Business and Technology Essay

This essay has a total of 1848 words and 11 pages.


Business and Technology




Agricultural Cooperatives and Grain Export Issues



I. Introduction

It is the contention of this paper that although one might be encouraged to locate a nexus
of interrelationships between agricultural cooperatives in America and current,
significant issues in grain exports. It is more likely however, that the crucial
relationships involve a "meta-organization" of individual farms of various sizes,
agricultural co-ops, various corporations related to agriculture, and United States
government departments and organizations; all of which act and react to international
grain export challenges.

The effects of normal supply and demand fluctuations, new markets opening, and a myriad of
other political-economic factors will, of course, have differing effects on different
players. For instance, the agricultural cooperatives will be effected differently than the
cereal manufacturers, or even than a large independent farm. Cooperatives are the focus
here, but the primary point remains: no matter what the producer-source, grain exports
from America are part of a complex constellation of factors.

Moreover, the discussion will include a few concluding remarks on future-oriented issues
which focus upon sustainable development. Sustainable development is no longer the watch
word of a few outspoken environmentalists. It is now a matter of survival for a huge and
rapidly growing world population. Grain exports are, by default, a part of the sustainable
development dialogue.


II. Existing and Restricted Markets

There are a number of current market potentials as well as existing ones. The new markets
are those which may not be open to American exports currently, or because of various
international embargos/treaties, can not be accessed by American grain producers. In
addition, historical changes indicate that the markets themselves change over time. The
break-up of the former Soviet Union for instance, has altered the pattern of grain
exportation to some of the new nations of that area. Russia is not an arch rival and
nuclear enemy any more and this directly effects the grain exports to there.

The FAS (Foreign Agricultural Service sums up the political changes in foreign markets in
this way: "Economic sanctions can be powerful foreign policy tools targeted to further
U.S. foreign policy and national security objectives." It is a case of the American
government causing some degree of economic restraint and even burden, on private grain
producers keen to expand their markets worldwide. The results are often negative, but
always rather complex:


Trade restrictions imposed by the U.S. Government, however well-justified, do impact U.S.
commodity exporters and consequently the entire agricultural sector. Furthermore, the
effects of these restrictions are not limited to just the markets that U.S. exporters are
prohibited from trading with: other exporters change their marketing strategies to the
detriment of the U.S. (F.A.S. 2000)


The restrictions in trade are controlled by the Office of Foreign Asset Control (OFAC).
The main countries targeted for restrictions are:


Cuba
North Korea
Iran
Iraq
Libya.

According to the FAS, the OFAC restrictions on these countries is fairly substantial.
Taken as a total, the countries will import approximately 11% of the world wheat trade.
This is not a trifling amount in terms of world market demand. It is enough to cause
fairly serious economic concerns to American coops and grain exports.


In general, there is a large international market awaiting American grain exports. It has
not changed in size, at least appreciably, in the past decade. The following graph of
wheat data for the 1990's indicates a peak reached around 1993, and a small drop since
then. In general though, the curve is shape is flat showing a steady market available for
U.S. exports.








III. Key Organizations

In April of 2000, the Coalition to Promote U.S. Agricultural Exports reported on its
Internet site that it was officially comprised of " an ad hoc coalition of over 80
organizations, representing farmers and ranchers, cooperatives, small businesses, regional
trade groups, and the State Departments of Agriculture."

Members of this Coalition are supposedly united in their efforts to strive together to
"support of U.S. policies and programs." These officially consist of:

Promote U.S. agricultural exports
Counter subsidized foreign competition
Strengthen farm income
Protect American Jobs.
(The Coalition, April, 2000). Clearly this organization is the type of meta-group
mentioned at the beginning of this paper, which has been created to represent a diverse
group to a diverse and changing, and complex international market. It supports U.S.
government policies and this means all groups, including agricultural cooperatives,
participate in specific programs.

MAP (Market Access Program) of the USDA is one such strategy. It is particularly
beneficial to agricultural cooperatives in the U.S. The official statement concerning the
objectives and nature of MAP is:
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