Events of the past two years have made food an increasingly worrisome item in household budgets and in the budgets of nations. In early 1974, food prices to the American consumer were 25 percent greater than two years earlier. This reflected dramatic increases in farm beef prices, while farm corn prices were double and wheat prices triple those of early 1972. Clearly something new has happened to a food market which has historically fed Americans well and for a uniquely small proportion of their income.
A series of events was associated with these price adjustments. In August 1971 the U.S. dollar was floated and a major realignment of international currencies set underway. Then inadequate rain cut the 1972 Soviet grain crop, while drought in Argentina and Australia crippled grain production; the Soviets began to purchase 28 million tons of grain, 18 of them from the United States. India's monsoon dropped below normal, cutting the cereal crop and eroding hopes for near-term self-sufficiency in cereal production. Peru's fish catch was a disaster; drought and typhoons slashed rice and corn crops in the Philippines; and, in the United States, the corn and soybean harvest was stalled by wet weather in the fall of 1972. The following spring still more wet weather delayed U.S. plantings. In July 1973 the United States, to limit rocketing price increases, instituted export controls on soybeans and soybean products. Finally, Congress adopted legislation that drastically altered the framework of American agriculture in the direction of a free market, with sharply lowered price supports and incentives for stockpiling.
In the developing new market situation, U.S. agricultural exports in calendar 1973 reached $18 billion, up from $9.4 billion the previous year and an average of $6.7 billion over the past five years. Although world cereal production recovered and indeed reached record levels in 1973, American agricultural exports in the current year continue high, and remain a critical element in the reversing of serious balance-of-payments deficits. At the same time, quantities of cereals allocated to PL 480 food aid programs have dropped to the
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