Agriculture and International Relations

‘Agriculture and International Relations: Analysis and Policy’ — this may sound like a rather vague theme for a collection of essays. Does it indicate that the individual papers published in this volume have little in common? At the first glance this may appear to be the case. What is, e.g., the common denominator of Petit’s quest ‘For an Analytical Political Economy’ and Warley’s analysis of ‘Agricultural Trade Policy Issues in the 1980s’? Is it only the fact that all of these papers have been written in the honour of Theodor Heidhues?

Nearly two years ago, on 11 November 1978, Theodor Heidhues died at the age of 45. His friends, colleagues and students, German and international agricultural economists, realise that his untimely death has left a great gap in agricultural economics, both in research and theory, which even today can hardly be closed. We especially miss his creative imagination which enabled him to order and analyse economic conditions, to trace the economic and social factors behind them and to illuminate their manifold and complex political and social implications. ‘The master economist’, as John Maynard Keynes described him, ‘must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often to be found together. He must be a mathematician, historian, statesman, philosopher — in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general and touch abstract and concrete in some flight of thought. He must study the present in the light of the past for the purpose of the future’ (Keynes, 1972, p. 173).

The expression ‘analytical political economy’ suggests that for the analysis of economic policy problems, we might fruitfully use modern analytical skills in approaches. and on problems, which were those of the classical economists (1). Among them, J. B. Say gives a clear definition of political economy. First, the sub-title of his ‘treaty’, ‘simple exposition of the manner in which wealth is formed, distributed and consumed’ describes clearly the object of the science. He also welcomes its newly-acquired autonomy and emphasises the distinction between ‘politics’, which is ‘the science of the organisation of societies’, and ‘political economy’, which deals with the production, the distribution and the consumption of wealth (Say, 1841, p. 2). Say, however, justifies the adjective ‘political’ in ‘political economy’ because of the social nature of the phenomena studied by economists. For him, wealth is constituted by what has a ‘recognised value’ that is ‘an exchange value’. In addition, the concern is clearly focussed on the public good, on the wealth of the nation. Without agreeing totally with Say on the definitions of wealth and of value, the other classical economists share his concern for what makes the prosperity of the nation. For Malthus the main purpose of political economy is to search for the causes which influence the development of wealth (Malthus, 1836, p. 3). For Ricardo, determining the laws which govern the distribution of the product between wages, profits and rents is the main problem in political economy (Ricardo, 1817, p. 9). Actually these two statements are more complementary than contradictory. Ricardo’s emphasis on distribution stresses another aspect of the early tradition of political economy which deserves attention today.

In this paper I will first examine the results of the World Food and Nutrition Study (WFNS) established by President Ford and delivered to President Carter (WFNS, 1977) and of the Commission on World Hunger (CWH) which was commissioned by President Carter and delivered to him (CWH, 1980). I also consider an educational effort to make American academic and religious circles more aware of problems associated with food, agriculture, and world hunger. In the second main section of the paper, I examine a fundamental underlying difficulty encountered in these efforts. In the second section, I will also present reasons for hope concerning American information systems and decision processes with respect to food, agricultural development and trade. The third main section deals with current issues about the American role in international food aid and the promotion of development. The fourth and last section deals with the methodological lessons from the first three sections for the research work which agricultural economists do on food, nutrition and agriculture in countries around the world.

The productivity of modern agriculture is the result of a remarkable fusion of technology and science (White, 1968; Asimov, 1979). In the West this fusion was built on ideological foundations that, from the early Middle Ages, has valued both the improvement of material well being and the advancement of knowledge.

Economic change is richly varied as one readily discovers when comparing historical eras, geographical regions and different organisational situations. Long-established trends occasionally reverse themselves. Growth, for example, may switch over to decline or decline may change into growth. Commodity supplies and prices often fluctuate in irregular, and seemingly unpredictable, patterns. New scarcities and sometimes new surpluses arise. The future of one group of firms or households improves while that of another group declines. Occasionally, the entire economic system, or part of it, stops working or is threatened with breakdown.

The agricultural economics profession has probably devoted as much time to the study of stability as to anything else. Arguably, it was the enquiry into the behaviour of agricultural product prices during the inter-war period which first gave agricultural economics an identity separate from other branches of applied economics, and this interest has continued to the present. Further, the stability issue has impinged upon most branches of the discipline, involving the study of the impact of price uncertainty on the behaviour of farm firms and the development of farm planning techniques in the face of uncertainty; the welfare implications of resource allocation in the face of price uncertainty; explanatory models of the causes of price instability; and stabilisation policies at both a national and international level.

My reflections are related to the plea by Michael Petit, put forward in his contribution to this volume, to discard the concept of the social utility function. Petit argues that the course of the agricultural policy in the European Community is not determined by the desire of the decision-making institutions to maximise some kind of social utility, but by the need to find a tolerable compromise between the conflicting interests of the participating groups. Even scientific economists, so argues Petit, would not be able to determine a social utility function with respect to the Community’s common agricultural policy. The results of the analyses are always biased by their respective national interests, thus proving Popper’s famous remark: ‘Take subjective value judgement away from a social scientist and you will take away his personality.’

United States trade and agricultural policies cannot be fully understood without reference to their historical and contemporary European counterparts. Policy with respect to using the international market and trade instruments to produce specific outcomes in the farm and the food-budget sectors is still relatively young and undeveloped. It does not compare, for example, with the long history of protection for farmers, such as that adopted by France in the nineteenth century, or of explicitly protecting consumers through cheap imports while carefully rationing public expenditures for farm-income support or modernisation, as was the policy in Britain until she applied to join the European Community.

For many centuries there has been commerce in meat in the form of dried or pickled products or live animals sold into neighbouring countries for slaughter. The invention of refrigeration around 1875 permitted the meat trade to develop in the form of chilled and frozen carcasses or pieces, as well as of live animals.

Until 1973, export restrictions did not pose a serious problem for international trade policy, which in the immediate post-World War II period was aimed almost exclusively at achieving free access to markets for the sale of finished goods. Then in 1973 several events occurred to change this situation. On 27 June 1973, the United States Administration decreed an export ban of limited duration on soybeans; and on 17 October of the same year several Arab States imposed an oil embargo on the United States. Following on from these two events, several other countries for diverse reasons — imposed restrictions on the export of various raw materials and semi-manufactured goods (1), with the overall result that international trade policy became increasingly concerned with ensuring assured access to raw-material markets (2).

One of the consequences of international specialisation and trade is to increase the vulnerability of trading partners to trade restrictions. The risks associated with dependence on imported grain as well as oil are now widely recognised. Grain, like oil, can be used as a weapon of diplomacy against countries which import a substantial proportion of their requirements. Either party may use the threat of cutting off trade as leverage to obtain concessions. This has created a new element of uncertainty, and a source of instability, in world markets. Thus I believe it appropriate in a volume dedicated to the memory of one who contributed so much to enhancing our understanding of the external implications of agricultural protection and trade policies to examine in some detail the issues that arise from attempts to use restrictions on food exports as an instrument of foreign policy.

What are the priorities for multilateral commercial diplomacy with respect to temperate-zone agriculture after the Tokyo Round negotiations of 1973–79? The answer is perfectly straightforward. They are much the same as they were before the Tokyo Round negotiations — only more so.

It may well be that the 1970s will come to be viewed as marking a seismic discontinuity in world economic affairs. The elements of this turbulent decade are familiar. They include the food and energy crises, a slowdown in economic growth, the onset of the Great Inflation, high unemployment and unused industrial capacity, monetary instability and international payments disequilibria. It was a time when the developing countries forced the subject of their poverty onto the global agenda and when the centrally-planned economies began to become more fully integrated into the world economy. The realities of interdependence between countries required the internationalisation of national policies and the domestication of foreign economic policies, but this clashed with the growing economic and social responsibilities of governments and heightened tensions between international obligations and the desire for national sovereignty. The need for adjustment grew while the ability or willingness to embrace it diminished. Hegemonic leadership and confidence in market forces declined, but collective management of complex and inter-related issues proved difficult to attain in a multipolar world with more numerous actors of diverse stages of development, interests and ideologies. The 1970s was a decade of negotiations aimed to redesign the international economic order on monetary arrangements, trade, development, food, commodities, energy, global commons and other matters, but in spite of all the effort the international economic order continued to deteriorate. At the beginning of the 1980s, unresolved issues and continuing stresses threaten the functioning of the global economic system.

International Agricultural Policy brings to mind that diffuse area of international relations where nations collectively confront the problems of world food and agriculture. To some it is the interplay of national policy actions as they impinge on each other through the trading system and to others it is defined by an endless stream of meetings in the international bureaucracy. In this paper, I want to use a specific and somewhat narrow definition of the area: international agricultural policy will be taken as the set of decisions taken collectively by the international community in pursuit of widely held objectives. The articulation of such objectives need not delay us greatly. As with national policy, too close a definition merely raises issues which hinder the development of programmes: some things are best left implicit. For present purposes, it is enough to assume that they include (i) the development of agricultural potential in the world consistent with general development aims and with the provision and distribution of adequate supplies of food, (ii) the enhancement of stability in the world’s food system to encourage sensible long-run decisions and to avoid disruptions arising from the inevitable fluctuations in food availability, and (iii) the equitable distribution of burdens of adjustment and the transfer of necessary funds internationally to support national efforts.

Food is a critically important issue in North-South relations because it can literally spell economic, political and human survival for large numbers of people as well as the simple economic well-being of many others. The potential for North-South cooperation on food is so great that achieving cooperation could set the tone for the resolution of other basic North-South concerns. But it is an issue that is complicated by economics and by politics; and it is one, too, that has defied resolution through traditional approaches and mechanisms.