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Third World Growth Helps U.S. Farmers c'
For years, the U.S. Agency for
(USAID) has helped Third World
countries grow by stimulating their
most basic industry: agriculture.
Unfortunately, the current woes of
the U.S. farm economy have many
Americans wondering if USAID is
only helping the competition.
The facts tell a different story:
USAID's goal of building stronger
economies in less developed coun-
tries (LDCs) is the best way to
generate new markets for U.S. com-
modities. Strange as it might sound,
it would be better for America's
farmers if the U nitied States invested
mirl. in agricultural development
o\ersiea.s, nut tleh. The IredsonsC are
* Third World countries already
are reliable customers for U.S. farm
products, and they represent the
fastest-and perhaps only-growing
market for American produce.
* Those LDCs that could use U.S.
food most can afford it least. The
record shows that as their economies
are strengthened and their purchas-
ing power is increased, LDCs have
been ready customers for U.S. farm
* There is no better or quicker way
to jumpstart the Third World
economy than by getting back to
basics- developing agriculture.
* Even if a developing country
becomes an exporter of commodities
grown by American farmers, its new
demand and ability to afford other
U.S. exports are net gains for Ameri-
can producers. Nevertheless, USAID
purposely does not support compe-
tition with U.S. agricultural
* Much of the agricultural research
used to help overseas farmers has
been applied with beneficial results
here at home, as well.
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Doing Well by Doing Good
To help America's friends in
the Third World meet short-
term needs, USAID provides food
to poor countries. In 1986, for
instance, $1.8 billion worth of U.S.
farm products were exported to
LDCs through U.S. food aid pro-
grams. These exports, which USAID
ensures do not disrupt commercial
sales, are in themselves critical to
the ailing U.S. farm economy. In
fact, the record shows that food
assistance can produce lucrative
trade relationships as LDCs grow
into paying customers.
Past recipients of U.S. food aid
are now among the top purchasers
of U.S. agricultural exports. In
1986, seven of the 10 leading
importers of U.S. farm goods had
been Food for Peace (Public Law 480)
recipients. Of the 50 largest cus-
tomers of American commodities,
30 are developing countries, 13 have
received P.L. 480 assistance and 21
are former beneficiaries.
So, USAID's short-term food
assistance program is an important
outlet for U.S. farm products and
has generated new commercial
markets by helping strengthen the
people and economies of developing
The Agency has an effective long-
term strategy at work in the Third
World. To promote economic
development, USAID makes the
most of what it finds in a country.
And, in most LDCs-where the
people are hungry or barely getting
by-a farmer's field is the best place
to begin to provide for basic human
needs and get an economy moving.
Some U.S. farmers might be con-
cerned that helping a corn farmer in
the Third World undermines their
155N 0743-5436 Published by the United States Agency for International Development
~Wa~n~g~JF~ -;.-- -r I r ~ 91 II
Published by the United States Agency for International Development
export sales. The fact is the type of
farmers who benefit from USAID
projects could never dream of com-
peting with U.S. producers. But they
could use a bit more food in their
bellies and extra income to
provide for other basic needs.
Income: The Vital Link
Besides enabling a nation to feed
itself, USAID wants to
make agriculture the engine for
growth. The idea is that the im-
proved profits realized from a better
rice yield, for instance, will be plowed
back into the local economy,
generating new jobs-on and off the
farm-and even more income.
Gradually, the country's economy
starts to move, and, as it gathers
steam, the demand for U.S. exports
"The developing world has a need;
you have a product," USAID Admin-
istrator Peter McPherson told a group
of farm leaders at a recent White
House meeting. "The vital link is
Not Just a Lot of Theory
t's been said that an economist
is someone who sees something
work in practice and wonders if it
will work in theory. To be sure, the
Agency's work isn't just a lot of
theory. USAID has practical results
to show for its strategy to vitalize
Third World economies through
And, the benefits to U.S. farmers
are just as apparent. As their econo-
mies have grown, LDCs have
replaced developed countries as
America's fastest growing markets.
By 1985, developing countries
accounted for over three-fourths of
U.S. wheat exports, one-third of
corn and barley and one-third of
soybean oil and meal.
Many agricultural economists have
weighed in behind the fact that
what's good for developing economies
is good for U.S. exports. A study by
the U.S. Department of Agriculture
(USDA) found that a 10'. increase
in per capital income in developing
countries led to a 13.6% rise in
American exports to those countries.
The faster the Third World
economy grows, the better it is for
U.S. farmers. One study revealed
that agricultural imports by LDCs
with more rapidly growing economies
exceeded imports by their weaker
sisters by 3 4'..
USAID programs build friendly,
cooperative relations that pay off
when a country sets out on its own.
There are sterling examples of coun-
tries that have "graduated" from
U.S. assistance programs and
become reliable commercial cus-
tomers of American feedgrains,
wheat and soybeans.
('Contrie. that have received -.Iub-
,tantjil Aminer Ian aid ha\ e inc re'a.ed
their imports tion the United Statec
at a .in tIaster late than their
purl.chse-s from other nation< In
1 91 Jlone. South Korea impon ted
$.2.1 billion north (it agl cultural
p)rodulct-; that's nm.re than the '.alue
of all UI.S. food aid prm ided to that
c, untr\ between 1 ci.:, and 1979.
"Raising productivit\ in agricul-
ture in developing mountt rie- geneIallk
doe. not pose a comnpetitive threat
to L'.S. prl'duiLerl." ulllns up Ed\ard
Schhuh ot the childl d Bank. "'On the
contrary, it create the potential lor
liture market, as incomes increase."
Will U.S. Farmers Miss Out?
he fatls -show that LI.S. tarmei-
ha\e hent-lited i.-ubsr Lintiall\
from Third World growth m the
last decade. By the same token, the
predicted slowdown in world devel-
opment will be felt by American
agriculture at a time when it is most
vulnerable. And, if U.S. foreign aid
is decreased, it will cripple this
country's ability to tap the potential
agricultural markets in the Third
"The LDCs have the demand, but
many don't have the hard currency
to purchase U.S. products," says
Dan Piper, a USDA economist
assigned to USAID's Office of Agri-
culture, explaining the importance
of U.S.-assisted economic develop-
ment in the Third World.
Another factor that should not be
neglected is that between now and
the year 2000, there will be an
additional 1.2 billion people in
the Third World. If developing
countries can generate enough
income to purchase food and feed-
grains, they will be an enormous
potential market for U.S. products.
"U.S. farm exporters have an
unmistakable interest in promoting
income growth in the developing
world," observed Robert Paarlberg
in a recent Curry Foundation report
on U.S. agriculture and LDCs. "It is
not the hunger of poor countries, or
even the growing populations, that
makes them better customers for
U.S. farm products. It is the pur-
chasing power that comes from their
"The bottom line is that-for the
purposes of increasing U.S. exports
of agricultural commodities,
chemicals and machinery and of
achieving food security-developing
countries must grow more rapidly,"
"U.S. foreign assistance is neces-
sary to help them develop their
economies so they can increase their
agricultural imports. If we do not,
we will not only fail to gain their
trade, we might lose them as allies,"
Developing countries are more
than markets to be tapped.
For a nation to grow, the people
must be allowed to make their own
decisions about their economic
future. Naturally, Third World
farmers aren't about to fight the tide
and try to grow a product not suited
for their homeland. Many of the
items they grow-tropical fruits,
coffee, etc.-could never be grown
profitably in the United States.
At the same time, when a farmer
can grow corn, wheat or rice, he's
bound to do so if it means food on
the table. It also makes good eco-
nomic sense for a country to do
whatever it can to increase its agri-
cultural exports to earn badly needed
Here's where some understand-
able concern among U.S. farm
leaders has been stirred. They cite
the decline in U.S. agricultural
exports from $48 billion in 1981 to
$26 billion in 1986. The idea of a
U.S. agency giving any type of aid to
a country that grows products that
American farmers are trying to sell
just doesn't sit well.
"USAID takes special care to
avoid supporting increased produc-
tion of agricultural commodities for
export by developing countries that
would significantly compete with
our own," assures Duane Acker,
director of USAID's Office for Food
But there's much more to it: In
the long run, LDC food production
increases are not detrimental to
the United States. Between 1961
and 1976, the 16 fastest-growing,
food-producing LDCs expanded their
net food imports by more than 7';
annually, according to an analysis by
the International Food Policy
Research Institute. Let's look at
Brazil has made considerable
pi i reo., in ec'ioi inmic dec elopci l iint
.mini-e the lq6I..,. Fuielinmi thi, gro,.th
\\a a Ti Innc rea in1 a r L'c .iltural
prodi tion f!inm 197l to 19 -
imlpre.siL e ipr.t;,re' h\ .in\ -tan-
dard. The non-agruiultural -ector
pi rpered a- riu ral iti.u nime in cre .ed.
\\ith the-e might t iorcet (t %\) k.
Brazil took in enough toreitn efx-
change ti. put it in the inmaket tl,
hu. more S. commooditie-.
While HBazii hecame a health'.
conimpetitur in the export nmaikel--
espciaIll in -i)\ bean meal and ,ill-
it+ I .S. wheat. corn ,nl/ ',ibri' n
import. increa-ed ijapidli durin' this
per iod. The valuee ut these L.IS.
agricultural g",ods pilrcha-.ed by
Brazil grew nearly, 25'. pet year
trum l iii-..l. And. allmo t all t
these \v elr pri'\ te io' /h put hael..
Mlala\ 1a also developed to a point
where it is now a net exporter of
agricultural goods. But to call that
country a competitor with American
farmers would be reading only one
side of the ledger. Malaysia's farm-
led prosperity has made it able to
afford increased U.S. imports. From
1967 to 1983, Malaysia doubled its
import of food, feedgrains and oil-
seeds. And, even though that country
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"The best thing for
to spur Third World
development to make
these nations into
willing and able
customers for U S.
produces palm oil, which competes
with soybean oil for some uses, it
has become a significant customer
for U.S. soybeans since 1979 due to
its glro\ ing li\estock Industri
So. it's o\er- implified to sa; that
inLrea-ed agricultural production in
Third W\orld countries takes rmarket-
aJlav fr(nm LU S. fai mers. In iact,
these exampkl-., show that the best
thing tof Ainc! ican pi oducerr ik to
Apur Third \World development to
mnke these nation- into ~ illing and
ab le cuListotner e or I .S. goodd,
.A tor the overall decline in LU.S
exports, inli 4i' ,o the .I Il million
los. can he attributed to iort ,ales
t.-, developing countries; irnnst of the
problem lies with reduced purchase.,
b\ de\eluped couintries, according
to Earl KIello-g of the Consortium
tIor Intei national De\elopment.
Kellogg blame, the drop in lU.S
export- during the past few \ear' on
the 'i\vei-\alued dollar, the w orldw Ide
economic slump. foreign exchange
being soaked up hv toreign debt
payments- and the fact that the U.S.
policy ol suIipporting higher agri-
cultural prices has encouraged other
developed countries to increase pro-
duction and exports,. "None of these
reasons has to do with increasing
j'.i iciultural p) )duLi.tlon mll d \el?('p-
ing countries.'" Kellog stress-t .
Research: More to Gain
T he United States ha, even
more to gain forn the invest-
ment in Third World agriculture:
The latest research and potentially
useful new crop aieties are being
perfected in international agri-
cultural centers around the world.
If you sat down in a restaurant
and ordered only food domesticated
on U.S. soil, you would certainly
leave the table hungry. Corn origi-
nated in Central America, soybeans
in Asia and wheat in the Middle
East. Since the days of Thomas
Jefferson, American agriculture has
imported plants and seeds from for-
eign shores, says Dana Dalrymple, a
USDA agricultural economist
assigned to USAID's Office of
"The United States is the largest
user of agricultural technology,"
Nyle Brady, senior assistant admin-
istrator of USAID's Bureau for Sci-
ence and Technology, points out.
"We have as much to benefit from
agricultural research as any country."
Semi-dwarf wheat varieties-with
genes brought here from Asia-
covered no less than 60% of U.S.
wheat acreage in 1984. About one-
fifth of the wheat and rice varieties
planted in the United States can be
traced to research centers in the
Third World and Japan.
Looking at this resource from
another angle, more effective resis-
tance to diseases and pests can be
perfected in countries where pesti-
cides have not reduced biological
control agents for diseases, weeds
and insects. U.S. researchers can
extract genetic materials from crops
in their native settings and breed
resistance into varieties used by
Again, this is more than a lot of
theory. The genetic sources of
resistance to wheat rust come from
Kenya. The resistance in the U.S.
potato crop to the golden nematode
originated in Peru. And, USAID-
supported research in the Third
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World is credited with containing
the peanut stripe virus that could
have inflicted untold damage on the
U.S. peanut crop.
"'We must ha\t research to stay
competitive." Brady contend-s.
"And. we could do a lot more to
take advantage of o\ erseas resear h "
Citing the benefits of wheat and rice
varieties he says there is not enough
study of other commoditie- that
could henetit L'.S. larmers. Thi,
will require more U.S. participation
in the development ot Thud worldd
agriculture, not less.
" Tt's time for U.S. farmers and
Small Americans interested in
agriculture to stop looking at Third
World countries as competitors and
see them for what they have become:
a larger component of our market
with potential for even more growth,"
"To become good customers of
U.S. farm products, countries first
need money to buy. And, the only
way a developing nation becomes a
significant trade partner with the
United States is through broad-
based economic growth."
"U.S. foreign assistance helps,
not harms, American agricultural
exports," McPherson sums up.
"Being the 'Good Samaritan' in the
modern world means that we must
search for the delicate balance that
allows us to help ourselves through