Changes in Agribusiness May Quiet Predictions of Global Hunger

A bumper crop of winter wheat is bursting from silos across America's heartland and - along with big yields overseas - muting recent warnings of global hunger.

The abundant harvests are raising world grain stocks from a record low last year of just 13 percent of total consumption to a projected 16 percent this year. They are the newest talking point in a high-stakes debate over whether future grain production will be enough to feed the world's expanding population.

Some Malthusian analysts warn the world is entering a period of scarcity. They note that as millions of people in developing nations begin to prosper, demand for grain is growing dramatically. Meanwhile, farmers have squeezed so much out of the land that productivity gains are now just slight.

"The question is what happens when we have a poor harvest," says Lester Brown, president of the Worldwatch Institute in Washington. "In 1988 in the United States we had a severe drought that reduced the world grain harvest below consumption, and we have never rebuilt reserves back to the same level. If we had another poor harvest like that, it would be chaos in world grain markets by September," says Mr. Brown.

Still, farmers throughout much of the world anticipate solid harvests this season, thanks to good weather and record high prices for corn and wheat last year. Their expected yields appear to reinforce the claim of optimistic analysts that ingenuity and market forces will reap continued abundance.

The US corn crop later this year is expected to approach a record tally.

"There have been the doomsday seers for 50 years about world grain production, and I don't see anything on the horizon that would prove them right," says Dave Miller, commodity specialist at the American Farm Bureau Federation in Park Ridge, Ill. "We continue to have production that in general is in excess of demand, and as soon as you get a shortfall, prices go up, stimulate new technology and resource allocation, and we fill the void again," he says.

Indeed, today's low grain stocks do not signal long-term scarcity. Rather, they are the consequence of looser government controls on the production and trade of agricultural goods and better transport and communications, say some analysts.

From Europe to the countries of the former Soviet Union to the US, governments have granted private enterprise more leeway in the tilling and storage of grain. Private companies store less grain because they are generally less willing to assume the risk and expense of large grain inventories than are state officials.

IN the US and many other countries, agribusiness, far more efficient than just a decade ago because of better transport and communications, has determined it can safely reduce its piles of grain.

"One of the reasons we can carry lower stocks is because, just as in industry, agriculture is learning how to do just-in-time inventory management," Miller says.

Grain production in Eastern Europe and across the former Soviet Union has stabilized after a wrenching adjustment from strict centralized control to a freer market. Other major grain producers are bringing in respectable yields or expect to do so.

Finally, the easing of trade restrictions has also sped the movement of goods from places of abundance to places of scarcity and given producers greater confidence in adequate supply, say agricultural experts.

America's winter wheat crop testifies to how the combination of high prices and strong, steady demand energizes production and lifts stocks. The harvest will be 20 percent larger than it was in 1996, according to estimates by the US Department of Agriculture.

Farmers in the areas around Texas and Oklahoma faced fierce drought last year. Good weather this year has accounted for much of the widespread production surge. Texas is up 37 percent; Kansas, 76 percent; and Oklahoma, 85 percent.