At the Canada Grains Council annual meeting there were a few references to the notion of a World Grain Reserve. It wasn’t seriously discussed and most folks there thought it was a pretty wacky and unimplementable structure. But the fact that it was mentioned at all shows how much the political and economic winds of change have switched direction.
You wouldn’t expect these folks to support the idea. Anything that imposes more government influence on their business – the CGC are mainly the people who run the grain companies and other commercial aspects of the grain biz – isn’t likely to make their lives easier or more profitable. But the general view that any sort of international grain reserve attempt would be a catastrophic failure doesn’t seem unreasonable.
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The basic idea is that the brilliant managers running the governments of grain exporting, grain importing, advanced and third world nations would begin storing grain in years of surplus production, and releasing it in years of deficit. That would get rid of all those ooky things about the world grain markets, proponents think. There would be no more years of brutally low prices caused by overproduction, because governments would soak up the excess and store it in a big bucket, like Joseph did in Egypt. With the excess off the market, prices would remain profitable. In years of shortfalls, when prices would normally spike, intelligent government managers around the world would release just enough of the stored stocks to bring prices back down to what they consider reasonable levels. Government technocrats would ignore selfish national interests and do what was best for the world.
Voila! All our problems would be solved! No more would farmers ever face an unprofitable year because of the markets. No more would poor folks be faced by much higher prices suddenly that their governments have trouble paying, or can’t pay. And golly, wouldn’t it be great for governments, people, companies all over the world to know that grain prices would always remain in a pretty tight range? That would make life much easier to budget for.
Jeez! Let’s just do it!
The problem is, as long time grain industry players noted, various nations including the U.S. have tried the idea and it didn’t work. Notice that the U.S. one is gone? So perhaps the problem is that former attempts were too small-scale and a vast, worldwide grain bank would be the solution.
I asked some of the international grain folks about this at the CGC, and they had trouble imagining the EU, the U.S., Canada, Australia, Argentina, Brazil, India, Russia, etc. all coming together and agreeing on how to run a grain reserve. Decades of haggling over farm subsidies at the WTO and the GATT didn’t reveal a lot of common ground between these various players with differing needs and views.
And after 15 years of covering this sort of stuff, and studying the GATT ag negotiations at university, I can’t imagine these countries agreeing on much when it comes to crop prices. Is anyone seriously suggesting dirt poor importing nations in Africa and Asia are going to agree to a system that keeps prices higher than they need to be in many years? I can just imagine the howls of outrage and indignation if people were starving somewhere and governments were keeping grain prices higher than they would be if the whole harvest was available. And does anyone actually believe a grain reserve could survive the first year in which prices leap and governments dump grain to dash them? I can’t see too many farmers being willing to support that. Would Midwest U.S. farmers or French farmers be willing to forgo those rare years of high prices in exchange for government bureaucrats offering them assurances that they’d make sure they got government-approved profit levels year-on-year? Can’t see it. That’s the kind of thing that gets governments thrown out.
Perhaps I just have a dearth of vision, and a new age of farmer and consumer and starving person altruism is about to be unfurled, like those seals being broken in the the book of Revelation. And government bureaucrats will finally prove themselves to be the brilliant technocrats that so many have yearned them to be, so that they could run our lives sensibly for us, and all the uncertainty and insecurity and vicissitudes of life in this crazy world can be managed away. And a grain reserve will bring us all together and we’ll all be happy, profitable, well-fed and well organized.
But a little voice in my head tells me to look at how well limited organizations dedicated to supply control like OPEC have operated (all OPEC’s members cheat on their agreements and have proven almost zero ability to manage oil prices – and it only includes a handful of nations), how successful pan-world organizations like the UN have been (anyone remember the genocide in Rwanda, the situation right now in Sudan, etc.), and I can’t see how intelligent people can come to support outlandish ideas like an international grain reserve.
But they’re doing it. Quite sensible left-wingers these days in the farm community are pushing the idea of an international grain reserve in a number of countries, including Canada, and it seems like the kind of pie-in-the-sky notion that will appeal to many in these days of belief in unlimited government power to fix things and suspicion of the market.
Because that’s what this notion is part of. The Neo-Conservatives were in charge for the last 30 years and everything’s messed up, so those bums are getting thrown out and a new crew and new attitude has come in. And for some that’s the attitude of just-get-the-government-to-run-everything, for others it’s a more moderate form of let’s-just-regulate-things-a-bit-more-sensibly, and for lots of fearful people it’s a panicked call of please-save-us-from-ourselves-and-make-all-these-problems-go-away.
How exactly world politics, world trade, world everything evolves out of the present, ongoing crisis can’t be known. But as was noted by the fearful executives at the CGC, the Zeitgeist is now one of more government control, intervention and regulation, and everyone in agriculture is going to be profoundly affected. It might not be worse than they way things went during the Neo-Con rampage, but it might be a lot different.
