In agriculture the most surprising event of 1972 was Russia's purchase of 400 million bushels of U.S. wheat: more than a third of the record-breaking total of U.S. exports for the year and more than half of average U.S. wheat exports for the half dozen preceding years. Another surprise, though on a far smaller scale, was the sale of 15 million bushels of wheat to the People's Republic of China, which until last year has had no trade with the United States. Late in the year India, facing near famine conditions because of poor harvests, began to buy wheat in this country. As a result of all this, the 865 million bushel carryover with which the country entered the marketing year will be nearly cut in half.
To a large extent this upsurge in exports was fortuitous. The world wheat situation was unusual: Russia's crop was drastically cut by bad weather. For varied reasons, including weather, three of the four major exporting countries— Canada, Australia, and Argentina —had relatively small supplies of uncommitted wheat. The United States had ample supplies and was eager to sell them. It is unlikely that in normal years Russia will be a large-scale buyer of American wheat; since 1965 she had been a net exporter.
However, some aspects of the year's developments, especially for grains other than wheat, may have significant implications for the future. In addition to its wheat purchases, the U.S.S.R. bought more than 250 million bushels of corn and 40 million bushels of soybeans from the United States last year. Since Russia appears to be firmly committed to its goal of providing her people with more livestock products, the outlook for continued purchases of U.S. feed grains, including sorghums, is favorable. U.S. Department of Agriculture analysts believe that this particular source of demand will continue for three to five years.
Also, the recent thaw in U.S. relations with the two large Communist countries could have general effects upon agricultural trade. Since Mainland China had bought nothing from the United States prior to this year, its purchases of wheat, plus 275 million bushels of corn and 22 million pounds of linseed oil, may be of more future importance than the relatively small amounts suggest. On the other hand, there may be some built-in limits to large expansions of farm exports to either Russia or China. Trade with Communist countries involves much more than the economic factors that usually dominate transactions in capitalistic countries; either nation could decide to import or export for political reasons, either internal or external. Also, and perhaps more important, neither country has large amounts of foreign exchange with which to purchase commodities from abroad.
Secretary of Agriculture Earl J. Butz commented on the latter problem in a speech last November. Referring to the possibilities of U.S. purchases of natural gas from the Soviet Union he said: "We need natural gas—Russia has natural gas. Russia needs food and feed grains—we have food and feed grains. When an agreement is reached for this country to obtain fuel energy from Russia, that fuel won't be paid for with rubles. It will be paid for with corn and soybeans and wheat and sophisticated electronics, for example. We will trade grain, which we can produce abundantly and efficiently (and which Russia cannot produce abundantly and efficiently), for fuel, which Russia has in abundance (and of which our supply is limited and costly to extract).
It was a long-range and oversimplified speculation on a most uncertain and complex situation. The gas negotiations were still in a very preliminary stage at the end of the year. If an agreement should be reached, much more would be involved than a barter of Russian gas for U.S. farm products. For example, it is likely that American capital, probably with government guarantees, would be needed to develop the pipeline and other facilities for bringing the gas to the point of shipment. Nevertheless, it was interesting that the thought should be voiced by a Cabinet officer. It is even more interesting to speculate upon the effects of any sustained rise in farm exports—whether to Communist countries or others—upon U.S. agricultural policy. Present programs of holding land out of production and offering export subsidies still are based on the idea of protecting farmers from the burdens of producing too much.
A version of this article appeared in print in the January 1973 issue of Resources magazine.
