August 6, 1975

Soviet Wheat Deal Not Large Enough

The main thing wrong with the sale of wheat to the Soviet Union is that it is a piddling amount.

I happen to think that Uncle Sam is being diddled by detente.  Selling the communists part of our surplus grain - at regular prices - is about the only advantage we will realize from sleeping with the Russian bear.

There has been some delighted finger-pointing from the big spenders in Congress in the hope we will blame the next round of inflation of the Communist bogey man.  It is a good try, but we now see that ploy as the smoke screen it has always been.  Government spending is recognized as the principal cause of inflation.

About the only weapon left to us in off-setting government handouts is sale of American products to foreign buyers.  In the parlance of international commerce we need a "favorable balance of trade."

America is the breadbasket of the world.  We have been blessed with soil and climate that makes us efficient in growing grain.

We used to be the manufacturer for the world, also, but that is a competitive service rapidly being wrested from us by "developing" nations still used to working long hours for little pay.

The soil and rain, however, can't be ex-ported; so it may be that our destiny is to feed the rest of the world which runs the factories.

True, the Soviets sharped us a bit back in 1972 when we made the first massive sale of grain to them.  But once burned is twice shy.  Congress cancelled the grain subsidies after the experience three years ago.  Today its straight cash and no "credits" - the way it must be from here on out.

Russia bought 4.5 million metric tons of wheat and 4.7 million tons of corn last month - not quite 10 million tons in all.  This compares with about 20 million tons three years ago.

Now, stay with these U.S. Agriculture Department statistics just a bit longer for they are important to an understanding of the wheat sale situation.

We have about nine million tons of wheat left over from least year.  To this we expect to add 60 million tons from the harvest now half completed - a total of 69 million tons to do something with.

It is estimated that U.S. citizens this year will eat about 22 million tons, and we just sold less than five tons to Russia.  This leaves 42 million tons of wheat we have yet to sell somewhere or start piling up in grain elevators to rot at taxpayer's expense.

As the money we send overseas, mostly for Arabian oil, skyrockets we urgently need to bring the dollars back home by the sale of wheat and other U.S. products.

Somewhere in the U.S. Department of Agriculture there should be high-powered sales force pushing the sale of wheat and other American foodstuffs to overseas consumers.

Americans are somewhat mystified by the export of commodities - that is, perishable food - simply because the transactions are in the multi-million-dollar range.

Actually, the process is quite simple if you take your eye off all those dollars.

A farmer - until he is collectivized communist style - is free to plant what he wants and to sell where he wants.  Generally he sells it to a grain elevator company which assumes the market risks, but some farmer cooperatives perform that service for themselves.

The grain operators, such as the giant Cargil Company in the U.S., are free to make contracts with any buyer in the world.  They are obligated, however, to inform the Agriculture Department within 24 hours of any grain sale of 100,000 tons or more.  The government may refuse an export license, but seldom does.  Except for sales to countries we are at war with, we are anxious to keep our valuable grain moving to market.

The Export Controls Act governing the export of grain has been on the books for many years, but it is scheduled to expire in August of 76.  It will be interesting to see if Congress extends it "as is", turns the grain farmers loose in a free market, or tries to keep all the grain in this country.

If the near sighted legislators we seem to prefer these days choose the latter course we can expect to see a wholesale defection from American farms.  Food will dry up just as domestic oil and gas supply dried up when Congress legislated out the profit.

Personally, I find it gratifying that we can recover from Russia some of our dollars ripped off by their Arab allies.

If only our farmers would grow more wheat, and the communists continue their inefficient government controlled farms, we might yet whip inflation in the U.S.

Author: Lindsey Williams