The Overstretched Superpower
Does America Have More Rivals Than It Can Handle?
RICE is the basic food of more than half the population of the world. South from Korea to Indonesia, and westward to Iran, including the vast populations of India, China and Japan, rice is the staple upon which the diet of a billion and a half people is based. Linguistic terms indicate its fundamental significance. In the Thai language, for example, food may be divided into two categories, khaw meaning "rice," and kab khaw meaning, literally, "with rice." Food is either rice or something eaten with it.
In a restless Asia, revolutionary in mood, caught between two opposing ideological and political forces, the question of the supply of this commodity upon which life itself is based has farreaching political implications. The major problem in the struggle to keep south and southeast Asia free of Communist domination is the standard of living of their peoples and the development of their economic resources. In 1952 Communist China emerged as an exporter of rice--a dramatic change after so many years of scarcity; and the Communists have made much of the fact in their propaganda in Asia, offering "New China" as an example of the productive superiority of the Communist system. There is urgent need for efforts to help the peoples of south and southeast Asia understand that the pretense of plenty and prosperity in China is a myth. And it is even more urgent that they be made to realize that increased production and a higher standard of living are possible in their own countries without the adoption of totalitarian methods. The struggle of the "East" versus the "West" in Asia is, in part, a race for production, and rice is the symbol and substance of it.
Rice has been scarce in the Far East throughout modern history, but the shortage has become even more acute since the Second World War. Wartime damage and postwar political disturbances caused a sharp decline in production and shipments. In 1934 international shipments of rice totaled 9,000,000 tons, but by 1948 they had dropped to 3,330,000. By the end of 1952 shipments had increased only to 5,000,000, a little over half the figure for the peak year 1934. Meanwhile the population explosion in Asia has continued unabated.
The prewar surplus producers of rice were Burma, Indo-China and Thailand, in that order. Philippine and Indonesian rice production was approximately equal to local needs. The main deficit areas were India and Ceylon, China, Japan and Malaya. The bulk of Indo-China's surplus moved within the French Union. Japan's needs were formerly met by "internal shipments" from the captive economies of Korea and Formosa, leaving Thailand and Burma as the primary exporters to meet the requirements of Malaya, of India and Ceylon, and of China. Burma was then a British colony and her trade in rice, as well as the brokerage, financing and transport of rice for Thailand, was firmly in the hands of British dealers. Trade was oriented to European market conditions, and international and domestic prices were dominated by London brokers. In the prewar era, considerable amounts of Asian rice were shipped to Europe and Africa.
The picture has been completely altered in the postwar period. Although the export surplus of Viet-Nam and Cambodia (small by prewar figures) continues to move within the French Union, all of Thailand's and Burma's rice now remains in the Far East. Today export sales and distribution are almost entirely in Asian hands, and the major part of the trade is carried on by contracts between governments.
Both production and movement of rice were badly dislocated by the war. Burma's 1946 crop was about half that of 1934, and her exports of rice dropped from 3,500,000 tons to 500,000. Years of war in Indo-China have cut exports in this commodity from 1,500,000 tons in 1940 to 9,000 tons in 1947. At the end of the war, abandoned rice land in southeast Asia totaled nearly 12,000,000 acres. Reclamation is not yet complete, and is not a task to be accomplished by bringing in a few bulldozers, for they toboggan over the tough, deep-rooted jungle grasses which have filled the paddy land. Moreover, thousands of agricultural laborers have sought the greater safety and higher wages of urban areas, and farmers are often short of help.
A further obstacle to production is the lack of transport facilities, not yet reëstablished after wartime dislocation. Thus, the movement of rice to markets, and of consumer goods to the farmer, is slow and costly; and lack of consumer goods has caused many rice farmers to produce only subsistence crops. Throughout south and southeast Asia, thousands of draft animals died of disease or have been killed for food by roving bandit gangs or, during the war, by Japanese army units living off the land. In some areas, a wartime legacy of disputed land titles, back taxes and rent remains to be settled.
Thailand provides the only exception to the general picture of postwar chaos. Although the country suffered a certain amount of damage to its bridges and railways as a result of Allied bombings, its agricultural economy remained intact. No statistics are available on Thai rice production during the war, but there is little reason to believe that any appreciable drop took place. Stocks on hand at the end of the war amounted to about 800,000 tons. It is clear enough that Thai rice helped feed the Japanese armies and make up deficits in southeast areas under Japanese occupation. There was a remarkable expansion of rice cultivation during and immediately after the war, but though this injects new political and economic factors into the picture, it does not solve the problem of shortage in Asia. Western rice is more expensive, and has to be paid for with hard currency, and the fact remains that 90 percent of the world's production is in east Asia. Increases or decreases elsewhere have but marginal effect on the basic problems.
At the end of the war, United States policy was directed toward the general objective of supporting the Nationalist Government in China and helping it develop as the leading Asiatic Power. Up to the time the Communists captured Shanghai in 1950, the United States provided China with large amounts of rice purchased in Thailand for emergency distribution under the auspices of UNRRA and the Chinese officials. Britain concluded a treaty with Thailand on January 1, 1946, which called for deliveries of 1,500,000 tons of rice, as partial war indemnity; but the agreement proved unenforceable, and to prevent the diversion of rice to illicit trade channels a tripartite agreement was concluded among the United Kingdom, the United States and Thailand on May 6, 1946, as a substitute for the Anglo-Thai Treaty. Under this arrangement, export of rice by Thailand was to be made only in accordance with allocations recommended by the Combined Food Board. This resulted in better feeling all around, though it did not altogether end the smuggling. Official international allotment of rice was discontinued at the end of 1949, though most of the world's export rice continues to be allocated by contracts between governments. Burma nationalized her rice trade in 1946.
Representatives of countries where there are shortages now negotiate with Thai officials in Bangkok and with Burma officials in Rangoon for allocations based on current crop estimates, at prices set about six months in advance of delivery. Since world prices are continually increasing, the buyers may get delivery at prices 25 percent below prevailing market prices. This means, in effect, a type of subsidization of neighboring economies by Thailand, and it also tempts these countries to sell part of their allocation. While the Thai and Burmans attempt to get higher prices for their only significant export crop, the receiving governments exercise pressure to keep prices down, appealing on humanitarian grounds and sometimes threatening economic reprisals.
In view of the fact that there has been a seller's market since 1946, Thai policy has been moderate and restrained. Malayan tin and rubber, Ceylonese rubber, Indian hemp, textiles and iron, and Indonesian oil and rubber are not being sold at prices fixed in advance in a rising market. There are, however, powerful interest groups in the rice supplying countries which profit from the system. About one-third of Thai's rice surplus is sold on the open market by private concerns. Export licenses officially cost $5.00 per ton of rice, but private traders may have to pay as much as $65.00 per ton for them.
Japan's changing position greatly affects the whole situation. From 1946 through much of 1952 the United States made up the Japanese food deficits. Now that the Japanese Peace Treaty is in effect, and with such prewar sources of rice as Korea and Formosa closed to her, Japan naturally has had to buy on the world market. Her desperate need makes her willing to offer top prices and attractive trade concessions; and in order to pay for these purchases she must export textiles, electrical and industrial goods. Thus Japan enters into marketing competition with both Britain and India and with the United States. In hope of "getting Japan off the American taxpayer's back" the United States Government has helped Japan rebuild her industry and reëstablish her export trade, especially in the Far East. And, cut off from trade with China, Japan must somehow not only regain her prewar export trade levels in south and southeast Asia, but must surpass them. Although the potential market of this area is great, present ability to absorb import goods there is limited. United States policy is directed toward helping both Great Britain and Japan reëstablish their economic stability, and our dilemma in this area where the export products of those two countries come into competition is further complicated by the fact that United States export business interests have greatly increased there in the postwar period.
What of substitutes for rice? At the present time there is a world shortage of rice and a world surplus of wheat, and wheat has been brought into Japan, India and other Far Eastern countries with the idea of partially substituting it for rice in the Asian diet. This may be possible on a small scale, but Asian agricultural holdings, farming methods and climates are not suitable to mass production of wheat, and reliance on imported wheat to make up Asian food deficits would raise serious political and economic problems. The United States, Canada and the Soviet Union are the major producers of wheat. It is true that at the end of 1949 Australian wheat cost 44 percent less than an equal amount of Burman rice in India. But such figures are misleading. Although wheat grain may undersell rice in Asia, wheat must pass through several expensive processes before it is ready for consumption. The finished wheat product on the dinner table is not cheaper than rice.
A more practical course is to seek to expand Asian rice production to meet the needs of the region. Studies made by the Food and Agriculture Organization indicate that output could be greatly increased, on land now under cultivation, by improvement in seed, plant breeding, irrigation and use of fertilizers, and by better methods of milling, storage and transport. Also, the nutritive properties of rice could be greatly increased--and better nutrition is, after all, the objective of the whole effort--by consumption of less highly polished rice. Milling interests would oppose such a change to brown rice, and it would require some adjustment by the Asian people.
In any event, a long road stretches between scientific investigation and the lessons of experimental farms, and the practices of the rice farmer. The farmers are not now increasing production significantly, and feel no inducement to do so. The cash incentive to higher production has little meaning to many Asian rice farmers, who have little capacity for intelligent saving and no picture of the use of cash surplus. Especially if consumer goods were not available, increased cash income per ton of paddy would, most likely, cause them to cut production, for they would merely conclude that they could maintain the current level of subsistence with less work. Economic and sociological changes are the precondition for greater production, and they cannot be achieved quickly by non-totalitarian methods.
But the Asian people know that they want more food, and the people as a whole know that they want better standards of living. The Communists are well aware of the significance of increased production, and as noted above they are holding up "New China" to south and southeast Asia to demonstrate the superiority of the Communist system. The peoples of the region know nothing about conditions in China except what they are told by Communist Party propaganda, and they are comparing the conditions under which they live with the myth of a prosperous and well fed China. When they are told that the United States far out-produces the Soviet Union, and that American farmers and factory workers live in luxury compared with the conditions of Russian and Chinese people, they grant it readily enough--but it does not seem to them to bear on their own situation. What the people in southeast Asia are interested in is how conditions in their own countries relate to what they think is the progress made in China.
Totalitarian methods sometimes bring impressive short-term results. A Communist does not concern himself with how to induce a rice farmer to adopt new varieties of seed, or to use different methods of production, milling, storage and transport. Under a Communist régime individual preferences make little or no difference. The individual does what he is ordered to do. Refugees making their way out of China bring constant reports that experimental farms established and financed by the United Nations and the United States have been taken over by Communists, the fruits of their experiments accepted, and their teachings forced upon Chinese farmers.
The claim of the Communists that China has ceased to be an area where rice is scarce, and that it now has enough for export, has impressed the people of south and southeast Asia. The details of the shipments of 300,000 tons to India and Ceylon in 1952 were left vague by the party-line press throughout Asia, but an effective propaganda campaign portrayed the shipments as great humanitarian gestures by "New China" toward her Asian brothers in their hour of need, and also as testimonials to Chinese prosperity and plenty.
The China-Ceylon rice deal was, in fact, a barter agreement in which China traded rice for Ceylon's strategic rubber. Exact prices paid for the rubber and for the rice have not been published, but students of the trade in the Far East believe that both products changed hands at prices slightly above world market quotations; but, in an even-barter exchange, price means little. The arrangement between India and China was not based on a trade agreement, but was an outright purchase by India, which the Communists nonetheless tried to disguise as charity. China had offered to sell India 50,000 tons of rice at a time when southern states of India were faced with a period of acute shortage due to a crop failure; and after protracted negotiation India agreed to buy the rice at a price above world market rates. However, when delivery date neared, the Chinese Government demanded, as a condition to the delivery, that the rice be distributed through an Indian Communist relief organization. The Indian Government flatly refused, and exposed the Chinese political objective. Finally, the Chinese Government dropped the condition and delivered the rice, preserving what face it could. But though this part of the propaganda offensive fizzled, the myth of plenty and prosperity inside "New China" remains in the minds of many Asians.
Has production actually increased in China to the point where she has an export surplus of rice? According to Peking figures,[i] 1951 production almost (99.4 percent) reached the figure for 1936, China's peak production year of that decade. In 1936, China had a net import deficit of 246,000 tons, her lowest import figure for the decade. (In 1938, her rice imports were 380,000 tons.) No one has ever suggested that there was enough rice for everyone in China in 1936, even with the 246,000 tons imported. The Peking figures indicate that there is less rice available in China today than in 1936, and there has been a tremendous population increase since that year. But China is now exporting rice! And the government has contracted to export 254,000 tons of rice per year to Ceylon for a five-year period beginning in 1953. The only possible conclusion is that the rice is being squeezed out of the already underfed Chinese people for purposes of international politics.
The game is not a new one for the Communists. Stalin played it with the wheat farmers of the Ukraine in the 1920's. His objectives were to gain foreign exchange, and to eliminate, by forced starvation, an unwanted "kulak" class. Peking has two additional objectives--to press its political offensive in south and southeast Asia, and to obtain supplies of strategic rubber.
But we cannot defeat this game merely by exposing it. The only effective checkmates to Communist efforts are increased production and better standards of living for the Malayans, the Burmans, the Indians, the Ceylonese, Indonesians and the other people of Asia--standards raised by their own efforts in their own lands. According to recent studies by the Economic Commission for Asia and the Far East, the minimum needs of south and southeast Asia could be met by a 10 percent increase in rice production in 1953, and some experts are convinced that a 50 percent increase in rice production is possible on land now under cultivation in Asia.
The difficulty is how to achieve the increased production which is technically possible, as well as how to increase the international shipments of rice--which are now only 55 percent of prewar. The gap between the possible and the actual can be bridged only by putting into practice the countless long-range plans now languishing in countless desk drawers. The fruits of experimental research must be passed on quickly to the man who ultimately implements the plans and programs--the rice farmer. An F.A.O. International Rice Conference held early this year in Bangkok wrestled with this problem, but international conferences can do no more than point up the needs and suggest methods for putting plans into action. United States and United Nations agencies functioning through foreign aid and technical assistance programs in south and southeast Asia point out these same needs, and can provide equipment, supplies and guidance. But direct action rests with the governments of the countries concerned, many of which are new and insecure. They deserve sympathetic understanding and every reasonable type of aid and assistance from the West. But in order to survive as members of the free world they themselves must quickly get on with their task, work out their own solutions, and put plans into practice.
[i] China Reconstructs, May-June, 1952, page 4.