Business And Technology
Agricultural Cooperatives and Grain Export Issues
It is the contention of this paper that although one might be encouraged to locate a nexus of interrelationships between agricultural cooperatives in America and current, significant issues in grain exports. It is more likely however, that the crucial relationships involve a meta-organization of individual farms of various sizes, agricultural co-ops, various corporations related to agriculture, and United States government departments and organizations; all of which act and react to international grain export challenges.
The effects of normal supply and demand fluctuations, new markets opening, and a myriad of other political-economic factors will, of course, have differing effects on different players. For instance, the agricultural cooperatives will be effected differently than the cereal manufacturers, or even than a large independent farm. Cooperatives are the focus here, but the primary point remains: no matter what the producer-source, grain exports from America are part of a complex constellation of factors.
Moreover, the discussion will include a few concluding remarks on future-oriented issues which focus upon sustainable development. Sustainable development is no longer the watch word of a few outspoken environmentalists. It is now a matter of survival for a huge and rapidly growing world population. Grain exports are, by default, a part of the sustainable development dialogue.
II. Existing and Restricted Markets
There are a number of current market potentials as well as existing ones. The new markets are those which may not be open to American exports currently, or because of various international embargos/treaties, can not be accessed by American grain producers. In addition, historical changes indicate that the markets themselves change over time. The break-up of the former Soviet Union for instance, has altered the pattern of grain exportation to some of the new nations of that area. Russia is not an arch rival and nuclear enemy any more and this directly effects the grain exports to there.
The FAS (Foreign Agricultural Service sums up the political changes in foreign markets in this way: Economic sanctions can be powerful foreign policy tools targeted to further U.S. foreign policy and national security objectives. It is a case of the American government causing some degree of economic restraint and even burden, on private grain producers keen to expand their markets worldwide. The results are often negative, but always rather complex:
Trade restrictions imposed by the U.S. Government, however well-justified, do impact U.S. commodity exporters and consequently the entire agricultural sector. Furthermore, the effects of these restrictions are not limited to just the markets that U.S. exporters are prohibited from trading with: other exporters change their marketing strategies to the detriment of the U.S. (F.A.S. 2000)
The restrictions in trade are controlled by the Office of Foreign Asset Control (OFAC). The main countries targeted for restrictions are:
According to the FAS, the OFAC restrictions on these countries is fairly substantial. Taken as a total, the countries will import approximately 11% of the world wheat trade. This is not a trifling amount in terms of world market demand. It is enough to cause fairly serious economic concerns to American coops and grain exports.
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In general, there is a large international market awaiting American grain exports. It has not changed in size, at least appreciably, in the past decade. The following graph of wheat data for the 1990’s indicates a peak reached around 1993, and a small drop since then. In general though, the curve is shape is flat showing a steady market available for U.S. exports.
III. Key Organizations
In April of 2000, the Coalition to Promote U.S. Agricultural Exports reported on its Internet site that it was officially comprised of … an ad hoc coalition of over 80 organizations, representing farmers and ranchers, cooperatives, small businesses, regional trade groups, and the State Departments of Agriculture.
Members of this Coalition are supposedly united in their efforts to strive together to support of U.S. policies and programs. These officially consist of:
? Promote U.S. agricultural exports
? Counter subsidized foreign competition
? Strengthen farm income
? Protect American Jobs.
(The Coalition, April, 2000). Clearly this organization is the type of meta-group mentioned at the beginning of this paper, which has been created to represent a diverse group to a diverse and changing, and complex international market. It supports U.S. government policies and this means all groups, including agricultural cooperatives, participate in specific programs.
MAP (Market Access Program) of the USDA is one such strategy. It is particularly beneficial to agricultural cooperatives in the U.S. The official statement concerning the objectives and nature of MAP is:
The Market Access Program (MAP) uses funds from the U.S. Department of Agriculture’s (USDA) Commodity Credit Corporation (CCC) to help U.S. producers, exporters, private companies, and other trade organizations finance promotional activities for U.S. agricultural products. The MAP was authorized by Section 203 of the Agricultural Trade Act of 1978 as amended, and is administered by USDA’s Foreign Agricultural Service. The MAP forms a partnership between cooperatives, state-regional trade groups, trade associations, and USDA’s Foreign Agricultural Service.
The Market Access Program uses funds from the U.S. Department of Agriculture’s (USDA) Commodity Credit Corporation (CCC) …to help U.S. producers, exporters, private companies, and other trade organizations finance promotional activities for U.S. agricultural products.
The program encourages the participation of agricultural cooperatives specifically; and small farm organizations as well.
There is also an FAS program promoting agricultural exports, including grains, and it is a third important organization which connects (potentially), all producers with foreign markets. The Foreign Market Development Cooperator Program (FMD), also known as the Cooperator program, is administered by the Foreign Agricultural Service (FAS) of the U.S. Department of Agriculture (USDA). The goal of the program is to develop, maintain, and expand long-term export markets for U.S. agricultural products.
Finally, as J.T. Smith points out in an article on one of Glickman’s (1998) conflicts with the Europeans, American agricultural producers usually have the full support of the American government. Glickman was willing to take on the European community as a whole when it subsidized barley production in Europe to the detriment of American barley producers. There was no question that American farmers were placed at a serious disadvantage when unable to compete, in terms of price, with Europeans barley producers whose product prices were clearly influenced by the subsidies. The weight of the American government was thrown against the European community in an effort to maintain treaties (GATT),and to protect American grain producers.
IV. American Advantages
American agricultural cooperatives have the financial capability of tapping into the seemingly fathomless well of American technology and agricultural science. This is not small point in reference to grain exports. As will be shown in the conclusion, the profitability of grain production depends partly on the ability to expand markets which in turn requires an increased land yield, and usually an increase in product quality )or at least a change which is seen as favorable by the market).
McGraw, Comis, Barry, and Hardin are unabashedly pro-American in their report on technological achievements in grain quality and production. However, their report is not without merit. It indicates that agricultural cooperatives, and others as well, have access to powerful techniques, genetic manipulations, and other scientific achievements which can yield a superior grain product for the world market and may even increase production substantially.
In addition, as the previous section on meta-groups indicated, Americans have an advantage comprised of marketing skills and large, unified support for grain exports which consists of public and private sector forces. This combination of marketing skill, relatively harmonious goals across many diverse groups, and scientific, technical advances in the agricultural scenes gives the U.S. almost overwhelming power to successfully export agricultural products.
V. Conclusions: Sustainability and Agriculture’s Future
Brown and Halweil (1998) observe that grain production and grain exports are limited by the hard facts of natural limitations:
In the United States, where the cropland base is essentially fixed, growth in the grain harvest is limited to the rise in land productivity. With this rise now barely keeping up with the growth in U.S. population, there is no growth in exportable supplies.
Agricultural sustainability in grain production therefore, is something of a given. It is not a negotiable matter since the amount of land is fixed. As Brown and Halweil note, only increased land yield can in crease production.
Wilken’s analysis of the effect of modern production levels and techniques on soil health is essential. Many effects on soil are presented here and there throughout the article and they mixed with the causes of such effects. They include: degradation, blocking of soil formation, erosion, microbial destruction, compacting, high production levels, natural causes such as insufficient rain or too much rain, tilling, fertilizers, drainage, wind erosion, filed waste removal, and what may be the most important: greed.
The two most interesting points made were about the consequences of bad farming practices, and the role of greed and/or increased production levels. Outright greed drives the wealthy landowners in Latin America to force land conversions from sustainable, small operations to large cash crop operations. (223). This results in pushing smaller farmers to more erodible land where erosion rates are thus increased. Production levels and conservation of soil are called diverging imperatives according to Wilken. (226). This means that the high levels of production required by an increasing population cause more strain on soil and may eventually result in the loss of huge areas of farmland because soil erosion and degradation are so high. Finally, Wilken notes that in areas where there have been bad practices (The former Soviet Union e.g.), recovery may take years, even decades. There are consequences to farming actions taken in the past. Therefore, sustainability will require the correction of past practices, research to determine the complex interactions involved in modern agriculture, and less demand on the land currently being farmed.
Wilken’s point is no different from that of other critics of traditional farming in the united States; namely, that farm practices will have to change somewhat radically in order for there to be a sustainable future. This means that in the future, grain producers and exporters in the US at the cooperative level, will have to consider new market levels which make sense for the land and for future productivity. In the end analysis, this is the single most important grain export issue.
Brown, L. and Halweil, B. American Grain Exports. World Watch Magazine. 1998.
Foreign Agricultural Service (F.A.S.) A Review of U.S. Trade Restrictions and Grain Exports. June, 1998.
McGraw, L., Comis, D. Barry, K. and Hardin, B. New Wheats. Agricultural Research Magazine. No date.
Smith, J.T. Glickman to fight entry of subsidized grain exports from Europe Abilene Reporter-News.
Foreign Agricultural Service. Market Access Program December 1998
Foreign Agricultural Service. Foreign Market Development Program. November, 1997.
Wilken, Elena. Assault of the Earth. World Watch March/April 1995.