The Global Glut

Take an indulgent farm policy, enhance it with advanced agricultural technology, cushion it with protective tariffs, and the guaranteed result is that old embarrassment, commodity surpluses. Once uniquely American, the farm glut has recently become international.

Overabundance is common in the developed nations that can afford to subsidize farming. It is a costly bounty that threatens to stimulate further protectionism and provoke trade-damaging price wars behind the barricades of new border taxes, import quotas and additional grain subsidies. The cruel irony is that while almost half of the world's people are malnourished, there is sufficient food to feed them today.

Problem Mountain. The problems of plenty are manifold in the Common Market countries. A policy combining protection and unrealistic price supports without production quotas has yielded a surfeit of foodstuffs. Excess sugar stocks have swollen to 1,000,000 tons and are expected to grow by more than 300,000 tons annually. In Italy, landowners have been forced to destroy crops of fruit and vegetables, and officials at the Ministry of Agriculture are fretting over what to do with 150,000 tons of ripening surplus oranges, more than 10% of the annual harvest.

One threat to trade relations between the U.S. and the Common Market is the market's mountain of surplus butter, which is now 300,000 metric tons and is expected almost to double by next spring. With storehouses filled and the world market clotted, leaders of the Common Market's agriculture section are trying to persuade consumers to switch from margarine to butter. The proposed solution, which includes a tax of at least $60 a ton on the food oils used in margarine, would slash by one-third the U.S.'s $500 million annual soybean exports to the Common Market. The tax plan was shelved after the U.S. threatened retaliation--by raising tariffs on imported European cars, for example--but as long as the "butterberg" grows, the bitterness will persist.

Beyond Western Europe and the U.S., there is an almost global glut of grains. Major advances in farming--such as the use of high-yield wheat strains in Asia, improved fertilizer and increased irrigation--have coincided with successive years of beneficent weather to produce a bumper crop of wheat. India and Pakistan, both traditional grain customers, have increased wheat production by 40% since 1966 and are now near self-sufficiency. The total stock in wheat-producing nations is 51 million metric tons, or almost the same amount of wheat that has been exported annually in world trade.

Price-cutting has started as the five major wheat exporters--France, the U.S., Canada, Australia and Argentina --unload stockpiles below the price minimums set by the International Grains Agreement in 1967. France opened negotiations with Red China on a deal to unload soft wheat. Not wanting to be left holding a surplus, the U.S. followed by underselling grain to Germany and Britain. Canadian farmers, prevented by the strait-laced Canadian Wheat Board from breaking the Grains Agreement, could only fume as prices fell. The board finally relented after it became apparent that a free-for-all was shaping up.

Feast or Famine. Now Canada's problem is finding buyers. Even the Russians, saddled with their own surplus, seem disinclined to accept the final 150 million bushels of wheat that they had ordered in 1966 as part of one of the largest grain sales ever concluded. Last month, the five major wheat producers met in Washington to shore up the sagging price floors, but the meeting adjourned without agreement.

Farming has been a feast-or-famine business for almost as long as history has recorded harvests. Today's bins of surplus food serve as pointed reminders that most agricultural policies are inadequate, inconsistent and archaic. The cost of subsidized farming in the Common Market is more than $2 billion a year; in the U.S. it is $3.6 billion. Yet prices are erratic, and people go hungry. Agricultural technology has shown that the Malthusian apocalypse of starvation can be avoided. The immense task now for the producers is to devise the economic and political conveyor belts that could put surplus food in the mouths of those who need it.

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