The global grain trade has fared better than almost any other business during the global financial crisis.
However, international grain industry executives told the Canada Grains Council’s recent annual meeting that regardless of the industry’s soundness, the cold hand of government control is extending again, backed by angry farmers and consumers.
“There is a growing part of the population believing, thinking that governments are the better entrepreneurs, are the better businesspeople,” said Klaus Schumacher of the German grain company Toepfer International.
“And this I find a little scary and we have to really watch out that this is not (becoming) really broadly accepted and is not really spilling into our sector.”
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Of particular concern to the industry is the growing chorus of countries toying with the idea of an international grain reserve that would buy up surplus grain in years of overproduction and dump it on the market in years of undersupply.
Kendell Keith, president of the U.S. National Grain and Feed Association, said Americans have had bad experiences with national grain supply controls.
“We have a great reluctance to go this direction of government-sponsored stockholding. We think it artificially depresses prices and we think it artificially depresses the incentives for private stockholding,” Keith said.
“So we think the marketplace still remains the best chance we have for responding in a timely way to the challenge.”
Council members said the drive for government-negotiated schemes such as an international grain reserve comes from a worldwide shift away from support of free trade and light regulation.
Millions of people around the world are disgusted with problems that are perceived to be caused by either deliberate malfeasance or incompetence of corporate and financial leaders.
South American countries have been moving toward government ownership of critical industries for a number of years and the same sentiments are now spreading in the northern hemisphere as developed nations are caught in an economic quagmire.
“This shift is really pointing in many countries in the world to higher government influence at least being discussed,” Schumacher said.
France in particular is driving for more government controls over economic activities that until recently have been left to the free market.
The notion of an international grain reserve was generally shrugged off by conference attendees. Similar schemes have been tried and considered to be failures within a number of countries, including the United States.
Creating one to bring exporters together would seem almost impossible, said Pamela Kirby-Johnson, director-general of the London-based Grain and Feed Trade Association.
“I can’t imagine the European Union, Australia, Argentina and the U.S.A. all co-operating on a grain reserve,” she said in an interview.
Combining those often antagonistic exporting nations with importing and needy countries in one big grain reserve seems even less imaginable. Still, the drive for government to influence agriculture and the grain trade appears to be building, many said.
A sense of the direction of world governments will likely be seen at an international summit to be held in St. Petersburg, Russia, in June.
