Sanctions aimed at Soviets hurt us, say grain farmers
Houston — President Reagan's economic sanctions directed at Moscow pose a threat to grain exporters.
US agricultural exports, which earned $45 billion last year, are only indirectly affected so far. Instead of cutting off current trade, the first round of sanctions suspends negotiations on a new Soviet-US grain agreement to replace the one expiring Sept. 30. It also suspends the maritime agreement that permitted Soviet ships to enter US ports on four-day rather than 14-day notice.
According to US Department of Agriculture spokesman David Lane, ''The action taken was actually very minor with regard to agriculture.'' He says there is plenty of time before September ''to meet and iron out other agreements with the Soviet Union.''
But producers and traders call even the first round of sanctions a ''de facto embargo.'' They charge that the sanctions are driving export customers to other, seemingly more reliable suppliers.
Grain traders have bitter memories of the 16-month Soviet grain embargo imposed by the Carter administration two years ago and ended by Mr. Reagan last April. For farmers, the issue is simple: Any further disruption of exports threatens to turn farm-belt depression into disaster.
Dan McGuire, director of the Nebraska Wheat Board, describes the possibility of embargoing US agricultural exports to the Soviet Union and Eastern Europe as ''devastating.''
Mr. McGuire admits that this year's bumper crops are partly responsible for an oversupply that is driving farm commodity prices down. Yet he also blames the Reagan administration for depressing prices further, first by ending Carter's embargo in April rather than months sooner and now by allowing fears of a new grain embargo to loom over the marketplace.
''The Reagan administration promised farmers free access to all world markets ,'' McGuire insists, ''and farmers produced with that in mind.''
McGuire explains that once farmers invest in planting seed, ''their production can't be shut off like a factory.'' Last year, he says, farmers responded to Reagan's promises by producing for an unrestricted world market. ''In the case of wheat, we anticipated 1.9 billion bushel exports and we were averaging enough to do that this year. But in the last few weeks since this Polish situation has come up and the signals have been sent out from Washington, exports have dropped, and that automatically reflects back into the price farmers receive, which is about $1 a less than a year ago.''
The result of turning agriculture into ''a foreign policy tool,'' McGuire says, is that just when Reagan budget cuts ''have scaled back the farm program so farmers do not have a safety net, at the same time the administration is cutting away our foreign markets.''
McGuire says that farmers aren't the only ones to suffer when government policy interferes with money-spinning farm exports.
''When commodity prices are low,'' he says, ''the farmer doesn't spend and so somebody in Detroit loses his job because a tractor or a pickup wasn't built because a farmer out here in Nebraska wasn't able to buy it. And then the railroad doesn't ship it, and that lays someone else off, and on and on.''
Joseph Halow, executive director of the North American Export Grain Association, says that ''a de facto embargo has actually been imposed, because when you tell the Soviets we are not going to negotiate (a new long-term agreement), then the Soviets won't buy anything for shipment after Sept. 30.''
This second case of government disruption of exports within two years, Mr. Halow explains, is worse than the Carter embargo because ''this time we have given the Soviet Union a whole year in which to make other arrangements.'' The result, he says, is that the Soviets are encouraging grain production outside the US. Argentina, Brazil, Australia, and Canada all are responding with increased production, he says, ''while we are talking about decreasing our production with acreage set-asides.''
For US Department of Agriculture spokesman David Lane, the root of the problem ''goes back to the American farmer and his efficiency . . . particularly in producing corn and wheat, so that we have so much grain on hand that prices are down.''
Mr. Lane also explains that ''even during this period of the sanctions, the Soviets are continuing to buy.'' Volume has dropped, he says, largely due to grain-handling problems. ''The Soviet Union is backlogged, with a railcar situation which is bad and ships lined up at the ports waiting to unload.''
Grain industry officials explain that the major international grain trading firms do not expect sanctions to turn into another embargo. They see sanctions as the Reagan administration's attempt to give a public appearance of action while recognizing that Carter's grain embargo proved the ineffectiveness of an embargo.
For an embargo to work, these officials explain, other key suppliers must cooperate. This would be extremely difficult for Argentina, Australia, and Canada, which have invested heavily in building their grain exports and have virtually no domestic markets or storage facilities to absorb excess supply.
At the same time, said one grain trader, overt Soviet intervention in Poland ''with Russian uniforms and Russian tanks in the streets,'' almost certainly would trigger an across-the-board embargo of agricultural along with other US exports. In that case, he added, the major grain firms would do what they could to support an embargo because ''no one wants to look like favoring trade at any price, or keep trade in grain until the last missile flies.''