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Agricultural Surplus Disposal and U.S. Economic Policies

Published online by Cambridge University Press:  18 July 2011

Robert M. Stern
Robert M. Stern
Affiliation:
Columbia University
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Extract

In the four and a half years ending December 31, 1958, the United States exported close to $6 billion of surplus agricultural commodities under various foreign disposal programs, the most important being the Agricultural Trade Development and Assistance Act, known commonly as P. L. 480. These P. L. 480 exports included the barter of American surpluses for imports of strategic materials, foreign relief shipments and donations and, most significantly, sales for the local currency of importers. This last type of transaction, which is without precedent in world trade, has enabled the United States to dispose of some 3.3 billion dollars' worth of surpluses in agreements made with 28 nations, and the major part of the foreign currencies generated—that is, some $2.1 billion—has been earmarked for economic development purposes in the receiving countries. Surplus disposal thus not only has become a primary means of promoting United States agricultural exports, but has acquired a major role in our foreign aid programs as well.

Type
Research Article
Information
World Politics , Volume 12 , Issue 3 , April 1960 , pp. 422 - 433
Copyright
Copyright © Trustees of Princeton University 1960

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References

1 Johnson, D. Gale, Trade and Agriculture, New York, 1950, p. 135.Google Scholar

2 “Even though people in the backward areas have insufficient diets, it is not a safe assumption that their greatest need is more food. Compared to the United States the inadequacy of their housing, their sewage disposal systems, their roads, and their farm machinery technology is much the greater.” Ibid., p. 169.

3 Cf. ibid., p. 135.

4 This applies especially to the proposals made by Kust, Matthew J., “Economic Development and Agricultural Surpluses,” Foreign Affairs, XXXV, No. 1 (October 1956)Google Scholar, who states (p. 105) that surplus disposal not only can be a means of accelerating economic growth in the underdeveloped countries, but can effectively relieve the world's and the United States' surplus problems as well. Kust's proposals are, unfortunately, so broad as to raise many more questions than they are designed to answer. For example, he never defines what is meant by an agricultural surplus. As a consequence, his proposal (p. 110) to establish a Commodity Exchange Union to absorb and reallocate the agricultural surpluses of the underdeveloped countries for their mutual economic development would mean presumably an end or at least a serious restriction of regular international commodity sales in place of a grandiose scheme of international barter. He thus ignores the obvious fact that surpluses are part and parcel of price-raising schemes, whether in a developed or in an underdeveloped country, and accordingly does not consider the problem of efficient resource allocation. One could say that his proposals are altogether inconsistent with the attainment of an expanded world trade, and that there are better ways to achieve the goal which he has in mind.

5 These matters are spelled out in more detail in FAO, Disposal of Agricultural Surpluses, Rome, 1954, esp. pp. 13–14 and 61–64.Google Scholar See also my article, “Agricultural Surplus Disposal as a Means of Financing Economic Development,” Economia lnternazionale, XII, No. 4 (November 1959), pp. 643–57.

6 Since price disincentives might create problems particularly in underdeveloped countries where production has been stimulated by the relatively high international prices created by the umbrella of United States price supports, a portion of United States foreign aid might be earmarked for use in cases where countries are unable to raise sufficient revenue to tide over producers who are in difficulty.

7 See Johnston, Bruce F., “Farm Surpluses and Foreign Policy,” World Politics, X, No. 1 (October 1957), pp. 1–23CrossRefGoogle Scholar; also U.S. Senate, 85th Cong., 1st Sess., Hearings Before the Committee on Agriculture and Forestry on the Operation and Administration of the Agricultural Trade Development and Assistance Act of 1954, and Its Relationship to Foreign Policy, Washington, D.C., 1957, esp. pp. 220–23.

8 See FAO, National Food Reserve Policies in Underdeveloped Countries, Rome, 1958.Google Scholar