Foreign markets for agricultural products and the competition of foreign agricultural producers in our foreign and domes...


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Foreign markets for agricultural products and the competition of foreign agricultural producers in our foreign and domestic markets
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Olsen, Nils A
United States -- Dept. of Agriculture
United States -- Bureau of Agricultural Economics
s.n. ( Washington )
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1i* hi fl
A .
V / ~' UI'flf STATES DEPART T:'T O' Ar'lICUL7 M.l

A :9 4,* 2; Fb / ^l i Bureau of A.-ricultural Econnmics


6i a.

SB_______ y Nils A. Olsen,
U.S.G.PSTO, (Chief, Bureau of A-ricultural Economics

Address at the National Association of State Marketing Officials,
Chicajo, Decer.ber 4, 1928

Farmers of this country have a vital interest in foreign market condi-
tions and tlie prospects for arricultur:l 1 production in foreign countries. Any
national program for a-riculture must reckon 'iith the foreign demand for agri-
caltural products, agricultural competition in foreign countries and r.gricul-
t'ural imports into this country. It follows, therefore, that the United States
Department of Ac:riculture cannot render adequate service to agriculture with-
out extending its activities into foreign fields.

About 90 per cent of the products that t".e'of the United States
market is directly affected by forei/.n production raareretcd either in foreign
markets to which we export or in domestic markets into w,'.Aich we import sore
part of the products w:,ich we consume. The nroAucers of one-half of all our
farm products-have to look to forei.-n .ar'.:ets for an outlet for some -part of
their products. Some of our great staple comm-nodities, such as wheat !und cot-
ton, are sold in all the principall markets of the world in competition with
foreign products. We export on the average over one-half of the cotton, a
third of the tobacco, and over a fifth of the -he-it we produce. *ven the
pork producers have a vital interest in foreign markets to which we s''i> about
34 per cent of the lard and 8 1er cent of the pork produced. The producers cf
many of the minor products are .just as nuch: interested in foreign markets as
are the producers of some of these :iajor Troducts, for, in recent years we
have exported nearly 50 per cent of tae rye crop, nearllr 15 per cent of the
rice crop, 9 per cent of the orange crop nnd 5 per cent of the apple crop. The
producers of all of those products and many more need information about for-
eign market conditions, as foreig-n production, in order thnt they may
advantageously market their product. .

We %iust not overlook the iapo.rtance of t',e competition offered by for-
eign agricultural producers in. our domestic markets. Our imports of agricul-
tural products, not including rubber, equal our exports. Many of these yrod-

ing saall but increasing supplies from Canada and New Zealand. VTuas forei ::
supply and market conditions are establishing fairly definite limits to the
extent to which the prices of bbbof"nuttton, butter, and cheese can rise Snt- .
the United States. The outlook for the producers of all the products In thisA
position Ls thus limited or determined largely by the outlook for foreign
production and foreign markets. -

The farmer's interest in foreign markets and in prospects for foreign,
production of agricultural products is, therefore, greater than our exports.
of about two billion dollars wort' of agricultural products would indicate.
The report value of all our agricultural products amounts to about 15 per
cent of toe farm value of our total agricultural Output, and about 20 pert
cent of thie farm value of the products sold from the farm. But nearly all
products, whether sold in the domestic or the foreign market, have their,.
values determined in large part by conditions prevailing in foreim-. countriesw.
..= ::
The nation has Iona been and still is committed to a policy ofpro- .
tecting tie home market. Thin policy was inaugurated for the benefit of
the manufacturers, and it )as been extended effectively to the benefit of :1
the producers of several of our agricultural coroditiles, As the productlo:":n::.
of other commodities s'.ifts. from, the position of being in excess over doa*-
tic requirements to being only barely sufficient for or less than domestic
reruiirements, this policy will become'effective for otber commodities. X "
have pointed out that the producers interest in foreign markets and foreign..:
production does not cease wit', thie shift from an export to an import basis. i
I want to go farther now and emphasize the national interest in developing
foreign markets for tho commodities which we export..'

" 2 -

Surely there is .a rn:-.:t i n l intercs.t in I.tern .. i1 nail ri"'LA" i :. :-
cultural products Exports ha. e j-rttributecd t ', r cr.;t ,f thp r..' i :d wnLr
began by bein.- -prim.arily -in e--c orter )f nr-ricultur-ii produ-ts. :r. .' zt
twenty ye-'rs tnie vplue of tie ex.orts of a.'ric ltur:ii ,rnoaucts h:tz -,r r, .,.an
doubled but the percentage of naricultural to tot.,l exy'.orts Y-i fr::
about 55 to 40. It is si nificant, however, *'nlt a rizulture, e-:.:21uir. for st
products, is still furnishin,;-. -. per cent of our export b-ar.i:ies3, *"Lr.d, 1.-..:*.'rinL-c
forest products 50 per cent, Acricultare and forestry,th-}reforc, sti" l..'.'c
as important a r-lace in our ex',ort marketss as have all ot'-cr industries c.- j nrld.

T.e .ro-.vth of forei,. markets ha s' been a *r.r, i t--Iort ,nt fct .:r ir. :'.*
agricultural development of thin country. As a nation. we r're :-jr.cerr.ed with
the developrm-nt' of our resources. Foreign mar.-ets enable producers in t:'.e
United States to specialize in the production Df those com...odities *./ic> t-.e
agricultural resources of country are best suited to produce be' -r.nd jur
domestic requirements. We not Dnly have the resources but we h'nave develced
for agriculture as an industry an ability to produce'a lare volume at rela-
tiveljy low costs per unit in corm-)etition with low priced honnd-labor in many
other parts of the world. Farmncrs are as vitally concerned with tie o 'o.ortu-
nitios for advantageously marketing in foreign countries such products as -ire.
produced in excess of our do.iestic requirements as they are in the -orotecti.n
of the domestic markets fQr those co,.nodities of w-hiich we do not produce an
exportable sur'nlus. Let us consider first some of the outstanding tendencies
in our agricultural export trade.

Before the World War the trend of our agricultural export trade was
downward. The declining tendency was particularly noticeable in corn and meat
products, especially beef. We h-id become a net in-iorter of dniry, products and
flaxseed, in fact cotton was about the only major -roduct whose exports did nct
show any definite evidence of decreasing. Then came the war, and in response
to high prices, new laid was brought under cultivation, old land was cultivated
more intensively, with the result that our agricultural output showed amarked
expansion and our exports increased tremendously. A decade has now passed
since the end of the war but our agricultural export trade is still influenced
and will continue to be influenced.b-" forces set in operation during th"at con-

We arc now far enough away from the war to observe the tendencies in
foreign markets. The effect of the war was to curtail our outlets in certain
markets and expand them in others.. Our exports of cotton to northwestern
Europe, for example, have declined in actual quantities and in proportion tc
bur total exports. Our shipmentsof pork to those markets show a declining
tendency. These declines have been offset, however, by t-,c exportation o0
larger quantities of wheat, tobacco, and fruit so tait our total agricultural"
export trade with European markets is probably lar'gLr than beforee t'.o
Of outst-nding significance .in our agricultural export trade has been the in-
crease in our shipments, principally of cotton, :-heat, wheat flour and tobacco
to the Orient.

Northwestern Europe hs always absorbed the bulk of our ariculturan'. ex-
ports. Before the war Europe took, on the average, about cc per :-tnt of cur

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total agricultural exports. In the last tree years the proportion has been
somewhat less than 80 par cent. On tho other hand, Asiatic markets have in-
creased in relative as w.ell as actual importance. Staring the five years pre.-
ceding the war a little ovor 3 par cent of our arioultural exports went to:
Asia. In thc last threo years the proportion was 11 por cent. Tho factors
underlying those shifts in our foreign markets are worthy of brief review*

Let us turn first to the Orient. One of the outstanding industrial
developr.ents of the past twenty years has been the expansion of the textile
industries of Japan and China. In 1913 Japan had about 2,300,000 cotton spin-
dles while in July this year the number was reported at 6,300,000. The incream-
in spindles in China has been no less striking, from about 1,000,000 in 1913 to
3,500,000 in 1928. This has resulted in greatly increased demand for MaserloA
cotton. Our exports of cotton to these countries reached the record figure of"
almost 2,000,000 bales in 1926-27 comnrpared with average exports of less than
300,000 bales before the war.

Our er-?orte of tobacco to the Orient havo shown an equally stzidking
growth. Before the war we shipped an annual average of slightly less than
11,000,000 pounds of unmanufactured tobacco to China and Japan. In recent
years our shipments to these markets have consistently exceeded 60,000,000
pounds and have at times surpassed 100,000,000. During the present year OhbI:
has been the leading market for flue-cured tobacco, our leading export type.:
In the first nine months our shipments of this tobacco to China totalled
82,000,000 pounds, or 36 per cent of our total exports of this type. In addi-
tion, 70 por cent of our cigarotta exports wont to China during thfs periol,-
The fact that our tobacco exports to China have hell up so well during recent
years of political disorder with its accompanying disorganization of the tobad-
co industry, disrupted transportation, and heavy taxation, is evidence of tbe
strength of the demand in thitmarket.

Our Agricultural Commissioner in the Orient reports a noticeable tends
to substitute wheat for rice in Japan and in parts of China where rice has a&-
ways been in the past the major item in the diet. This should result in lar. r
markets for our Pacific Coast heat and flour. Our exports of wheat, including
flour, to China and Japan amounted to about 15,000,000 bushels in 1927-28 con-
pared with an average before the war of 11,500,000 bushels. Japan is a deficit
wheat-producing country and with the limited amount of land available for whe OM: ,
cultivation promised to continue in that position. Manchuria, it is true, has ,
a large potential wheat area but somewhat unfavorable climatic conditions ar:.. .... '
said to constitute a limiting factor in wheat production there. In North Ohi"ls
and in districts near Shanghai, the principal Chinese market for wheat and.. i
flour, considerable quantities of uh6at are grown. Outside of these native :
what's our principal competition for the Oriental wheat and flour markets it
the future will come from Canada and Australia. :

The items mentioned aro some of the outstanding examples of American '
Agricultural products now being shipped to the Orient. Other products Ulti.Ctb ;
offer possibilities of greater expansion are fruit and processed foodstuffs



. **

such as canned gnods. The low prrchasinrg power of course linits oar trade in
China, but there are marw thousands of Clinese whose purchasing power is rpla-
tively high who can afford to and will take our products. Given a period of
stable political conditions and economic development the riggreg-.ite demand 3f
the millions of Chinese of the poorer classes would constitute a market of great
importance for American agricultural products.

In Japan the purchasing power is considerably higher than in China but
high tariffs limit the market there for our processed foodstuffs, and plare
the trade largely on a luxury basis. It seem probable that future expansion
in that market will take place largely in those commodities that are at present
entering the trade, namely, cotton, wheat, and tobacco, and California rice.

Many products of the temperate zone,. for the production of which we
have exceptional facilities, are needed in the tropical sections of latin Amer-
ica. An important trade has already been developed with these regions. Cur
trade with Cuba consists largely of an exchange of such products as cereals,
pork products, dairy products, and canned roods for sugar. Low sugar prices
in recent years have undoubtedly affected adversely our trade in that market,
Disturbed political conditions in Mexico and Central American have hindered
the economic development of those countries and have undoubtedly restricted
the demand for our food products. An additional limiting factor for some of
our products such as canned fruits and vegetables has been the high import du-
ties in many countries which put these products out of the reach of the major
part of the population. Although these tropical countries will not for many
years take a substantial part of our exportable surplus there is undoubtedly
a possibility of marked expansion in that trade.

After making the most optimistic allowances possible, however, for in-
creased exports of our agricultural products to Asiatic and other non-European
markets, still clear that, to dispose of the major part of our exportable
surplus of agricultural products, we must continue to depend upon Europe.

Since the United Kingdom is our leading market for agricultural products
it is important to observe the trend of the import trade of that country in
recent years. During the war, Great Britain was unable to maintain its position
in its Asiatic markets and British textile goods were displaced to a consider-
able extent by the products of the greatly expanded textile industries of the
Orient. This is the fundamental explanation of the prolonged depression being
experienced in the American section of the British cotton textile industry.
This has meant smaller purchases of American cotton. In addition, the basic
industries of coal, iron, and steel have been depressed for a number of years
and this may have tended to restrict the demand for some of our products, par-
ticularly those in the luxury or semrni-luxury groups. The depression in the
older industries has been offset to some extent, however, by thie increased ac-
tivity in some of the newer lines, such as automotive, electrical, and rayon
manufacture. At any rate, British purchases of such products as wheat, tobacco,
and fruit have increased both as a whole and from the United States. In tobacco
and fruit especially there is good evidence of increasing per capital consumption.

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new areas, and increasing use of mechanical devices for hrwvestIng the crp.,
have all contributed to the maintenance of our position an a cotton produce. w'

:i !! is the situation in respect to co-,r,nctltion from ot'-,,-r cotton -,-o-
ducin, countries? In tnc .first *,Ilacc, it s--.ild b,. noted tiat most of t-c
world's cotton spindles are adapted to t.e s'--innln-.: of ordinary sta.)le cr ttor.
which constitutes the bul'- of tur crin. In C.e ot .nr le:dingn forei n c- t tor.
producingn .--countries the stole is eit-er considerably s-orter and 10 oc.rer
quality than Armerican, as in India and China, or it is considerable lcn,-eL.r in
staple, as In Zgrpt. In InCia tie level of cotton nroductic.n is above re-::-'"ar
and strenuous efforts are beinh- made to increase tae. quantity and improve the
qualit-, of the output.

C.ina has a considerable area adapted to the cultivation of cotton.
Since that country constitutes the l-rgest market t for cotton goods in W'e wcrld
there is a decided incentive for cotton production. With stable political nnd
economic conditions prevailin.-, it might supply a larger )art of its recraire-
meats but many years of pro,:ress in the imn movement of the quality of the out-
put would be necessary before cotton from t-at country would compete seriously
.with the American product.

In Egypt the trend of cotton production seems to be do'Tnmard and there
is little reason to expect a larger sup)Ily of the EV&-ptian staple, \'.-,hich, at
most, co.r.)etes only indirectly with American cotton.

The greatest potential source of competition seems to lie in South Amer-
ica, notably Brazil, and in Central .Africa. During tne -neriod of hi-h prices of
cotton, accompanying the small Amnerican crops between 1922 1923, deter..ined
efforts were made to increase cotton reductionn in these areas. Because of in-
adequate transportation facilities, lack of suitable labor, and ot.ier problems s
connected with cotton growing, these efforts have ,net with only zuoderate success.
In Africa the Lnglo-3gyptian Sudan, Uganda, and Tanganyika appear to present the
most nromise,for cotton 'rowing ani proCuction in the Anlo-Efyptian Sudan has
increase-" steadil'- in recent years fro-i a-bout 23,000 bales in 1922-23 to 1ZC,CL
bales in 1925-27. The African production, outside of Egypt, is still insignifi-
cant compared with our cr-p, and iuless there is a drastic change in the cotton
price level it does not appear probable that the present generation of American
cotton farmers will be seriously affected by competition from this source.

In South America the production of cotton is about twice as large as be-
fore t'ie war. The region best adapted for cotton production on that Continent
lies in t'e interior of Brazil where transportation difficulties and the lack 5f
suitable labor have handicapped expansion. Nevertheless Brazilian cotton produc-
tion reached more than SC0,000 bales in 1924-25, an increase of -acore t'--in 5 per
cent over the pr6-4.-T averaso. There has been sore decrease in production since
that time as a result of tie lower )rices for cotton, %ut in the future a larger
part of the world's cotton supply will undoubtedly be provided by Brazil. r7ot
without significance are the reports of a project now under wa: in Japan w: ich
conteminlates the emigration of thousands of Japanese annually to Brazil, rimnr-
fly for the purpose of growing cotton. We will dto -ell to follow carefully the
developments in Brazilian cotton production.

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trey were in the tive years flnodiately preodOLing tae war* T1e exCensoUW o .:.'
wheat growing in the drier areas west of the Missouri river, where productiiw
costs have been reduced by the use of tractors and combine harvesters, totberi ii-..p:
with -the continued absence of Important quantities of Russian grain Srom tkl:h t e
port markets have been the principal factors contributing to the mainteUnqi*::.i.i
our *position as a *teat exporter. Although there are no. signs of a reffxaptt l
I n the near feature of grain export s from assia -in important amounts, It Booimtf
improbable that such an important- grain-producing area will remain perzmaneotylllll
out of the export field, It is for this reason particularly necessary to. t.!bw
low closely the developments in Russian agriculture. ..".., i

At present. Canada, Argentina, and Australia are our principal oq i$ .
tors in the foreign wheat markets. All of these dountries have considerable2@ f
areas if new land which can and will be brought into production as the dama .-.:-
for grain increases. Wheat acreage in Canada is almost 2-1/2 times as lag 0 8*"
it was before the war; In Argentina the increase has over 20 pe ..
cent and in Australia to about 45 per cent.

Canada has become the world's largest wheat-exporting country,>
between 35 and 40 per cent of the total quantity that enters the international
export trade. The United States ranks next, with adsomewhat more than 20 per ,
cent of the total, and then comes Argentina with about 18 per coAt and. A)ua4*
": ". :.. : .. :i
with 12 per cent.. The remainder of 10 to 15 per cent is supplied by India, bs
esia, the Danube Basin, End North Africa. .

The relationship of types and qualities to the wheat export trade. Iem so::.-
portant. The European production consists largely of soft white and red 0sheA.01
hard wheat is needed to mixwith them to produce the best bread. A little Ot.:;'
half of our crop is usually hard wheat. Conditions in the Prairie Provinces of.::i:.
Canada are favorable for the production of hard wheat of high protein content;
and a nuch larger percentage of hard wheat than of total wheat entering inttr2 ?
national trade comes from Canada. Argentina also grows a considerable quaatlt!|
of hard wheat which enters the export trade and competes with ott wheat in the
International market. ."' ,

Italy and France are the principal importers of durum wheat, largely-tc'_".
usa in the mafnufacture of macaroni. Russia wasf-ormerly an. Important source;tl-
durum but At present most of the imports into those countries come from Nfort '-ilf
Aherica- the United States and Canada. Here again we find Canada furnishtin
increasing competition. In the yearsiwhen we have considerable quanti tiest0of. :
durum wheat to export, the strength of the demand and the competition enocbstW4
in our foreign markets are of great significance to our durwa producers. 0t0llJ
wheat from the Pacific Coast and hard red wheat are exported to the Orient WaR
they meet competition from Canadian haMd wheat and Australian white wheats.,i


Tobacco has always been mn imrrort..nt item in o-ir n-.ricultur-i, expert trade
The position of our flue-cured tobacco, wvich- coistititen -jvei .inl-hW.f ,f rfur
total ex orts, seems secure in foreign %-arkets :or :,ann" years to cimr;.
have been iateo to grow flue-cured tobracico rn A.-mericun seed in many rrLrt s rf tht
world but it "Tho beer. found extrenr.-Ir ti:'ic.1lt to -nroed1ce to.'to.cco c ,-:r:i.le in
quality to that .-:ro-.-.-n in Virinia, :Trt> and Snit i Carol in-, and'. n.r, i:i. The
United Kingdoum and Ohina to,-other take about 70 per cent of our total px.orts of
this type. The greatly increased cIns.-nption o" clrarettes, for ".ic. flue-cure.4
tobacco is largely used, h'is expanded t:!e forei.nm as well as the dr'.estir ..arket
for this tme. The Empire preferential ,lutics tustablinhod by Great Britain have
stimulated the'production of tobacco in Snnada and the British colonies ir. Afric-:
but in all these places more success h!Ls been attained in the production and mar-
keting oC piipe tobacco than of cigarette leaf. Nevertheless British colonies are
supplying a much larger proportion of the British tobacco requirements inmd the
developments of tobacco production in Britiai countries should be folko ;ed care-
fully. Of the total imports of tobacco into Great Britain in 1522 abou-t 90 per
cent came from the United States and 7 per cent fronra British countries. In 1927
we supplied 80 per cent w'lile the proportion supplied by British countries had
increased to 1C per cent.

In the discussion of our trade with. Orient the importance of China as
a market for our tobacco was mentioned. We have as ,et little com)etiticr in' su--
plying t;-is market. It is true that larger quantities of tobacco from k-erican
seed are bein, grown in China but the amount and quality are not sich*'as to af-
fect seriously the market for our flue-cured tobacco.

The position of our fire-cured and air-cured tobaccos in foreign markets
is not so pro.-ising. These tobaccos, which are used more largely for -ipe and
chewing tobaccos, find their principal foreign m-arkets in Continental Eirope.
Competition with this tobacco is becoming keener, In Italy, which was at one
time our leading foreign market for dark-fired Kentucky and Tennessee, the pro-
duction o-f tobacco has increased almost fourfold since the 'war. The effect on
our exports of this type to Italy is ,hown by the decline from 31,0'0,0'0 pounds
in 1923 to less than 500,0cC, pounds in 1927. In other Euro.eon markets larger
quantities of competitive tobacco from the Dutch East Indies are affecting the
sale of our dark tobadcos. Increasing production of pipe tobaccos in British col
ones is tending to to some extent the sale of our darker tobaccos in the
British market.

American fruits are shipped to all parts of the world and there is a
definitely upward tendency in our frui?: exports. In 1927-218 our exports of
fresh, canned, and dried fruit were, or a volume basis, about 2-1/2 times as
large as before the war. In-proved transportation, involvin:- more regular ar.d
direct service as well as refrigeration and ventilation, have greatly facili-
tated the exports of our fresb fruits. The openin,- o-f the Panama Canal route
for Pacific Coast fruit and the recent establishment of direct steams--i.) service
between Jacksonville, Florida, and Liverpool for fruit from the Southeastern
States are cases in point. In both instances there has been some reduction in
transportation costs from the corimbined rail-and-ocean route formerly used but

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the principal edvantag liusp in the fact that it i's possiblo to land the tfrut
in foreign markets in better condition than formerly., -Thi is e a fundpiunmn.tal:.
consideration in our fresh fruit export trade for if we. are to compete sucof- a-s
fully in distant foreig-n markets wie' must do so on the basis of high quality.. .||

Although American fruits are for the most part well known and. aoreoikted.
in most of the leading foreign markets, we cannot afford to ignore tie kmee corn-. 'lll
petition fron other producing mauntries in prospect for, the future. Serious at-
tention beir.- iven to the grading and packing of .iome grown apples in. Great
Britain, our principal foreign market; increasing exports-of well packed ts. =ai
apples to Muropean markets; contianed keon competition from Canada in practioalJ A
all markets, are some of the problems to bc ddalt with by .our. apple *rqwers-.-&
ehippers, .

Our orange and grapefruit exports have shown encouraging increased in re-
cent years. Most of the orange exports go to Canada, at present and, so far,
the winter months are concerned European markets do not hold out much proaise.n:. '^
cept for the hig iest quality fruit because of the large supplies of cheaw S.paaish
oranges and the relatively high quality Palestine fruit that is available at thstiafc.
time. There should be a better market, at least in Great Britain, during the sUis
mer and fall months when the only important competition at present cones fro. .s
South Africa. The consumption of grapefruit in Great Britain is gnewing and with. ,.
proper care in marketing the fruit and more attention to informing conqpmers as 'III
to the intrinsic merit and tha-tpron r way of serving, it, European countries \
should provide an increasingly profitable outlet for Amnerican grapefruit. |

Our exports of dried fruit have esown a remarkable increase in recent ||
years with both of the leading items, prunes and raisins, reaching record quan.
cities in 1927-28. Aggressive merchandising has contributed to this increase.
In this field, toc, we can expect greater competition in the future, especially |
from the relatively new fruit producing areas of Australia and South Africa.

But, as indicated in the beginning, foreign markets and the competition
we encounter there are not only our interest in the foreign situation. More thbauq:i
a third of our agricultural output meets competition from foreign products in"o ..,iuri
domrestid market. Producers of such commodities as wool, flaxseed, dairy pro&tit .
and a large number of fruits, nuts, and vegetables are so affected. The high ..
purchasing power of this country attracts imports, and these imports or the threq-.
of them, tend to set price limits beyond which the price of our own products cas'.
not advance.

We import more than half of our total consumption of wool. Some of thls
is carpet wool which does not compete directly with out domestic wools The Ist-
ports of conretitive combing and clothing wool show an upward tendency. Since
our imports constitute such a large part of our consumption our wool growers a e
definitely affected bi trends and fluctuations in wool production abroad adL by
the strnneh of foreign wool markets. Changes in prices paid for wool at the

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London Wool Sales, for example, ar' reflected in ..r i.r -es qui.te-. e u 1:. d moE-
tic wool market in Boston. The- prices -t LonCd:i taro tl.emnelves ai rfilc:t -n -
the present and prospective wool supply and tU. strer.htl- r weI.,er r I.? -
mand of the principal wool manafacturin, countries.

Australia, Argentina, New Zealand, and the Union of South Afrlt'- 8Yt? t"he
principal sources of wool directly competitive with the Arerican pr:d.'t. T'erc
is ko definite indication at present of an increasing 'vcil product ib: i:; "hrip
countries as a w-hole. Wool crowing in most of tiese countries, in fact, is -Ort-
ing kpen competition from other type:- of igrlculture such as '.neat ,Irnwin r. ;nd
dairying. Nevertheless there con be little question but t'.nt t'-.ere arp '9 C.-'ibil-
ities of considerable e:-parsion of 'ooi procu-i.'tion in t-ese co-ntrip.j i' ;Yor G
market conditions warrant. Whatever the developments ir tris direction, >
it is evident that this country will continue to be dependent ipon f:),re-igr. c-In-
tries for a considerable nart of its wool supply and that the prices received
by our wool growers will be influenced by foreign production and c3r.m- optionn ,f

Flaxseed is an-ther -f -ur ior:ducts w.hich ::-.eets stron- foreign Tc:npetitior
in our domestic market. We produce only about half of our t'laxseed re'.:iremrentg.
Argentina is the other principal source of supply. The size of the crop in
Argentina is therefore a leaiing factor in determining the price of flaxsecd in
the United States. The acreage sown to fla.seed in Argentina at present amounts
to about 7,000,000 compared with about 4,000,000 before tho war.

A significant development in foreign competition has occurred in recent
years in tho importation of winter vegetables from Mexico, Cuba, the Bi.hara
Islands and Bermuda. The principal source oi supply is the Mexican West Coast
where the acreage devoted to vegetables hAs increased from-n around 5,Cir, in12]7-!J3
to 63,000 last season. The chief effect of these importations is to ta,:e the
edge off the market for the early vegetables from Texas and Florida.

It sbems clear that we must expect competition from foreign agricultural
products, both in our domestic and our foreign markets, to become increasir.gly
keen as time goes on. Our growing population will gradually absorb a larger
part of many of our comnodities, as has already happened with our dairy products,
and this will tend to place some that arc now on an export basis upon a domestic
basis. But this will merely mean a change in the focal point of the competition.
Prices of such products will still be subject to the influence of foraijn
supplies. This is well illustrated in the case of dairy products which we once
exported in large quantities but of which we are now a net importer,

Somo of our products, for the production of which we have cxc:ptional
facilities, will doubtless remain on an export basis. The prices received for
such products will be influenced by the strength of the demand in our foreign
markets and by the competition encountered therein.

The development of world transportation is bringing the products oft' the
most distant agricultural regions into the world markets. Te have an. excellent
example of the rt-lative cP.eapncss of ocean transportation in the fact th'.t
Argentina can bring corn into our Atlantic and Pacific Coast markets more cheapl-
than, American corn can be moved by rail to those areas from the corn belt. r;.e
* imprnvomnant of oncan transportation is not, however, the only infiuen:e in the


SThis increasing competition of foreign agriculture and the shifts in ,....
the demand for agricultural products abroad will require adjustments on the .,
part of American farmers to meet the changing conditions. Intelligent pro-. '
duction and marketing programs necessitate adequate and-reliable Informatio. .iitL

Let me be more specific. Every year, and in some cases, twice a year, q;q
the Bureau of Agricultural economics issues an Outlook Report. Its purpose
is to present a picture of the. market situation ii respect to all of the l i.III
portant crops in order to give the producer a more adequate basis upon wich'.iiii
to plan his operations over the coming year. One of our major problems to::..:-.
evaluate the significance of the foreign situation. Vhat is the outlook forn.iii
the foreign demand for American cotton as indicated by the activity of the:,
textile industries abroad and the general economic situation in foreign 0*1W5,i'
tries? Are there any noteworthy tendencies in the .world Output of dairy .II
products, beef, and pork? What is their significance to American producers.0:1':
The prices received by American wheat growers for their product is detelaflt Id
by world production, not merely by the amount harvested in this country. Wb-41.Ij|
are the prospects for Russia's return to the'world's grain., markets? that are m.
the factors operating to affect the production of what in other countries? .
These are a few of the many questions that we must answer if a well-rounded *!l..:
picture of the agricultural situation is to be presented to American farmerxi.l

It is obvious that in planning production and marketing the farmer w frMt.
have information as to foreign and prospective foreign production. Just a e.
now has information regarding production and marketing conditions, in the Unitl
States. The farmer is not adequately served with the raw date provided by
foreign governments in foreign units anJ foreign languages, or by the in-
complete and scattered data as published by the International Institute of ^i
Agriculture, or as collected in the multitudinous consular and commercial re--..:i:
ports of the several countries of the world. Not only must such data be ';:|
supplemented with additional information, but the farmer needs a world crop "l
and market reporting service in his own language and his own terms. He needs
to have the facts interpreted by those who understand his problems, and *.l
furnltudjromptly, to him by those who can speak his langua&,e. I

Some progress has been made in laying the foundation for an adequate :
foreign agricultural service. In keeping with the organic act creating the : i
Department of Agricultureo, "... the general design and duties of which shall
be to acquire and to diffuse among the people of the United States useful .
information on subjects connected with agriculture, in the most general and ,
comprehensive sense of that word *..", the Department of Agriculture has lon:
recognized that farmers need the facts about foreign competition and foreign
markets. It is interesting bo observe that even before the Department of :
Agriculture was established the officials of the Department of Interior, then
concerned with agriculture, apologized for the large amount of foreign statiltisi
contained in the agricultural report, in the following words:

.* bat this is rewarded by rnar:y q.Tite ,Is
essential as the statistics o: o .r o.-.n co.-tr,,
in order thit we may know who -re o'"' itoro
and where an o)er.inl ;.na occur for the *ic )f
our products."

The Co.,.i sioner of A:-riculture in his ar.n'uzd rcoort for i .-'3.- 3 2 s.ated
that the .r st ir.crease in surplus ;jroductio: which '.had to ho :Iriwttcd ir.
Europe made it necessary "to obtain oro nt and trustworthy information of
current crop reports of the world, ana especially of European ,ouz.trieO.",
Congress, by an act ol June 18, 188338, directed t-.e consuls and
commercial agents of the United States in focei.n coIuntries to '-re ,aLe ar.:
transmit to the Departrent of Statu "for th. ut-..c 01o the A ,ricilt-.ral Dc ,att-
ment, month-i,' raPorts relative to th- character, condition, and prospective
yields of thc agricultural and horticultural ind&.strics --nd othcr fruit._.rl.-
of the country in which.. they are r-.s ectively stationed." Theb were farther
directed to furnish as often as required, at least once in twelve months,
"the prices current of all articles oi merc. andise, including t.iose of the
farm, the garden, and the orchard, that are im:rortLd through the port of
place in which he is stationed." The Comnissioncr of Akrizultur: in turn
was directAd to include the consular reports, or as mnuca thnr.ol as hc darmed
matorially i.nportant, in his annual report, stating prices in dollars and
cents and rendering foreign weights and measures into their AMierican equivalent.

The commercial attaches and agents of the De-oartment of Comerce are
in position to collect valuable information on general business conditions
affecting the demand for farm products, as well as other basic facts required
in aporaisin, crop and livestock conditions in foreign lands and the demand
for farm products in foreign markets. These representatives are favorably
situated also for conducting promotional work looking to the expansion of
foreign takings of American farm products.

It was the farmers' need for world wide infor-qation about crops and
conditions which affect the markets for farm productss that ins pired David
Lubin to spend many ;ears of his life wo'-king for the establishment and
development of an International Institute of' ALrizulturc. The International
Institute, established in 1905, has made an important contribution in the way
of stimulating ',anr foreij:n countries to develop cro-narket re-,orting
services which provide not only their own producers b'out producers in other
parts of the world with information necessary to the planning of production
and the marketing of their crops in the Crcit markets of the world.

To-day we have a basis for an officicnt wo;-ld crop and market re-
porting service. The Intcrnational Institute of A-riculturc as an official
international organization of governmentss has its place. It c..n do much
toward stimulatin; governments to make accurate reports and car. be an
efficient transmitter of the official reports of one country to all other
countries of the world. We find it necessary, however, to collect a great
amount of information in addition to what is being supplied tne Ir.ternation.a-
Institute. nAmerican Consuls scattered through tae world are in 2 position
to provide a great volume o1 local information about crops and :.irrkets not

- 3-M

Ti Is merely a roundatton upon, wucnn &n errective rorelign
agricultural service can be built. The International Institute is still :
far from realizing the dream of David Lubin. Many countries are still
lacking an official crop and market reporting.service and many of the farm "
products of the world are still treporte4. The Consula Servic i ii
efficient but is not trained for agricultural reporting. Many o t.mheme ,
are keen observers and good reporters but the effectiveness of the Conmulr:
Service can be greatly improved with the advice and assistance of agrioul .. i
turally trained men. Many of the commercial agents of the Department of "
Commerce are also good observers. Most of them, however, naturally are
selected for their knowledge of commerce and industry and therefore devote .
most of their attention to activities in these fields.

What is now imperatively needed is effective direction, coordina-
tion and expansion of these several activities with specific reference to
the needs of American agriculture. -Frequently it will be found necessary .
to check estimates of production provided by foreign governments, or ewIn
foreign independent estimates of farm production. Data covering prodto-
tion practices, costs, and tendencies affecting the-expansion of-agri- .
culture must be collected ahd carefully analyzedd in order to appraise
the probable competition in foreign countries, to which American producer
must adjust their plans. Information regarding all those influences which
either increase or decrease the demand for American farm products m=st be
currently collected and interpreted for the guidance of the American pro-
ducers and shippers in seeking foreign markets.

Such a service, if adequately performed, calls for first class
men who have intimate knowledge of the problems confronting producers in
this country, and training and experience in analyzing those problems, "
and who can carefully coordinate the material collected on conditions in
foreign countries, with information now made available covering conditions -
at home. Only in this manner is it possible to place before the producer '
that complete picture of the situation both domestic and foreign which .
he needs in formulating his plans. ||

An adequate world-wide crop and market reporting service would re-
quiro that well trained representatives of the Department of Agriculture
be placed in the great markets for agricultural products, to report upon .
market conditions; that other men be sent to the great competing producn 1I
centers to report upon crop and livestock conditions. In addition to thee i
men, who may be stationed at central points, we need agricultural specialty ts I
who travel from country to country, dealing with special commodities, ad" i
advising with Consuls and Commercial Agents as to what information is needed
from their posts. .

Let me illustrate how our domestic crop and market reporting
service can be extended to be of value to our producers, by describing what i
is boing done with the small organization and limited funds that we now
have. il

It is of tho rc--atcBt i;:.oortanc.c-- th:t American cottor. ;o'%.e.- c e
kept informed regarding develo!ner.ts af-ectirr de-.and fur cjtto:. i:. r r
foreign markets. The activity of foreicnr. cotton :;iiis, the ecor.o.n:ic
position of the.various couLtries with parti:ular reference to t'.e
purchasing power of the people und the s'c.s oi01 cotton and cotton :oCls
on hand, arc examples of the sort of izio'ramtion needed if we Are to :nazu
an intelligent estimnate of the stre:.,t- cf t.e forei n de-and i or o--r cotton..
These factors are covered in detail in rru.t;.y reports from ti.e A : ri: .It-ra*
Commissioner in Berlin. !,1ch ci the material .ont.iined in th-ese reports,
is absolutely essential for a proper esti-mate of the foreign o .L.ani
situation and they are obtainablelo fro:.-, no othu.r source, The Ariclt 4ra'
ComnTissioner in Berlin has cxcollent contacts with Europoan cotton i.'.le
partly as a result of the work in conncctio:-. wvith' the introduction of the
universal cotton standards -romiulLatcd by the Departmcnt of A4ricut-lurc.
A cotton specialist is located in Eurone to advise and assist dealers in
the use of st-andaz'-s for American cotton. T-,e Aricltural Cox.iissioner at
Shanghai has arranCed with Cons,:ls to report on consumption, imoorts and
other significant facts a-'out the markets inr. Japan and China. It is
rather obvious th.t w.e should also h-ve a cotton soecialist ir. the Orient,
and that someone who Inows cotton and un.rde:':stands the production and mar' ing problems of the South ought to be so.u.-ying the production o' cotton in
India, Chnina, and elsew'-ere.

To prosperity of a nu.iber of' our ;lie--ro'in : rre,.s c'uccnds to
a very considerable extent upon effective foreign marketing. One o0 the
important problems has be-n to adjust s'-hipments in such a way as to avoid
-gluts in the foreign markets. In the past it has often ha jened that heavy
arrivals of apples on one week would uniuly de ress prices whrreias the next
week there might be a scarcity with higri pricess resulting. The work of
the Bureau's fruit socialist in Europc has been of decided v-.lue in
keeping, American apple producers and shippers informed by wee,:ly cable
as to the prices received for American apples on the aEuropean auction,
supplies available, the quality of the fruit, and the nature of the demand.
Reports are made not on ap:)les in general but rather upon particular
varieties of apples fro.- 'i'ticular districts. It frequently happens
that demand is good for 6ne variety of apelc but not for others. The
prospects for specific vrieties are poited out. The frait specialist
has been able to make many concrete suggestions as to met.hocs toj be used
in the export trade which have been of great )ractical value to our shippers.
Fruit of individual American shippers is examined and if a shipment is fo-.u.d
to be in unsatisfactory condition for any reason the shipper is so informed
and rccoirmendations are nado as to how the conditions may be avoided in t'.e
future. In addition, he is a qualified fruit inspector and is able to
act as in intermediary when questions arise concerning the L:rades or Luality
of nAmerican apples received in Euro-)e. Every year he makes a first-hand
investigation of one or more of the important fruit-producing areas in
foreign countries which offer co-noetitionr to American fruit. It has proved
the greatest advantage to our am.ile growers to have a man stationed in
Europe who not onld is thoroughly fan.:iliar with the foreign marketing of
fruit but who has had years of experience in fruit production and :m'r'keting
in the United States.

Aain, it is obvious that one rm-n is not enough to look -ifter the
fruit interests of the United Statos. !e ouwht to a m:-n1 in the
Orient, and someone should canvass thLe possibilities of marketing .nore fru-iit
in Latin-knerican countries. Then there are also problems of competition
with producers of the Mediterranean Basin ought to be investigated.

ai.A,-L5j.. wLtUJ.LUE 01U& bum J.Oj L WUUJ. SU.bL.WBI&UUU 4WU UUVW&a 57 USLUOW &CWUUW.
Agricultural Conmuissioner in London. The activity of the wool manufactu I
industry at Bradford, England, has an important bearing on world wool prtie#
and weekly cables covering conditions there are receqpvod through the hmerlam
Consul at Bradford. Cabled reports are received on $te trend of wool vales
in the auctions in Australia and New Zealand.

We need more information as to the condition of sheep, and we need
advanced estimates of the production of wool in all of these countries.
We have sent a man to New Zealand, Australia, and South Africa to stur
methods of marketing wool and he has made a valuable report., but we need
to investigate further the possibilities of expanding production in theO
important countries.

Another illustration of the beginning of the development of a
valuable service is the reporting on shipments of early vegetables from
Mexico into the United States. Expansion of the vegetable industry on th
Mexican West Coast during the past few years has introduced a factor in the
American market which affects materially American producers of early
vegetables. To meet this competition effectively, it is necessary for
American producers and shippers of winter vegetables to be informed regarding
the size of the Mexican crops; the factors, such as weather and diseases,
affecting production; and the movement of vegetables to American markets.

It became apparent during the 1926-B7 season that reliable information
on these points was. not available to our vegetable producers and a service
was inaugurated by the Foreign Service of the Bureau of Agricultural
Economics to meet this need. An arrangement was made with the Department of
State whereby the American Consuls located in the Mexican West Coast region
report by mail, or by telegraph in case of outstanding developments, the
production and shipment of vegetables. These reports are consolidated by
the Foreign Agricultural Service and are sent by mail and by the Bureau's
leased wires to individuals and associations to whom they may be of value.

The first report of the 1927-28 season gave a background survey of the
industry and covered the prospects for the year. it weas released two weeks
before the first shipments were made to the American market and gave our
producers of early vegetables a clear idea of what they might expect in
the way of Mexican competition. Subsequent releases have.dealt with im-
portant developments affecting the production and shipment of Mexican
vegetables. A similar service has been started to cover. vegetables from
Cuba and the Bahama Islands.

The utility of this service is evidenced by the great numbers of
requests that como to the Department of Agriculture for information as to
the siue and condition of the crops, and probable shipments for the season.
The Consuls are doing good work, but someone who is familiar with the fruit
and vegetable industry in the United states should make a canvass of the
situation in Mexico, Cuba, and the Bahama Islands each season before
shipments begin.


It is Just as important to the producer of vcgotables ir. Florida
that he be informed as to prospects for shi icsts and volume of ship-
ments from Mexico as from Texas. The Departmunt maintains a service
reporting the shipments of vegetables from those centers in the T.Lited
States that specialize in production, and the receipts of these vegetablIes
in the big central markets. The purpose of this service is to regularize
shipments and to inform producers in each area as to what is beinc shlp,,ed
from other areas. It would be a simple matter to extend the fulI service
of the Department of Agriculture into Mexico, Cuba, and the Bahamas, and
thereby have a united service covering all production centers that compete
with the producer of Florida or Texas in the markets of the United States.

I have endeavored to show you concretely by describing the handling
of a few commodities the kind of service that the Department is now render-
ing and the needs for expanding this service. Farmers in the United States
can compete with farmers of other countries in quality and volume of pro-
duction in many lines, not only in the markets of the United States but in
foreign markets. But to compete with profit the American farmer must be able
to plan his production with a full kaowledbe of both foreign and domestic
demand for his product and of what his competitors are doing. Furthermore,
the fullest development of the agricultural resources of this country
from a national point of view requires us to exert ourselves to find
profitable outlets for the farm products of which we can and ordinarily do
produce an exportable surplus.



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