benefits of the operation of the loosely structured general agrreemnent:
*GATT-or more exactly the governments that belong to it-h4as developed working procedures and rules which have not only made effective tariff negotiations possi-





56

ble but have also provided for adjustments, consultation, the settlement of disputes, and the accommodation of member's special problems without destroying the framework of general principles or setting in motion the debilitating process of trade retaliation. The price of this pragmatism and flexibility has been an inability to assure the full application of the principles at all times; departures from the rules have been tolerated. But the processes of negotiation have been kept
going.'
The GATT should be looked upon not as a fixed set of rules, but as a limited agreement on tariffs and certain other trade barriers, and a framework for negotiating adjustments between trading partners while keeping certain principles in mind.

(1) GATT AND SECTION 22
Almost from the beginning, there has been tension between certain of the provisions of the GATT and U.S. agricultural trade policy. In 1948. Congress amended the Agricultural Adjustment Act, adding a provision that any international agreement to which the United States was or might in the future become a party would take precedence over section 22. Three years later, however, section 22 was amended to read, "No trade agreement or other international agreement applied heretofore or hereafter entered into by the United States shall be applied in a manner inconsistent with this section."
Also in 1951, Congress amended the Defense Production Act of 1950 and added a section requiring import quotas on fats, oils, and certain dairy products. This amendment was clearly a contravention of the GATT. Quotas imposed under the authority of the Defense Production Act gave rise to a complaint by the Netherlands that it had suffered injury from the quota. The complaint was resolved by a GATT committee agreeing that the Netherlands could withdraw equivalent tariff concessions made to the United States. The quotas instituted under the Defense Production Act were maintained, but moved under section 22 authority in 1953.
Because of the 1951 amendment to section 22 and the Defense Production Act amendments, in 1954 the United States was obliged to ask for a waiver of the application of GATT Article XI. As John H. Jackson has noted:
It was clear, of course, that the United States would have to
carry out the congressional enactment, whether or not GATT granted the waiver. Should the United States be forced to carry out the congressional enactment without a waiver, damage to the legal principles of GATT could, it was thought, ensue and indeed one result might be the withdrawal of the
United States from GATT.2
The waiver was granted with the requirement that an annual report on the operation of section 22 be made to the GATT. The United States
Siebold, William, Jr., Trade Policies Since World War II, Current History, June 1962, p. 357.
S Jackson. John IT., World Trade and the Law of GATT. New York, Bobbs-Merrill Co. 1969) p. 735.






57
has, since then, complied with the reporting requirement. Section 22 quotas are still in effect for certain commodities. The following is a list of the commodities and years in which section 22 quotas have been applied.
1939--Cotton.
1941--Cotton and wheat.
1952-Cotton, wheat, barley, oats, edible nuts, certain dairy
products.
1959-Cotton products, wheat and products, certain dairy products, linseed and linseed oil, peanuts and peanut oil, rye
and rye flour, tung nuts and oil.
1964-Cotton and products, wheat and products, certain dairy
products, peanuts.
1975-Cotton products, certain dairy products, peanuts.
While the U.S. waiver for section 22 is one of the most obvious instances where the GATT has not been observed, other countries can claim no special virtue. A large-majority of other contracting members to the GATT maintain nontariff barriers on the agricultural trade in open violation of the general agreement. In the 1950's and early 1960's, the continued violations of the terms of the general agreement in regard to agricultural trade had become such a way of life that little discomfort was felt by national representatives to the GATT and no efforts were made to suggest dates that the nontariff barriers might be dismantled.3 In 1962. a standing committee of GATT concerned with agriculture consulted 34 of the contracting parties and found that at least one and sometimes several, nontariff protective devices were used in practically every country consulted. In the case of dairy products, for example, 31 of the 34 countries applied one form and sometimes several, nontariff barriers: in the case of wheat, nontariff barriers were used in practically all wheat exporting countries. In Europe, even before institution of the European Community's Common Agricultural Policy (CAP). Belgium, the Federal Republic of Germany, and Luxembourg had requested GATT waivers on agricultural trade.

(2) GAT T AND SECTION 32
The GATT itself does not strongly limit export subsidies on agri cultural products. Article XVI(3) only requests that contracting parties seek to avoid the use of export subsidies on agricultural products. The article then proceeds. however, to state that if a contracting party does grant a subsidy which operates to increase the export of any agricultural product, the subsidy should not be applied in a manner which results in the contracting party obtaining "more than an equitable share of world trade in that product." From the beginning of the GATT, the United States has continued to use section 32 subsidies on various agricultural products, most notably cotton and wheat. In the aftermath of the controversy surrounding the 1972 Soviet grain sales. in Which subsidies of up to 62 cents a bushel were paid on wheat shipments to the Soviet Union even after large purchases had become evident, the United States terminated grain export subsidies.
3 Dam. Kenneth W. The GATT: Law and International Economic Organization. Chicago. University of Chicago Press (1970), p. 256.





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It should be noted that during the first several years of the existence of the Food for Peace program, Public Law 480, there was vocal opposition to its concessional sales provisions by foreign trade experts and U.S. agricultural export competitors. Even though it was recognized that the line between export subsidies and sales on concessional terms was not clear, there was a belief that Public Law 480 grants and sales, consisting of surplus U.S. agricultural commodities, effectively preempted the markets of other suppliers. It is highly unlikely, for example, that the U.S. share of the Polish market in the late 1950's or the Indian market in 1965-66 would have been nearly as large as it was without Public Law 480. While some in the United States saw Public Law 480 as food aid, other nations saw the program in terms of subsidized surplus disposal.

C. RECENT ISSUES IN AGRICULTURAL TRADE PoLicY
As Europe became an increasingly attractive market for U.S. commlercial agricultural exports in the late 1950's and early 1960's, the United States tended to place greater emphasis on the principle of free agricultural trade. At the same time, with the creation of the European Community's Common Agricultural Policy in the early 19(;0's, U.S. agricultural exports began to encounter increasing protectionism. Typical of the controversies which arose between theEuropean Community and the United States was the 1962 "chicken war" in which U.S. poultry exports were severely cut through the operation of the Community's poultry policy which combined two variable levies, a nondiscriminatory tariff and a tariff aimed only at nonmembers of the European Community. Following a formal U.S. complaint, a GATT panel determined that the damage inflicted on Amnerican exporters by the operation of the Community's poultry policy amounted to some $46 million a year. The United States, relying on article XXVII of the GATT, responded in January 1964 by rescinding tariff concessions worth approximately $46 million on U.S. imports of trucks and brandy, two commodities exported mainly by the European Community. Although the chicken war went no further, other controversies between the United States and the European Commnitv have continued to arise. The most recent concerned U.S. soybean exports displaced by EC surplus dried milk disposal activities.
In the 1964-67 Kennedy Round trade negotiations, the United States tried to link its concessions on industrial trade matters with other GATT members' concessions on agricultural trade. A specific goal was to limit the import restricting provisions of the European ComImunity's Common Agricultural Policy. This effort failed because no other nation was willing to abide by GATT agricultural rules, for domestic political reasons, and because the United States continued to hold a privileged position due to the section 22 waiver. The U.S. position was especially hard to defend because title II of the Trade Expansion Act of 1962 specifically mandated retention of section 22 authority. The significant tariff cuts on agricultural products that were negotiated at tihe Kennedy Round tend(led to make nontariff barriers. even more than l)reviously, the major impediments to freer l~!_ri(lltilral trade.







Tfhe conflict over agricultural trade policy continues in the current round of multilateral trade negotiations being held in Geneva. The United States is attempting, once again, to have agricultural trade barriers considered at the same time as industrial trade barriers. The European Community, unwilling to change its common agricultural policy, is not particularly concerned with agricultural trade liberalization. Nor is the European Community in favor of linking industrial and agricultural trade negotiations, or removing nontariff barriers to agriculture. The United States, having dropped its program of export subsidies, is pressing the European Community to eliinat the use of subsidies on all commercial agricultural exports. The continued existence of section 22 quotas and the GATT waiver remain controversial issues, though former U.S. Secretary of Agriculture Butz indicated that the elimination of section 22 quotas could be negotiated as part of a larger package that included the elimination of foreign export subsidies.
With the creation of GATT, U.S. agricultural trade policy entered a period of faoigfreer trade in agriculture in the GATT and at the same time continuing to take certain steps to control imports and exports in contravention of the GATT. Not surprisingly, U.S. trading partners have exhibited the same behavior.
In the early postlu-World War II period, the impetus for agricultural trade liberalization came from the Department of State, with the Department of Agriculture and U.S. agricultural interests hI-kewarm, or actively opposed. As American agriculture became more competitive in world markets, domestic agricultural interests gradually shifted to a free trade position. Access to other markets became the critical factor in maintaining a high level of agricultural exports. Today it is the Department of Agriculture, speaking for U.S. farmers, that Is opposing the Department of State in various controversies concerning the political use of food exports.












IX. DO'NTESTIC POLITICAL CONSIDERATIONS IN THE USE
OF U.S. FOOD FOR DIPLOMATIC PURPOSES: THE CONCER-N OF AGRICULTURAL INTERESTS
rl'l,,, ii ;e of U.S. food power for diplom,,itic piirposes has generally tn
beell viewed the. Amet-Wan Tarni community from the perspective Of its imI)act on in,,irkets for their products. During periods characterize(I bv laiwe-seale cri-ain surpluses, agricultural interests generally sitj)poi-1Wd commercial export programs and confessional sales of those (101I)PIO(Ilt 11-S to dek-elopin" cotilitries. They have argued. on the other Jimid. thit --ecent Government interference, in the market to constraill slilec, lias (-ost Aiiaerie.in fanners both monev and markets. If similar iiiai-ket disnij)tions conthme. farin spokcesm n maintain. farmers inay loc:,, tl.wli- incei1tives and/orthuir financial abilityto prodtice at or near capacity, with adverse conseqiieiices to the American economy.

A. FOOD POWER AND AGRIECULTURAL POLICY-NIAKING
In a 1,irzelv urban ericaa, the reaction of a,(Yi-ieiiltiira1 prodneers to prol-)osals lor the diplomatic use of food is closely linked to their I)ell(,f thit, tlleir economic interests are constantly in dancer of beincr sliolited M deference to urban demands for chJap food. While city dwellers, iiiay favor limitations on farm exports to keep retail foo4 prices down, farmers seek free access to -world inarkets to maximize their profits and sell their doinestle sin-pluses. Farm interests are ,qeutely sollsitive to tho d-,111(,rer doinesticalIN, motivated proposals for re4ilctlorfs on farin exports might be justi fied on diplomatic ('rjojjjj(1s. or that foreifrll policy proposals for export restrictions will be I- 1
siipportc(l byl iirbsn and labor interests because of the potential domesti(- pi-lce of such restrictions. 'Most farm organizations
t1wrefol-e 11"!ve opposecl. Goveniiiient restrictions on U.S. agricultural exj)(wts in tin,,e of peace aiid ha -(, opposed legislation cyianthirr the en tn
Presl(lciif hi-oad staiidbv :wtlioritv to Iiinit slich exports.
The -,'X( Wloism of fm:111 (-Xilolips r(,,(Yar(liii(r diplomatically 1110tiv"Ited restrictlow-, on fini-ni expoi-ts is 11ii-ther heitrlitene(l by their belief that t1le'N' lost eontroloNerthe til(yi-icultin-al policymaking process iii flie
ted State,.-,. For ni,,mv ytars farm organizations. land-grant Mstitljt*ojjs. t1le jTj;. Pep-jl:tii',(,iit of k(rricultjire ,md Comyressmen aiid Sellntol-,-, froln wryl-icultunll are'.1s wen, the major force iliflilencilig "Igi-ipolic A f't er 19 72, tho nill(rc. of tictive participants in policyliroa(leited to im-lude cowiimer orcranizatimis, 1(ibor unions the Fe(lonll Collllllisc lo,). Departmeias ofState :uid Ttaboi-, -wd ad(1111oll"11 (-()7l(rl,(1SS1011-11 cofill) I 1, -ell w ithill the D opllrtllwl t of Ari'l('111till.e. f(al-111 111tel-ests wen" 11o Imiger the so]e cmiceri-l. Url)an1); [. -wd fel'(1111(y Nccom ite(l for a (rj-oNN-ljl(r pol-t-joll of t1le I)(,1);[ 1-t 11 le., it's alld 1wd to coll.-;ider rel"Ated ISSUCIS
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such as ecology, civil rights, collective bargaining, and retail food prices.
The shift in the control of agricultural policymaking became clear during 1975. Consumer groups and labor unions expressed fears of a food price rise as a result of Soviet grain purchases and brought pressure on the Government to control exports to keep food costs down. Labor unions expressed concern for the consumer as justification for their boycott of Soviet grain shipments, though in the farmer's view the real reasons were far different. The negotiating sessions that settled the longshoremen's work stoppage were attended by union leaders and Government officials; no farm spokesmen were invited. When the administration extended the grain moratorium to cover Poland, the Secretary of Agriculture was not consulted or informed until the news became public knowledge. The chief negotiator sent to Moscow to discuss the terms of the grain agreement with the Soviets was from the Department of State, and articles in the press referred to Secretary Kissinger's takeover of control over agricultural trade with the U.S.S.R. By the end of 1975, farmers began to look upon Secretary of Agriculture Butz as something of a martyr, and the Department of Agriculture as a victim of the State Department and labor unions.
In early 1975 the policymaking machinery at the White House consisted of three related groups. Although the Secretary of Agriculture participated in each, he was chairman of none. Farmers resented the fact that the primary responsibility for determining agricultural policy was vested in other departments. The American Farm Bureau declared that "the State Department had used farmers as political pawns in its diplomatic game through manipulation of the marketing of agricultural commodities."
The National Association of 'Wheat Growers included this comment in its criticism of the Soviet grain agreement:
One can't help but wonder why a more meaningful agreement to agriculture and the general public couldn't have been reached, if negotiators were knowledgeable in agriculture and indoctrinated with free-market principles. President Ford is going to have to decide what the policies of his administration are. He and many of his spokesmen philosophy [sic] over the freedom to produce, freedom to market, and expanded and unfettered export opportunities-while Secretary of State Kissinger expounds restrictive commodity agreements. international pricing provisions, reserves, and food as a foreign policy weapon. The trail has forked, and they have taken separate paths.
In February, Bill Prichard, a spokesman for the American Soybean Association, came to Washington with a petition signed by 40,000 farmers in 14 States, calling for the control of agricultural policy to be returned to the Department of Agriculture. Prichard claimed that Government interference in the marketplace had cost 600.000 soybean farmers an average of $11,000 each during the past 2 years.
Perhaps to regain the confidence of the farm community. Presidellnt Ford reorganized the food policymakiiing groups in March 1970. 11 named the Secretary of Agriculture Chairman of the Agricultural





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Poliev Collin-littee, w1deli rcp1,,i(-ed t Xo committees prei-iously licaded bv the Secretaries of State and Trea Tkirv.
Althou(Th farriers ivere encouraged by the sliift, flivy were not entirely pleased ivith Secretary Blitz' position oil the food povver isstie. Butz acknowledged the 1111portance of foreign niarkets to Ainerican mariners. but lie niziinta*ned tliat the Pres'dent coidd not itrnor(, the options open to the 1-nited States in -%voi-ld affilirs., options that wero.
I Of its a(rr*C1lJt1ll-e. 1-I's N,*
va able becaitse f i I I iew seemed to plac(
power and petropower as two nialor factors ill world affairs, with the T-nited States making effective use of the power it had. Nevertlieless, Biil-z tried to reassure farmers and foreign customers about tht. tivailabili-tv of U.S. commodities for export. In Sincrapore ill April 1976. lie state(! that "we intend to make no use of exploit controls. Our e- -perience in 1973 of restricting exports of oilseeds and prodticts was a inistake-one, that we do not intend to repeat." He added. fliat the United States did not intend to make additional formal agreeinents I dKe the one with the Soviet Union because it was a response to a iin iqlle siniation.
Farm leaders liave iii-ged farmers to wor1c togetlier to aqstire tliat Irilicultural. policy decisions do not go apaiiist the prodiicer. They have Ill,,C-red joint action-; to control crop 1)rodiict-ion and to handle direct export mcarXI-Ttin(y of commodities. Oren Lee Staley of the -Nation.,,1 Mariners Organization, in a statement before the Subcomn-littee on Foreign Agriculturtil Policy of the Senate Agrictiltural and Forestry conlmitt ee in January 1976, stated the farmer's position succinctly:
Tf tli(, N-ation stints to use foo(I ,),s a tool or weapon., flien
let flho NCation Niv it at rea,.son.alde pi-ires ac; it (Toes nilinitiolls,
otl!('I- siippliesand Way intenilat ional polities ivith
everyoll, ,-s propel-ty-not the farillells! L,
products and solely at
f a rill Qrsl expense.

B. POTENTTALT ifPACT OF Tlir T-sr or FooiDPow-i-,iz oN-T U.S. F zir kxf)
NORTCULTURAT, "ATAIRIKETINC Snu(-,ruRES
Tile llq(, of V.S. food an iii4rimiont of Anierican for.-i"ll
prdi(- --Iif it sliotild I)e tised oil a significant scale. in the flitilreliaN-e a niaior I T. S. fanii and acrri(-ii1tm-a1
11111)"Ict, oil eli01FJ-,etinjr Sh-1](4111-CIS. Gril-C11 t'lle present sti-lictilre for the marl etlll(y of it Qyricifltiiral coininodifies, repeated iise of restraints oil foreif-ni
I el-) f of- d pl oni at i( en (N coiil d prm-e I I i glil N dil 1-111)til-e to t1l f, T-116
Mn-irriiinit- v. There, are approxini.itely 2.8 million farnis in the T-nited st:ltw Of Otis tol"11, aholit r10011000 lia -(, aiiiiii,,il sales of ',-,-,40.000 or 1110111, 111](1 Owse, accoiinf for 9. ') perceiit of the food niarketed ill the Vi6ted The rk-!11:1 in ill,(--r 2.2 111111ioll fal-ilis prodilee Only I-) Pellceiit of t1w fowl mai-kete(I in flie coiintrv.
'I'lle, "Ire "ol0listicated blisine.,4s eliterprises. 71e y re(111ire ],arrre, illplit's of capit;d tuid advance plaimimr. 'Many of tlicil. c,-)JJt,,I1 coefs "Ire fixe(]. swings ill price "Ind (]('Illalld f(;r flit, coin1 lwllt Ws flw \, 1)T-()dl1CV c;IT) S(iriollsl.N, tilreatcli tlv profitaN lif N -- illdee(I ., -!I otrel- ; o f 1-11tl,(, v 1,0 6 fit \,---Of -Il( (rp 1.
\foSf 111,111,ti- 1" .4,
W0111d pl-efer st"Ibiv ilwrl,-ct voll(litioll !-- evell :st soll)0 S"'I (11' 1 f(ice ill V(If,: I Lr(l 111"It-h'A. 'I'lle 11"e- or 01re"It1) 1 1 I () a I (r






63

eneci use-of U.S. food power abroad without domestic mechanisms to compensate for resulting price and demand fluctuations would almost certainly force large farm managers into forms of self-protective behavior that would reduce production levels and encourage dom-estic inflation.
Manyv small farmers, under such conditions, would probably be forced to find other means of livelihood. Several seasons of low prices and/or denial of access to world markets could erode their equity position and force them to turn to nonfarm work, or perhaps to the abandonment of marginal lands.
Middle-size farms would perhaps be best able to deal with market fluctuations and absorb price losses for limited periods of time. These farms generally have a good capital equity position against which to borrow, improving their chances of continuing in operation through a period of adversity generated by diplomatic strategies.
Thus, if the Government were to limit foreign sales for diplomatic ends without enacting new legislation to cushion the domestic effects, it seems likely that very large arms and small farms would be subject to financial pressures from which some owners might not be able to emerge with their holdings intact.
As noted in the introductory chapter of this study, systematic governmental intervention in agricultural markets is a necessary feature of a coherent national policy to use food for diplomatic ends. A Government-financed stabilization program would satisfy the basic requirements outlined by Oren Lee Staley of National Farmers Organization in January 1976. In effect, the Government would be purchasing food at a fair price to producers, and the "weapons" used in international affairs would be financed by all taxpayers. The- farmers would not be expected to bear the total cost of the Nat-ion's use of food power. Whether the benefits of institutionalized buffer stock programs to facilitate diplomatic use of 'food would outweigh possible inefficiencies resulting from increased Government intervention in the market is likely to remain a subject of continuing controversy.










X. POSSIBLE GOVERNMENT ALTERNATIVES FOR
MANAGING U.S. FOOD EXPORTS
Proposals to use agriculture to achieve diplomatic objectives implicitly or explicitly require Government supervision of grain and soybean exports. There is no way that grain and soybean exports can be managed in a manner that would achieve foreign policy objectives if the manager is the market and the actors are private grain traders. There is, however, a range in the degree of control that can be exerted over agricultural exports. This range runs from a State trading agency that would control the entire export process, allocating amounts, fixing prices, and making deliveries, to a structure like the Canadian Wheat Board, which sets prices to farmers and negotiates amounts and prices with foreign buyers, but leaves delivery to private contractors, to a hypothetical U.S. grain and soybean trading agency that would negotiate the contracts-according to a political or economic standardleaving prices to be determined by the market and allowing private suppliers and shippers to bid on the deals negotiated. In the last case. the degree of intervention in the market ranges from having responsibility for certain types of contracts, such as those with state trading agencies, to general responsibility over large contracts, to providing only general policy guidance to be implemented by private grain traders. As an alternative to creating some sort of Government trading agency while still controlling grain and soybean exports, it has been recommended that all agricultural exports be required to be shipped under a validated license to be granted by the Export Control Office in the Department of Commerce.' All existing private marketing and exporting companies would continue to operate as at present, buit with the clear understanding that some licenses might be modified or not granted for preannounced political reasons. or that prices negotiated might )e changed.
Before summarizing the diplomatic costs and benefits, it must be emphasized that current proposals to create a single U.S. grain marketing agency (such as that contained in H.R. 8933, introduced in the 94th Congress bv Representative Weaver of Oregon) have been very strongly. and almost uniformly, opposed by U.S. farm, marketing. and grain organizations, as well as by the Ford administration. The arguments a ainst such a proposal are based mainly on grounds of the superior flexibility and greater efficiency of the present system, and on a philosophical opposition to Governiment intervention in the market.
Assuming some single agency were created or some technionue used to control all U.S. Rain and soybe ans exports, what would be the diplomatic costs and benefits of such a move? On the benefits side of the equation :
I ehnpldpr, William. Food. Foreln Polley and Raw Materials Cartels, New York, (rane Rtissak & Company [1976j pp. 51-52.
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(i) The U.S. Government would be able to monitor or control the size and timing of U.S. grain and soybean exports. "Surprises" such as 1972 Russian grain deal would not recur.
Certain countrip- -,ould be rewarded through price or special access for supporting U.S. positions overseas or in international forums.
(2) The domestic impact of high world demand for grain or soybeans could be minimized. Any extraordinary claims on U.S. food resources could be regulated in order to keep prices under control. A recurrence of the 1973 soybean embargo could be prevented.
(3) A system of grain reserves could be more easily created and maintained with a single agency controlling the level of exports and diverting appropriate amounts to the grain reserve.
(4) The system for organizing grain and soybean exporting in this country would be more like those of our trading partners. Currently, several major competitors have single government agencies controlling grain exports. Many of the major grain buyers, Japan, the Soviet Union, the People's Republic of China, and most African and Asian countries deal through single state agencies.
(5) The agency would not face the disadvantage that private U.S. grain companies face when dealing with large buyers such as the Soviet Union, because of the buyers' ability to play off one seller against another in promising large contracts while actually concealing their overall needs.
(6) It is possible that the grain trading agency might be used to counter Third and Fourth World commodity cartels and demands for commodity indexation.
On the costs side of the equation:
(1) The move would run counter to U.S. policies favoring freer trade and decreased Government intervention in agricultural markets.
(2) For most of the developed market economies, a single government trading agency would tend to politicize the grain and soybean trade more than at present. The same kind of agricultural trade controversies that presently take place between the United States and the European Community would still take place, only sometimes the grain trading agency would be involved and other times the Department of Agriculture would be involved.
(3) In the case of disputes, the existence of such an agency would create government-to-government conflicts immediately rather than allowing a private grain trader to act as an intermediary in the first instance as at present.
(4) The existence of such an agency might imply that the control of U.S. cereals and soybean exports was a more effective and powerful tool than it would be in reality. That is. policymakers could tend to use the control of agricultural exports more often and for larger purposes than was feasible.
(5) The use of criteria other than commercial consideration bv the single market agency would directly contravene article XVIT (1) (h) of the GATT.
At the present time. many Fou rth and some Third World countries already conduct their agricultural import programs throu ih a U.S. Government agency because of their reliance on Public Law 4S0. For these countries, a switch from dealing with AID-USDA to a single grain trading agency would involve no real change. The transactions






66

would still be outside the market, the dependent relationship would still exist, the legislated and other U.S. requirements would still continue, and the inevitable political decision to provide food and allocate amounts would still be made. For those Third World countries that have relied entirely on U.S. commercial exports or those who have received some Public Law 480, trade would change. Such countries would be required to observe whatever conditions were established unless they were able to obtain their grain from Canada, Argentina, or Australia.
For the developed countries, a shift to a single grain trading agency could significantly change trade relationships. These countries have become accustomed to purchasing grain through private channels, with competitive pressures establishing prices. Imposing a Government agency between these contractual parties would represent a significant departure from traditional operating patterns. The fact, however, that other exporting countries use such agencies means that importing countries have experience with such a system. Where the United States is concerned, however, it would mean establishing a new set of commercial relationships. Since a similar change would not be required, in the case of competing exporters, it could mean some shift in trade to them, at least in the short term. In the longer term, the effect would depend on the aggressiveness of the Government agency in marketing U.S. farm products.
It should be noted that the greatest impact of a single grain and soybean trading agency would likely to be on domestic U.S. prices and production. In this case, foreign policy requirements would be only one element of a decisionmaking process heavily influenced by domestic political and economic considerations.









APPENDIX I
DESCRIPTrION OF THE EXPORT ADMINISTRATION ACT
The major legislation regulating agricultural export trade since World War II has been what is currently known as the Export Administration Act. The original act of 1949 (Public Law 81-110) was a modification of war-time legislation that gave the President authority to control exports for short-supply and national security purposes. The 1949 act stated the congressional finding that certain materials continued to be in short supply in the United States and abroad and that their export from the United States could have a serious effect on the domestic economy, on the fulfillment of American foreign policy, and on U.S. national security.
Section 2 of the 1949 act declared:
that it is the policy of the United States to use export controls to the extent necessary (a) to protect the domestic economy from the excessive drain of scarce materials and to reduce the inflationary impact of abnormal foreign demand, (b) to further the foreign policy of the United States and to aid in fulfilling its international responsibilities; and (c) to exercise the necessary vigilance over exports from the standpoint of their significance to the national security.
Section 3 conferred upon the President the authority to carry out these policies. The President was empowered to prohibit or curtail exports "under such rules and regulations as he shall prescribe," or to delegate such authority to appropriate officials.
Section 3(c) specifically limited the exercise of Presidential authority over agricultural commodities.
(c) the authority conferred by this section shall not be
exercised with respect to any agricultural commodity. incnluding fats and oils, during any period for which the supply of such commodity is determined by the Secretary of Agricuiflture to be in excess of the requirements of the domestic economy. except to the extent required to effectuate the nolicies set forth in clause (b) or clause (c) of section 2
hereof.
In determining which commodities should be controlled. and to what extent, the official making the determination was required to seek "information and advice from several departments and independent agencies concerned with aspects of our domestic and foreign policies and operations having an important bearing on exports." In authorizing exports under the act, the responsible official was to encourage the full utilization of private competitive channels. "giving consideration to the interests of small business, merchant exporters as well as producers, and established and new exporters."
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The act of 1948 was extended without any significant revision in 1951, 1953, 1956, 1958, and 1960.
The amendments of 1962 (Public Law 87-515) added new material to sections 2 and 3 of the act. The addition to section 2, the declaration of policy, stated that it was U.S. policy to formulate and apply export controls in cooperation with all nations with which the United States had defense treaty commitments, and to formulate a unified policy to be observed by non-Communist nations in their dealings with Communist-dominated nations to further the national security and foreign policy objectives of the United States. Section 3(a) was amended to provide for denial of a request to export goods from the United States to any nation threatening the national security of the United States if the President determined that such exports made a significant contribution to the military or economic potential of that nation, to the detriment of the United States.
A 1965 amendment (Public Law 89-63) to the 1949 act added a fourth paragraph to section 2:
(4) the Congress further declares that it is the policy of
the United States (A) to oppose restrictive trade practices or boycotts fostered or impose by foreign countries against other countries friendly to the United States and (B) to encourage and request domestic concerns engaged in the export of articles, materials, supplies, or information, to refuse to take any action, including the furnishing of information or the signing of agreements, which has the effect of furthering or supporting the restrictive trade practices or boycotts fostered or imposed by any foreign country against another
country friendly to the United States.
In 1969 a new Export Administration Act became law (Public Law 91-184). It enumerated in more detail the basic policies incIuded in the previous act. The 1969 act was based on four congressional findings: (1) The availability of certain materials in the United States and other nations varies, so that the composition, quantity. and distribution of U.S. exports may effect the domestic economy and the fulfillment of the foreign policy objectives of the United StateF. (2) Unrestricted exports may adversely affect the national security of the United States. (3) Unwarranted restrictions of U.S. exports have a serious adverse effect on U.S. balance of payments. (4) The uncertainty of export policy for certain commodities has curtailed the efforts of American business in respect to these monm IJodities to the detriment of U.S. trade balances.
In section 3 of the act, the Congress declared U.S. policy in five ar ea s.
SEc. 3. The Congress makes the following declarations: (1) It is the policy of the. United States both (A) to encourage trade with all countries with which we have diplomatic or trad:ling relations, except those countries with which such t nrade has been determined by the President to be against tle national interest. and (B) to restrict the export of goods and technology which would make a significant contribution to the military potential of any other nation or nations which wWld( prove letrimental to the national security of the United
States.






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(2) It is the policy of the United States to use export
controls (A) to the extent necessary to protect the domestic economy from excessive drain of scarce materials and to redluce the serious inflationary impact of abnormal foreign demand, (B) to the extent necess-ary to further significantly the foreign policy of the United States and to fulfill its international responsibilities, and (C) to the extent necessary to exercise necessary vigilance over exports from the standpoint of their significance to the national security of the United
States.
(3) It is the policy of the United States (A) to formulate,
reformulate, 'and apply any necessary controls to the maximum extent possible in cooperation with all nations with which the United States has defense treaty commitments and (B) to formulate a unified trade control policy to be observed
by all such nations.
(4) It is the policy of the United States to use its economic
resources and trade potential to further the sound growth and stability of its economy as well as to further its national
security and foreign objectives.
(5) It is the policy of the United States (A) to oppose
restrictive trade practices or boycotts fostered or imposed by foreign countries against other countries friendly to the United States, and (B) to encourage -and request domestic concerns engaged in the export of articles, materials, supplies, or information, to refuse to take any action, including the furnishing of information or the signing of agrTeements, which has the effect of furthering or supporting the restrictive trade practices or boycotts fostered or imposed by any foreign country against another country friendly to the United States.
Section 4 of the 1969 act amended the duties of the Secretary of Commerce to implement, review, and report trade policies. It also stated the authority of the President to establish rules and regulations for exports. Section 4 (f ) reiterated the restriction on the use of export controls on agricultural commodities.
(f) the authority of this section shall not be exercised
with respect to any agricultural commodity including fats and oils, during any period for which the supply of such a commodity is determined by the Secretary of Agriculture to be in excess of the requirements of the domestic economy.
except to the extent required to effectuate the policies set forth in clause (B) or (C) of paragraph (2) of section 3 i
this Act.
Section 5 of the 1969 act restated the requirement for consimitatiorn before establishing export controls and encouraged full utilizzatiomi of private trade channels for authorized exports. Other sections enumnerated the penalties for violation, enforcement procedures, amid reporting requirements.
The 1969 act was extended in 1971, and aimeiided in 1972 by the Equal Export Opportunities Act (Public Law 92-412). The 1972 amendments added as a declaration of policy that the desirability of subjecting or continuing to subject commodities to export controls





70

should be subject to review and consultation by U.S. Government agencies and qualified experts from the private sector. The 1972 amendment (1) required that Secretary of Commerce undertake a review of export controls to determine whether the controls should be removed, (2) authorized the President to remove unilateral export controls, and (3) required additional executive branch reports to the Congress.
The June 1973 embargo on soybeans, cottonseed, and their products, was imposed under the legal authority set forth in the Export Administration Act of 1969. At the time of the imposition of the embargo Secretary of Commerce Frederick Dent declared that the conditions required under section 3(2) (A) of the 1969 act had been met. The embargo was imposed with the approval of the Secretary of Agriculture.
The 1969 act was to expire on June 30, 1974, but Public Law 93372 extended the expiration date through September 30, 1974, while debate continued on substantive amendments. The amendments did not become law until October 29, 1974. During the interim period of September 30-October 29, the administration relied on permanent "national emergency" legislation, such as the Trading With the Enemy Act. for standby authority to control exports.
The 1974 amendments (Public Law 93-500) extended the Export Administration Act through September 30,1976, and made several substantive changes in the 1969 act. To the four congressional findings enumerated in section 2 was added:
(5) Unreasonable restrictions on access to world supplies
can cause worldwide political and economic instability, interfere with free international trade, and retard the growth and
development of nations.
The declaration of policy in section 3 was amended in two ways. First, the word "abnormal" was removed from section 3(2) (A). It therefore became possible to institute export controls if any level of foreign demand resulted in an excessive drain of scarce materials and serious domestic inflation. Second, a new paragraph (7) was added to declare an additional policy for the use of export controls.
(7) It is the policy of the United States to use export controls, including license fees, to secure the removal by foreign countries of restrictions on access to supplies where such restrictions have or may have a serious domestic inflationary impact, have caused or may cause a serious domestic shortage, or have been imposed for purposes of influencing the foreign policy of the United States. In effecting this policy, the President shall make every reasonable effort to s"ure the removal or reduction of such restrictions, policies, or actions through international cooperation and agreement before resorting to from the imposition of controls on the export of materials the United States: Provided, that no action in fulfillment of the policy set forth in this paragraph shall apply to the
export of medicine or medical supplies.








Additional amendments were made to section 4 establishing procedures by which any persons engaged in a domestic business operation could request exemption from export controls in order to alleviate a unique hardship resulting from those controls. The desire to sell at higher prices was declared unacceptable as evidence of unique hardship.
Other amendments of relevance concerned the monitoring and reporting procedures under sections 5 and 10. The quarterly report to Congress, under section 10, was thereafter to include al analysis by the Secretary of Commerce of (1) the impact on the economy and world trade of shortages or increased prices of commodities subject to monitoring under the Export Administration Act and to the reporting requirements of the Agricultural Act of 1970, (2) the worldwide supply of those commodities, and (3) actions taken by other nations in response to such shortages or increased prices.
Although the Export Administration Act has not been invoked for more than monitoring, minimal licensing, and reporting of exports since the soybean embargo of 1973, the existence of this standby authority convinced U.S. grain trading companies to cooperate in the voluntary prior-approval system of 1974, and the moratorium on grain sales to the Soviet Union and Poland in 1975. Farm groups, especially the National Association of Wheat Growers, have charged that the voluntary 1975 moratorium violated the terms of the 1969 act, as amended. The NAWG is considering a lawsuit to test the recent Presidential actions in the courts.
In a respose to a congressional inquiry on the legality of the moratorium and the U.S.-U.S.S.R grain agreement, the State Department submitted a legal memorandum and written answers to specific questions. In answer to a question about the legal authority for the administration's action in 1975, the State Department replied:
The Department regards the Export Administration Act as
the basic authority for the President to impose domestically enforceable export controls. The President must comply with the terms of that act or some other authorizing legislation or treaty in order to enforce export controls as a matter of domestic law. The Export Administration Act, however, does not require the President to impose controls at any time on any product, nor does it derogate from the President's power to take actions, including the Grains Agreement and the various informal reacests and understandings, which may affect exports but which have independent constitutional or legislative authority. That such actions may not be enforceable domestically without prior compliance with the Export Administration Act does not render them or their authority invalid.
As an explanation of the grain agreement and its relationship to the 1969 act, the State Department concluded:
The Congress has granted tho Presdentv very bro-I nilthority to control exports from the TTnited States in the Export Administration Act of 1969, as amended, 50 U.S.C. App.
2401-241.'. 'With reopeet to agricultural commodities, Con-






7 2

gress has made clear in Section 4(f) that export controls may be-but are not required to be-established in cases of extreme short supply or when the President determines that such controls are required to further significantly the foreign policy of the United States and to fulfill its international responsibilities, or to protect the national security.
As Congress has granted the President complete discretion to impose or not to impose export controls on general foreign policy grounds, it is well within the constitutional power of the President to agree, as in Article II of the Agreement, not to exercise that discretion to control the export of a defined quantity of grain for a specific period of time under conditions where the United States grain supply does not fall below certain limits. This undertaking is consistent with the policies of the Export Administration Act as stated in Sections 3 and 4(f). Moreover, as this assurance was necessary to obtain the Soviet purchase commitment, it serves the purpose of the Agricultural Marketing Act.
A question has been asked whether the consultation provisions of Article IV of the Agreement constitutes de facto export controls without regard to the procedural requirements of the Export Administration Act. The grain Agreement with the USSR clearly meets the foreign policy criteria of the Export Administration Act. Thus, the President could have--or could in the future-rely on the authority of that Act if he determines that export controls are in the national interest. However, the Agreement itself does not limit the export of United States grain or establish any controls
enforceable under United States law.
The 1974 extension of the Export Administration Act of 1969 was to expire on September 30, 1976. Both the Senate and the House had passed extension bills before adjournment of the 94th Congress. However, both bills died when no Senate conferees were appointed before final adjournment. Two provisions of the extension bills are pertinent to this study.
The first pertinent provision of the extension bills was the Huddleston amendment to section 4(f) of the act. According to the amendment no export controls could be imposed on agricultural commodities for foreign policy reasons until a Presidential determination had been made that such controls were required, and until a 30-day period had elapsed during which Congress could adopt a concurrent resolution disapproving of the proposed controls. The amendment, added to S. 3084 on the Senate floor by a voice vote, did not provide for congressional disapproval of export controls for short supply or national security reasons. The Huddleston amendment was proposed to the House Tnternational Relations Committee during its markup of TT.R. 153)77, but encountered strong opposition and was defeated.
Second. identical sections-108 in S. 3084 and 16 in IT.R. 153771uthorized the Secretary of Commerce, in consultation with the Secretory of Agriculture to guarantee that agricultural commodities purchased by or for the use of foreign countries, and stored in the United States for export. would remain free from any short supply export







controls later imposed if the purchaser gave adequate assurances that
(1) the comm cities would be eventually exported, (2) neither the sale nor export of the commodities would result in an excessive drain of scarce materials from this country or have a serious domestic inflationary impact, (3) storage of the commodities in the United States would not unduly limit the space available for domestically owned commodities, and (4) the purpose of the storage inthis country was to establish a reserve for later use, but not including resale to a third country. The provisions were intended to give greater assurance to foreign buyers that the commodities they had purchased and paid for would not be'subject to quantitative export controls imposed after the purchase had been made, and to encourage the acquisition of reserve supplies of U.S. farm commodities by foreign buyers.











APPENDIX 11
TABLE 1. -WH4EAT: I WORLD EXPORTS AND PERCENTAGE OF TOTAL BY SELECTED EXPORTERS, FISCAL YEARS 1951 THROUGH 1976


World World
United Slates Canada Australia Argentina U.S.S.R. West Europe East Europe Other total producMillion rilo Million Million Million Million Million Million Mmillio(ilun Pertion
mnetr.-c metric metric metric metric metric metric metric metric metriif IL xFscal year tons Percent tons Percent tons Percent tons Percent tons Percent tons Percent tons Percent tons Percent tons) tons) ported

1951 ------ 9.9 35 7.8 27 3.9 13 2.8 10 1.6 5.0 1. 1 4 0.5 1.0 0.4 1.0 28.2
1j2---- 12.9 44 9.4 32 2.6 9 .8 2 1.8 6.0 .5 2 .4 1.0 .3 1.0 29.0--------- 8.6 32 10.6 39 2.7 10 .7 3 1.9 7.0 .8 3 .5 1.0 .7 2.0 26.7--------194~ 5.8 241 7.8 32 1.9 7 2.9 12 1.5 6.0 1.8 7 .6 2.0 1.7 7.0 24.4--------15 .... 7.4 27 6.8 25 2.5 9 3.5 13 1.4 5.0 2.7 10 .6 2.0 1.9 7.0 27.3
196---- 9.4 30) 7.8 25 2.8 9 3.1 10 1.9 6.0 3.4 11 .4 1.0 1.4 4.0 30.4--------S 14.9 43 7.4 21 3.4 9 2.6 7 3.1 9.0 1.7 4 .4 1.0 .9 2.0 34.7--------18.. 109 33 8.1 25 1.6 5 2.1 6 4.3 13.0 4.1 12 16.9 30 24
1J59--------12.0 313 8.1 22 2.0 5 2.7 7 6.1 17.0 3.5 9 .2 .9 1.0 2.0 36.0------11----13.8 3 7 7.7 20 3.1 8 2.1 5 5.7 15.0 3.4 9 .5 1.0 .8 2.0 37.2 ----------h6---- 17.9 41 9.3 21 4.9 it 1.9 4 5.0 11.0 2.9 6 .5 1.0 .3 .7 43.0 240 1
1962--------19.6 40 9.9 20 6.2 12 2.3 4 5.3 11.0 3.8 8 .4 .9 .4 .9 48,3 226 21
16----17.3 38 9.0 20 4.7 10 1.8 4 5.7 12.0 4.6 10 .3 .8 .7 1.0 44,4 256 17
14----23.1 40 15.0 26 7.7 13 2.7 4 2.6 4.0 4.7 8 .3 .5 .9 1.0 57.3 238 24
1965--------19.3 36 11.8 22 6.4 12 4.2 8 2.1 4.0 6.8 13 .3 .7 1. 1 2.0 52.4 275 19
1966 --------23.3 36 14.8 23 5.6 8 7.8 12 2.6 4.0 6.8 10 .8 1.0 1. 1 1.0 63.3 265 23
19G-------- 19.3 3 4 14.8 25 6.9 12 3.1 5 4.3 7.0 5.8 10 1.7 3.0 .6 1.0 57.4 307 18
1968- -- -----20.1 37 8.9 16 7.0 13 1.3 2 5.2 9.0 7.7 14 2.3 4.0 .6 1.0 53.5 295 18
1969--------14.6 29 8.7 17 5.3 10 2.7 5 5.6 11.0 9.2 16 2.0 4.o .6 1.0 49.2 328 15
1970 --------16.4 30 8.9 16 7.3 13 2.0 3 6.4 11.0 11. 1 20 1.2 2.0 .7 1.0 54, 5 309 17
1971-------- 19.6 33 12.6 21 9.5 16 1.6 2 7.2 12.0 6.4 11 .8 1.0 .3 .6 58,5 313 18
1972--------16.9 28 15.8 27 8.6 14 1.3 2 5.8 9.0 8.7 14 .6 1.0 .6 1.0 58.5 346 14
17----31. 7 43 15.6 21 5.4 7 3.5 4 1.3 1.0 12.0 16 .9 1.0 1.9 2.0 72.4 339 21
1974-_-------31.1 45 11,5 16 5.4 7 1.1 1 5.0 7.0 12.3 17 1.9 2.0 .7 1.0 69.0 367 19
1975--------28.0 40 11.2 16 8.2 11 2.2 3 4.0 5.0 13.0 18 1.7 2.0 ., 4 68.6 352 19
1976--------32.4 44 12.5 17 8.8 12 3.8 5 .5 .6 12.9 17 .8 1.0 .5 .6 72.2 343 21

1 Includes flour. Sources: World Grain Trade Statistics. USDA. FAS M-258 September 1974, Worldj Grain Situation:2 Percents may not total due to rounding. Review and Outlook. USDA. FG 6-76, April 1976. Production Figures: USDA, World Grain Situation.
3 Preli minary. Review plus Outlook. Foreign Agriculture Circular FG 6-76, April 1976, p. 25.







75

TABLE 2.-AVERAGE ANNUAL PRICES RECEIVED BY U.S. FARMERS FOR WHEAT, CORN, AND SOYBEANS
lin dollars per bushel

Calendar you Wheat Corn Soybeans

1945 ------------------------------------------------------- 1.49 1.23 2.08
1946 ------------------------------------------------------- 1.90 1.53 2.57
1947 ------------------------------------------------------- 2.29 2.16 3.33
1.98 1.28 2.27
1949 ------------------------------------------------------- 1.88 1.24 2.16
1950 ------------------------------------------------------- 2.00 1.52 2.47
1951 ------------------------------------------------------- 2.11 1.66 2.73
1952 ------------------------------------------------------- 2.09 1.52 2.72
1953 ------------------------------------------------------- 2.04 1.48 2.72
2.12 1.43 2.46
1955 ------------------------------------------------------- 1.98 1.35 2.22
1956 ------------------------------------------------------- 1.97 1.29 2.18
1.93 1.11 2.07
1958 ------------------------------------------------------- 1.75 1.12 2.06
1959 ------------------------------------------------------- 1.76 1.05 1.96
1960 ------------------------------------------------------- 1.74 1.00 2.13
1961 ------------------------------------------------------- 1.83 1.10 2.28
1962 ------------------------------------------------------- 2.04 1.12 2.36
1.85 1.11 2.51
1964 ------------------------------------------------------- 1.37 1.17 2.62
1965 ------------------------------------------------------- 1.35 1.16 2.54
1.63 1.24 2.75
1967 ------------------------------------------------------- 1.39 1.03 2.49
1.24 1.08 2.43
1969 ------------------------------------------------------- 1.25 1.16 2.35
1970 ------------------------------------------------------- 1.33 1.33 2.85
1.34 1.08 3.03
1972 ------------------------------------------------------- 1.76 1.57 4.37
3.95 2.55 5.68
4.09 3.03 6.64
1975 ------------------------------------------------------- 3.52 2.46 4.60

Source: USDA Agricultural Statistics.












TABLE 3.-FOOD AID AS A MAJOR END-USE FOR U.S. WHEAT, FEED GRAIN, AND SOYBEAN OIL PRODUCTION
[Dollar amounts in millions]

Value of U.S. Volue of U.S. Food aid feed Value of U.S. Food aid soybean
wheat amd flour Food aid wheat feed grains grains as a soybean oil oil as a percentexported under Total value of as percentage exported under Total value of percentage of exported under Total value of age of total food aid U.S. wheat and of total whleat food aid U.S. feed grains total feed grain food aid U.S. soybean soybean oil' Fiscl year programs flour exports exports programs exports exports programs oil exports exports

1949 ......... ................... ... $981 $1,300 75 $212 $280 76 NA $45
1950 -------------------------------- 596 661 SO 209 245 87 'NA 72
1951 ... ... ..................... .. 334 729 45 188 366 53 N A 68 ------- --------1 952 ------------------------- N A 1,060 ---------------- N A 324 ...... ......... N A 16 ---------------195') .....NA---------------------9--------9N A 209 ----------------- N A 11 -----------1954--------------------------------- NA 441 ---------------- NA 224 ----------------- NA 5 -----------1955 -------------------------------- 274 491 56 NA 236 ----------------- NA 58 -----------1956--------------------------------- 405 587 69 NA 388 ---------------- NA 145 ............. -1957 --------------------------------- 641 930 69 NA 336 ---------------- NA 92
1958--------------------------------- 474 723 65 102 398 25 $70 93 76, .,
199 --------------------------------- 653 773 84 106 530 20 94 100 94,
1960 --------------------------------- 645 874 73 149 545 27 72 109 66
1961 .-------------------------------- 833 1,150 72 143 537 26 60 97 61
1962 --------------------------------- 895 1,282 69 185 701 26 76 117 64.
1963 --------------------------------- 885 1,157 76 93 733 12 60 132 45.
1964 --------------------------------- 927 1,517 61 85 819 10 70 109 64
1965 --------------------------------- 999 1,239 80 72 945 7 113 175 64.
196 --------------------------------- 936 1,401 66 113 1,350 8 105 140 75
1967 --------------------------------- 642 1,311 48 207 1,162 17 126 145 86
1968 ------------------------------- 634 1,277 49 118 1,015 11 112 117 95
1969 -------------------------------- 403 892 45 37 768 4 76 89 85
1970 --------------------------------- 390 941 41 62 987 6 85 138 61
1971 --------------------------------- 382 1,200 31 67 1,092 6 120 242 49
1972- -------------------------------- 377 1,048 35 77 1,118 6 129 224 57
1973 -------------------------------- 304 2,345 12 93 2,311 4 75 144 52.,
1974 --------------------------------- 249 4,695 5 102 4,651 2 72 294 24Sources: Fiscal years 1949-51, table 18, USDA; U.S. Farm Products in Foreign Tr3de, Statistical Bulletin 112, 1953. Fiscal years 1955-57, calculated from volume data in Foreign Agricultural Trade of the U.S. November-December 1962. Fiscal years 1957-74, USDA Agricultural Statistics, fiscal years 1958-74.




~~ ~~ ... ...j








77


TABLE 4.-VALUE OF U.S. EXPORTS, AGRICULTURAL. EXPORTS, AND EXPORTS OF COARSE GRAINS, WHEAT, AND SOYBEANS

[Dollar amounts in millions]

Value of
exports of
Agriuf-'wheat and flour;
Agricul-Coarse grains; and
tuiral soybean products
exports as Exports Of as a percentage
Total Agricul- a percentage Exports of Exports of soybeans, of the value of U.S. tural of total feed wheat and meal, and total agricultural
Fiscal year exports exports exports grains flour oil exports

1930------------ $4,618 $1,496 32 -------------------------191'-- - 3,032 1,038 134 - - - - - - - - - - - -
192 - - - 1,908 752 39 - - - - - - - - - - - -
1933 ------------- 1,413 590 42 -------- ----------- ------
194------2,008 787 39 ------1935 ------------- 2,085 669 32 -- ----------------- ------1936 ------------- 2,375 766 32
1937--- ---------- 2,791 732 26 -------- --------------- -1938 ------------- 3,362 891 27 -- --- - -- - - -- - -- - --
1939------------- 2,885 683 24 -- - - -- -- - - - - - - -- -
19403------------- 3, 744 738 20 ------------------------
1941 ------------- 3,959 350 9 -- - - - - - - - - -- - -
1942 ------------- 6,451 1,032 16
1943 ------------- 10,023 1,497 15 - -- -- -- - - -- - - -- - -1941 ----------- 14,698 2,305 16----- -------------195------12, 549 2,191 17 $33 $79 $226
1946 ------------- 8,468 2,857 34 52 563 23 22
1947 ------------- 12,725 3,610 28 305 876 48 34
1948 ------------- 13,799 -3,505 25 173 1,361 48 45
1949 ------------- 12,690 3,830 30 280 1,300 110 44
1950 ------------- 10,104 2,986 30 245 661 103 34
191------12,598 3,411 27 366 729 154 36
192---------5,7 4,53.2 326 1,060 127 37
193------15,126 2,819 19 309 669 112 38
194------15,226 2,936 19 224 441 149 27
1955------- --14,927 3,144 21 236 491 180 29
196------16,896 3,496 21 388 587 329 37
1957 ------------- 20,672 4,728 2336 930 375 35
198------18,741 4,003 21 398 681 327 35
1959------------ 17,357 3,719 21 530 726 369 44
190------19,110 4,519 24 545 812 465 40
191------20,507 4,946 24 537 1,080 486 42
192------21,447 5,142 24 710 1,216 522 47
1963 ------------- 21, 638 5:,078 23 733 1,087 684 49
194------24,718 6,068 25 819 1,453 726 49
1965 ---------26,331 6,097 23 945 1,184 938 50
196------28,886 6,676 23 1,350 1,357 1,050 56
197------30,819 6,771 22 1,162 1,268 1,122 52
1968 ------------- 32,195 6,311 20 1,015 1,250 1,100 53
1969 ---------- --- 35,221 -5, 741 16 768 893 1,122 49
190------41, 05 9 6,721 16 987 942 1,520 51
191------43,663 7,758 18 1,096 1,201 1,895 54
1972-----------44,848 8,047 18 1,118 1,048 1,993 51
193------57,815 12,902 22 2,311 2,345 3,123 60
1974 ------------- 84, 960 21, 323 25 4, 652 4, 695 4, 632 65

Source: Calculated from USDA Agricultural Statistics, 1951-75.






















TABLE 5. -WHEAT AND WHIAT FLOUR: MAJOR U.S. EXPORTS BY COUNTRY OF DESTINATION, BY REGION, AND AS A PERCENTAGE OF THE RECEIVING COUNTRY'S WHEAT AND WHEAT FLOOR IMPORTS FROM ALL SOURCES I
IMetric, tons in thousands; fiscal yea rsl

1966 1957 1968 1969 1970 1971 1972 1973 1974 1975 1976'
Metr Ic Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Per- 00
tons cent tons cent tols cent tons cent tons cent tons cent ton s cent tons cent tons cent tons cent tons cent

Western Hemisphere:
Mex -- o------ 1 14 4 100 -------- 3 100 3 6 4 80 402 98 650 100 705 89 832 100 ISO) 100
Brail----------------- 848 36 1,142 43 2,047 67 771 32 945 45 768 42 488 30 1,16G6 39 1,560 63 662 33 2,807 70
Chile ---------- 211 67 59 9 56 12 38 10 29 14 151 32 7 1 1 1 613 54 550 72 598 74
Peru----------------- 214 42 550 100 260 41 113 20 166 26 199 30 458 70 536 66 471 63 616 69 600 70
Veneziuela___. 375 67 453 76 611 87 685 88 699 92 441 74 628 81 625 93 575 95 499 92 510 18
Western Hemisphere
toa------2,598 11 3,140 15 3,362 16 2,771 18 2,996 18 2,919 14 3,276 19 4,348 13 5,369 18 4,530 16 N/A --Western Europe, EC:
GeM1,Wst----- 512 26 504 28 453 24 442 17 316 17 681 26 215 7 250 8 328 15 328 22 400 25
Netherlands------------ 368 46 400 48 290 30 286 22 288 17 555 42 558 40 771 39 488 3.2 635 35 600 3
United Kingdom ----- 517 11 577 13 238 5 123 2 323 6 1, 169 21 522 13 843 18 402 13 203 6 800 2
ECtoa-------2,7317 11 2,352 12 1,829 9 2,058 13 1,783 10 3,356 16 1,779 10 3,022 9 2,478 8 2,158 7 N/A.....Other Western Europe ---- 6?2 -- 384 --------173 --------215 --------426 -- 733 ---- 408 509 674 ---- 418...............--Total Western Europe-- 3,409 14 2,736 13 2,002 9 2,273 15 2,209 13 4,090 20 2, 187 iz 3,531 11 3, 152 10 2,576 9 N/A
Eastern Europe: Poland --- 26 1 153 9 41 3 14 1 10 1 1 ------------------- 610 47 213 15 52 3 1,000 s0
Eastern Europe total--------- 1, 563 6 477 2 3?5 1 14 ---- 0--- 875 4 34 ---- l,233 3 851 2 124------- N/A --Total Europe-------- 4,972 ------ 3,213 --- 2,328 --- 287 --- 2,219 --- 4,965 --- 2,221 ... 4.764 4,003 2,700 ---- /A ...
U.S.S.R -----------------------------------------------------------------------------------------3------....9,468 63 2,725 61 978 39 4,500 42







Asia:
Bangladesh ------------------------------------------------------------------------------------------------- 304 28 979 44 505 31 442 21 800 48
China, Peoples Republic ---------------------------------------------------------------------------------------------------- 591 11 3 190 56 1,496 25 -------------India ------------------ 7,137 93 4,528 68 5,628 86 2,303 60 2,539 83 1,391 60 932 57 382 37 11620 44 3 834 67 4,500 69
Iran -------------------- 285 100 157 71 2 3 ---------------------------- 240 100 588 52 503 68 584 97 1: 332 84 1,000 76
Japan ------------------ 1,929 54 2,203 52 2,258 56 1,824 43 2 277 51 2 940 60 2 139 43 3,397 61 3 052 57 3,224 59 3 100 55
Korea, South ------------ 527 87 b44 83 765 89 968 86 1: 629 97 1: 701 97 1:461 79 1 621 91 1: 627 100 1,577 100 1:600 100
Pakistan --------------- 968 78 1,097 62 2,079 97 649 86 987 90 654 60 947 92 1: 122 82 536 53 826 54 700 58
Taiwan ----------------- 372 96 240 90 400 98 371 64 580 100 574 83 313 57 499 75 664 94 544 86 475 86
Turkey ----------------- 419 100 16 6 38 84 304 55 682 77 528 92 100 18 31 100 329 54 692 67 4 33
Asia total ------------- 13,022 56 10,228 51 13,380 65 8,821 60 10,108 61 10,401 52 9,482 56 11,376 35 15,040 48 17,169 61 N/A -----Af rica:
AWria ----------------- 314 78 753 80 257 38 243 34 176 64 251 38 455 51 408 63 1,045 65 717 47 900 60
Egypt ------------------ 1,256 53 1,275 51 24 1 ---- ----- j ---- 6 ----- ii -------- 292 9 784 24 811 24 1,000 29
Morocco ---------------- 176 49 586 57 632 65 5 8 76 265 57 577 55 575 52 400 29
Africa total ------------- 2,438 11 3,V0 16 1,279 6 839 5 1,127 7 1,604 8 1,885 11 1,789 5 3,374 10 2,633 9 NA -----Total U.S. exports to
world 23,033 ------ 19,614 ------ 20,352 ------ 14,721 ------ 16,452 ------ 19,893 ------ 16,869 ------ 31,749 31,016 ------ 28,027 ------ 32,400 -----The data are derived from 2 different sets of trade statistics: Reference Tables on Wheat, Corn, and porting periods and frequentlyy) poor trade statistics on either end, the regional totals may not reflect Total Coarse Grains Supply-Distribution for Individual Countries, USDA. Foreign Agriculture Cirrular the individual country totals shown for the relevant time period, or vice versa. In addition to these FG 9-761 may 1976, for individual country data: and U.S. Grain Export Trends, Foreign Agriculture potential sources of error, the individual country figures themselves should be looked upon as only Circular FG 7-76, May 1976, for regional data and totals. The individual country totals add the percent approximate. For our purposes here, the figures are accurate enough to provide sufficient data on the of these totals comprised of shipments from the United States are based on the importing country's major consuming countries upon which to draw policy conclusions. Only those countries which have rei statistics for receipt of wheat and feed grains from the United States. The overall regional totals are purchased more than 500,000 metric tons of wheat or feed grains in any I year are included on these based on U.S. data on shipments to the designated regions and U.S. calculations as to the percent of tables. that region's imports comprised by U.S. exports. Because of time lags due to shipping, different re- 2 Preliminary.










TABLE 6.- FLED GRAIS:1 WORLD EXPORTS AND PERCENTAGE2 OF TOTAL BY SELECTED EXPORTERS, FISCAL YEARS 1951 THROUGh 1973

(Metric tons in millions]

World World
United States Canada Australia Argentina U.S.S.R. West Europe East Europe Other total producexports tion a
Metric Metric Meti c Metric Met ic Matric Metic Metric (metric metricc
Fscal year to is Percent tons Percent tons Pecejit to,13 Percent tons Parcent tons Percent tons Percent tons Percent tons) tons)

1951 .. 5.6 48 0.6 5 0.6 5.0 0.6 5 1.5 13.0 0.2 2 0.2 2 2.0 17 11.7
19)2 ------------------------- 4.4 31 2.3 16 .5 4.0 1.0 7 1.7 12.0 .2 1 .7 5 2.8 20 14.0 -------1953 --------------------------4.1 28 3.7 25 .7 5.0 .9 6 1.4 9.0 .5 4 .4 3 2.3 16 14.4
19............................ 3.2 22 3.4 23 .7 5.0 2.7 18 1.0 6.0 .5 3 .6 4 2.2 15 14.7......
1955 --------------------------- 3.8 27 2.0 14 .5 3.0 2.4 17 .4 2.0 .5 4 .8 6 3.2 23 14.1 -------1956 ---------------------------------- 7.4 43 1.5 9 .6 4.0 1.2 7 1.3 7.0 1.0 6 .7 4 2.7 16 16.8
19 7------------------------------5.8 3Z 2.0 11 .7 4.0 2.0 11 1.3 7.0 2.1 12 .6 3 2.9 16 17.9
19 ----------------------7.9 40 2.0 10 .4 2. 0 2.2 11 1.3 6.0 1.4 7 1.1 5 3.2 16 19.9 -------1959---------------------------104 49 1.5 7 1.0 5.0 2.7 13 .8 4.0 .7 3 .9 4 2.6 12 21.1
I .0,-- .....................11, 1 49 1.4 6 .8 3.0 3.9 17 .3 1.0 1.4 6 1.0 4 2.3 10 22,5
1961--------------------------10.7 47 .8 3 1.1 4.0 2.4 10 1.1 5.0 2.3 10 1.3 5 2.7 12 22.7 457 00
1962-. ..14.1 46 .9 3 1.1 3.0 3.5 11 2.0 6.0 3.4 11 1.4 4 4.0 13 30.7 440 0
14.9 50 .5 1 .6 2.0 3.2 10 1. 2 4.0 2.6 9 1.2 4 5.1 17 29.8 461
15.7 45 1.1 3 .7 2.0 3.7 10 1.2 3.0 4.4 12 1.5 4 6.0 17 34.6 470
1965------ -------------------17.6 48 .9 2 .7 2.0 5.0 13 1.4 3.0 4.8 13 1.3 3 4.4 12 36.4 475
1966- ........................ 25.2 56 .9 2 .4 1.0 3.7 8 2.2 5.0 5.6 12 1.1 2 5.2 11 44.7 488
1967 ------------------------------- 20.8 48 1.0 2 .8 2.0 6.5 15 .5 1.0 6.3 14 1.4 3 5.3 12 42.8 521
1968 ------------------------------ 19.6 46 1.1 2 .3 .8 4.1 9 .6 1.0 6.3 15 1.8 4 7.9 18 42.0 545
199 -------------------------- 15.9 38 .4 1 .8 2.0 5.7 13 .8 2.0 8.0 19 1.3 3 7.8 19 41.0 548
1970 ------------------------------ 19.2 44 1.2 2 .9 2.0 6.0 13 .8 2.0 8.5 19 1.1 2 5.3 12 43.4 574
1971. --------------------------- 19.3 38 3.9 7 2.2 4.0 7.8 15 .9 1.0 8.5 16 1.4 2 6.4 12 50. 6 574
197 --------------------- 20.7 38 4.3 8 3.2 5.0 6.2 11 .6 1.0 11.3 20 .5 1 7.2 13 54.4 626
1973 -------------------------------- 35.4 56 4.0 6 1.6 2.0 4.2 6 .2 .4 10.4 15 1.2 1 6.4 10 64.0 609
1974 -------------------------------- 43. 6 56 2. 7 3 1.9 2.0 8.2 10 .9 1.0 13.7 17 2.0 2 4.6 5 77.6 665
191,,-------------------------34.2 48 2.6 3 2.9 4.0 8.5 12 1.0 1.0 11.2 16 1.1 1 8.4 12 69.9 626
19764 ------------------------------- 45.2 55 4.2 5 3.1 3.0 5.5 6 .0 -------- 12.0 14 3.1 3 8.8 10 81.9 638
ILorn, sorghum, bdily, oats. Sources: World Grain Trade Statistics. USDA. FAS M-258 September 1974. World Grain Situation;
2Prcents will not total due to rounding. Review and Outlook. USDA, FG 6-76, April 1976. Production figures: USDA World Grain Situation;
al re plus miIlet. Review and Outlook. Foreign Agriculture Circular FG 6-76, April 1976, p. 26.





TABLE 7.-FEED GRAINS MAJOR U.S. EXPORTS BY COUNTRY OF DESTINATION, BY REGION, AND AS A PERCENTAGE OF THlE RECEIVING COUNTRY'S FEED GRAIN IMPORTS FROM ALL SOURCES'
[Metric tons in thousands; fiscal years]

1966 1967 1968 1969 .1970 1971 1972 1973 1974 1975 19762
Metric Per- Metric Per- Metric Pre- Metric Per- Metric Pet- Metric :Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Pertons cent tons cent tons cent tons cent .tons cent tons cent tons cent tons cent tons cent tons cent tons cent
Western Hemisphere:
Canada ---------------- 551 100 485 100 788 100 799 100 667 100 :288 '100 220 100 715 100 1,215 100 1, 071 100 524 100
Mexico----------141 96 76 98 113 99 49 94 46 95 195 34 110 93 645 73 1813 94 2, 210 79 -1,515 64
Western Hemisphere total. 947 63 753 54 1, 300 69 1,198 55 1,556 67 1,137 43 1, 125 57 3, 001 73 4, 490, 69 4, 212 61 INA
Western Europe, EC:
Belgium- Luxembaurg-.. 1,576 72 1,302 50 761 34 452 21 761 31 988 32 332 12 289 11 368 11 716 21 2,750 96
Germany,West ------ 1,692 31 1,458 30 1,704 34 1,360 31 1,328 33 2,219 36 2,174 38 2,110 43 2,996 54 2,557 50 2,550 49
Italy----------2,975 44 1,647 26 1,938 31 1,702 27 1,263 23 1,240 20 1,418 24 2,474 41 2,504 37 2,336 42 2,057 38
Netherla-------- 2,577 81 2,274 76 2,241 71 1,373 59 1,705 63 2,158 61 1,176 44 2,159 65 3,306 61 4,974 79 4,625 '73
United Kingdom--------2, 518 58 1, 924 46 1, 824 45 1, 748 43 1,841 43 1, 507 36 1, 472 33 1, 880 44 1, 444 32 1,768 45 -1,700 31
ECtoa--------13 53 59 9,177 41 9,891 46 7,891 39 7,428 38 8,316 34 8,222 37 10,967 50 12,322 46 11,313 46 NA
Other West Europe:
G'ee-------329 100 136 48 188 94 289 100 373 84 191 100 208 93 419 100 1,022 94 646 89 835 94
Potgl-------85 34 162 55 126 40 63 15 92 24 160 35 43?/ 52 580 54 518 48 1,177 83 1,276 .81
San-------1,946 64 922 28 1,078 39 237 10 916 38 214 8 293 11 2,220 7/6 2,806 67 2,627 59 2,525 -58
Total other Western Europe--- 2,882 ----1,445 ------ 1,540 599 ------ 1,504 ---- 810 ------ 1,243----3,271----4,591----4,982 NA_____Total Western Europe ------- 16, 635 58 10, 622 38 11, 431 43 8, 490 34 '8, 932 37 9,126 31 9, 465 35 14, 238 51 16, 923 48 16, 295 49 NA---Eastern Europe:
Poland----------------- 27 2 305 53 270 31 330 30 138 9 263 30 335 16 525 41 680 35 '912 40 2,305 74
Romania--------------------------------------------------------------- 202 100 420 98 53 13 229 84 104 35 880 86 ------Eastern Europe total- -_-_-_-_--976 25 957 54 612 28 739 29 698 26 1,374 49 949 20 1. 190 23 1,258 34 2,041 33 ------Total Europe ------------- 17,611 ------ 11,579 ------ 12,043 --- 9,229 ------ 9,630 ------ 10,500 ------ 10,414 ------ 15,428----18,181836------ INA...
U..SR---------------------------------------------------2,935 67 4,199 61 5,163 73 1,291 47 10,050 67
Asia:
China, People's Republic---------------------------------------887 100 1,806 87 23 4- -India------------------ 57 4 2,279 100 996 75 56 100-- 20 6 3 107 100 468 97 542 51 10 4 615 100
Iae--------297 66 474 74 539 83 525 90 677 85 646 87 684 82 702 76 781 80 920 81 825 76
Jaa-------3,745 72 4,641 64 4,182 53 4,369 51 6, 49.3 64 5,958 56 3,456 33 8,009 66 10,217 72 7,7C4 58 8,0310 60
Korea, Sct......105 92 112 100 225 100 157 52 194 77 263 63 616 98 879 99 973 100 645 67 500 36
Tai,.van ----------3 1 18 4 14 2 60 6 13 2 9 568 33 672 44 163 13 660 44
Asia total ------ 6, 159 83 8,326 -75 6, 173 55 5,441 52 7,798 61 7,489 57 5,844 39 12, 617 70 15, 325 69 9,443 49 NA --Africa total------------ 556 62 473 64 149 26 109 30 234 19 257 43 4U9 68 419 56 1,169 87 980 83 ------Total U.S. exports ta worl..- 25, 294 ----- 20, 831 -- 19, 665 -- 15, 977 ------ 19, 218 --_-19, 383------- 20,7)38---35, 397 ------ 43, 775 ------ 34, 232 ---- 45,200----IThe data are deIrived from 2 different sets of tradesta tistics: Reference Tables on Wheat, Corn, and porting period and (frequently) poor trade statistics on either end, the regional totals may not reflect Total Coarse Grains Supply-Distribution for Individual Countries, USDA. Foreign Agriculture Circular the individual country totals shown for the relevant time period, or vice versa. In addition to these
FG7b, May 1976, for individual country data: arid U.S. Grain Export [rends, Foreign Agriculture potential sources of error, the individual country* figures themselves should be looked upon as only Circular FG 7 76, May 1976, for regional data and totals. The individual country totals and the percent approximate. for our purposes here, the figures are accurate enough to provide sufficient data on the of these totals comrised of shipments from the United States are based on the importing country's major consuming countries Upon which to draw policy conclusions. Only those countries which have statistics for receipt of wheat and feed grains from the United States. The overall regional totals are purchased more than 500,00.0 metric tons of wheat or feed grains in any 1 year are included on these based on U.S. data on shipments to the designated regions and U.S. calculations as to the percent of tables. that region's imports comprised by U.S. exports. Because of time lags due to shipping, different re- 2 Preliminary.








82

TABLE 8.-WORLD TRADE IN SOYBEAN OIL, ANNUAL 1965-74
tIn thousand metric tons]

195 1966 1967 198 1969 1970 1971 1972 1973 1974 1975

EXPORTS FROM
MAJOR EXPORTERS
United States ------- 553 393 514 434 403 681 784 595 439 759 356
Germany, West ----- (1) (1) 33 36 42 68 76 63 134 241 -------France -------------() () (1) () (1) 29 42 59 63 81 -------Netherlands ------- (1) (1) (1) 21 55 86 94 113 118 197 -------Denmark ----------- 41 33 43 44 45 56 47 46 33 32 -------World total ------- 688 512 664 594 608 1, 117 1,339 1,097 1,46 1,533 -------IMPORTS BY
MAJOR IMPORTERS
Pakistan ----------- 91 26 83 58 73 118 121 45 62 124 -------India -------------- 40 33 51 35 83 79 77 66 73 (1)
Iran --------------- 27 30 (L) 29 32 97 95 117 93 16 -------Yugoslavia --------- (1) 21 52 (1) (1) (1) 120 116 39 50 ......
Spain ------------- 97 28 (1) (1) (,) (,) (,) -------Sweden ------------ (1) (1) (1) (1) 22 38 47 38 45 53-Egypt -------------(1) ( ) 47 40 73 36 55 (1) 20 2o .......
Morocco ----------- 44 (1) (1) 30 (1) 39 66 34 44 64 ......
Peru --------------(1) (1) ) (1) (1) 21 43 4 68 7o ------Chile --------------() () (1) () (1) 30 32 () 40 40 -------Canada ------------()( ) 23 23 (1) 20 34
UnitedKig 21 (K) (d) --) 5 61 91 63 () 40 -------France-----.--------() () (1) 1) (1) 37 44 40 41 8 5--
Germany, West-..... -1) -) I-) (1) 33 43 42 27 23 37-----Italy --------------) (1) ( () 37 30 (1) 44 131......
Net-alnds .---------() (1) (1) 25 27 (1) 36 75...

World total
imports -------- 546 324 429 389 515 911 1,181 964 W 1,2&4 ------I Less than 20,000 metric tons.
Sources: 1965-70 USDA FAS Foreign Agriculture Circular FFO 17-71, October 1971. 1970-74 USDA FAS Foreign Agricultare Circular FOP 4-76, April 1976.







83


TABLE 9.-WORLD PRODUCTION AND TRADE IN SOYBEAN CAKE AND MEAL
[Annual 1965-75; in million metric tons

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975

World soybean cake
and meal prod uction------------- 17.1 20.0 21.8 22.8 25.5 26.3 26.9 28.9 31.7 39.4 34.4
EXPORTS FROM
MAJOR EXPORTERS
United States --------1.9 2.2 2.4 2.6 2.9 3.6 4.0 3.6 4.4 4.9 3.6
Brazil-------------- .1 .1 .1 .2 .2 .5 .9 1.4 1.5 2.0 3.1
People's Republic
of China---------(I 1 1 1 1 1 1 1 1 1 1
World total
expots - 2.0 2.4 2.5 2.9 3.2 4.1 4.9 5.0 5.9 6.9 6.7

IMPORTS BY MAJOR
IMPORTERS
BelgiumLuxembourg -------. I I----------1 .2 .3 .3 .4 .3 .3 .3
Denmark ----------- .2 .2 .2 .1 .2 .2 .2 .3 .3 .4 .4
France ------------- .4 .6 .6 .7 .8 .8 .9 1.0 1.1 1.5 1.4
WestGermany --------.4 .7 .7 .6 .9 .9 1.2 1.3 1.1 1.6 .7
Italy--------------- I 1 1 1 .2 .2 .3 .4 .4 .6 .4
Netherlands--------.1 .2 .2 .3 .2 .5 .6 .5 .5 .7 .8
United Kingdom..----. .2 .2 .1 .1 1 .2 .3 .2 .2 .2 .2

Total West
Europe --- 2.2 2.8 2.7 2.9 3.2 3.9 4.6 5.0 5.2 5.6 5.4
Czechoslovakia --- (1) (1) (1) (1) (1) 1 2 .3 5 2 .3
East Germany-------.1 .3 .2 .2 .3 .3 .4 .6 .6 .7 .6
Hungary-----------(1 I1 () .1 .1 .2 .2 .3 .4 .5
Poland -------------(1 1 1 (1) (1) .1 .1 .2 .5 .4 .5
Total East
Europe --- .3 .5 .5 .5 .7 1.0 1.3 1.9 2.4 2.6 2.9
Total Europe 2.5 3.3 3.2 3.4 3.9 4.9 5.9 6.9 7.6 8.2 8.3
World total
exports----. 2.8 3.6 3.5 3.7 4.3 5.3 6.2 7.3 8.2 8.8 8.4

1Less than 100D,000 metric tons.
Source: USDA FAS: 0. & P.: FCA, June 1, 1976.








84

TABLE 10.-WORLD PRODUCTION AND TRADE IN WHOLE SOYBEANS
[Annual 1965-75; in million metric tons

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975'

World whole soybean production.. 32.3 34.8 36.5 39.7 40.5 41.8 43.5 47.4 57.3 51.4 62.9
EXPORTS FROM
MAJOR
PRODUCERS
United States ------- 6.1 6.7 7.1 8.0 8.4 11.9 11.5 11.9 13.2 13.9 12.4
Prazil --.. ----..... (2) .1 .3 (2) .3 .2 .2 1.0 1.7 2.7 3. 5
People s Republic
of China ......... .5 .5 .5 .5 .4 .4 .4 .3 .3 .3 .3
World total
exports.... 6.9 7.5 8.1 8.7 9.3 12.6 12.2 13.4 15.4 17.1 16.2
IMPORTS BY
MAJOR
IMPORTERS
BelgiumLuxembourg ...... 1 .1 .2 .2 .2 .3 .3 .3 .4 .7......
Denmark,,...... .4 .3 .4 .3 .4 .5 .4 .5 .3 .4
France .... .1 .1 .1 (2) (-) .4 .4 .4 .5 .5
Germany, West..... 1.2 1.6 1.6 1.4 1.3 2.0 2.0 2.2 2.8 3.7 ----Italy .. ... .4 .5 .5 .6 .6 .8 .8 .8 .8 1.2 -------Netherlands ---------.3 .4 .4 .6 .9 1.1 1.2 1.6 1.2 1.5
Spain ------------- .3 .6 .8 .9 1.0 1.2 1.3 1.4 .8 1,5
United Kingdom ..... .2 .2 .2 .2 .3 .3 .3 .5 .7 .8......
West Europe
total ....... 3.5 4.3 4.7 4.7 5.2 7.2 7.4 8.3 8.3 11.2 -------Can1aJa -----------.4 .4 .4 .3 .4 .4 .4 .3 (,) .3......
U.S.S.R ------------(2 (2) ( 2 ;) (() .3 ---7C hina,1aiw an . ..1 .3 .3 .4 .6 .5 .7 .6 .5 -------Israel --------------.2 .2 .2 .2 .2 .2 .4 .3 () (2)
Japan-------------1.8 2.1 2.1 2.5 2.5 3.2 3.2 33 3.6 3.2
World total
imports.... 6.5 7.5 8.1 8.3 9.1 11.9 12.6 13.8 14.8 17.0 -------I Estimate,
2 Less than 100,300 metric tons.
Sources: 1965-70, USDA, FAS Foreign Agriculture Circular FFO 17-71, October 1971; 1970-74, USDA, FAS Foreign Agriculture Circular FOP 4 76, April 1976.






TABLE 11.-WHOLE SOYBEANS AND SOYBEAN MEAL AND CAKE: U.S. EXPORTS BY MAJOR COUNTRY OF DESTINATION, AND AS A PERCENTAGE OF THE RECEIVING COUNTRY OR REGION'S IMPORTS
FROM ALL SOURCES'
[Annual, 1965-75; metric tons in millions]

1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975
Metric Per- Metric Per- Metric Per- Metric Per- M3tric Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric Per- Metric tons cent tons cent tons cent tons cent tons cent tons cent tons cent tons cer~t tons cent tons cent tons

WHOLE SOYBEANS
Belgium-Luxembourg-------------- 0.1 --- 0.2 ---- 0.2 ---- 0.2 ---- 0.4 ---- 0.3 ---- 0.3 --- 0.1 --- 0.3 --- 0.2 --- 0.3
Denmark----------------------- .3 --- .3 ------ 4 --- .4 --- .3 ---- .5 --- .5 --- .4 --- .4 --- .2 --- .2
Fr nc -(2)--- -- -(--- -2)) (2) () (--2)2) (..2)).. ..22 ....3.. .2 -- -33-- --.3 -- ..4- - -2.
Germany, West ------------------- .7 ---- .8 ---- .9 ---- .9 ---- .7 --- 1.2 --- 1.4 --- 1.5 --- 1.6 --- 1.9 --- 1. 1
Italy -------------------------- .4 --- .3 --- .4 --- .4 --- .5 --- .6 --- .7 --- .5 --- .7 --- .8 --- .7
Netherlands --------------------- .7 ---- .9 ---- 1.0 ---- 1.0 ---- 1.1 --- 1.5 --- 1.6 --- 2.0 --- 2.2 --- 2.5 --- 2.7
Spain ------------------------- .2 --- .5 --- .7 --- .9 --- .7 --- 1.0 --- 1.0 --- 1.2 --- .8 --- 1.2 --- 1. 1
United Kingdom ------------------ .2 --- .1 --- .1 --- .1 --- .1 --- .1 --- .1 --- .2 --- .2 --- .2 --- .2
Europe total I-------------------- 3.4 97 3.7 86 4.3 91 4.3 91 4.3 82 6.0 83 6.6 89 6.8 81 7.3 88 8.2 73 7.3
Canada4----------------------- .9 --- .7 --- .6 --- .7 --- 1.2 --- 1.8 --- .9 --- .6 .2 --- .3 --- .4
China, Taiwan ------------------- .1 --- .1 --- .3 --- .3 --- .4 --- .5 --- .5 ---- .6 --- .6 --- .4 --- .9
Israel ------------------------- .2 --- .2 --- .1 --- .2 --- .2 --- .1 --- .3 --- .3 3 --- .3 ----.3
Japan------------------------- 1.4 77 1.7 81 1.6 76 2.1 84 2.0 80 2.9 90 2.6 81 2.987- 3.1 86 2.7 84 2.7 CT
Total U.S. whole soybean exports
to world-------------------- 6.1 --- 6.7 --- 7.1 --- 8.0 --- 8.4------- 11.9------- 11.8------- 11.9------- 13.2------- 13.9 --- 12.4
SOYBEAN MEAL AND CAKE
Belgium-Luxembourg -------------- .1 ---- .1 ---- .2 ---- .1 -- -- .1 ---- .2 ---- .3 ---- .2 ---- .1 ---- .2 ----.2
France ------------------------ .3 --- .4 --- .4 --- .4. ... .4 --- .5 --- .6 --- .8 --- .8 --- .8 --- .7
Germany, West ------------------- .3 ---- .4 ---- .4 ---- .5 ---- .6 --- .7 --- .8 --- .7 --- .8 --- 1.0 --- .8
Italy -------------------------- .1 -- .1 -- .1 --- .2 -- .2 -- .3 --- .2 --- .3 -- .4 --- .5 -- .3
Netherlands --------------------- .2 ---- .2 ---- .4 --- .5 .5 --- .5 --- .6 --- .3 --- .2 --- .3 --- .2
Yuola va---- -------- -- -- -- -- -- -- -- -----(2) - ( .1 (2)12 .1 .. 1 ------ ().1 .. 1I --- .3 .---2 -Eurrpe total 3-------------------- 1.6 72 1.9 67 2.1 77 2.3 79 2.6 81 3.1 79 3.4 73 3.1 62 3.8 73 4. 1 73 3.31
Candaad-a --.2- -- -- - -- -- -- .2- --2----.---------.22---------.2.2-.2------2--------.-.2-------------.1----1---------.2.2-.--.--.
Total U.S. soybean cake and meal
exports toworld -------------- 1.9 --- 2.2 --- 2.4 --- 2.6 --- 2.9 3.6 --- 4.0 --- 3.6 --- 4.4 --- 4.9 --- 3.7

I Percentages calculated from unrounded figures. Also see footnote 4. seve, al West European countries, particularly the Netherlands, in that a large amount of transhipment
2 less than 100,000 metric tons. takes place and the country listed in U.S. trade statistics as thre importer of the soybeans and meal is
3 Includes Eastern Europe. not, in fact, the final destination. The latter phenomenon is why U.S. percentage of import calculation,
4 Because larwe amounts of U.S. soybeans and real are stored in Canadian facilities prior to ship- have only been made for Europe as a whole rather than for individual countries. ment 0 a inal destination, in some years, figures on U.S. "exports to" Canada have exceeded total
Canadidn "imports from all sources"' by 300 or 400 percent. A similar pruIbIem exists in regard to Source: U.S. Commerce Departmient data.
0








NVERSITY OF FLORIDA

3 1262 04248 3262IIIIII
3 L2b2 04248 32b2