Superpowers and grain
Chicago — Soviet planners have a new crop of problems this harvest this year will be not the 235 million metric tons needed to meet production targets, not the 190 million figure predicted earlier by international grain experts, but barely above last year's "defeat" harvest of 179 million tons.
* Formal signing in Peking of a four-year contract under which the United States guarantees its "best endeavors" to supply the Chinese with 6 million to 9 million metric tons of grain each year.
The poor harvest sets back hopes of supplying grain-fed meat to Russian consumers. The Chinese grain contract means there is a major competitor for steady supplies of American grain -- since until this week only the Soviets had a multi-year grain contract with the US.
Adding to the seriousness of this switch, the Soviet contract expires next September, and the Carter administration insists it will not be renewed unless Soviet troops are withdrawn from Afghanistan.
The latest reports from the Soviet Union also give President Carter new reason -- in the final days of his re-election campaign -- to claim that his controversial Jan. 4 embargo on new grain sales to the Soviets has proved the most effective reponse "short of military intervention" to Soviet-aggression.
But the lasting domestic significance of the Soviet grain shortage and the US-China agreement may lie in how they change voter perception of President Carter's foreign policy success.
Earlier, farm-state protests concentrated attention on the fact that Carter's embargo was cutting off an important market for US grain. There were warnings that other overseas customers would turn to new suppliers because they could not trust the US to be a dependable supplier.
Now it seems that, while the embargo on sale of 17 million metric tons of grain to the Soviet Union is having a significant impact on that nation's economy, it is just as significant that, despite th aggression in Afghanistan, the US government stood by its five-year contract to supply the Soviets with 8 million mettric tons of grain. Longshoremen in US ports protested, but the 8 million tons were loaded and delivered.
While making clear that it would go to the extreme of using food as a political weapon, the Carter administration at the same time demonstrated that when a formal trading agreement is signed, the US will stick to the letter of the agreement. This perception, Washington sources explain, is at least partially responsible for the Chinese signing of a four-year contract. Other countries -- Mexico, Japan, and Israel chief among them -- are also seeking multi year contracts for US agricultural products.
Congressional advisers and international food supply experts dismiss the idea that either the poor Soviet harvest or the addition of another steady customer to the list of overseas buyers for American farm products will affect world food supplies. And they see little or no effect on food prices in the US.
They point out that Soviet grain harvests traditionally fluctuate from a low of 150 million tons up to 250 million, and that the world is well used to adjusting for this instability.
The current US program of farmer-owned grain reserve stockpiles has increased the world market's ability to absorb grain in years of plenty and tide over poor years without the major effect on world prices and supply experienced in the early 1970s. Also, American and European farmers have had bumper wheat harvests this year, assuring adequate world supplies.
The Chinese grain purchases will also have little or no impact in terms of the world grain market, it is said. Since China began to import grain in 1972, its purchases from the US have varied; but they were expected to top 8 million metric tons this year with or without an agreement and are expected to continue to increase steadily. Therefore Chinese purchases may encourage US farmers to plant more -- and Alaska already has begun to convert vast tracts of virgin land into barley fields.
According to Steven McCoy, a staffer of the US House Agriculture Committee, the Chinese grain contract "essentially institutionalizes Chinese purchases of US grain which have been a feature of our agricultural trade since the '70s. It is not going to cause any dislocation of supplies or changes in US agricultural export policies."