The two sides of abundance. Record crop year means a bigger surplus in the US, but other regions have devastating shortages
The world is producing more food than ever before. Global grain production set a record in this crop year. If US farmers bring in the harvest they're expected to this fall, they'll kick off the next crop year with a bang. The US Deparment of Agriculture (USDA) also forecasts a record US-corn crop.
The abundance is dramatic evidence of man's technological progress. Unfortunately, however, man has proved to be better at producing food than distributing it. Vexing problems lie on each side of the abundance story.
The first problem is regional shortage. The focus of concern is Africa, where major droughts have slashed food production and forced millions of people to depend on outside food donations. Emergency relief efforts have helped alleviate hunger. Improved rainfall signals that Africa may eventually be able to grow more food for itself, says Ray Nightingale, coordinator of food needs analysis at USDA's Economic Research Service. ``In the current crop season, things are looking much better.''
Meanwhile, in another part of the world, the United States is facing the other side of abundance: chronic surplus.
A string of worldwide bumper crops has depressed prices and farmers' incomes in many regions of the world. But the focus is on the US. Because of farm programs that force the government to buy up surplus stocks, the US holds most of the world's surplus grain.
``Traditionally, we've carried a disproportionate share of these stocks in the US,'' says Robert N. Wisner, economics professor at Iowa State University. Holding such surpluses is becoming increasingly expensive. This is one reason there have been calls for major change in US farm programs.
Unfortunately, in trying to change current farm legislation, much of which expires at the end of this month, US policymakers face a dilemma.
From an economist's viewpoint, farm supports should be lowered. This would give farmers less incentive to grow as much food as they grow now. Prices would drop so that the US could again compete in world markets. The trouble, economists say, is that the adjustment would take a number of years. And in the interim, many US farmers would go broke. An estimated one-third of the US farming community already faces financial difficulties.
Saving the farmer, however, could prove very costly, these economists add.
One proposal -- to fight back on the trade front by shutting out imports and subsidizing exports -- could spark a trade war. US agriculture, so dependent on exports, would be the biggest loser, trade specialists say.
Another proposal is to let farmers decide whether the government should regulate crop production. In the past, supply control has helped in the short term but has not provided long-term solutions, many economists note.
``With what we can do in our government system, it can't,'' says D. Gale Johnson, an economics professor at the University of Chicago, who has studied the impact of supply-control programs. The programs are almost always voluntary. ``That means you have to bribe people to participate,'' which becomes increasingly expensive, he says.
Furthermore, in recent years, when the US cut back production through supply-control programs, other nations simply boosted theirs, points out Mr. Wisner.
In the past five years, production increases have been especially dramatic in the European Community, China, and India. All three -- accounting for nearly half the world's population -- have shifted from buying grain on the world market to selling it. Some countries -- notably in the EC -- protect farmers with high price supports and subsidized exports.
``We have not had the cooperation of other exporting nations,'' Wisner says. And getting that cooperation -- another solution rarely mentioned -- would prove difficult, agricultural economists say.
``There's no way of getting any cooperation,'' Dr. Johnson says. ``Even we and the Canadians can't get along for more than six months on these kinds of things. . . . Most governments of the world don't want to face their consumers with expanding [rising] food prices.''
Still, some direction in US farm policy needs to be found, because the US-held surplus is unlikely to go away by itself, economists say.
Last week the Agriculture Department forecast a record US corn crop -- 8.47 billion bushels -- and bumper soybean and wheat harvests. These harvests, included in department estimates for the 1985-86 crop year, could boost world grain production to another record. The department now estimates 1,661.4 million metric tons will be grown worldwide in the 1985-86 crop year, up from the record 1,638.4 million tons this year. [Note: The USDA fudges the world crop, allowing it to begin anywhere from about July to October, depending on the country.]
Is the gloom -- shared almost universally by agricultural economists -- justified? Only a decade ago, experts were touting the opposite scenario: permanent food shortages and high farm income.
``I often think about that,'' says Allen Shiau, agricultural economist at Chase Econometrics, a forecasting firm. But ``unless we can find a new market, I don't see a dramatic change in the picture.''
The surplus problem is hardly new. Except for a few years during the 1970s, the US has been saddled with chronic surpluses, says Richard Pottorff, manager of the agriculture service at Data Resources Inc., another forecasting firm. And US efforts to control them date back at least to the 1600s, when Virginia adopted acreage-reduction programs.