“Soviets Return to the US Grain
Market: Purchases May Aid Farmers, Hurt Consumers”,
Journal, 6 January
This article reports the large increase in Soviet purchases of
agricultural commodities in 1989 and speculates that the resultant increase in
soybean prices could lead to higher meat prices for American consumers. Not since 1985 had Soviet purchases been
at this level, and the almost $1.9 billion spent on U.S. agricultural
commodities this fiscal year (1988) is nearly three times the amount spent in
the previous year (1987).
All of this was forecasted to help farmers greatly, allowing many to turn
a profit and maybe even leave the safety net of
US farm programs.
But this new increase in Soviet purchases was not expected to be
sustained by most. In fact, the
article states, a main reason for the increase in Soviet purchases this year was
low US corn prices and that the
US government sharply subsidized the Soviet’s wheat
purchases. Soybean purchases were
the only commodity purchase that was forecasted to remain at higher levels, due
to the USSR’s programs to improve the meat supplies. This would help US farmers, but how much
so depended on the government farm programs. Although world demand for soybeans had
increased steadily during the previous three years (1985 – 1988),
US production had shrunk over the same period. Most analysts, the article reports,
agreed that failing to increase production would be a big loss, and many worried
that the government was forcing so much land out of production that the
US may cut itself out of the world soybean market just as
the market was getting good.
Brazil and Argentina, the two other big soybean producers, were expected to
increase output the next fall.
Jeremy Austin Purcell
19 March 2002