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Letting slip the essential link between political power and agricultural power

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This note elaborates on the closing theme of Energy conservation was much easier for toasters: the rising challenge to a linchpin of US economic dynamism, food crop exports. This is one of the items that I feel are usually invisible to voters and many of the political elites and for which the distraction of the war on terror saps administrative focus to formulate a timely response.

It is worthwhile to look at the postwar landscape of US agricultural production rise that has provided both revenues (some 12% of US GDP) and significant sway over global agricultural agreements:

  • Both the Soviet Union and the People's Republic of China had plunged into mad forms of collectivization stripped of any market incentive advantage along with population relocations that played havoc with production.
  • India was desperately poor and underdeveloped, seeking to ward off starvation in which even imported grain often rotted at railhead due to lack of transportation.
  • Argentina and Brazil suffered various authoritarian, military, and otherwise ineffectual regimes that blunted general productivity such that high per capita incomes at the beginning of the 20th century then declined.
  • Crop and animal enhancements were in their infancy, even in the US in the early postwar decades.

Wheat leads the change:

  • Over 90 nations now grow wheat, many at lower cost than the US and with greater proximity to key consumer markets.
  • The PRC (China) became the world's largest wheat producer after a sustained self-sufficiency effort.
  • India rose to significant world exporter as it released part of its substantial wheat reserves.
  • Russia has returned to the world wheat market as it rebuilds its Black Sea wheat belt.
  • US wheat acreage has shrunk to its lowest level since the 1970s.
  • US suffers the 'rich man's disease" of desiring imported foods.
  • Emerging food powers pour money into infrastructure (ports, rail, and navigation) while the US does not.
  • Emerging food powers have land for the taking (that the US does not) and suppresses environmental groups (which is politically difficult in the US)
  • Dwindling US production percentage raises farmers' risk as price swings due to shortages or climate do not favor US producers (loss mitigation).
  • Rising risk to US farmers raises demands for federal subsidies.
  • Biotechnology advances, first from the US and now other nations, are for sale to any global competitor.

It should be remembered that the 'cost of doing business' is far less in developing and underdeveloped nations as opposed to the US or Europe as business regulations, environmental and pollution control, and respect of tribal populations are mainly the interest of developed nations who have put the necessities of shelter, food, and survival behind them.

Livestock is not immune either. Just as US beef exports have catastrophically tumbled over fears of mad-cow disease (US beef was banned in more than 70 countries), Brazil is roaring onto the world market: "Brazilian agriculture has the benefit of vast pasturelands, low labor costs and a talented entrepreneurial class."

Agricultural power and political power are handmaidens. Brazil will contest any US commodity market that it can enter and will find welcome support from China and South-South allies. Brazilian infrastructure is being built at breakneck speed, often with Chinese assistance.

Barring new agricultural breakthroughs, the wildcard in the glide slope of US agricultural decline is China. It's governmental statistics are suspect in any category (witness the cooking of the books over the SARS epidemic) as in so many parts of Asia, the Americas, and Africa. It is unclear whether its current surplus will translate into net importer or exporter. It clearly wants independence from foreign markets in all key raw materials and food stuffs and will continue its drive for self-sufficiency.

New Farm Powers Sow the Seeds Of America's Agricultural Woes
Long a Buyer of U.S. Wheat, Russia Is Now a Threat; Economic Clout at Risk
Mr. Grenz Contemplates Soy
By ROGER THUROW, SCOTT KILMAN and GREGORY L. WHITE
Staff Reporters of THE WALL STREET JOURNAL
June 18, 2004; Page A1

How a Brazilian Cattle Baron Shakes Up World's Beef Trade
Mad Cow Boosts Mr. Russo And His Grass-Fed Herd; A Bullish Move in Israel
One Alligator and 13 Rabbis
By MATT MOFFETT
Staff Reporter of THE WALL STREET JOURNAL
June 22, 2004; Page A1

Famine to Feast: China's Attempt To Feed Itself Roils Wheat Trade
By CHARLES HUTZLER
Staff Reporter of THE WALL STREET JOURNAL
June 18, 2004; Page A8

Gordon Housworth



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