Food First Part 4




HOUGHTON MIFFLIN COMPANY BOSTON                          1977



Chapter 3: The Price Scare?

Question: Perhaps in specific countries you can make the case that the misappropriation of the land generates hunger. But how can you avoid seeing the global trend? Is not the rising price of food throughout the world proof that we have entered an age of scarcity? The time of cheap food appears to be over for good. The poor countries are placing greater demands on our food resources than ever before, not to mention the Russians. How can you say that these global trends are not, at least in large part, a reflection of a growing number of people on a limited agricultural base?

Our response: As strange as it may sound, what we are taught to view as scarcity is actually a product of efforts to cope with the problem of overproduction in a world where most hungry people cannot buy the food that is produced.

This crisis of overproduction spawns scarcity-creating solutions: production cutbacks, the planting of nonfood and animal feed instead of food crops, and built-in inefficiencies in the use of what is produced. There is scarcity, but it is not a scarcity of food. The scarcity is of people who have either access to the means to grow their own food or the money to buy it.

Agricultural legislation in the United States going back to the 1930s reveals that historically the major farm problem has been overproduction. After the scourge of overproduction during the Depression toppled farm prices, the Agricultural Adjustment Act of 1933 established guaranteed minimum prices for crops. The allotment system (establishing limits to the acreage a farmer could plant with a particular crop), the Soil Bank (paying farmers to hold a certain number of acres out of production), and various other programs are some of the methods employed over the year to regulate and curtail the production capacity of America’s farmers.

Approaching the 1970s, who would have thought that scarcity was around the corner? 1969 was called the year of the “Great Wheat Glut.” An article in Nation’s Business, in September 1969, entitled “Too Much of a Good Thing” and subtitled “America’s Farm Problem Is Not How to Grow More Food but How to Grow Less” pictured a farmer standing on a tractor in the middle of a “field of plenty” waving the white flag of surrender. The article’s conclusion: “There are too many farmers, working too many farms, with too vast a capacity to produce.”

  • What Americans know as the “food crisis of rising prices,” starting in 1972-1973, was largely the direct and intentional result of United States “Food Power” policies that hit upon scarcity as a way to increase both the volume and price of agricultural exports.
  • As we will show in Part VII, Food Power was a strategy to create demand and raise prices so as to increase the foreign exchange earnings of the United States.
  • The acreage allotment figure for 1970 was 75% of that of 1967; less land was cultivated in 1970 than in 1948-1952.
  • In both 1969 and 1970 the amount of grain that could have been grown, but was not, on land held out of production amounted to over 70 million metric tons – about double all the grain imported annually in the early seventies by the underdeveloped countries.
  • By devaluing the dollar (thus making our grain cheaper abroad), by rescinding a law requiring that half of our grain going to the Soviet Union and Eastern Europe be carried by American ships, and by offering the Soviet Union financing for its gain purchases, the United Sates set the food bait.
  • 19 million tons of grain went not to feed the hungry but to feed Soviet livestock.
  • In September 1972 another 5 million acres of wheat land was held out of production – equal in size to all the farmland in the United Kingdom.
  • In early 1973 the United States devalued the dollar for a second time, making American grain 15% cheaper for the Japanese. The Japanese jumped at the bait.
  • The result was that world grain stocks that had stood at 95 days worth of grain in 1961 were now down below 30 days.
  • This planned and rapid depletion of grain reserves, more than any other single factor, contributed to the unprecedented increase and volatility in food prices.
  • Scarcity was not the problem; the world produced more grain per capita in the so-called scarcity year 1972-1973 – about 632 pounds – than it had in the year 1960, not considered a crisis year.


Yo-yo prices

The market system has built-in commodity cycles in which “years of glut” follow “years of want.” The result? Yo-yo prices.

  • In the market system, a period of glut is the consequence of the previous period of scarcity.
  • These alternating periods of glut and shortage occur because we have a food production system in which investment decisions are made only on assessments of current profitability.
  • The catch is that in a food processing and marketing system tightly controlled by a few corporations, consumer prices climb up but never come back down.
  • Commodity price cycles become a handy smoke screen for profit margin increases.


Chronic surplus

The American people are being asked to believe that the age of scarcity is upon us. Yet, as long as food is bought and sold like any other commodity and as long as a large portion of people are too poor to buy the food they need, the major problem of agricultural economists will continue to be the threat of surplus, not scarcity.

Feeding over a third of the world’s grain production to animals is one way enterprising profit-seekers have devised to reduce a price-deflating surplus and simultaneously to create a product for which the consumer will be willing to pay a high price. (Such a way of dealing with a chronic surplus situation makes it easy to forget that livestock can be produced with virtually no grain, as are the 250 million pigs in China!)

  • One way to deal with the surplus produced by livestock is to feed it right back to livestock.
  • The European Economic Community (EEC) got rid of its 400,000 tons of surplus powdered skim milk surplus by requiring livestock producers to incorporate the milk into their feed rations.

The theory that we are now entering the age of inevitable scarcity because our numbers have surpassed some supposed threshold cannot be substantiated. In a world where food stocks are deliberately depleted so that United States grain exports might earn the greatest foreign exchange and where the major headache of hundreds of agricultural specialists around the world is how to reduce mountains of so-called surplus, the notion of scarcity is worse than a distortion. It shifts the blame for scarcity onto nameless masses of people and onto “natural limits” of the earth. Seen this way, scarcity becomes a scare word before which we all feel powerless.

Chapter 4: More People: A Thinner Slice for Everyone

Leave a Comment