Grain trade
Encyclopedia
The grain trade refers the local and international trade
in cereal
s and other food grain
s such as wheat
, maize
, and rice
.
The grain trade is probably nearly as old as grain growing
, going back the Neolithic Revolution
( around 9,000 BC ). Wherever there is a scarcity of land (e.g. cities) people must bring in food from outside to sustain themselves, either by force or by trade. However, many farmers throughout history (and today) have operated at the subsistence level
, meaning they produce for household needs and have little leftover to trade. The goal for such farmers in not to specialize in one crop and grow a surplus of it, but rather to produce everything his family needs and become self-sufficient
. Only in places and eras where production is geared towards producing a surplus for trade (commercial agriculture
), does a major grain trade become possible.
Early trade was most likely by barter
, and because hauling large amounts of grain around was so difficult with ancient technology, the trade was probably quite limited in terms of the volume traded and the area moved. The development of the money economy
and the wheel
, would have facilitated a much more expansive trade.
In the ancient world, grain regularly flowed from the hinterland
s to the core
s of great empires: maize in ancient Mexico
, rice in ancient China, and wheat and barley
in the ancient Near East
. With this came improving technologies for storing and transporting grains; the Hebrew Bible
makes frequent mention to ancient Egypt
's massive grain silo
s.
During the classical age, the unification of China
and the pacification of the Mediterranean basin by the Roman Empire
created vast regional markets in commodities at either end of Eurasia. The grain supply to the city of Rome
was considered by be of the utmost strategic importance to Roman generals and politicians.
In Europe with the collapse of the Roman system and the rise of feudalism
many farmers were reduced to a subsistence level, producing only enough to fulfill their obligation to their lord
and the Church
, with little for themselves, and even less for trade. The little that was traded was moved around locally at regular fair
s.
A massive expansion in the grain trade occurred when Europeans were able to bring millions of square kilometers of new land under cultivation in the Americas, Russia
, and Australia
, in an expansion starting in the fifteenth and lasting into the twentieth century. In addition the consolidation of farmland in Britain
and Eastern Europe
, and the development of the railway and steam ship shifted trade from local to more international patterns.
During this time debate over tariff
s and free trade
in grain was fierce. Poor industrial workers relied on cheap bread for sustenance, but farmers wanted their government to create a higher local price to protect them from cheap foreign imports
, Britain's famous Corn Laws
being an example.
As Britain and other European countries industrialized and urbanized they became net importers of grain from the various breadbasket
s of the world. In many parts of Europe as serfdom
was abolished, great estates were accompanied by many inefficient smallholding
s, but in the newly colonized regions massive operations were available to the average farmer and not only great nobles. In the United States
and Canada
the Homestead Act
and the Dominion Lands Act
allowed pioneers on the western plains
to gain tracts of 180 acre (0.7284348 km²) or more for little or no fee. This moved grain growing, and hence trading, to a much more massive scale. Huge grain elevator
s were built to take in farmers' produce and move it out via the railways to port. Transportation costs were are major concern for farmers in remote regions, however, and any technology that allowed the easier movement of grain was of great assistance, meanwhile farmers in Europe struggled to remain competitive while operating on a much smaller scale and in 1911 Encyclopædia Britannica
wrote:
In the 1920s and 30s farmers in Australia and Canada reacted against the pricing power of the large grain-handling and shipping companies. Their governments created the Australian Wheat Board and Canadian Wheat Board
as monopsony
marketing board
s, buying all the wheat in those countries for export. Together those two boards controlled a large percentage of the world's grain trade in the mid 20th century. Additionally, farmer's cooperatives such the wheat pools became a popular alternative to the major grain companies.
At the same time in the Soviet Union
and soon after in China
, disastrous collectivization programs effectively turned the world's largest farming nations into net importers of grain.
By the second half of the 20th Century, the grain trade was divided between a few state-owned and privately-owned giants. The state giants were Exportkhleb of the Soviet Union, the Canadian Wheat Board, the Australian Wheat Board, the Australian Barley Board, and so on. The largest private companies, known as the "big five", were Cargill
, Continental, Louis Dreyfus
, Bunge
, and Andre
.
In 1972, the Soviet Union's wheat crop failed. To prevent shortages in their own country, Soviet authorities were able to buy most of the surplus American harvest through private companies without the knowledge of the United States government. This drove up prices across the world, and was dubbed the "Great Gain Robbery" by critics, leading to greater public attention being paid by Americans to the large trading companies.
Since the Second World War, the trend has been in North America for further consolidation of already vast farms. Transportation infrastructure has also promoted more economies of scale
. Railways have switched from coal to diesel fuel, and introduced hopper car
to carry more mass with less effort. The old wooden grain elevators have been replaced by massive concrete inland terminals, and rail transportation has retreated in the face of ever larger truck
s.
Farmers in the European Union
, United States
and Japan
are protected by agricultural subsidies. The European Union's programs are organized under the Common Agricultural Policy
. The agricultural policy of the United States
is demonstrated through the "farm bill", while rice production in Japan
is also protected and subsidized. Farmers in other countries has attempted to have these policies disallowed by the World Trade Organization
, or attempted to negotiate them away though the Cairns Group
, at the same time the wheat boards have been reformed and many tariffs have been greatly reduced, leading to a further globalization
of the industry. For example, in 2008 Mexico
was be required by the North American Free Trade Agreement
(NAFTA) to remove its tariffs on US and Canadian maize
.
Modern issues affecting the grain trade include food security
concerns, the increasing use of biofuels, the controversy over how to properly store and separate genetically modified
and organic
crops, the local food
movement, the desire of developing countries to achieve market access
in industrialized economies, climate change
and drought shifting agricultural patterns, and the development of new crops.
Trade
Trade is the transfer of ownership of goods and services from one person or entity to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and...
in cereal
Cereal
Cereals are grasses cultivated for the edible components of their grain , composed of the endosperm, germ, and bran...
s and other food grain
Food grain
thumb|150px|Barleythumb|150px|LentilGrains are small, hard, dry seeds harvested for human food or animal feed Agronomists also call the plants producing such seeds grains or grain crops....
s such as wheat
Wheat
Wheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
, and rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
.
History
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
, going back the Neolithic Revolution
Neolithic Revolution
The Neolithic Revolution was the first agricultural revolution. It was the transition from hunting and gathering to agriculture and settlement. Archaeological data indicates that various forms of plants and animal domestication evolved independently in 6 separate locations worldwide circa...
( around 9,000 BC ). Wherever there is a scarcity of land (e.g. cities) people must bring in food from outside to sustain themselves, either by force or by trade. However, many farmers throughout history (and today) have operated at the subsistence level
Subsistence agriculture
Subsistence agriculture is self-sufficiency farming in which the farmers focus on growing enough food to feed their families. The typical subsistence farm has a range of crops and animals needed by the family to eat and clothe themselves during the year. Planting decisions are made with an eye...
, meaning they produce for household needs and have little leftover to trade. The goal for such farmers in not to specialize in one crop and grow a surplus of it, but rather to produce everything his family needs and become self-sufficient
Self-sufficiency
Self-sufficiency refers to the state of not requiring any outside aid, support, or interaction, for survival; it is therefore a type of personal or collective autonomy...
. Only in places and eras where production is geared towards producing a surplus for trade (commercial agriculture
Commercial agriculture
Commercial Agriculture refers to a process of large-scale production of crops for sale, intended for widespread distribution to wholesalers or retail outlets. In commercial farming crops such as wheat, maize, tea, coffee, sugarcane, cashew, rubber, banana, cotton are harvested and sold into world...
), does a major grain trade become possible.
Early trade was most likely by barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
, and because hauling large amounts of grain around was so difficult with ancient technology, the trade was probably quite limited in terms of the volume traded and the area moved. The development of the money economy
History of money
The history of money spans thousands of years. Numismatics is the scientific study of money and its history in all its varied forms.Many items have been used as commodity money such as natural scarce precious metals, cowry shells, barley, beads etc., as well as many other things that are thought of...
and the wheel
Wheel
A wheel is a device that allows heavy objects to be moved easily through rotating on an axle through its center, facilitating movement or transportation while supporting a load, or performing labor in machines. Common examples found in transport applications. A wheel, together with an axle,...
, would have facilitated a much more expansive trade.
In the ancient world, grain regularly flowed from the hinterland
Hinterland
The hinterland is the land or district behind a coast or the shoreline of a river. Specifically, by the doctrine of the hinterland, the word is applied to the inland region lying behind a port, claimed by the state that owns the coast. The area from which products are delivered to a port for...
s to the core
Core-periphery
Core-periphery theory is based on the notion that as one region or state expands in economic prosperity, it must engulf regions nearby to ensure ongoing economic and political success. The area of high growth or former high growth becomes known as the core, and the neighboring area is the periphery...
s of great empires: maize in ancient Mexico
History of Mexico
The history of Mexico, a country located in the southern portion of North America, covers a period of more than two millennia. First populated more than 13,000 years ago, the country produced complex indigenous civilizations before being conquered by the Spanish in the 16th Century.Since the...
, rice in ancient China, and wheat and barley
Barley
Barley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
in the ancient Near East
Ancient Near East
The ancient Near East was the home of early civilizations within a region roughly corresponding to the modern Middle East: Mesopotamia , ancient Egypt, ancient Iran The ancient Near East was the home of early civilizations within a region roughly corresponding to the modern Middle East: Mesopotamia...
. With this came improving technologies for storing and transporting grains; the Hebrew Bible
Hebrew Bible
The Hebrew Bible is a term used by biblical scholars outside of Judaism to refer to the Tanakh , a canonical collection of Jewish texts, and the common textual antecedent of the several canonical editions of the Christian Old Testament...
makes frequent mention to ancient Egypt
Ancient Egypt
Ancient Egypt was an ancient civilization of Northeastern Africa, concentrated along the lower reaches of the Nile River in what is now the modern country of Egypt. Egyptian civilization coalesced around 3150 BC with the political unification of Upper and Lower Egypt under the first pharaoh...
's massive grain silo
Silo
A silo is a structure for storing bulk materials.Silo may also refer to:* Silo , a 3D modeling software* Silo , a defunct chain of retail electronics stores* SILO , used in Linux...
s.
During the classical age, the unification of China
Qin (state)
The State of Qin was a Chinese feudal state that existed during the Spring and Autumn and Warring States Periods of Chinese history...
and the pacification of the Mediterranean basin by the Roman Empire
Roman Empire
The Roman Empire was the post-Republican period of the ancient Roman civilization, characterised by an autocratic form of government and large territorial holdings in Europe and around the Mediterranean....
created vast regional markets in commodities at either end of Eurasia. The grain supply to the city of Rome
Grain supply to the city of Rome
In classical antiquity, the grain supply to the city of Rome could not be met entirely from the surrounding countryside, which was taken up by the villas and parks of the aristocracy and which produced mainly fruit, vegetables and other perishable goods...
was considered by be of the utmost strategic importance to Roman generals and politicians.
In Europe with the collapse of the Roman system and the rise of feudalism
Feudalism
Feudalism was a set of legal and military customs in medieval Europe that flourished between the 9th and 15th centuries, which, broadly defined, was a system for ordering society around relationships derived from the holding of land in exchange for service or labour.Although derived from the...
many farmers were reduced to a subsistence level, producing only enough to fulfill their obligation to their lord
Lord
Lord is a title with various meanings. It can denote a prince or a feudal superior . The title today is mostly used in connection with the peerage of the United Kingdom or its predecessor countries, although some users of the title do not themselves hold peerages, and use it 'by courtesy'...
and the Church
Tithe
A tithe is a one-tenth part of something, paid as a contribution to a religious organization or compulsory tax to government. Today, tithes are normally voluntary and paid in cash, cheques, or stocks, whereas historically tithes were required and paid in kind, such as agricultural products...
, with little for themselves, and even less for trade. The little that was traded was moved around locally at regular fair
Fair
A fair or fayre is a gathering of people to display or trade produce or other goods, to parade or display animals and often to enjoy associated carnival or funfair entertainment. It is normally of the essence of a fair that it is temporary; some last only an afternoon while others may ten weeks. ...
s.
A massive expansion in the grain trade occurred when Europeans were able to bring millions of square kilometers of new land under cultivation in the Americas, Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
, and Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, in an expansion starting in the fifteenth and lasting into the twentieth century. In addition the consolidation of farmland in Britain
Enclosure
Enclosure or inclosure is the process which ends traditional rights such as mowing meadows for hay, or grazing livestock on common land. Once enclosed, these uses of the land become restricted to the owner, and it ceases to be common land. In England and Wales the term is also used for the...
and Eastern Europe
Magnate
Magnate, from the Late Latin magnas, a great man, itself from Latin magnus 'great', designates a noble or other man in a high social position, by birth, wealth or other qualities...
, and the development of the railway and steam ship shifted trade from local to more international patterns.
During this time debate over tariff
Tariff
A tariff may be either tax on imports or exports , or a list or schedule of prices for such things as rail service, bus routes, and electrical usage ....
s and free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
in grain was fierce. Poor industrial workers relied on cheap bread for sustenance, but farmers wanted their government to create a higher local price to protect them from cheap foreign imports
Protectionism
Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...
, Britain's famous Corn Laws
Corn Laws
The Corn Laws were trade barriers designed to protect cereal producers in the United Kingdom of Great Britain and Ireland against competition from less expensive foreign imports between 1815 and 1846. The barriers were introduced by the Importation Act 1815 and repealed by the Importation Act 1846...
being an example.
Breadbasket
The breadbasket or the granary of a country is a region which, because of richness of soil and/or advantageous climate, produces an agricultural surplus which is often considered vital for the country as a whole. Rice bowl is a similar term used in Southeast Asia...
s of the world. In many parts of Europe as serfdom
Serfdom
Serfdom is the status of peasants under feudalism, specifically relating to Manorialism. It was a condition of bondage or modified slavery which developed primarily during the High Middle Ages in Europe and lasted to the mid-19th century...
was abolished, great estates were accompanied by many inefficient smallholding
Smallholding
A smallholding is a farm of small size.In third world countries, smallholdings are usually farms supporting a single family with a mixture of cash crops and subsistence farming. As a country becomes more affluent and farming practices become more efficient, smallholdings may persist as a legacy of...
s, but in the newly colonized regions massive operations were available to the average farmer and not only great nobles. In the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
the Homestead Act
Homestead Act
A homestead act is one of three United States federal laws that gave an applicant freehold title to an area called a "homestead" – typically 160 acres of undeveloped federal land west of the Mississippi River....
and the Dominion Lands Act
Dominion Lands Act
The Dominion Lands Act was an 1872 Canadian law that aimed to encourage the settlement of Canada's Prairie provinces. It was closely based on the United States Homestead Act, setting conditions in which the western lands could be settled and their natural resources developed...
allowed pioneers on the western plains
Interior Plains
The Interior Plains is a vast physiographic region that spreads across the Laurentian craton of central North America.-Geography:The Interior Plains are an extensive physiographic division encompassing 8 distinct physiographic provinces, the Interior Low Plateaus, Great Plains, Central Lowland,...
to gain tracts of 180 acre (0.7284348 km²) or more for little or no fee. This moved grain growing, and hence trading, to a much more massive scale. Huge grain elevator
Grain elevator
A grain elevator is a tower containing a bucket elevator, which scoops up, elevates, and then uses gravity to deposit grain in a silo or other storage facility...
s were built to take in farmers' produce and move it out via the railways to port. Transportation costs were are major concern for farmers in remote regions, however, and any technology that allowed the easier movement of grain was of great assistance, meanwhile farmers in Europe struggled to remain competitive while operating on a much smaller scale and in 1911 Encyclopædia Britannica
Encyclopædia Britannica Eleventh Edition
The Encyclopædia Britannica Eleventh Edition is a 29-volume reference work, an edition of the Encyclopædia Britannica. It was developed during the encyclopaedia's transition from a British to an American publication. Some of its articles were written by the best-known scholars of the time...
wrote:
The farmers of the United StatesAgriculture in the United StatesAgriculture is a major industry in the United States and the country is a net exporter of food. As of the last census of agriculture in 2007, there were 2.2 million farms, covering an area of , an average of per farm.-History:...
have met a greatly increased output from CanadaAgriculture in CanadaCanada is one of the largest producers and exporters in the world. As with other developed nations, the proportion of the population and GDP devoted to agriculture fell dramatically over the 20th century but it remains an important element of the Canadian economy....
, the cost of transport from that country to EnglandEnglandEngland is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
being much the same as from the United States in the 20th century. So much improved is the position of the farmer in North America compared with what it was about 1870, that the transport companies in 1901 carried 17¾ bushelBushelA bushel is an imperial and U.S. customary unit of dry volume, equivalent in each of these systems to 4 pecks or 8 gallons. It is used for volumes of dry commodities , most often in agriculture...
s of his grain to the seaboard in exchange for the value of one bushel, whereas in 1867 he had to give up one bushel in every six in return for the service.
As regards with the British farmerAgriculture in the United KingdomAgriculture in the United Kingdom uses around 71% of the country's land area and contributes about 0.6% of its gross value added. The UK produces less than 60% of the food it eats and the industry's share of the national economy is declining...
, it does not appear as if he had improved his position; for he has to send his wheat to greater distances, owing to the collapse of many country millMill (grinding)A grinding mill is a unit operation designed to break a solid material into smaller pieces. There are many different types of grinding mills and many types of materials processed in them. Historically mills were powered by hand , working animal , wind or water...
ers or their removal to the seaboard, while railway rates have fallen only to a very small extent; again the farmers wheat is worth only half of what it was formerly; it may be said that the British farmer has to give up one bushel in nine to the railway company for the purpose of transportation, whereas in the seventies he gave up one in eighteen only. Enough has been said to prove that the advantage of position claimed for the British farmer by Caird was somewhat illusory. Speaking broadly, the KansasKansasKansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...
or MinnesotaMinnesotaMinnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
farmers wheat does not have to pay for carriage to LiverpoolLiverpoolLiverpool is a city and metropolitan borough of Merseyside, England, along the eastern side of the Mersey Estuary. It was founded as a borough in 1207 and was granted city status in 1880...
more than 2sShillingThe shilling is a unit of currency used in some current and former British Commonwealth countries. The word shilling comes from scilling, an accounting term that dates back to Anglo-Saxon times where it was deemed to be the value of a cow in Kent or a sheep elsewhere. The word is thought to derive...
. 6d. to 7s. 6d. per tonTonThe ton is a unit of measure. It has a long history and has acquired a number of meanings and uses over the years. It is used principally as a unit of weight, and as a unit of volume. It can also be used as a measure of energy, for truck classification, or as a colloquial term.It is derived from...
in excess of the rate paid by a YorkshireYorkshireYorkshire is a historic county of northern England and the largest in the United Kingdom. Because of its great size in comparison to other English counties, functions have been increasingly undertaken over time by its subdivisions, which have also been subject to periodic reform...
farmer; this, it will be admitted, does not go very far towards enabling the latter to pay rentRentingRenting is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for all property charges regularly incurred by the ownership from landowners...
, titheTitheA tithe is a one-tenth part of something, paid as a contribution to a religious organization or compulsory tax to government. Today, tithes are normally voluntary and paid in cash, cheques, or stocks, whereas historically tithes were required and paid in kind, such as agricultural products...
s and rates and taxTaxTo tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es.
- Encyclopædia Britannica Eleventh EditionEncyclopædia Britannica Eleventh EditionThe Encyclopædia Britannica Eleventh Edition is a 29-volume reference work, an edition of the Encyclopædia Britannica. It was developed during the encyclopaedia's transition from a British to an American publication. Some of its articles were written by the best-known scholars of the time...
Canadian Wheat Board
The Canadian Wheat Board was established by the Parliament of Canada on 5 July 1935 as a mandatory producer marketing system for wheat and barley in Alberta, Saskatchewan, Manitoba and a small part of British Columbia...
as monopsony
Monopsony
In economics, a monopsony is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers...
marketing board
Marketing board
A marketing board is an organization created by many producers to try to market their product and increase consumption and thus prices. They most commonly exist to help sell farm products such as milk, eggs, or beef and are funded by the farmers of those crops. Marketing boards often also receive...
s, buying all the wheat in those countries for export. Together those two boards controlled a large percentage of the world's grain trade in the mid 20th century. Additionally, farmer's cooperatives such the wheat pools became a popular alternative to the major grain companies.
At the same time in the Soviet Union
Soviet Union
The Soviet Union , officially the Union of Soviet Socialist Republics , was a constitutionally socialist state that existed in Eurasia between 1922 and 1991....
and soon after in China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
, disastrous collectivization programs effectively turned the world's largest farming nations into net importers of grain.
By the second half of the 20th Century, the grain trade was divided between a few state-owned and privately-owned giants. The state giants were Exportkhleb of the Soviet Union, the Canadian Wheat Board, the Australian Wheat Board, the Australian Barley Board, and so on. The largest private companies, known as the "big five", were Cargill
Cargill
Cargill, Incorporated is a privately held, multinational corporation based in Minnetonka, Minnesota. Founded in 1865, it is now the largest privately held corporation in the United States in terms of revenue. If it were a public company, it would rank, as of 2011, number 13 on the Fortune 500,...
, Continental, Louis Dreyfus
Louis Dreyfus Group
Louis Dreyfus Group is a diversified French private company that is involved in agriculture and energy commodities...
, Bunge
Bunge Limited
Bunge Limited is a Bermudan food conglomerate with its headquarters in White Plains, New York. As well as being a leading global soybean exporter it is also involved in food processing, grain trading, and fertilizer...
, and Andre
André Maggi Group
The André Maggi Group is a large Brazilian company involved in the soybean industry. It is the largest private producer of soybeans in the world...
.
In 1972, the Soviet Union's wheat crop failed. To prevent shortages in their own country, Soviet authorities were able to buy most of the surplus American harvest through private companies without the knowledge of the United States government. This drove up prices across the world, and was dubbed the "Great Gain Robbery" by critics, leading to greater public attention being paid by Americans to the large trading companies.
Modern trade
Economies of scale
Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
. Railways have switched from coal to diesel fuel, and introduced hopper car
Hopper car
A hopper car is a type of railroad freight car used to transport loose bulk commodities such as coal, ore, grain, track ballast, and the like. The name originated from the coke manufacturing industry which is part of the steel industry ....
to carry more mass with less effort. The old wooden grain elevators have been replaced by massive concrete inland terminals, and rail transportation has retreated in the face of ever larger truck
Truck
A truck or lorry is a motor vehicle designed to transport cargo. Trucks vary greatly in size, power, and configuration, with the smallest being mechanically similar to an automobile...
s.
Farmers in the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
and Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
are protected by agricultural subsidies. The European Union's programs are organized under the Common Agricultural Policy
Common Agricultural Policy
The Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....
. The agricultural policy of the United States
Agricultural policy of the United States
Agricultural policy of the United States is the governing policy of agriculture in the United States and is composed primarily of the periodically-renewed federal U.S. farm bills.-History:Over the first 200 years of U.S...
is demonstrated through the "farm bill", while rice production in Japan
Rice production in Japan
Rice production in Japan is important to the food supply in Japan, with rice being a staple part of the Japanese diet.The most striking feature of Japanese agriculture however is the shortage of farmland. The 4.63 million hectares under cultivation in 2008 has shrunk, with most farmers over...
is also protected and subsidized. Farmers in other countries has attempted to have these policies disallowed by the World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
, or attempted to negotiate them away though the Cairns Group
Cairns Group
The Cairns Group is an interest group of 19 agricultural exporting countries, composed of Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Indonesia, Malaysia, New Zealand, Pakistan, Paraguay, Peru, the Philippines, South Africa, Thailand, and Uruguay.-History...
, at the same time the wheat boards have been reformed and many tariffs have been greatly reduced, leading to a further globalization
Globalization
Globalization refers to the increasingly global relationships of culture, people and economic activity. Most often, it refers to economics: the global distribution of the production of goods and services, through reduction of barriers to international trade such as tariffs, export fees, and import...
of the industry. For example, in 2008 Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
was be required by the North American Free Trade Agreement
North American Free Trade Agreement
The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
(NAFTA) to remove its tariffs on US and Canadian maize
Maize
Maize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
.
Modern issues affecting the grain trade include food security
Food security
Food security refers to the availability of food and one's access to it. A household is considered food-secure when its occupants do not live in hunger or fear of starvation. According to the World Resources Institute, global per capita food production has been increasing substantially for the past...
concerns, the increasing use of biofuels, the controversy over how to properly store and separate genetically modified
Genetically modified organism
A genetically modified organism or genetically engineered organism is an organism whose genetic material has been altered using genetic engineering techniques. These techniques, generally known as recombinant DNA technology, use DNA molecules from different sources, which are combined into one...
and organic
Organic food
Organic foods are foods that are produced using methods that do not involve modern synthetic inputs such as synthetic pesticides and chemical fertilizers, do not contain genetically modified organisms, and are not processed using irradiation, industrial solvents, or chemical food additives.For the...
crops, the local food
Local food
Local food or the local food movement is a "collaborative effort to build more locally based, self-reliant food economies - one in which sustainable food production, processing, distribution, and consumption is integrated to enhance the economic, environmental and social health of a particular...
movement, the desire of developing countries to achieve market access
Market access
Market access for goods in the WTO means the conditions, tariff and non-tariff measures, agreed by members for the entry of specific goods into their markets. Tariff commitments for goods are set out in each member's schedules of concessions on goods. The schedules represent commitments not to...
in industrialized economies, climate change
Climate change
Climate change is a significant and lasting change in the statistical distribution of weather patterns over periods ranging from decades to millions of years. It may be a change in average weather conditions or the distribution of events around that average...
and drought shifting agricultural patterns, and the development of new crops.