Surplus Export Policy and Domestic Farm Policy

Abstract

IN THE last three years we have seen a gradual recovery of United States agricultural exports from the post Korean War drop. The current volume of exports is at about the same level as prevailed in the boom years of the late 20's and in the post World War II period. When the historical trend is calculated at constant prices, the 1956 level of farm exports was at a postwar peak and was surpassed in the last thirty years only slightly by 1927. In respect to the recent upturn in agricultural exports, it seems fair to say that there is little likelihood that we will be able to maintain this increased volume of exports over any extended period of time. This judgment is supported by the fact that 41 percent of our farm exports last year went out under foreign loans, grants to foreign governments, special barter deals for strategic materials, and sales for foreign currency. While our total agricultural exports have increased almost 20 percent since 1954, bonafide sales in the open market abroad declined by about 6 percent.1 To put it another way, our agricultural export market is expanding at a slightly lower rate than the rate of increase in Congressional appropriations to pay for exports. Aside from the long-standing reciprocal trade agreements program, our current agricultural trade policy finds expression primarily in the Agricultural Trade and Development Act of 1954. This act authorizes sales for foreign currencies, barter transactions, grants for emergency foreign relief, and donations to private charities for the needy overseas. Sales for foreign currencies have accounted for a major part of the exports under this program. The one remaining new look in our export policy is found in a competitive pricing and export subsidy plan which has been in operation about a year. This is an attempt to hurdle the price gap between the domestic and export markets on price supported products. This gap ranges from as low as 9 percent for some seed crops to around 40 percent of the price for nonfat dry milk solids. To close or narrow this gap the Commodity Credit Corporation sells surplus stocks to exporters at competitive prices or export subsidies are paid to them. Last year C.C.C. released for sale to exporters nearly one billion dollars' worth of surplus products (mostly wheat and cotton) at world prices. This amounted to 28 percent of our total agricultural exports in 1956. The proponents of this plan can