This is Eve. Michael Hudson explains how the United States sought to foster a reliance on grain as a way to maintain economic dominance. Most of us know that wars are often fought over resources, but it seems unlikely that control of agricultural supplies would achieve a similar goal in modern times.
The author is Michael Hudson, a research professor of economics at the University of Missouri, Kansas City, and a fellow at the Levy Institute for Economics at Bard College. His latest book is The fate of civilization.
A new monthly column in the German newspaper Berliner Wochenende.
Since World War II, U.S. trade strategists have based their international policy on the control of two key commodities: oil and grain. Economically, oil and grain are pillars of the U.S. balance of payments and, along with arms, are major export surpluses, especially as the U.S. economy has deindustrialized.
And politically speaking, these are basic needs of any economy. U.S. diplomacy has sought to make other countries dependent on U.S. grain, most notably when the U.S. tried to impose a grain embargo on China in the 1950s in opposition to Mao Zedong’s Chinese Communist revolution. But Canada broke the sanctions and has enjoyed friendly relations for decades.
U.S. trade strategists have sought to promote grain dependence on U.S. farmers by opposing foreign attempts to achieve grain self-sufficiency. Most notoriously, the World Bank has refused, from the start, agricultural loans to Southern/Third World countries for food grain production. Loans have been limited to promoting tropical crops that do not compete with U.S. agricultural production. As a result, countries such as Chile, which has the world’s largest source of natural guano fertilizer, have wasted their copper export revenues on purchasing U.S. grain that they could easily have produced themselves.
As soon as the seven-nation Common Market/EEC was established in 1958, its Common Agricultural Policy became a major area of diplomatic conflict between the EEC and the United States. This was one of the reasons why American diplomats promoted the European Free Trade Area (EFTA) as a rival, which had built strong American agricultural protectionism into its trade agreements. President Roosevelt’s Agricultural Adjustment Act, price supports (“parity prices”), agricultural extension services, and other government assistance had led to sustained increases in agricultural productivity more than any other country.
It was not surprising, therefore, that the European CAP sought to achieve similar gains in the agricultural sector and contribute to the trade balance of France, Germany and other member states. For the EEC, the CAP was its main and most successful economic achievement of the 1960s and 1970s. Europe had become a major grain exporter. There was nothing US diplomacy could do to maintain its previous market power in the region.
This success led to agriculture becoming an important element of French and German diplomacy, and the expansion of the EEC into today’s European Community.Clearly, these two major agricultural producers sought to maintain their dominant position.
It is only natural that new EU member states would seek subsidies for their own agriculture to achieve similar agricultural productivity improvements and support. This is an ongoing political battle within the EU, and it came to a head with the outbreak of the Ukraine war for access to the European market. Ukraine’s soil is renowned as some of the most fertile and productive in the world, and it’s no surprise that it is a global exporter of grains, sunflower seeds, and other agricultural products.
But here too, US diplomatic interests conflict with those of the EU, as US companies have bought up large swaths of Ukrainian farmland and are seeking access to European markets, starting with Poland, Polish President Andrej Duda explained the issue in an interview with Lithuanian National Radio and Television.
I would like to draw your attention especially to industrial agriculture, which is not really run by Ukrainians, but by large Western European and American companies. If you look at most landowners today, they are not Ukrainian companies. This is a contradictory situation, and it is no wonder that peasants are defending themselves, because they have invested in Polish farms, and cheap agricultural products from Ukraine are dramatically destructive for them.
The threat to Polish and other European farmers who source low-cost Ukrainian grain has been further heightened by two major developments: Ukraine’s access to the Black Sea has been cut off, leaving its main alternative for selling grain by rail to the west, and the US company Blackrock, working with Ukrainian President Zelensky, has orchestrated US and European investment in Ukraine’s industrial-scale agriculture to provide Ukraine with hard currency for its NATO-backed war against Russia.
Ukrainian domestic lobbying groups have joined U.S. diplomatic pressure for tariff-free access to the EU grain market. Polish farmers recently tried to block Ukrainian grain imports from undercutting the selling price of their own grain. Without price supports for these and other EU farmers, the threat of competition from U.S.-supported Ukrainian farms is a major deterrent to Ukraine joining the EU.
Thus, the conflict between American and European agricultural interests that has been playing out for more than half a century will be reignited. The extension of EU economic support for Ukraine’s agricultural competition will be the agricultural trade equivalent of destroying the Nord Stream natural gas pipeline, undermining European prosperity.
US agricultural interests, which have opposed the EEC’s CAP since 1958, now pit US investment interests against EU agricultural producers.
