WORLD GRAIN MARKETS IN THE 1980S: THE IMPACT OF GOVERNMENT POLICIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84S00558R000400070003-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 22
• Document Creation Date: December 21, 2016
• Document Release Date: January 3, 2008
• Sequence Number: 3
• Publication Date: May 1, 1983
• Content Type: REPORT

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Directorate of
Intelligence
Secret
in the 1980s:
The Impact of
Government Policies
World Grain Market:
ON FILE USDA RELEASE INSTRUCTIONS APPLY
Secret
GI 83-10139
May 1983
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Intelligence
World Grain Markets
in the 1980s:
The Impact of
Government Policies
ice o o a
Issues. Comments and queries are welcome and
may be directed to the Chief, Commodity Market
Branch, Economics Division, OGI
Secret
GI 83-10139
May 1983
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in the 1980s:
The Impact of
Government Policies
Key Judgments The developments in international grain markets during the 1980s will be
Information available determined more by agricultural policies in the key producing countries
as of 20 May 1983 than by any other factors, including weather. With the exception of the
was used in this report.
United States, the major exporters have production expansion programs
under way:
? Canada plans to increase grain production in the Prairie provinces, its
main grain region, about 20 percent by 1990.
? During the 1980s output in the European Community will expand by a
million tons per year, and perhaps even faster, in response to domestic
support prices well above world levels.
? Argentina plans to raise grain production by 50 percent from present
levels-to 45 million tons-in 1990; we think, however, only about one-
half this gain can be reasonably expected.
? Australia plans to double wheat production in the next 20 years, but the
use of more marginal land will mean larger annual fluctuations in output.
With large grain surpluses and weak demand, pressures on exporters to
protect their markets are mounting. While an all-out agricultural trade
war is unlikely, competition among grain exporters has become fierce and
acrimonious as the major players seek outlets for their surpluses. The use
of production subsidies, attractive finance packages, and concessionary
repayment terms has become the rule rather than the exception. These
measures are paying off. Except for Australia, the major competitors of the
United States will register increases in their export volume and market
shares this year, while US grain sales will decline and the US market share
will fall to the lowest level in eight years.
In a buyer's market, the main beneficiary will be the Soviet Union-the
world's largest grain importer. Specifically, Moscow will be in a strong
position to bargain for advantageous terms on both the economic and, at
times, the political front. Argentine interest in selling grain to the Soviets,
for example, may influence the willingness of Buenos Aires to take strong
stands against Moscow on international issues. Beyond this, the grain
market glut means that, barring a serious crop failure, the USSR will be
able to meet the lion's share of its grain import requirements from non-US
suppliers, should Moscow so choose. We believe this condition will prevail
for some time.
Secret
Secret
GI 83-10139
May 1983
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In the coming months Moscow may try to use the current world grain glut
as leverage in negotiating a new US-USSR grain agreement. The tempta-
tion to use leverage will be especially great if this year's Soviet crop is good.
Moscow's negotiating stance will nevertheless be tempered by the desire to
strike an agreement that would assure them access to US grain over the
next five years. Above all, the Soviets want to avoid coming hat in hand to
the United States at a time of tight world grain supplies.
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Setting the Stage in the 1970s
Prospects for the Remainder of the 1980s 6
The Stock Overhang: Implications for the United States 9
10
A-1 Major Grain Exporters: Wheat and Wheat Flour
Production and Exports
A-2 Major Grain Exporters: Coarse Grain
Production and Exports
2. US Grain Export Prices c.i.f. Rotterdam
3. Grain Production of Major Producers, 1970-85
5. Basic Support Prices for Wheat, 1970/71 and 1980 to 1983 4
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Figure 1
World Grain Production and Consumption
1,000 a
1970-71 71-72 72-73 73-74 74-75 75-76 76-77 77-78 78-79 79-80 80-81 81-82 82-83
Production
Consumption
^ Surplus
^ Deficit
a. January 1972, Soviets purchased record amounts of grain.
b. 1973-74, US corn output decreases by 17.1 percent (36 million tons).
c. June 1975, Soviet output fell by 50 million tons, imports rose 26 million tons.
d. 1975-76, Soviet grain production increased by 80 million tons-65 percent of the total increase that year.
e. 1977-78, China and the USSR account for 55% of the increased production.
f. January 1980, US partial embargo on grain to the USSR.
g. January 1981, grain production increased 42 million tons, US up 62 million, others down by 20 million tons.
Figure 2
US Grain Export Prices c.i.f. Rotterdama
1970 71 72 73 74 75 76 77 78 79 80 81 82 83 84
Wheat
Corn
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World Grain Markets
in the 1980s:
The Impact of
Government Policies
Setting the Stage in the 1970s
World grain markets were characterized by tight
supplies and high prices during most of the 1970s.
Poor weather reduced crops in marketing years I (MY)
1973 and 1975 and drove up world grain prices. This,
in turn, stimulated an all-out production effort by
most grain growers (figures 1 and 2). Since 1975
world grain production has increased at an average
3.1-percent yearly rate, compared with an average of
2 percent for the prior eight years.' The bulk of
production gains were made by the large grain export-
ing countries-the United States, Canada, Australia,
and Argentina (figure 3).
The increase in production was reflected in interna-
tional markets. Since 1975 the volume of world grain
trade has grown by 50 percent. Factors accounting for
the surge included:
? Periodic crop shortfalls in important LDCs and
centrally planned economies, particularly the
USSR.
? Rising incomes, especially in developed countries
like Japan, which dramatically increased the de-
mand for livestock products and the consequent
need for animal feed.
? The decision of LDCs, especially those in Africa, to
emphasize the production of cash crops rather than
food grains.'
As a result, the major importers became increasingly
dependent on the world market, according to US
Department of Agriculture (USDA) statistics (figure
4). In Japan, for example, between 1970 and 1980
imports rose by two-thirds. The USSR shifted from a
net exporter to the world's largest importer. China's
yearly imports-mostly wheat-more than tripled
during the 1970s to 11 million tons. Eastern Europe's
imports more than doubled, exceeding 10 percent of
' Throughout this paper, the term marketing year refers to the
July/June period ending in the year designated. For example, MY
1973 refers to I July 1972 through 30 June 1973.
2 The term grain as used in this paper refers to wheat and coarse
grains. Coarse grains include barley, rye, oats, corn, sorghum,
millet, and mixed grains.)
consumption. Among Third World countries, OPEC
and the middle-income LDCs more than tripled their
grain purchases while low-income LDCs increased
their total imports by more than 55 percent (table 1).
Role and Impact of Government Policies
The rise in both production and grain trade by the
major exporters was underpinned by government poli-
cies and generally favorable weather. Policy initiatives
were directed in two areas-direct support to farmers
and indirect measures facilitating exports. The scope
and direction of policy changes varied among exporter
countries. For some, particularly the United States
and Canada, the increased trade of the early 1970s
and consequent reduction in stocks led to a lifting of
acreage restrictions. Canadian acreage quotas have
been eased since 1970, allowing farmers to plant twice
as much wheat. In the United States, until this year
acreage set-aside programs were largely eliminated,
causing a 75-percent expansion in harvested area
since 1970.
To encourage production, exporters took a number of
steps to insulate farmers from risk and ensure
incomes:
? Canada adjusted its Agricultural Stabilization Act
in 1975, shifting away from strict market price
stability toward guaranteeing a margin between
revenues and costs.
? Australia, through its Wheat Board, guaranteed
that any cuts in annual prices paid growers would be
limited to 15 percent, thereby reducing income
uncertainty. Further, the Wheat Finance Fund be-
gan to pay farmers a guaranteed price at the time of
harvest instead of when the grain was sold by the
Wheat Board, which could be many months later.
roduction by 25X1
rain
romoted
ices
t
? EC
p
g
pr
p
suppor
guaranteeing farmers that production costs would
be covered. Wheat support prices have grown to
nearly twice the world market price (figure 5).F-
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Figure 3
Grain Production of Major Producers, 1970-858
Actual
Trend
50 50 50 _- -- - 50
lil Ili i Il_II I i lililil ili ili iililil
1970 72 74 76 78 80 82 84 86 1970 72 74 76 78 80 82 84 86 1970 72 74 76 78 80 82 84 86 1970 72 74 76 78 80 82 84 86
200
150
50 50
I Ii IiIIIIIIIIIII II IIIIII III I I I I I
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Figure 4
World Grain Imports
China
Eastern Europe
USSR
EC
Japan
1
1970-71 71-72 72-73 73-74 74-75 75-76 76-77 77-78 78-79 79-80 80-81 81-82 82-83
Governments also took steps to ease shipping bottle-
necks. The Canadian Wheat Board, for example,
bought 10,000 hopper cars between 1973 and 1979 to
move grain to the ports. Buenos Aires invited interna-
tional trading firms to make private investments in
storage and handling facilities.
To ensure markets, government-to-government long-
term agreements (LTAs) became increasingly impor-
tant to the major exporters. For example, in 1981
Ottawa signed a five-year agreement to provide the
USSR with 25 million tons of grain. Exporters fre-
quently sweetened grain deals by offering favorable
financial provisions, as Canada did in 1982 when it
extended $1 billion in government-guaranteed com-
mercial credits.
Traditional marketing efforts were also pushed. Cana-
da and Australia, where the government has exclusive
export control through grain marketing boards, main-
tained offices in major cities around the world to
promote sales. Other countries, including the United
States, relied on private grain traders to transact
export sales, but agricultural attaches, official trade
promotion tours, and export-enhancing legislation-
such as provisions for concessionary sales under PL
(Public Law) 480-provided strong government sup-
port. Through these efforts, Canada, Australia,
Argentina, and the United States have been able
to export roughly one-half of their production (ap-
pendix A).
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 Table 1
LDC Grain Imports
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Imports
Imports as
Imports
Imports as
(million metric
a Share of
(million metric
a Share of
tons)
Consumption
tons)
Consumption
(percent)
(percent)
Total 29.9 19.2 64.8
Figure 5
Basic Support Prices for Wheat, 1970/71 and 1980 to 1983
1970-71
United States
Canada
Australia
Argentina
EC
1980-81
United States
Canada
Australia
Argentina
EC
United States
Canada
Australia
Argentina
EC
1982-83
United States
Canada
Australia
Argentina
EC
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The expansionary production policies of US competi-
tors are being maintained, even though demand has
slackened. As a result, a massive buildup in stocks
occurred in MY 1982. We anticipate that record
stocks of some 250 million tons will accumulate this
year (MY 1983), equal to more than one year's world
exports (figure 6). Most of the stock increase will
result from record corn production in the United
States. Agricultural officials expect US grain stocks
will comprise an unusually high 60 percent of the
world total when the marketing year ends this June.
With large stocks and weak demand, pressures on
exporters to sell more grain abroad are mounting.
World exports, according to USDA estimates, are
expected to fall this year by 6 percent, about 15
million tons-primarily because of slack demand for
feed grains. The United States, as the world's largest
feed grain supplier, will bear the brunt of this decline.
More than one-half of the drop in US exports will
result from lower grain sales to the Soviet Union.
Despite an anticipated loss of 4 percentage points in
market share, the United States will still account for
half the world's grain exports in volume terms.
In an attempt to gain larger market shares, govern-
ments are opting for even greater use of attractive
sales and finance packages:
? Record quantities of EC wheat have been sold to the
USSR and China, neither of which prefers EC
wheat; to help promote the sale to China, the EC
introduced a special $6 per ton freight subsidy.
? Canada entered the East German market for the
first time, selling 1 million tons of grain on the basis
of two-year commercial credits guaranteed by Otta-
Major Foreign Government
Grain Export Agencies
Canada. The Canadian Wheat Board maintains con-
trol over the destination of Canadian wheat by selling
directly to foreign buyers and handling or closely
coordinating delivery. On the other hand, a large
portion of Canadian barley is sold to private firms (at
Canadian ports) and little control has been main-
tained on its destination.
Australia. The Australian Wheat Board has always
kept very close control over wheat sales-either
dealing with foreign governments or requiring that
sales to private firms (at Australian ports) be made
only with named destinations. Coarse grains are
handled by state boards and private firms, and less
control results.
EC. The EC Grain Management Committee decides
how much of each type of grain will be offered for
export and what subsidies will be paid to sell its
higher cost product in the world market. The EC can
require proof of destination before it pays the export
subsidy.
Argentina. The Argentine Grain Board plays only a
minor role in controlling grain exports and allows
private firms to make sales without disclosing the
grain's destination.
Other Exporters. South Africa and Thailand each
have centralized selling agencies; however, most of
their corn crops are sold to private firms at the
loading ports, and at this time all government control
ceases. Brazil also uses centralized selling agencies.
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Figure 6
World Grain Stocks
I I I I I I I I I I I I 1
1970-71 71-72 72-73 73-74 74-75 75-76 76-77 77-78 78-79 79-80 80-81 81-82 82-83
These measures are paying off. With the exception of
Australia, the major competitors of the United States
will register increases in their export volume and
market shares this year (figure 7). According to
USDA estimates:
? Canada's exports will rise by 2 million tons and its
market share will increase from 12 to 14 percent.
? Argentina's exports will be up by 1.5 million tons,
and its market share will increase from 9 to 10
percent.
? The EC, with about 10 percent of the market, will
post a small gain in both exports and market share.
? Australia, hit hard by drought, will show a
6-million-ton decline in exports, and its share of the
grain trade will fall from 7 percent to less than
5 percent.
Intense competition is generating acrimony among
exporter countries. According to press reports, the EC
is taking a hard look at imposing restrictions on
imports from the United States of soybeans and corn
gluten (a feed grain substitute), which now total about
$6 billion a year.
Prospects for the Remainder of the 1980s
Barring unusually bad weather, the production poli-
cies which foreign grain producers have put in place
will assure adequate supplies of grain for the foresee-
able future. The current buyer's market and the
aggressive grain export policies of the major produc-
ers are likely to continue for the near term. Beyond
that, the present wide gulf between production and
consumption likely will narrow somewhat as the
Western recovery takes hold and as the effects of
greater US acreage set-asides, including the payment-
in-kind (PIK) program, are felt. Whether the grain
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Figure 7
World Grain Exports
Other
EC
Argentina
Australia
Canada
125
United States
100
- I I I I I 1 1 1 1
1970-71 71-72 72-73 73-74 74-75 75-76 76-77 77-78 78-79 79-80 80-81 81-82 82-83
surplus situation is reversed will depend on demand
and supply factors such as the pace of economic
recovery and its effect on grain consumption, produc-
tion policies, weather, and trade policies.
Production in the 1980s. Even with current record
production levels, key producing countries have the
ability to raise output further. However, production
growth is likely to be slower than the 3-percent annual
rate of the late 1970s, given tight budgets, the
shortage of investment funds, and low world grain
prices. Still, a number of ways to boost production-
improved cropping practices, hybrid seed, and fertiliz-
er applications-are available and will be employed,
given the right market signals. Judging from the
output goals of the major foreign producers, a contin-
uation of current production and export policies will
be the rule rather than the exception:
? Canada. The Canadian Wheat Board has set a
target of 50 million tons for annual grain production
from the Prairie provinces, some 20 percent higher
than current output. According to a 1982 report, the
Canadian Grains Council stated that this goal will
be relatively easy to attain by: (1) putting into
production some land now kept in summer fallow,
(2) using genetically improved seeds, (3) increasing
fertilizer application rates, and (4) improving culti-
vation practices. Ottawa has initiated a bold export
program to stimulate further Canadian production
increases by eliminating bottlenecks that now limit
shipping. If planned rail and port improvements are
completed, West Coast grain export capacity should
double by 1985, to 15 million tons, in part through
the construction of a $260 million grain terminal at
Prince Rupert. Shipping capacity at Vancouver is
expected to expand by nearly one-half during the
same period.
? EC. The European Commission forecasts grain out-
put of 137 million tons by the 1988/89 season, up
slightly from this year's output of 130 million tons.
With acreage fixed and yields among the highest in
the world, only gradual technological improvements
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are anticipated. The main spur to output will come
from favorable prices to EC farmers under the
Common Agricultural Policy (CAP). With support
prices well above world prices and subsidized ex-
ports, EC producers are insulated from the world
grain markets and are therefore encouraged to
produce more than is needed domestically. We
foresee no significant change in this policy. Howev-
er, budgetary problems will make some CAP reform
likely; at a minimum, it will limit the rate at which
price supports are increased.
? Argentina. According to press reports, Buenos Aires
plans to increase grain production to 45 million tons
by 1990, 50 percent above present levels, by putting
marginal lands into production, increasing yields,
and decreasing grain export taxes. With current
yields for wheat about three-fourths of those in the
United States and corn yields only one-half, the
potential for improvement is great. We think, how-
ever, that only about one-half of this gain can be
reasonably expected. Almost all prime cropland is
now under cultivation. Economic conditions will
continue to impede the necessary capital expendi-
tures, particularly those for badly needed storage
capacity. Moreover, inflation has caused the prices
of seed, fertilizers, herbicides, and fuel to soar since
the end of the Falklands crisis, putting farmers in a
cost-price squeeze and creating disincentives for
them to market their grain.
? Australia. The new Labor Party government of
Prime Minister Hawke, which came to power on
5 March, has yet to announce its agricultural policy.
Press reports indicate, however, that Canberra plans
to increase grain support prices and provide relief
aid, such as interest rebates, to farmers who are
enduring the worst drought of the century. Austra-
lian farmers, for their part, plan to offset lost
production by seeding record acreage. Encourage-
ment from the government, including a program to
improve yields and to put marginal lands under
cultivation, is likely to keep Australian production
rising in the 1980s. The National Farmers Federa-
tion believes that wheat production can double in
the next 20 years. Even if this goal is realized,
however, the use of marginal land will probably
increase the already large year-to-year fluctuations
in output
Weather and Crops
Climatologists frequently disagree on questions of
long-term trends and turning points in the weather.
Weather does, however, explain the wide range of
variability about trend among major grain produc-
ers-the United States, Canada, Australia, Argenti-
na, the Soviet Union, China, and the European
Community-which account for about 70 percent of
world grain production. Among major exporters,
Australia and Argentina exhibit the most variability
around trend, but together they account for only
3 percent of production and 15 percent of exports.
Hence, their impact upon world markets is less than
that of the United States, Canada, or the EC.
In the 1970s weather events caused sharp year-to-
year fluctuations in production and prices. Average
yearly output of wheat and coarse grains during the
decade was 1,045 million tons, with an average yearly
fluctuation of plus-or-minus 50 million tons. The
greatest decline of the decade-55 million tons-
occurred with the depressed MY 1975 harvest. Re-
turn to normal weather enabled output to increase by
a record 124 million tons in MY 1977. Most of the
variation in global output stemmed from events in the
USSR and the United States. Soviet production
changes swangfrom an 80-million-ton gain between
MY 1976 and MY 1977 to a 55-million-ton loss
between MY 1979 and MY 1980, making the USSR
the most erratic factor in world import demand. In
the United States, crop fluctuations ranged from a
51-million-ton increase between MY 1971 and MY
1972 to a 34-million-ton decline between MY 1974
and MY 1975.
While production policies will in large part determine
the trend in output for the 1980s, weather will be the
most important factor affecting annual swings in
world grain production. In the past, good weather in
the major producing areas in a given year has gener-
ated world production increases of more than 100
million tons, about 10 percent of world output. Bad
weather, however, tends to be regionalized, with good
weather elsewhere largely offsetting its effects. De-
clines in world output in a given year because of bad
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Table 2
Economic Growth and Grain Consumption
(Average Annual Rate of Growth)
Gross
National
Product
Grain
Consump-
tion
Gross
National
Product
Grain
Consump-
tion
World
3.6
2.5
0.8
-0.5
Developed
countries
3.3
1.4
0.3
-0.6
6.2
Communist
countries
3.5
weather have generally been less than 50 million tons.
It is therefore very unlikely that weather alone will
cause the current surplus situation to end. Moreover,
grain production in most countries is too small to have
a significant impact on world supplies. This year's
drought in Australia's primary wheat regions, for
example, reduced that country's harvest by nearly 50
percent, but the 10.5-million-ton shortfall has not
affected the world market.
Poor weather would have the most telling impact on
the world market if it occurred in the United States.
This would be especially true if a severe weather
problem coincided with sharply reduced sown areas.
While a poor harvest in the United States in any year
would mean higher world grain prices and a draw-
down in US stocks, this year there would still be
sufficient grain supplies to meet world demand be-
cause of record stock levels.
Demand in the 1980s. We believe slower economic
growth and international debt problems will cause
grain demand to grow more slowly than the
2.5- to 3-percent rate of the 1970s. Most private and
public forecasters expect a weak recovery in OECD
economic growth during the next year or two and
relatively slow growth thereafter. Wharton, for exam-
ple, forecasts average growth of 2.8 percent in 1983-
84 and 2.6 percent during 1985-90. This will provide
little impetus to increases in grain demand (table 2).
Grain import demand in the LDCs is likely to be
constrained by their financial indebtedness to West-
ern banks. Many have had to implement austerity
programs in response to International Monetary Fund
(IMF) mandates, limiting their imports-including
grain. Improvements in LDC export earnings can be
expected to lag behind OECD growth.
The growth of grain demand in the developed coun-
tries may be slowing as a result of cutbacks in red
meat consumption. For example, USDA presently
estimates that per capita red meat consumption in the
United States fell 4 percent in 1982 and will fall again
in 1983. Reflecting this decline in the demand for
feed grains, US coarse grain consumption has fallen
to the level that prevailed four years ago. According
to recent market surveys, grain producers are con-
cerned that the shift from beef to poultry, which
conserves grain use, could be permanent, reflecting
changing tastes. The failure of beef demand to recov-
er would significantly dampen overall grain consump-
tion growth rates during the remainder of the 1980s.
The Stock Overhang:
Implications for the United States
To date, the United States has been the only major
grain producer willing to adjust its production to
market conditions. Unless other countries take similar
actions, the current grain glut is likely to continue for
some time and competition for export markets will
intensify. While an all-out agricultural trade war (for
example, dumping of surpluses, import embargoes,
and prohibitive tariffs) is unlikely because most ex-
porters generally realize such a trade war would
produce no winners, aggressive marketing tactics will
be widespread! Moreover, production cutting policies
in one country are likely to discourage similar actions
in competing export countries.
The level of EC subsidies will continue to be a major
irritant to cohesion within the alliance. Chances are
remote that the Europeans will bring their price
support program in line with world prices because of
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the widespread unemployment among farmers such a
move would create, but some reform in the Common
Agricultural Policy is likely for budgetary reasons.
About two-thirds of the entire Community budget
goes to support agriculture. In addition to straining
US-EC relationships, the CAP is creating serious
friction within the EC:
? The EC Commission has formally proposed an
average increase of 5.5 percent in agricultural com-
modity prices for 1983/84.
? The Committee of Agricultural Organizations in
the EC (COPA)-the European farm lobby-is
publicly pushing for an average price increase of at
least 7 percent, lifting the current ceiling of
1 percent of VAT, if need be, to finance the
increase.
? West Germany's Minister of Agriculture openly
criticized the Commission's price proposal as inequi-
table, saying that it provided no real price increases
for German dairy and grain producers.
? France's Agriculture Minister publicly criticized
West Germany for running a trade surplus with
other EC members.
While this year's price proposals are moderate com-
pared with EC price increases in recent years of about
10 percent, they are unlikely to induce cuts in EC
production.
As long as the surplus situation continues, countries
that need to import grain will benefit. Low prices and
concessionary repayment terms offered by exporters
seeking to undercut the competition will enable debt-
ridden LDCs to import more grain than they could
otherwise afford.
The Soviet Advantage
The Soviet Union-the world's largest grain import-
er-stands to gain considerably from the current
grain glut. From MY 1980 to the present, Moscow
has bought nearly 150 million tons of grain, reflecting
four consecutive poor grain crops. Moreover, concern
over grain availability after the US partial grain
embargo of 1980 led Moscow to sign five-year grain
agreements with Canada and Argentina for yearly
average minimums of 5 and 4 million tons, respective-
ly.' So far, shipments have well exceeded the mini-
mum amounts. In contrast, US sales to the Soviet
Union will be at their lowest level since MY 1975,
only slightly above the minimum 6 million tons
specified in the US-USSR LTA.
The ready availability of cheap grain greatly reduces
the economic costs to Moscow of a poor domestic
grain crop. In a buyer's market the Soviet Union can
play one supplier off against the other in pushing for
better buying terms. Barring crop failure, the Soviet
Union probably would be able to meet its medium-
term grain import needs entirely from non-US suppli-
ers. It is unlikely to do so, however, for several
reasons:
? Buying grain from the United States gives Moscow
leverage in negotiating grain purchases with the
other major suppliers.
? The United States is able to supply grain during the
winter months when logistic problems limit supplies
from other countries.
? Moscow may wish to keep supply lines from the
United States open in the event of a return to world
grain shortages.
Nonetheless, Moscow may try to use the current
oversupply situation as leverage in the coming months
in negotiating a new US-USSR grain agreement; the
current agreement expires on 30 September. In mid-
May, Moscow formally agreed to the US proposal of
7 April to negotiate a new LTA. Earlier, a Soviet
trade official indicated that the minimum and maxi-
mum purchase levels would be the key issue in the
Moscow also wants delivery guarantees. It may use
the US-USSR grain trade consultations scheduled for
June to further clarify its position. In any case, we
believe Soviet negotiators will want to hammer out a
new agreement to assure multiyear access to US grain
while market conditions are in Moscow's favor.
' More precisely the Canadian-Soviet LTA called for a minimum of
4 million tons in 1981, increasing by 0.5 million tons each year to
25X1
25X1
25X1
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Appendix A
Table A-1
Major Grain Exporters:
Wheat and Wheat Flour Production and Exports a
Million metric tons
(except where noted)
World total
384.4 446.8 423.3 441.5 448.6
Argentina
5.7 8.1 8.1 7.8 7.8
73.0 72.0 86.0 94.3 102.3
2.6 3.3 4.8 3.9 4.3
a Market year, July through June.
b Ten countries of the European Community.
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Table A-2
Major Grain Exporters:
Coarse Grain Production and Exports a
Million metric tons
(except where noted)
EC b
66.5
70.1
69.1
69.7
67.9
United States
205.7
222.1
238.7
198.4
248.9
Total
317.1
336.9
343.2
316.5
368.3
a Market year, July through June.
b Ten countries of the European Community.
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Table A-3
Major Wheat Importers a
Million metric tons
(except where noted)
1977/78 1978/79 1979/80 1980/81 1981/82
China 8.6 China 8.0 USSR 12.1 USSR 16.0 USSR 19.5
USSR 6.6 Japan 5.7 China 8.9 China 13.8 China 13.2
Japan 5.8 USSR 5.1 Eastern Europe 6.1 Eastern Europe 6.0 Egypt 6.1
EC b 5.4 Egypt 4.8 Japan 5.6 Japan 5.8 Japan 5.6
Eastern Europe 5.0 EC b 4.6 EC b 5.3 Egypt 5.6 Eastern Europe 6.4
Egypt 4.3 Eastern Europe 4.4 Egypt 5.2 EC b 4.6 EC b 4.7
Brazil 3.1 Brazil 3.7 Brazil 4.0 Brazil 3.9 Brazil 4.5
South Korea 1.8 Other Western 2.1 Iraq 2.3 South Korea 2.1 India 2.3
Europe
Morocco 1.8 Pakistan 2.0 Other Western 2.1 Morocco 2.0 Morocco 2.4
Europe
Bangladesh 1.7 Algeria 1.7 Bangladesh 2.0 Other Western 2.1 Other Western 2.2
Europe Europe
Total 44.1 42.1 53.6 61.9 _ 66.9
Share of 66.4
world total
(percent)
a Market year, July through June.
b Ten countries of the European Community.
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Table A-4
Major Coarse Grain Importers a
Million metric tons
(except where noted)
1977/78
197
8/79
1979/80
1980/81
Japan
17.0 Jap
an
17.9
Japan
18.9
Japan
18.9
USSR
25.6
EC b
15.1 EC
b
14.5
USSR
18.4
USSR
18.0
Japan
18.3
USSR
11.7 Eas
tern Europe
10.6
EC b
13.4
EC b
11.6
Other Western
Europe
12.6
Other Western
Europe
9.1 USS
R
9.9
Eastern Europe
11.4
Eastern Europe
10.7
EC b
10.0
Eastern Europe
8.3 Oth
er Western
8.3
Other Western
9.9
Other Western
8.9
Eastern Europe
6.9
Eur
ope
Europe
Europe
Taiwan
2.8 Tai
wan
3.7
Mexico
5.0
Mexico
8.2
Taiwan
3.7
Mexico
2.3 Chi
na
3.1
Taiwan
3.3
Taiwan
3.6
South Korea
2.7
South Korea
2.0 Mex
ico
3.0
South Korea
2.5
South Korea
2.6
Saudi Arabia
2.5
Israel
1.1 Sou
th Korea
2.6
China
2.0
Brazil
2.1
Mexico
2.1
Venezuela
0.8 Bra
zil
1.6
Brazil
1.7
Saudi Arabia
1.9
China
1.3
Share of
world total -
(percent)
83.6
a Market year, July through June.
b Ten countries of the European Community.
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Secret
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