Agriculture
Essay Preview: Agriculture
Report this essay
I. Introduction
It is the contention of this paper that although one might be encouraged to locate a nexus of interrelationships between agricultural cooperatives in America and current, significant issues in grain exports. It is more likely however, that the crucial relationships involve a “meta-organization” of individual farms of various sizes, agricultural co-ops, various corporations related to agriculture, and United States government departments and organizations; all of which act and react to international grain export challenges.
The effects of normal supply and demand fluctuations, new markets opening, and a myriad of other political-economic factors will, of course, have differing effects on different players. For instance, the agricultural cooperatives will be effected differently than the cereal manufacturers, or even than a large independent farm. Cooperatives are the focus here, but the primary point remains: no matter what the producer-source, grain exports from America are part of a complex constellation of factors.
Moreover, the discussion will include a few concluding remarks on future-oriented issues which focus upon sustainable development. Sustainable development is no longer the watch word of a few outspoken environmentalists. It is now a matter of survival for a huge and rapidly growing world population. Grain exports are, by default, a part of the sustainable development dialogue.
II. Existing and Restricted Markets
There are a number of current market potentials as well as existing ones. The new markets are those which may not be open to American exports currently, or because of various international embargos/treaties, can not be accessed by American grain producers. In addition, historical changes indicate that the markets themselves change over time. The break-up of the former Soviet Union for instance, has altered the pattern of grain exportation to some of the new nations of that area. Russia is not an arch rival and nuclear enemy any more and this directly effects the grain exports to there.
The FAS (Foreign Agricultural Service sums up the political changes in foreign markets in this way: “Economic sanctions can be powerful foreign policy tools targeted to further U.S. foreign policy and national security objectives.” It is a case of the American government causing some degree of economic restraint and even burden, on private grain producers keen to expand their markets worldwide. The results are often negative, but always rather complex:
Trade restrictions imposed by the U.S. Government, however well-justified, do impact U.S. commodity exporters and consequently the entire agricultural sector. Furthermore, the effects of these restrictions are not limited to just the markets that U.S. exporters are prohibited from trading with: other exporters change their marketing strategies to the detriment of the U.S. (F.A.S. 2000)
The restrictions in trade are controlled by the Office of Foreign Asset Control (OFAC). The main countries targeted for restrictions are:
North Korea
Libya.
According to the FAS, the OFAC restrictions on these countries is fairly substantial. Taken as a total, the countries will import approximately 11% of the world wheat trade. This is not a trifling amount in terms of world market demand. It is enough to cause fairly serious economic concerns to American coops and grain exports.
In general, there is a large international market awaiting American grain exports. It has not changed in size, at least appreciably, in the past decade. The following graph of wheat data for the 1990s indicates a peak reached around 1993, and a small drop since then. In general though, the curve is shape is flat showing a steady market available for U.S. exports.
III. Key Organizations
In April of 2000, the Coalition to Promote U.S. Agricultural Exports reported on its Internet site that it was officially comprised of “Ð an ad hoc coalition of over 80 organizations, representing farmers and ranchers, cooperatives, small businesses, regional trade groups, and the State Departments of Agriculture.”
Members of this Coalition are supposedly united in their efforts to strive together to “support of U.S. policies and programs.” These officially consist of:
Promote U.S. agricultural exports
Counter subsidized foreign competition
Strengthen farm income
Protect American Jobs.
(The Coalition, April, 2000). Clearly this organization is the type of meta-group mentioned at the beginning of this paper, which has been created to represent a diverse group to a diverse and changing, and complex international market. It supports U.S. government policies and this means all groups, including agricultural cooperatives, participate in specific programs.
MAP (Market Access Program) of the USDA is one such strategy. It is particularly beneficial to agricultural cooperatives in the U.S. The official statement concerning the objectives and nature of MAP is:
The Market Access Program (MAP) uses funds from the U.S. Department of Agricultures (USDA) Commodity Credit Corporation (CCC) to help U.S. producers, exporters, private companies, and other trade organizations finance promotional activities for U.S. agricultural products. The MAP was authorized by Section 203 of the Agricultural Trade Act of 1978 as amended, and is administered by USDAs Foreign Agricultural Service. The MAP forms a partnership between cooperatives, state-regional trade groups, trade associations, and USDAs Foreign Agricultural Service.
The Market Access Program uses funds from the U.S. Department of Agricultures (USDA) Commodity Credit Corporation (CCC) “Ð…to help U.S. producers, exporters, private companies, and other trade organizations finance promotional activities for U.S. agricultural products.”
The program encourages the participation of agricultural cooperatives specifically; and small farm organizations as well.
There is also an FAS program promoting agricultural exports, including grains, and it is a third important organization