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Malthus, Marx and the North American Breadbasket

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North America's dramatic emergence over the past generation as the world's principal supplier of food can be illustrated with a half dozen numbers. During the late 1930s, three of the world's seven major geographic regions supplied virtually all of the grain moving into the world market. Latin America, with exports of nine million metric tons yearly, was the leading food exporter, and grain exports were an important source of foreign exchange earnings. North America and Eastern Europe (including the Soviet Union) were each exporting five million tons yearly. Most of the grain exported from these three regions, principally wheat and corn, went to Western Europe.

Thirty years later, the pattern of world grain trade has been altered beyond recognition. As of 1966, Latin America, with net grain exports of two million tons, was scarcely self-sufficient. Exports from Argentina were largely offset by imports into Brazil and other smaller importing countries. Eastern Europe, including the Soviet Union, no longer exported grain but on the contrary was an importer; in 1966 the area imported some fourteen million tons, largely from Canada.

Of all the changes in the pattern of world grain trade between the late 1930s and 1966, the change in the position of North America was most pronounced. As shown by the table on the next page, net grain exports increased from five million tons to sixty million tons, providing in 1966 some 85 percent of the combined grain exports of the net exporting regions. Australia has substantially increased its exports, but its share of the total has remained at about 12 percent. North America has clearly emerged as the breadbasket of the world.

About three-fourths of North America's grain exports originate in the United States; the remaining one-fourth, coming from Canada, consists largely of wheat. U.S. grain exports are presently rather evenly divided between wheat and feedgrains. Significantly, the United States alone could export easily the entire sixty million tons yearly if it were to remove all remaining production constraints.

Several factors have contributed to North America's growing importance as a source of food for the rest of the world. Three of these stand out. On the demand side, both the forces identified by Malthus and the adverse influence of Marxian thought on agriculture in the communist countries have contributed to the steadily growing excess of food consumption over production outside North America. On the supply side, the massive application of science to agriculture in the United States has resulted in an impressive increase in its capacity for producing food, making it possible to respond to growing needs abroad.

WORLD GRAIN TRADE BY MAJOR GEOGRAPHIC REGIONS

Estimated Region 1934-38 1960 1966 (in million metric tons) North America + 5 + 39 + 60 Latin America + 9 0 + 2 Western Europe - 24 - 25 - 23 Eastern Europe (inch U.S.S.R.) + 5 0 - 14 Africa + 1 - 2 - 3 Asia + 2 - 16 - 30 Oceania (Australia & N.Z.) + 3 + 6 + 8

Note: plus = net exports; minus = net imports. Minor imbalances between world imports and exports in a given year may be due to rounding or variations in reporting methods used by various countries.

II

Malthus first described the threat of uncontrolled population growth in 1797, nearly 170 years ago. His theory that population would tend to grow geometrically while food production would increase arithmetically has proved valid throughout much of the world. Half a century after his gloomy prognosis Ireland's population was sharply reduced by a famine.

It is commonly supposed that food shortages exist in the less developed countries because agriculture is performing poorly there. This is not exactly the case. Food production is increasing almost as rapidly in the less developed countries as in the developed ones. Between 1957-59 and 1966, total food production in the less developed countries increased 19 percent as compared to 22 percent in the developed countries. But population growth rates in less developed countries were double those in the more advanced countries, largely offsetting the overall gains in food production. Latin America and Western Europe illustrate this. Both have expanded food production at about 2.5 to 3.0 percent annually over the past decade. In Europe, where population is increasing at about 1 percent per year, this has meant progress and a steady upgrading of diets. But in Latin America, where population has been multiplying at nearly 3 percent per year, food output per person has not been gaining.

Rates of population increase in the less developed countries today are without precedent. In several they are well above 3 percent yearly, in some instances approaching the biological maximum. Populations growing at 3 percent yearly double within a generation and multiply eighteenfold within a century. To the agriculturalist, this Malthusian arithmetic is frightening. A less developed country today is, almost by definition, one with a rapid rate of population growth. There are not many exceptions. The impact of modern health measures has reduced death rates, but comparable reductions in birth rates have not been achieved. Even a population growth rate of 3 percent could be tolerable if there were vast areas of fertile, well-watered land to be brought under the plow. But unfortunately, most of the frontiers have long since disappeared and the supply of new land which can be brought into production quickly and cheaply is fast diminishing.

The world food problem is, however, more than a race between food and people. In reality it is a race between the production of food and the demand for food. There are two reasons for the sharp increase in the world demand for food: population growth is one; the other is rising per capita incomes.

In some countries, rising incomes are generating more growth in the demand for food than is population increase. This is certainly the case in Japan, where incomes have risen 7 percent annually over the past decade, but where population has grown less than 1 percent annually. The same is also true for many countries in Europe, particularly West Germany, France, Sweden and Italy. To construe the problem merely as a race between food and people fails to grasp the whole issue.

In no country prior to World War II had population growth rates or per capita incomes risen rapidly over an extended period. High, sustained rates of growth in both population and income per person are largely postwar phenomena, and to make things more difficult, they have occurred simultaneously. The result, in recent years, has been a rate of increase in demand which the world's farmers have not matched.

The difference in diets between a low-income, less developed country and a more advanced country such as the United States or Canada is much more than merely the difference between 2,000 calories per person per day and 3,000 calories. Caloric intake measures only the quantitative aspects of diet. It gives no indication of quality; it does not show whether malnutrition exists-from, say, the lack of protein.

To provide the high-protein diet enjoyed by North Americans requires close to one ton of grain per person per year. Of this total only about 150 pounds are consumed directly as grain. Most of the remainder is consumed indirectly in the form of meat, milk and eggs. The amount of grain available per capita in the less developed nations averages about 400 pounds per year. Deducting some 10 percent of this for seed leaves 360 pounds for consumption, or less than one pound per person per day. Nearly all of this must be consumed directly to meet minimum energy requirements. Little is left for conversion into meat, milk and eggs-the traditional sources of protein in the more developed nations.

For every $2 rise in annual per capita income there is a corresponding rise in grain requirements of at least one pound. (See chart.) The significant point is that virtually every country, regardless of its level of development, is striving to improve per capita income over the next few years. If these plans succeed, much more food must be obtained somewhere.

III

Just as the developing countries are, almost by definition, countries with rapid rates of population growth, so communist countries are countries with a poorly performing farm sector. There are few, if any, significant exceptions. To name a communist country-Poland, Czechoslovakia, East Germany, the Soviet Union, Albania, Mainland China, Cuba-is to name a country having problems with agriculture.

All of these nations have claimed allegiance to Marxian thought-in agriculture as well as in the rest of the economy. Actually, Marx himself had little to say about agriculture. He was a city boy, primarily interested in diagnosing the social ills of early industrial societies. It was largely his followers who assumed that agriculture, like industry, could be readily organized on a large scale under state control. And it was they who went on to exploit agriculture in order to provide the basis for industrialization. Agriculture was given neither sufficient inputs nor incentives.

The communist countries are beginning to pay dearly for this policy. Food shortages have become a drain on their foreign exchange and a drag on their economic growth. The decision to organize agriculture on a large-scale, authoritarian basis has cost the communist countries literally billions of dollars in inefficiently used resources and lost economic growth.

Khrushchev's rise to power was closely followed by several efforts to cure Russia's farm ills. The Machine Tractor Stations were abolished; large areas were planted to corn in an effort to emulate successes in the American Midwest; and vast areas of virgin land were plowed and planted to wheat in areas of marginal rainfall. Output did increase from 1954 to 1957, and in 1958 Khrushchev promised the Soviet people that they would soon surpass the Americans in per capita production of meat, milk and eggs- At the same time, however, investment in agriculture was reduced. In the following years, output stagnated at 1958 levels. Yet in 1963 when I visited the Kremlin, Khrushchev was still bragging loudly. That year drought struck, accentuating an already weak position, and in 1964 the Soviet Union imported more wheat than any country in history. Khrushchev was out of office before drought occurred again in 1965.

The dramatic reversals in Chinese agriculture, following the Great Leap of 1958 and during the early 1960s, were equally abrupt. Many, principally those who had failed to gauge the weaknesses of the Great Leap, particularly in agriculture, were much surprised in 1961 when China turned to Western countries for several million tons of imported grain. This continuing dependence on food from abroad probably reveals more accurately than any other available information the true state of affairs in Chinese agriculture. Another indicator is the reported effort to move twenty million urban immigrants back to the rural areas from whence they came "to provide more labor to produce food." What it may disclose is not so much a shortage of labor in the countryside as the inability of the Peking régime to procure food in the countryside for movement to the cities. To avoid hunger and possibly famine in the cities, Peking has imported food from abroad and exported people back to the countryside where their village kin are more willing to share their food with them.

A generation ago Mainland China was the leading producer of soybeans, supplying some 90 percent of all the soybeans entering the world market. In recent years, however, a steadily expanding population has reduced the outflow of soybeans to a trickle. Today, the United States produces three- fourths of the world soybean crop, enabling it to provide some 90 percent of the soybeans entering a vastly enlarged international market.

Mainland China is, perhaps ominously, suffering from both the influence of Marx and the forces identified by Malthus.

IV

Offsetting the effects of the forces described by Malthus and the adverse influence of Marxian thought on food production has been the impressive development of North America's capacity for producing food. Several factors have contributed to this. To begin with, the United States has an excellent piece of agricultural real estate. Its Midwest, or Corn Belt, is one of the largest areas of fertile, well-watered farmland in the world. The only other areas even remotely approaching it in both size and inherent fertility are Northwestern Europe, the pampas of Argentina and the Gangetic plain of India.

Not only did we start with good farmland but we have done an excellent job of developing it. Through scientific soil and water management we have made inherently fertile soils even more fertile. Perhaps the most important single factor contributing to our unparalleled productivity has been the family farm. As a production unit it is the most efficient yet devised. Other forms of production organization are in use or have been experimented with, but most have not worked well. This is particularly true for most of the systems embodying very large production units such as collectives, communes or haciendas. The family farm, where the social unit and the production unit are identical, provides a stronger link between effort and reward than any other system. As a result, they are continuing to grow in both size and efficiency. Although many of these production units run up to several hundred acres in size and have assets frequently exceeding $100,000, they are not corporate farms. They are still family units, owned and operated by the family, using mostly family labor. The number of large corporate farms is exceedingly small, and actually declining.

Another factor contributing to the success of American agriculture has been the careful delineation of the government's role. There seems to be a great deal of confusion as to the proper role for the public and private sectors in many of the hungry countries today. The record of U.S. agriculture provides some clues. The government has never been directly engaged in agricultural production. Actions such as the Homestead Act of 1862 were specifically designed to encourage private settlement and production. Neither has the government engaged in producing and distributing any of the multitude of inputs that modern agriculture requires. This has been left entirely to private industry.

Conversely, we did decide that government should conduct agricultural research and education. The idea that problems in agriculture should be subject to systematic research took root over a century ago. The first publicly supported agricultural research in the United States took place before the Civil War in the Patent Office, the predecessor of the Department of Agriculture. Since the passage of the Hatch Act in 1887, the Land Grant Colleges have been an important partner in agricultural research. This government-sponsored work was the precursor of the concept of research and development in modern industry. We also decided at an early date that the government should be involved in extending new ideas and techniques from the laboratory and experimental plot to the farm. The result has been our widely respected Extension Service. The discoveries made through research sponsored by the Department of Agriculture are public property. As soon as new varieties are developed they are released, to be multiplied and distributed by private industry, hopefully at a profit. Similarly, when the process for developing frozen citrus concentrates had been perfected in Department laboratories, it was turned over to private industry.

Public policy recognized, after much struggle, that three million production units-producing literally dozens of different commodities and scattered throughout the United States-are not likely to be able to bargain effectively with the non-farm economy. As a result, government has influenced the terms of trade between farmers and the rest of the economy, generally by means of price supports. This policy, dating from the late 1930s, was instrumental in triggering what we now term the modern agricultural revolution. The effect of an assured price level backed by government is to encourage farmers to invest both short-term production capital in fertilizer and in superior but expensive seed of new and improved varieties; and longer term capital in productive capacity-in irrigation, drainage and other improvements in land and other capital assets.

Governments in nearly all of the countries with modern, productive agriculture now operate price-support programs for principal crops. Thus we see government serving as a guarantor of minimum price, a referee in the marketplace and a catalyst to technological progress. This is not to say that the pattern we have chosen to follow in the United States is the precise policy that should be adopted by the developing countries, but it may be a useful guide. Involving government too directly in agriculture- often for political reasons-has resulted in a great waste of resources in developing countries. V

Inevitably, the agricultural successes of the North American breadbasket and stagnation in communist agriculture have affected the balance of power between East and West. Indeed, North American food and our capacity for producing it have been instrumental in tilting the scales in favor of the West.

About the same time as Khrushchev's 1958 promise of a better diet and, implicitly, a better performance in agriculture, the Soviet leaders were also challenging the United States to a general economic competition. This was to replace the more overt military and political competition characterizing the earlier stages of the cold war. In some areas of economic competition the Soviets are performing exceedingly well. The overwhelming advantage we once enjoyed in the production of steel has been narrowed; the generation of hydroelectric power has increased rapidly in the Soviet Union, narrowing the gap between the two economies; in the space race we do not know whether the language first spoken on the moon will be English or Russian.

But in agriculture there is no contest. The United States, with scarcely 6 percent of its people still on the farm, is feeding 200 million Americans, 60 million Indians and the equivalent of at least another 100 million people in other parts of the world. The Soviets, by contrast, with close to half of their labor force still tied to agriculture, are importing grain to provide bread for their people. If we were as far ahead of the Russians in the space race as we are in agriculture, we would by now be running a shuttle service to the moon.

The impressive food-producing capability of North America and our growing lead over the countries of the East are beginning to have an impact on the countries of the Third World. During the early post-colonial years, many of the newly independent peoples could be satisfied with slogans and flag waving. Now they are hungry; they want food, not slogans. Rising rice prices in Djakarta helped to undermine Sukarno. Empty shelves in the food shops of Accra contributed to the overthrow of Nkrumah. More and more, the less developed countries are turning for assistance to those with food and food-producing know-how.

Our unmatched food-producing capability has strengthened our foreign policy immeasurably. For instance, during the period since World War II, and particularly since the communist takeover of the Chinese Mainland in 1949, the Japanese and U.S. economies have become increasingly integrated. Traditionally, China and Japan were natural trading partners, with China supplying basic raw materials and foodstuffs in exchange for Japanese manufactures; Japan looked to China for much of its imports of soybeans, rice and other farm products. But China can no longer supply Japan's needs. Today, Japan looks to the United States for the bulk of its imports of farm products-wheat, rice, feed-grains, soybeans and cotton. The flow of farm commodities crossing the Pacific from the United States to Japan may exceed $1 billion in 1967. Without our ability to generate huge farm exports, these strong economic ties could not have developed. In geographic terms Japan is off the coast of China, but in economic terms it is just off the coast of California. This is but one of the more dramatic illustrations of the value of a productive farm sector in supporting our foreign policy.

The growing food deficits common to nearly all the communist economies are causing them to become politically and militarily vulnerable. During the early 1950s the Communist Chinese did not hesitate to intervene massively in the Korean conflict, but today, though they have threatened to intervene in Viet Nam, in fact they have not done so. Nor do I think they will. During the early 1950s China was self-sufficient in food production. During the 1960s, however, it has imported five to six million tons of grain annually. In addition, its dependence on imported fertilizer has increased to the point where it is now the world's leading importer. Significantly, nearly all the imports of both food and fertilizer come from the West- Australia and Canada in the case of grain, Western Europe and Japan in the case of fertilizer.

Combined imports of food grains and fertilizer into China now require nearly 40 percent of her total export earnings. Data on food production trends within China are unreliable but the fact that the Chinese leadership, intent on industrializing, is willing to use such a large share of available foreign exchange for food and fertilizer-essentially consumer goods-indicates just how hard pressed the Chinese are on the food front. In the event of a showdown with the Chinese in Viet Nam, or anywhere else in Asia, it is quite likely that exports of food from Australia and Canada would cease. Imports of fertilizer might also be halted, and China would then face a near famine or possibly worse.

Food deficits in Eastern Europe are also affecting the relationships between countries. The fact that nearly all the COMECON countries have grain deficits has loosened the economic and, therefore, the political ties binding them together. As recently as the early 1960s, the Soviet Union was supplying large quantities of grain to the East European countries in exchange for industrial products, such as chemicals from East Germany and machine tools from Czechoslovakia. As of the mid-1960s, however, the East European countries are turning increasingly to Canada for wheat and to the United States for feedgrains. East Germany, once the breadbasket of all Germany, must today import large and growing quantities of food and feed. The East European countries are finding that their natural trading partners lie to the West as well as to the East.

The embarrassing food shortages plaguing almost every communist economy are causing governments to invest more resources in agriculture, with the result that production is likely to increase. The Soviet Union enjoyed a bumper crop in 1966. This is not to say, however, that it, or any of the other communist countries, will become a leading grain exporter. The pressure for internal improvement in diets, as the standard of living improves, is too great. Some very substantial gains in grain production will be required before the Soviet Union can satisfy the growing desire of its people for more meat, milk and eggs.

As agriculture failed in one communist country after another, and they turned to the West for food imports, the communist strategists in Moscow must have faced a dilemma as they plotted their takeover of the world. What if they were successful? Who would be left to feed them?

VI

As the East-West ideological conflict begins to fade, it is clear that a new North-South polarization is beginning to take shape between the have and have-not countries. This new polarization-which is essentially economic rather than political-threatens to be a pervasive and divisive force. In spite of all the rhetoric describing the need to narrow the gap, the gulf is widening, both absolutely and relatively. Nowhere is this growing gap so painfully evident as in the case of food.

For the past seven years, increases in world food production have almost exactly equalled those in population growth. But the expansion in production plus the continuing reduction in stocks in recent years have not been sufficient to cover the additional demand created by rising incomes. The result has been rising prices for basic food commodities such as wheat and rice, both within individual countries and in world markets.

Those countries which are more advanced and which have stronger purchasing power have been increasing their per capita consumption. In several countries where purchasing power is weak, either because of a lack of income or lack of foreign exchange, per capita consumption has declined. Two drought years are only a partial explanation of why per capita food supplies in India in 1966-67 were 5 percent below those of the early 1960s.

This decline, of course, has been concentrated in the low-income groups. Those of middle and upper income have increased their expenditures for food to offset at least partially the rise in prices. Those at the bottom of the economic scale, already using most of their income to buy their meager daily rations of food, have not been able to do so. When they have tightened their belts to the last notch, they take to the streets. Food demonstrations or riots erupt periodically, and with increasing frequency, in the major cities of Asia, North Africa and Latin America.

Perhaps the best illustration of just how acute this problem is becoming is the trend in rice prices in recent years. Nearly all of the world's rice- consuming peoples, except the Japanese, are continuing to multiply at an unabated rate. The area of land which can be used to produce rice, however, is rather rigidly defined by temperature, the availability of water and type of soil. The result has been a growing worldwide shortage of rice and rising prices over the past few years, and particularly the last several months. The price of rice, traditionally somewhat higher than wheat, has now climbed to the point where a ton of rice can be exchanged for two tons of wheat in the world grain market. Although this has not seriously affected the more advanced countries such as Japan or the smaller rice- importing countries of Europe, it has sharply reduced the ability of low- income, rice-consuming countries to import the rice they need.

An analysis of the trends in world stocks of grain-held almost entirely by the major exporters of wheat, feedgrains and rice-shows the emergence of some new and disturbing trends. During the eight years from 1953 to 1961, world grain stocks increased by an average margin of nine million tons each year. During this period world production was running ahead of consumption. During the six years from 1961 until 1967, world stocks of grain declined each year. Most of this decline, averaging fourteen million tons per year, took place in the United States. This means that since 1961 grain consumption has been exceeding production by 1.4 percent a year. Stated otherwise, production is going up only 2 percent a year, while consumption has been increasing at about 3.4 percent annually.

This excess of consumption over production has been met by using the surplus stocks held by the major exporting countries, particularly the United States. But if food deficits continue to grow in the less developed countries, the exporting nations will not be able to fill the growing food gap. Five years ago, we in the United States had the world's two major reserves in the race between food needs and food production: some fifty million tons of excess grain in storage, and a large area of fertile cropland made idle under our farm programs. During the early 1960s, idle cropland increased and in 1966 exceeded fifty million acres. Decisions within the past year to increase acreages of wheat, feedgrains, rice and soybeans will bring nearly one-half of this cropland back into production. Once this ready reserve is exhausted, it will become much more difficult for the world to achieve any abrupt increases in production to meet additional demand.

Since World War II, and more particularly since passage of Public Law 480, the 1954 enabling legislation for our food aid program, the United States has been attempting to alleviate world hunger by shipping food abroad. By the end of 1966, about 176 million metric tons of food worth $15.7 billion had been shipped abroad under concessional terms. Despite this massive program we are still as far from solving the problem as when we began- perhaps further than ever.

The growing economic distance between the have countries of the North and the have-not countries of the South is, moreover, now a source of social unrest and political instability. Secretary Robert McNamara gave a speech in Montreal last May in which he pointed out the relationship between the living standards in various countries and the incidence of social unrest and violent political upheaval. In that speech he made a short but very significant statement: "Security is development." For our purposes I would like to narrow that a bit and say "Security is food." Without an adequate supply of food in the developing countries, the prospects for economic and political stability are not good.

If we are ever to solve the world food problem, we must now begin concentrating in earnest on increasing food production in the less developed nations. We have a pretty good idea of what is needed. In varying proportion according to particular situations, the hungry countries need: increased quantities of fertilizer and other farm chemicals, improved varieties of seeds, increased availability of water, added credit, productive price policies, improved marketing facilities and expanded research and education. What makes progress so difficult is that most of these must be brought together at the same time and place.

It is well recognized that these inputs are in short supply in most of the less developed nations. But one key item that is perhaps less well recognized is the lack of trained agriculturalists. Skilled and educated manpower is essential in every phase of a program designed to improve the production and marketing of agricultural products. Yet in virtually none of the less developed nations is the supply of trained manpower in agriculture anywhere near adequate. In many cases, there is only a handful of educated researchers, planners and extension workers. Colleges of agriculture are few and their output small.

By comparison, in the United States we have land-grant institutions in every state, plus many privately supported institutions, which have been graduating trained agriculturalists for many decades. We have a relatively vast reservoir of highly skilled professional manpower (although still more is needed). In the Department of Agriculture alone we have 40,000 professional agriculturalists, only a few of whom are in Washington; most are working in the field throughout the 3,100 counties in the United States. These professionals include agronomists, entomologists, plant geneticists, agricultural economists and a host of others needed to develop and maintain high levels of productivity.

Until the less developed nations can build up cadres of trained personnel of their own, the logical approach is to make use of agriculturalists from the advanced nations. The United States has, for many years, been loaning know-how through A.I.D. and its predecessor agencies, and through programs operated by State universities and private consulting organizations. More recently these programs have been broadened to include the Department of Agriculture through the establishment of an International Agricultural Development Service which is financed by, and works closely with, A.I.D.

In addition to providing trained biological and social scientists, the Department is increasingly called upon to assist in formulating the policies so essential for rapid progress in agriculture. Food price policies must become producer oriented, providing the farmer with a price for his products which makes the use of modern agricultural technology profitable. Policies governing foreign private investment must encourage the influx of capital, management and marketing know-how needed to produce and distribute the sorely needed inputs.

This is not a job government can or should do alone. The participation and coöperation of industry-with its special skills and resources-is also urgently needed. As a nation we must cease asking how much it will cost to solve the food/population problem and begin asking how much it will cost if we fail to solve the problem in the allotted time. Time is the critical dimension. Today's hungry countries must compress the progress of centuries into decades and decades into years if they are to feed their rapidly multiplying peoples. Our aid is essential. As a nation we must now exercise the same imagination and resourcefulness which brought us to our current position of world agricultural leadership. We must devise more effective ways of linking our skills in producing food with the needs of the less fortunate multitudes abroad. The challenge has never been greater, or the stakes higher.

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