AS a part of their service in feeding humanity the farmers of the world produce each year about 3,500,000,000 bushels of wheat. It is grown on all the continents. Every day in the year, somewhere in the world, it is being harvested. In no fewer than sixty countries the crop is sufficiently important to be reported statistically. The United States produces more wheat than any other country, but even its large crop is less than 30 percent of the world's production. In each of the wheat producing countries production fluctuates rather widely from year to year. But fluctuations in the different countries tend to offset one another, and though there is some annual variation in the total quantity produced in the world the prevailing storage and marketing practices result in a fairly constant annual flow of wheat into the world's markets.

Most of the international trade in wheat is supplied by four countries. Among these four Canada stands first and the United States second. The United States Department of Commerce reports[i] that the overseas movement of wheat and flour, expressed as net exports, during the four crop years ending with 1925-26, was supplied in the following percentages:

 

Canada 39
United States 23
Argentina 18
Australia 11
Other Countries 9
  ---
  100

Canada and the United States, then, furnish more than 60 percent of the overseas movement of wheat. Evidently the relationships existing between the wheat industries of the two countries is of much public interest.

It is in the western part of each country that the wheat industry is of greatest importance, both absolutely and relatively. The major types of wheat grown in these two regions -- west of the Mississippi in the United States and west of Winnipeg in Canada -- are sufficiently alike to interest similar markets, but the West of the United States has more complex problems than the Canadian West has in the disposal of its wheat. The wheat growers of each region are subjected to the interplay of similar economic forces but the forces are affected by certain conditions that are not the same in the two countries. These differing conditions include such things as tariff duties, transportation facilities and costs, soil conditions, agricultural practice, type of population and weather conditions.

The wheat industry of Canada is concentrated chiefly in the three Prairie Provinces--Manitoba, Saskatchewan, and Alberta--which account for fully 90 percent of the wheat acreage of the Dominion. Westward and northwestward from Winnipeg the vast empire of wheat extends for nearly a thousand miles. The visitor from the United States is greatly impressed with the immensity of the country and the dominance of wheat. Of course these provinces produce other commodities besides wheat. Livestock is of some importance in all three, but especially in Alberta. Flax and other crops are important in some districts. But as compared with the landscape of the wheat regions of the United States we see in these three provinces few cattle or sheep, few silos, which are so common in the United States and which indicate the feeding of cattle and sheep, and few fields of Indian corn, a common indicator of the presence of hogs. On the other hand, the grain elevators that form the skylines of most of the towns are an unforgettable feature.

The wheat industry has developed in the three Prairie Provinces with remarkable rapidity. Since 1900 the total area of land in wheat has increased from 2,000,000 acres to about 22,000,000 acres. In the ten years, 1914 to 1923, the production of wheat increased from 141,000,000 bushels to 452,000,000 bushels. Nor is there any indication that acreage and production have reached their maximum. The three provinces are said to contain 170,000,000 acres of arable land, of which less than 50,000,000 acres has been placed in cultivation. It has been estimated that there are more than 20,000,000 acres of unused fertile land within fifteen miles of existing railroads. The land is comparatively cheap, prices ranging from less than $20 to about $35 an acre. This land, millions of acres of it, is favorable, in topography and soil fertility, to wheat production. It may be doubted whether the land now unused will be found as productive as that which has been selected and placed under cultivation. Much of the unused land may be subject to a greater frost hazard, or for other reasons it may be less desirable. But there can be no doubt that, with advantageous price relationships, the wheat industry of the three Prairie Provinces could be materially expanded.

This situation is of practical significance to the wheat grower in the Western United States. His land has been in cultivation for a longer time than has the land of the farmer in the Prairie Provinces. His fields, being older and usually no better farmed than those in Western Canada, are less rich in native fertility and rather more badly infested with weeds. His economic relationships are more complex. The wheat industry of the Prairie Provinces is more concentrated and its output is more uniform than that south of the border. The Prairie Provinces produce essentially one type of wheat, known on the market as hard spring wheat. The greater complexity of the wheat industry in the United States is suggested by the following table which shows the annual production, in round numbers in bushels, of the major types of wheat in the two countries:

 

Type of Wheat Annual Production Principal Places of Production
CANADA    
  Hard spring 400,000,000 Manitoba, Saskatchewan, Alberta
UNITED STATES    
  Hard spring 250,000,000 Montana, the Dakotas, Minnesota
  Hard red winter 260,000,000 Kansas, Nebraska, Oklahoma, Eastern
     Colorado, Northern Texas
  Soft red winter 250,000,000 From Missouri to Pennsylvania
  Durum ("Macaroni") 45,000,000 The Dakotas
  The White wheats 45,000,000 Pacific Coast States

The diversity of output and the wide distribution of our wheat industry create some complex problems, especially in marketing, that the Canadians do not have to face. The wheat grower of our own West, whether he produces hard winter wheat in Kansas or hard spring wheat in Minnesota, must compete with the three Prairie Provinces in marketing his product. His problems are further complicated by the fact that in other sections of the United States other farmers are growing and marketing entirely different types of wheat. In Canada, where the population is relatively sparse, wheat is produced chiefly for export. In the more populous United States most of the wheat produced is consumed at home. Canada exports about 75 percent of her wheat and the United States about 20 percent of hers. These differences have produced in each country a different complex of transportation, manufacturing, and marketing activities.

The Canadian wheat grower is more of a specialist than our wheat grower is. In our West the wheat industry is more specialized than in most other parts of the United States, but it still is not so highly specialized as in the Canadian West. The Canadian has both the advantages and the disadvantages of high specialization. Since he emphasizes the wheat industry and the production of a single type of wheat, the Canadian farmer gives his full attention to the problems of that particular specialty. In many ways this promotes efficiency. But it has its disadvantages. The Canadian wheat grower, to a greater extent than the American, has all his eggs in one basket. He must assume greater hazards than need to be assumed by most wheat growers in the United States. In Western Canada when wheat production is low or when prices are unsatisfactory the farmer has a bad year. In the United States, on the other hand -- except for relatively small areas which are approximately as new, agriculturally, as Western Canada -- the wheat grower is also an important producer of other commodities. Kansas, the leading wheat state in the Union, also ranks third among the states in beef cattle and twelfth in dairy cattle. Nebraska, another important wheat producing state, ranks near the top as a producer of corn. Minnesota, a large producer of hard spring wheat, is one of the leading dairy states. Again, the season in Canada is short and likely in any year to end with an early frost, while in the United States, and particularly in the Middle-Southwest, the growing season is comparatively long. In Kansas and adjacent states it is not at all uncommon when the winter wheat crop fails, in a year that proves to be favorable for corn, for many farmers to plant corn on land where winter wheat has failed and to reap larger profits than they would have had if the wheat crop had succeeded. This sort of thing seldom occurs in Western Canada because by the time spring-seeded wheat has failed there the growing season is well along and frost is too near for the seeding of other crops. The longer growing season and the greater age, agriculturally, of our farming regions have tended to produce in this country a more diversified, and, in some ways, less hazardous type of agriculture than that which dominates the Canadian West.

The farmers of the Prairie Provinces have some advantages over our western wheat growers in the cost of transportation. Transportation costs in that country are lower, whether the movement is from the farm to central terminals, from the farm to Buffalo (where an increasing quantity of Canadian wheat is milled, either in bond for export as flour or for consumption in the United States), or from the farm to overseas points. The water rates, while varying from time to time in both countries, average essentially the same in the two, but the land rates are distinctly lower in Canada. In a recent report the Food Research Institute states[ii] that, "over comparable distances, the Canadian roads haul a hundred pounds 41 miles for 1 cent, the American roads only 23 miles for 1 cent." Whether the rates charged by the railroad companies in the United States are justifiable, in view of railroad operating costs and quality of service, is a large question in itself and its discussion will not be attempted here.

The United States imposes an import duty of 42 cents a bushel on wheat. This duty applies to Canadian wheat imported into the United States for domestic consumption but not to that imported in bond to be milled for export. The tariff on wheat is by no means fully effective. With rare exceptions, it does not raise the price of wheat in the United States above the price of comparable grades in Canada by the amount of the duty. Its degree of effectiveness depends upon the grades of wheat concerned and upon the size of the wheat crop in each of the two countries. When the combined production of hard spring and hard winter wheat in the United States is small and the Canadian crop is very large, as in the crop year of 1923-24, prices at Winnipeg fall below prices at Minneapolis and Kansas City. Even in the year mentioned the price differential only a part of the time equaled the amount of the duty, which was 30 cents a bushel until March 7, 1924, when it was increased to 42 cents. Similar conditions as to production produced similar effects two years later, in the crop year 1925-26, with the price differential going slightly higher but still not equaling the amount of the higher duty. Between these two crop years, that is, in 1924-25, the Canadian crop was very small, the crop of hard spring wheat in the United States was moderately large and the crop of hard winter wheat in this country was quite large, and prices actually were higher at Winnipeg than at Minneapolis and Kansas City most of the time. While the duty on wheat is only partially effective and that only on superior grades of wheat, it is doubtful whether the western wheat grower would welcome a repeal of the wheat tariff, especially if such action were considered without reference to other items in the tariff schedules. The present import duty is of some benefit to the producer of high quality hard wheat, winter or spring, when Canada has a large production of wheat of comparable quality. It is to be observed, however, that upon the whole the benefits as expressed in price differentials have been rather disappointing to the western wheat grower.

One of the most interesting recent developments involving the West and the Canadian wheat grower is the organization of the so-called wheat pools. In this respect the West has much to learn from Canada. In the latter country there are three great pools, one each in Manitoba, Saskatchewan, and Alberta. Each of these pools assembles the wheat of its members for the purpose of feeding the commodity into the market in an orderly manner, presumably in accordance with market demands, throughout the entire year, and for the purpose of cheapening the cost and improving the service of wheat marketing. The wheat is marketed by a central sales agency that represents all three pools. The first pool was operated in Alberta in 1923-24. In that year there were about 25,000 members and the pool handled 34,000,000 bushels from 2,500,000 acres. Three years later the three provincial pools had a total membership of 136,000 and handled about 200,000,000 bushels of wheat, or about half the total crop. In the United States there are now nine pools. Their operations involved 16,800,000 bushels in 1925-26 and 17,500,000 bushels in 1926-27.

The stated objectives of the pools -- lower marketing costs, more orderly marketing so as to avoid market gluts and shortages with consequent wide fluctuations in prices, and a more accurate reflection of quality differences in the prices paid to producers -- are all desirable. The pooling plan has not been tried long enough to prove conclusively whether they are practically attainable. Some of the effects of pooling are indirect and difficult to evaluate. For example, it is claimed by pool supporters with some reason that the existence of the pools has caused some of the regular commercial agencies to pay better prices than they would have paid if the pools had not been in operation. Some Canadians imply, if they do not actually state, that the Canadian pools have helped at times to put Winnipeg prices above prices at Minneapolis.

The pooling plan itself is essentially sound. Its purpose is to market the farmers' wheat without any attempt to make the processes of marketing profitable in themselves. One of its most important features is that it seeks to obtain for individual farmers prices that fairly reflect differences in the quality of their wheat. The commercial grain trade, with some conspicuous individual exceptions, has largely failed to do this, and its failure has injured the producers of high quality wheat and the wheat industry itself. The grain trade is not wholly to blame. Indifference and shortsighted individualism among farmers contribute heavily to the difficulties that confront a grain dealer who tries to buy wheat on the basis of quality. The farmers who produce inferior wheat tend to patronize the dealer who pays a flat price. To establish the practice of buying on quality requires a degree of coöperation between grain dealers, on the one hand, and between farmers and the grain trade, on the other, that has not yet been attained. When the wheat producers in a given district are paid a flat price regardless of important quality differences, the farmer who grows a high quality product is penalized for his excellence and the producer of inferior wheat is rewarded for his inefficiency. This tends definitely to retard sound agricultural development. If the wheat pools did nothing else but remedy this one widespread evil they would render a great public service.

The difficulties of establishing successful pools are greater in the United States than in Canada, with its more uniform product, a population that is economically more homogeneous, less deeply intrenched opposing agricultural factions, a more concentrated wheat industry, and, perhaps, a greater need, all things considered, for an improved marketing system. But the Canadians are furnishing an example of intelligent group action that unquestionably is stimulating interest among our own wheat growers.

The rapid growth of coöperative marketing among farmers in the past twenty-five years is an interesting phenomenon. It runs counter to the general development toward specialization in agriculture. During the nineteenth century the American farmer became less self-sufficient and more of a specialist than he ever had been before. He concentrated his attention on fewer enterprises and depended increasingly upon other people. As his business became more specialized and commercialized, his dependence upon others came to involve the marketing of his products as well as the making of his clothing, butter, and cheese, the repairing of his harness and machinery, the shoeing of his horses, and the sharpening of his plowshares. Apparently he has been less satisfied with the service of commercial marketing agencies than with that of the agencies to which he has shifted other responsibilities and tasks. At any rate, there is a definite swinging back in the matter of marketing. The United States Department of Agriculture reports that in the year 1925 at least two million farmers in the United States were members of coöperative associations and that these organizations did a business of $2,400,000,000. In 1915 the membership had been 651,000 with a business of $635,800,000. The development of wheat pools is simply a part of the movement toward more extensive agricultural coöperation.

Canada has gone further than the United States in enacting legislation for the benefit of wheat growers. This probably is because the abuses in grain marketing were greater in Canada than in the United States. The Canada Grain Act of 1912 is one of the major acts of legislation to give protection to wheat growers. Briefly, its objective is to provide close governmental oversight and supervision of transactions involving the elevator interests, the transportation companies, and the grain growers, with a view to seeing that the farmers get a square deal. Some supplementary legislation has been enacted since 1912. The government does not attempt to buy or sell grain or to regulate prices. It has, however, acquired elevators at Vancouver and at a few important interior points, chiefly for the purpose of increasing the effectiveness of its supervisory activities. Somewhat comparable, but less far-reaching, legislation has been enacted in the United States, including the Grain Futures Act and the acts providing for federal supervision of certain features of the grain business at the principal markets. In each country there is legislation, both federal and state, providing for scientific research and education, for combating insect pests and plant diseases that affect the wheat crop, and for collecting and disseminating statistical information regarding supply and demand factors that influence wheat movements and prices.

Opinions differ, especially in the United States, as to how far it is practicable to go in legislation to benefit the wheat grower. The farm organizations themselves have not agreed upon a legislative program, and it is difficult to determine the state of public opinion on the subject. There are several reasons why this is so. Many wheat growers are doing well under present conditions and are inclined to be apathetic. The people in this group say little or nothing about legislation, while some of those who are dissatisfied say much and those who appear to wish to capitalize dissatisfaction say even more. Many people -- editors, farmers, politicians, publicists -- who disbelieve in proposed legislative remedies hesitate to oppose them for fear of being regarded as unfriendly to the farmer. It is probable that the consensus of informed opinion among farmers is at least skeptical regarding the practical feasibility of direct governmental participation in wheat marketing. Many farmers are convinced that the present marketing system fails to reward adequately the individual producer of high quality wheat and that it involves too wide a spread between the price that the producer receives and the price that the consumer pays. Many hold that transportation costs are higher than they should be, especially in the Middle-Southwest. Some believe that these conditions can be dealt with successfully by legislation. Others advocate large-scale agricultural coöperation. Still others hold that a laissez faire policy will be more satisfactory in the end. It is probable that all three policies will have a part in the developments of the next quarter-century.

The more one studies how agriculture responds to changes in economic conditions and to contributions of agricultural and mechanical science in the form of new crops, new methods, and new machines, the less inclined one is to attempt a long-range forecast of the future relative positions of our West and the Canadian provinces in the wheat industry. The two regions are competitors, directly or indirectly, in the wheat markets of the world. Moreover, each region is in competition with Argentina, Australia, and other wheat producing countries. Each of the two has certain advantages and certain disadvantages, natural or artificial. Each must strive for its place in the sun. There appears to be little, if any, expectation in either region that the wheat growers of the two will unite in any comprehensive manner to solve the general problems that face the industry as a whole. At the time of the international conference of wheat pool officials at Kansas City in May, 1927, the newspapers hinted that a gigantic international wheat pool might be formed. But the speeches made at the conference did not support the hint. Some of the speakers directly contradicted it. The sentiment seemed rather to be that wheat growers in all countries, and especially in wheat exporting countries, have a common cause in the sense that they all need better marketing service than they are getting from commercial agencies, that pooling offers improved service, and that each country should apply the principles of pooling to its own marketing problems in accordance with its own conditions. It is coming to be believed in the United States that the wheat growers in each region that produces a characteristic type of wheat should operate a regional pool. This is the present direction of development. The principal obstacles are those of human nature. They are exceedingly difficult but they should not be insurmountable if sufficient capable leadership comes forward, as in time it commonly does if a need is sufficiently acute.

It is a platitude to say that the wheat growers on both sides of the international boundary already have achieved a comparatively high degree of efficiency in production, if efficiency be measured in terms of average output per man engaged in the industry. The increase of individual productive efficiency in agriculture generally is one of the features of American history since the middle of the nineteenth century. In 1850, the average area of farm land cultivated per man engaged in agriculture in the United States was 12 acres. In 1920 it was 34 acres. A large share of the increase is accounted for by the principal wheat growing states where the use of large-scale machinery is the rule. In 1920 the figure for Kansas was 96 acres and that for Nebraska was 103 acres. To make each acre produce more through the practice of improved agronomic methods, and so reduce unit costs, and to develop a better type of organization of the entire business of the individual farm so as to get more efficient use of land, labor, and machinery, are tasks the achievement of which will increase the western wheat grower's ability to survive the inevitable competition. Simultaneously improvements must be made in marketing methods and in the quality of the product.

Relations between the wheat growers of our own West and those of the Prairie Provinces appear to be entirely friendly. But each region has its own fish to fry. As contacts become closer there probably will be increasing agreement as to how to handle the distributive problems of the wheat industry, but equally probably what each region regards as intelligent self-interest will determine the direction of development. In the long run, the larger rewards will go to the people who excel in the application of agricultural, commercial, and political intelligence.

[i] Theodore D. Hammatt, "Factors in Wheat Marketing," 14 pp., United States Department of Commerce, Washington, 1927.

[ii] "Wheat Studies of the Food Research Institute," Vol. III, No. 1, Stanford University, California, November, 1926.

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  • F. D. FARRELL, President of Kansas State Agricultural College, formerly in charge of numerous agricultural and reclamation experiments for the United States Department of Agriculture
  • More By F. D. Farrell