International grain trade, 1950-80 (English)

International trade in cereals represents one of the fastest growing segments of agricultural trade. Contrary to general presumptions, the data suggest that declines in domestic production explain only 13 percent of the total growth in cereal trade. Instead...  See More + International trade in cereals represents one of the fastest growing segments of agricultural trade. Contrary to general presumptions, the data suggest that declines in domestic production explain only 13 percent of the total growth in cereal trade. Instead, trade expanded in response to positive real growth in population and in income. This is largely due to the conduct of government policies. Low prices have accentuated the reliance of the LDCs on cereals imports and have forestalled the production of exportable surpluses. Government policies also explain price movements in the international market. When importing countries are forced to compete for supplies, price serves as the allocative mechanism. Changes in international market behavior and increased instability in prices have created new problems for participants, the magnitude of which should not be exaggerated. Nevertheless, the policies of the LDCs themselves are at least partially responsible for the magnitude of price instability. Policy shifts toward freer trade would increase stability. But as long as countries continue to subsidize domestic consumption, international market controls are likely to remain as key components of grain policy.  See Less -