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Published online by Cambridge University Press: 10 May 2017
Responsible and informed individuals and groups now view the prospective balance between the world's demand and supply for food for the next decade quite differently. There are those who view the recent short-falls in production relative to desired consumption as relatively temporary in nature and that the most likely course of events is stocks of grain will be rebuilt and grain prices will decline to more usual levels over the next year or two. Those who argue this position consider the present situation as primarily a temporary aberration, of which there have been several others in recent history. At the turn of the present century the British were concerned that the demand for wheat was going to outpace the supply; after World War II there was deep concern about the problems of rebuilding agriculture in Europe and, somewhat later, meeting the increased demand for food due to the sharp increase in birth rates that occurred in both industrial and developing countries, and in the mid-1960's, following unfavorable crops in the Soviet Union, China and South Asia it was feared that the world faced famine on a large scale. Yet, following each, the course of events was feared that the world faced famine on a large scale. Yet, following each, the course of events was quite the opposite and grain and food prices fell and the concern of governments was to protect their farmers from the consequences of supply growing more rapidly than demand.
1 An effort was made to present differing viewpoints by the Panel on Nutrition and the International Situation to the Select Committee on Nutrition and Human Needs, U.S. Senate, National Nutrition Policy Study: Report and Recommendations-VI, 93rd Congress, 2nd Session, June, 1974.Google Scholar
2 “The international scarcity of major agricultural commodities which emerged in 1973 reflects important long term trends as well as the more temporary phenomenon of lack of rainfall in the Soviet Union and parts of Asia and Africa. We appear to be entering an extended period in which global grain reserves which provide a crucial measure of safety when crop failures occur, will generally reamin on the low side, and in which little if any excess cropland will be held idle in the United States. Food prices are likely to remain considerably higher than they were during the last decade.” Lester R. Brown and Erik P. Eckholm, U.S. and the Developing World, Overseas Development Council, 1974, p. 66.Google Scholar
3 G. Edward Schuh, “The Exchange Rate and U.S. Agriculture,” American Journal of Agricultural Economics, Vol. 56, No. 1 (February, 1974), pp. 1-13.Google Scholar
4 I have elsewhere argued that the direct payments did not increase net farm incomes by more than a third to a half of the gross payments received. See D. Gale Johnson, Farm Commodity Programs: An Opportunity for Change, American Enterprise Institute, Washington, 1973, p. 48.Google Scholar
5 Farm prices in the United States in 1971 included farm program payments and an export subsidy was paid on wheat. No such distortions existed in 1910-14.Google Scholar
6 “While in some developing countries the practical ceiling on land development may have been reached, in a large part of the developing world there remains land resources which are either unutilized or are utilized in production processes with very low returns. The largest ‘land-reserves’ in the developing countries are in South America, Africa and in parts of South East Asia. All of these regions suffer from specific limitations … but modern technology is increasingly able to cope with the problems and one may expect some very major development programes for cultivated land in these regions.” Preparatory Committee of the World Food Conference, Preliminary Assessment of the World Food Situation Present and Future, United Nations, 1974, p. 65.Google Scholar
7 Total cropland (excluding cropland used only for pasture) in the United States in 1950 was 409 million acres; in 1969 total cropland was 384 million acres. (H. Thomas Frey, Major Uses of Land in the United States: Summary for 1969, ERS, USDA, Agr. Econ. Rpt. No. 247, 1973, p. 4.) Cropland harvested declined from 352 million acres in 1949 to 286 million acres in 1969, ibid., p. 9.Google Scholar
8 Theodore W. Schultz has given strong emphasis to the limited role of land in agricultural production: “… only about one-tenth of the land area of the earth is cropland. If it were still in raw land in its natural state, it would be vastly less productive than it is today (underlining in the original). With incentives to improve this land, the capacity of the land would be increased in most parts of the world much more than it has been to date. In this important sense cropland is not the critical limiting factor in expanding food production.Google Scholar
“The original soils of western Europe, except for the Po valley and some parts of France, were, in general, very poor in quality. They are now highly productive. The original soils of Finland were less productive than most of the nearby parts of the Soviet Union, yet today the croplands of Finland are far superior. The original croplands of Japan were vastly inferior to those of Northern India. Presently, the difference between them is greatly in favor of Japan. There are estimates that the Gangetic Plains of India could, with appropriate investments, produce enough food for a billion people …
“Harsh, raw land is what farmers since time immemorial have started with; what matters most over time, however, are the investments that are made to enhance the productivity of cropland.” “The Food Alternatives Before Us: An Economic Perspective,” Agricultural Economics, University of Chicago, Paper No. 74:6, May 25, 1974.
9 In a study of adjustments in the use of nitrogen fertilizer in the Corn Belt, Wallace Huffman found that there was a major change in the fertilizer corn yield function between 1959 and 1964. The function became much flatter and even though nitrogen use per acre of corn increased 150 percent between 1959 and 1964 the marginal productivity of nitrogen declined very little. See Wallace Huffman, “The Contribution of Education and Extension to Differential Rates of Change,” unpublished Ph.D. dissertation, University of Chicago, 1972, pp. 27-34.Google Scholar
10 Tennessee Valley Authority, “World Fertilizer Market Review and Outlook,” in U.S. Senate Committee on Agriculture and Forestry, U.S. and World Fertilizer Outlook, 93d Congress, 2d Session, March 21, 1974, p. 106. Natural gas at $0.20/MCF is equivalent to petroleum at $1.54 per barrel; at $1.00/MCF for natural gas the equivalent petroleum price is $6.53 per barrel.Google Scholar
11 Ibid. For a 200 ton per day plant using the older technology the gate price of a ton of urea if natural gas were free would be about $164. With natural gas at $1.00/MCF the gate price would be $116 for a plant producing 1,000 tons of ammonia per day. Interpolations made by the writer indicate that with a natural gas price of $1.80/MCF (equivalent to $11.50 per barrel of oil), the gate price of urea would be approsimately $140 per ton.Google Scholar
12 Ibid.Google Scholar
13 Ibid., p. 81.Google Scholar
14 According to TVA estimates, the gate price for urea per ton in a plant with 1,667 metric tons per day capacity operating at 60 percent of capacity is approximately $155 per ton; at 90 percent of capacity, approximately $120 per ton. The calculations assume natural gas at $1.00 per thousand cubic feet. Ibid., p. 172.Google Scholar
15 David Pimentel, et al., “Food Production and the Energy Crisis,” Science, Vol. 172, 2 November 1973, p. 445.Google Scholar
16 Brown and Eckholm (op. cit., p. 74) have constructed an index of world food security, which is based on the total stocks of wheat and feed grains held in Australia, Argentina, Canada and the United States plus an estimated grain equivalent of the idled U.S. cropland. Using this index it is shown that grain reserves equaled 26 percent of world grain consumption in 1961, 15 percent in 1967 and projected to be only 7 percent in 1974. A significant part of the decline in the index of world food security resulted from a significant overestimation of the amount of grain that would be produced on the diverted or set-aside land. While the estimating procedure was not revealed, a check of the estimates indicates that it was assumed that each idled acre would yield 90 percent as much as the acreages actually harvested. For example, in 1972 the acreage diverted was 61.7 million and the grain equivalent was estimated to be 78 million metric tons. The average yield for the diverted land was 1.26 metric tons per acre compared to 1.40 metric tons per acre of grain actually harvested. By the calculations made total reserves declined from 209 million metric tons in 1972 to 89 million tons in 1974; over half of the decline was due to the reduction in the grain equivalent from idled cropland from 78 million tons to zero.Google Scholar
Brown and Eckholm greatly exaggerated the amount of grain that would have been produced on the idled cropland by assuming an unrealistically high yield and that all of the idled land would return to cultivation. Planting intentions for 1974 (unaffected by the adverse spring weather) for wheat and the feed grains exceed actual planted acreage in 1972, when 61.7 million acres were idled, by only 26 million acres. If the increase in planned soybean acreage is added, the increase in planted area of wheat, feed grains and soybeans was 35 million acres. And part of the increase in acreage between 1972 and 1974 was a response to higher real grain prices and not to the release of the “land reserve.” Planting intentions for 1975 for wheat, feed grains and soybeans exceed 1972 actual by 35 million. Cotton acreage, however, is planned for 1975 at 3.5 million acres below 1972. The 1972 actual acreage of grains and soybeans was 2.2 million below intentions in March.
17 D. Gale Johnson, World Food Problems and Prospects, American Enterprise Institute, Washington, 1975, Chap. 6.Google Scholar
18 U.S. Department of Agriculture, Agricultural Statistics, 1970, pp. 5-6 and 1972, pp. 5-6.Google Scholar
19 Yagil Danin, Daniel Sumner and D. Gale Johnson, “Determination of Optimal Grain Carryovers,” Office of Agricultural Economic Research, University of Chicago, Revised March 23, 1975, p. 27.Google Scholar
20 Johnson, World Food Problems and Prospects, Chap. 6.Google Scholar
21 U.S. Department of Agriculture, Agricultural Supply Demand Estimates, #26, April 25., 1975. Data in the source are in short tons and not in metric tons used in this paper.Google Scholar
22 In 1909 direct grain consumption per capita was 136 kilograms; in 1971, 64 kilograms. Livestock consumption of grain, converted to a per capita basis, was 798 kilograms in 1909 and 706 kilograms in 1971. Thus the totals were 934 kilograms in 1909 and 770 kilograms in 1971. If all concentrates fed to livestock are used rather than grain, since many of the non-grain concentrates are a substitute for grain in production, the same result emerges. Per capita direct grain consumption plus per capita concentrates fed to livestock decreased from 1,092 kilograms in 1909 to 920 kilograms in 1971. Data on grain and concentrate use by livestock from Ralph D. Jennings, Consumption of Feed by Livestock, 1909-56, Agric. Res. Service, USDA, Prod. Res. Rpt. No. 21, November, 1958, pp. 82 and 92; George C. Allen and Earl F. Hodges, Livestock-Feed Relationships—National and State, ERS, USDA, Stat. Bul. No. 530, June, 1974, p. 175. Direct per capita grain consumption from USDA, Agricultural Statistics, various issues.Google Scholar
23 There is a high positive correlation between the tractor use and per capita gross national product-affluence, that is. If one excludes grain and other concentrates fed to horses and mules, in 1909 per capita direct and indirect use was 824 kilograms; in 1971, 915 kilograms.Google Scholar
24 United Nations World Food Conference, Assessment of the World Food Situation: Present and Future, E/Conf. 65/3, 1974, p. 30.Google Scholar
25 United Nations World Food Conference, Assessment of the World Food Situation: Present and Future, pp. 84 and 91.Google Scholar
26 Ibid., p. 84. In the Asian Centrally Planned Economics the projected demand growth is 96 million tons.Google Scholar
27 The unanimity on this point seems so great that perhaps one should be suspicious! Among recent studies the following may be noted: United Nations World Food Conference, Assessment of the World Food Situation: Present and Future, EC/Conf. 65/3, 1974; Economic Research Service, U.S. Department of Agriculture, The World Food Situation and Prospects to 1985, For. Agric. Econ. Rpt. No. 98, December 1974; L. L. Blakeslee, Earl O. Heady, and C. F. Framingham, World Food Production, Demand and Trade, Ames, Iowa State University Press, 1973, and University of California Food Task Force, A Hungry World: The Challenge to Agriculture, Berkeley: University of California Division of Agricultural Sciences, July 1974.Google Scholar
28 Grain yields estimated from FAO data.Google Scholar
29 Space limitations prevent more than noting the importance of the expansion and improvement of marketing, transportation and processing institutions and increased investment in human capital and improved communications. For the role and importance of investment in human capital, see Theodore W. Schultz, Transforming Traditional Agriculture, New Haven: Yale University Press, 1964, Chap. 12.Google Scholar
30 Estimates made by Robert Evenson and Yoav Kislev in Agricultural Research and Productivity, New Haven: Yale University Press, 1975, Chap. 2.Google Scholar
31 Preliminary Assessment of the World Food Situation: Present and Future, p. 66.Google Scholar
32 Schultz, Transforming Traditional Agriculture, Chap. 3.Google Scholar