Stream of consciousness:
No Choice But to Sell the Russians Grain at the same time as we were mining the Harbor at Haiphong. The war ended in 1976. I heard the news while I was reporting on a hearing before House subcommittee on Oil Seeds and Rice. It came as especially bad news to rice growers.
2014 Food policy update:
Going on the valid assumption that what is past is prologue, I present to you background for understanding the disaster President Obama’s decision to sign the farm bill represents.
February, 2014 with the Secretary of Agriculture and key Democratic players in Congress (Republicans boycotted the ceremony), President Obama signs into law the 2014 five-year farm bill.
USA Today notes: “The five-year bill — approved by Congress this week after years of fierce debate — expands federal crop insurance. It also changes the food stamp program, cutting it by $800 million per year — about 1% — and raising the automatic eligibility requirement.”
Translation, the new farm bill is meaningless when it comes to making food policy. Farmers no longer pay attention to what the Secretary of Agriculture tells them. Fat cats, most significant producers of SUGAR, are getting handouts they do not deserve and in the process defy our plans for International trade agreements.
Sadly, unnecessary handouts are traditional. They do not affect food policy; they just cost the government too much.
As for social policy, which perversely is really what the Department of Agriculture’s budget is really about, the poor are being hurt by cuts in food stamps and low-income pregnant women continue to be at high risk for infant mortality.
The fact that the Secretary of Agriculture is the official in the federal government with the highest budget targeted to reduce infant mortality is alarming. The high infant mortality rate is indicative of the Secretary of Agriculture’s failure in this regard. The fact that the Secretary of Agriculture should have any role at all in the campaign to reduce infant mortality is indicative of the bizarre nature of farm bills such as Obama just signed.
In 1975, I was writing a book for Marty Peretz. Martz Peretz was in the process of creating an important journalistic empire at The New Republic. Never cautious about anything, Marty was forced into a legal contract where caution was presumably and certainly legally required.
To understand the situation, it is required to have an understanding of The New Republic's role in the 20th Century as the jewel of American journalism. If you are not familiar with Walter Lippman, more New Republic praise is required.
Once Is Not Enough
by Joel Solkoff
While Americans mined the entrance to Haiphong harbor and bombed railroad lines to prevent Soviet goods from entering North Vietnam, the Soviet Union reacted by secretly negotiating the sale of 19 million metric tons of American grain. Later that year , when the deal had become public and was already being called, “The Great Grain Robbery.”
John Rarick, then a member of Congress, said to Earl Butz, who is still the Secretary of Agriculture,
“As a farm boy, I can remember my dear old Hoosier grandmother telling me to watch out for some American businessmen, they will trade with the Devil if they can make a profit.”
Secretary Butz quipped, “If he has dollars.”
Early in his Administration, Richard Nixon had proposed abolishing the Department of Agriculture. Secretary of Agriculture Butz told me he accepted the job on the condition the Department not be abolished.
Last month, memories of 1972 returned as the headlines reported he controversy surrounding the Soviet Union’s mammoth new purchases of American grain. Longshoremen in Houston refused to load the wheat until a federal judge ordered them back to work.
Longshoreman at the Port of Houston
After skiing, President Ford answers questions from reporters. Photo courtesy Colorado Ski and Snowboarding Hall of Fame
September 6, 1975 Irate wheat farmers met with President Ford, interrupting his golfing vacation in Vail, to tell him that they depend upon exports for survival.
President Jimmy Carter addressing the AFL-CIO run by George Meany shown with iconic cigar. Without Meany’s support, Carter would never have been elected President.
The price of food in July rose at an annual rate of 22.4 percent for the second month in a row. AFL-CIO President George Meany blamed the 10.3 million metric tons of Soviet grain purchases for rising food costs, warning consumers of “more bad news.”
In July a bag of groceries that last year cost a resident of Washington, DC $10, cost $13.90.
Secretary Butz blamed the featherbedding practices of union-working middlemen for much of the rise, but admitted Soviet grain sales would cost Americans 1.5 percent in additional food costs.
When it is all over, the Russian wheat deal of 1975, in which more corn has been sold than wheat, may be considerably larger than 1972. The principal difference is in 1972 the United States did not have to sell grain to Russia; in 1975 we do.
The wheat deal of ’72 changed American agriculture dramatically and probably irreversibly. In one quick and unexpected move, surplus became scarcity .
- Grain storage bin
No longer was the government paying high storage costs, at one point ran to more than a million dollars a day. Instead the government sold all the wheat and corn it had in storage and then it sold all the storage bins.
No longer are farmers paid not to grow . By 1973 President Nixon had signed a new agricultural act passed by a Democratic Congress that was unaware of its implications and because of the Secretary of Agriculture’s enthusiasm for exports. Butz boasted 50 million acres that had been lying fallow were put into production.
Today  we have a policy insiders in the department call “wall to wall farming.” This year’s wheat crop is the largest in American history, and the corn crop may set a record too.
This video provides an overview of Wallace, who after ruling USDA, served as Vice President to Franklin Roosevelt for Roosevelt’s second and third term. In 1948, Wallace ran as an Independent candidate for President.
On August 20, Butz, the most powerful Secretary of Agriculture since Henry A . Wallace, gave a speech in which he explained America’s new farm policy is designed to meet the food needs of the world ‘s exploding population.
“By the year 2000, if we continue to multiply at present rates, there will be between 6.5 to seven billion people living on earth. This means in the next two-and-a-half decades we must learn how to feed as many people as we have learned to feed since the dawn of history. Even now, we aren’t feeding the 3.9 billion nearly as well as we should.”
In 1933, Henry Wallace changed American agriculture by implementing the farm programs the Great Depression had made necessary. Earl Butz has been changing American agriculture by destroying the programs Wallace had implemented.
Butz’s predecessor, Nixon-appointee Clifford Hardin, took over Butz’s seat on the Ralston Purina Board.
Butz is an extremely clever Secretary who has not always bothered about legal niceties . He talks about feeding the hungry while his policies make it even more difficult to do so.
While the participants may be talking about bread, they are thinking about meat. the Russians had a choice. Their political leaders could renege on their promise to increase the protein content of the Soviet diet and slaughter the stock of their developing livestock industry.
Or they could feed their livestock American corn and soybeans and Soviet wheat, using superior American wheat for making bread. The political leaders were reluctant to tell their people they must be content to continue eating grain, potatoes and beets. In order to increase their meat supply, they were required to do something their agriculture was unable to do–produce bumper crops year in and year out to feed the livestock.
That is why, three years later the Russians are back on the world grain market with even larger needs, causing prices to skyrocket by the sudden and unexpected manner in which they make their purchases.
In 1972, when weather interfered with their plans, the Russians were able to take advantage of political circumstances in the United States and buy a quarter of our wheat crop and much of our corn and soybeans.
Richard Nixon needed détente.
His foreign policy required while fighting a war in Indochina aimed at preventing the spread of Soviet influence, he convince the American public that he was simultaneously easing Cold War tensions. He had to give the Russians something to make it worth their while to ignore such provocations as the mining of Haiphong harbor. At the same time, domestically, his Secretary of Agriculture was eager to pursue Butz’s policy of “getting the government out of agriculture.”
Perhaps there was some hope that farmers would not realize what they had lost at least until after the election and would vote for an administration that had raised farm prices.
The Department of Agriculture’s Commodity Credit Corporation (CCC) loaned the Russians the money under extremely favorable credit arrangements. The Russians used the money to make secret transactions with private grain trading firms.
The US government does not have the legal authority to export commodities. That can only be done by private companies.
America ‘s grain trade is dominated by six multinational corporations with monopolistic power similar to the Canadian Wheat Board and the Soviet Union’s ministry of agriculture. The power of the big six is greater and they operate for private rather than public interest.
The companies sold the Soviet Union grain they had purchased from USDA’s CCC storage bins and from American farmers. This grain was sold to the Russians at prices significantly lower than the domestic price and the companies were paid the difference by the US government–$160 million in subsidies. Meanwhile the grain companies-operated on tips provided rom USDA by USDA officials who later came to work for the grain companies
Originally published in the New Republic after the Labor Day weekend, 1975.
The magazine provided the following biographical information: “Joel Solkoff is a Washington writer specializing in Agriculture.”
Copyright 2013 by Joel Solkoff. All rights reserved.
What follows is President Obama’s lengthy explanation in which he eventually explains why he signed the farm bill. Stay tuned for why doing so was a bipartisan mistake.