The grain trade refers to the local and international

trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct exc ...

cereal A cereal is any grass cultivated for the edible components of its grain (botanically, a type of fruit called a caryopsis), composed of the endosperm, germ, and bran. Cereal grain crops are grown in greater quantities and provide more food ...

s and other food grains such as

wheat Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeologi ...

barley Barley (''Hordeum vulgare''), a member of the grass family, is a major cereal grain grown in temperate climates globally. It was one of the first cultivated grains, particularly in Eurasia as early as 10,000 years ago. Globally 70% of barley p ...

maize Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American English, North American and Australian English), is a cereal grain first domesticated by indigenous peoples of Mexico, indigenous ...

, and

rice Rice is the seed of the grass species '' Oryza sativa'' (Asian rice) or less commonly ''Oryza glaberrima'' (African rice). The name wild rice is usually used for species of the genera '' Zizania'' and '' Porteresia'', both wild and domesticat ...

. Grain is an important trade item because it is easily stored and transported with limited spoilage, unlike other agricultural products. Healthy grain supply and trade is important to many societies, providing a caloric base for most

food system The term food system describes the interconnected systems and processes that influence nutrition, food, health, community development, and agriculture. A food system includes all processes and infrastructure involved in feeding a population: growi ...

s as well as important role in

animal feed Animal feed is food given to domestic animals, especially livestock, in the course of animal husbandry. There are two basic types: fodder and forage. Used alone, the word ''feed'' more often refers to fodder. Animal feed is an important input to ...

for

animal agriculture Animal husbandry is the branch of agriculture concerned with animals that are raised for meat, fibre, milk, or other products. It includes day-to-day care, selective breeding, and the raising of livestock. Husbandry has a long history, sta ...

. The grain trade is as old as agricultural settlement, identified in many of the early cultures that adopted sedentary farming. Major societal changes have been directly connected to the grain trade, such as the

fall of the Roman Empire The fall of the Western Roman Empire (also called the fall of the Roman Empire or the fall of Rome) was the loss of central political control in the Western Roman Empire, a process in which the Empire failed to enforce its rule, and its v ...

. From the early modern period onward, grain trade has been an important part of colonial expansion and international power dynamics. The geopolitical dominance of countries like Australia, the United States, Canada and the Soviet Union during the 20th century was connected with their status as grain surplus countries. More recently, international commodity markets have been an important part of the dynamics of

s and grain pricing.

Speculation In finance, speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline in value.) Many ...

, as well as other compounding production and supply factors leading up to the 2007-2008 financial crises, created rapid inflation of grain prices during the 2007–2008 world food price crisis. More recently, the dominance of

Ukraine Ukraine ( uk, Україна, Ukraïna, ) is a country in Eastern Europe. It is the second-largest European country after Russia, which it borders to the east and northeast. Ukraine covers approximately . Prior to the ongoing Russian inva ...

and

Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-ei ...

in grain markets such as wheat meant that the

Russian invasion of Ukraine in 2022 On 24 February 2022, in a major escalation of the Russo-Ukrainian War, which began in 2014. The invasion has resulted in tens of thousands of deaths on both sides. It has caused Europe's largest refugee crisis since World War II. A ...

caused increased fears of a global food crises in 2022. Changes to agriculture caused by climate change are expected to have cascading effects on global grain markets.

History

The grain trade is probably nearly as old as grain growing, going back the

Neolithic Revolution The Neolithic Revolution, or the (First) Agricultural Revolution, was the wide-scale transition of many human cultures during the Neolithic period from a lifestyle of hunting and gathering to one of agriculture and settlement, making an inc ...

(around 9,500 BCE). Wherever there is a scarcity of land (e.g. cities), people must bring in food from outside to sustain themselves, either by force or by trade. However, many farmers throughout history (and today) have operated at the

subsistence level A subsistence economy is an economy directed to basic subsistence (the provision of food, clothing, shelter) rather than to the market. Henceforth, "subsistence" is understood as supporting oneself at a minimum level. Often, the subsistence econo ...

, meaning they produce for household needs and have little leftover to trade. The goal for such farmers is not to specialize in one crop and grow a surplus of it, but rather to produce everything his family needs and become self-sufficient. Only in places and eras where production is geared towards producing a surplus for trade ( commercial agriculture), does a major grain trade become possible.

Classical world

In the ancient world, grain regularly flowed from the

hinterland Hinterland is a German word meaning "the land behind" (a city, a port, or similar). Its use in English was first documented by the geographer George Chisholm in his ''Handbook of Commercial Geography'' (1888). Originally the term was associate ...

s to the cores of great empires: maize in ancient Mexico, rice in

ancient China The earliest known written records of the history of China date from as early as 1250 BC, from the Shang dynasty (c. 1600–1046 BC), during the reign of king Wu Ding. Ancient historical texts such as the '' Book of Documents'' (early chapt ...

, and

and

in the

ancient Near East The ancient Near East was the home of early civilizations within a region roughly corresponding to the modern Middle East: Mesopotamia (modern Iraq, southeast Turkey, southwest Iran and northeastern Syria), ancient Egypt, ancient Iran ( Elam, ...

. With this came improving technologies for storing and transporting grains; the

Hebrew Bible The Hebrew Bible or Tanakh (;"Tanach"
'' ancient Egypt's massive grain

silo A silo (from the Greek σιρός – ''siros'', "pit for holding grain") is a structure for storing bulk materials. Silos are used in agriculture to store fermented feed known as silage, not to be confused with a grain bin, which is use ...

s. Merchant shipping was important for the carriage of grain in the classical period (and continues to be so). A

Roman Roman or Romans most often refers to: * Rome, the capital city of Italy * Ancient Rome, Roman civilization from 8th century BC to 5th century AD *Roman people, the people of ancient Rome *''Epistle to the Romans'', shortened to ''Romans'', a lett ...

merchant ship could carry a cargo of grain the length of the Mediterranean for the cost of moving the same amount 15 miles by land. The large cities of the time could not exist without the supplies delivered. For example, in the first three centuries AD, Rome consumed about 150,000 tons of Egyptian grain each year. During the classical age, the unification of

China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's List of countries and dependencies by population, most populous country, with a Population of China, population exceeding 1.4 billion, slig ...

and the pacification of the

Mediterranean The Mediterranean Sea is a sea connected to the Atlantic Ocean, surrounded by the Mediterranean Basin and almost completely enclosed by land: on the north by Western and Southern Europe and Anatolia, on the south by North Africa, and on ...

basin by the

Roman Empire The Roman Empire ( la, Imperium Romanum ; grc-gre, Βασιλεία τῶν Ῥωμαίων, Basileía tôn Rhōmaíōn) was the post-Roman Republic, Republican period of ancient Rome. As a polity, it included large territorial holdings aro ...

created vast regional markets in commodities at either end of

Eurasia Eurasia (, ) is the largest continental area on Earth, comprising all of Europe and Asia. Primarily in the Northern and Eastern Hemispheres, it spans from the British Isles and the Iberian Peninsula in the west to the Japanese archipelag ...

. The grain supply to the city of Rome was considered to be of the utmost strategic importance to Roman generals and politicians. In Europe, with the

and the rise of

feudalism Feudalism, also known as the feudal system, was the combination of the legal, economic, military, cultural and political customs that flourished in medieval Europe between the 9th and 15th centuries. Broadly defined, it was a way of structu ...

, many farmers were reduced to a subsistence level, producing only enough to fulfill their obligation to their

lord Lord is an appellation for a person or deity who has authority, control, or power (social and political), power over others, acting as a master, chief, or ruler. The appellation can also denote certain persons who hold a title of the Peerage ...

and the Church, with little for themselves, and even less for trading. The little that was traded was moved around locally at regular

fair A fair (archaic: faire or fayre) is a gathering of people for a variety of entertainment or commercial activities. Fairs are typically temporary with scheduled times lasting from an afternoon to several weeks. Types Variations of fairs incl ...

Early modern and modern expansion

A massive expansion in the grain trade occurred when Europeans were able to bring millions of square kilometers of new land under cultivation in

the Americas The Americas, which are sometimes collectively called America, are a landmass comprising the totality of North and South America. The Americas make up most of the land in Earth's Western Hemisphere and comprise the New World. Along with th ...

, Russia, and Australia, an expansion starting in the fifteenth and lasting into the twentieth century. In addition, the consolidation of farmland in Britain and

Eastern Europe Eastern Europe is a subregion of the European continent. As a largely ambiguous term, it has a wide range of geopolitical, geographical, ethnic, cultural, and socio-economic connotations. The vast majority of the region is covered by Russia, whi ...

, and the development of

railways Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a prep ...

and the

steamship A steamship, often referred to as a steamer, is a type of steam-powered vessel, typically ocean-faring and seaworthy, that is propelled by one or more steam engines that typically move (turn) propellers or paddlewheels. The first steamship ...

shifted trade from local to more international patterns. During this time, debate over

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and p ...

s and

free trade Free trade is a trade policy that does not restrict imports or exports. It can also be understood as the free market idea applied to international trade. In government, free trade is predominantly advocated by political parties that hold econ ...

in grain was fierce. Poor industrial workers relied on cheap bread for sustenance, but farmers wanted their government to create a higher local price to protect them from cheap foreign imports, with Britain's Corn Laws being an example. Tab, Indiana - Railroad

As Britain and other European countries industrialized and urbanized, they became net importers of grain from the various breadbaskets of the world. In many parts of Europe, as

serfdom Serfdom was the status of many peasants under feudalism, specifically relating to manorialism, and similar systems. It was a condition of debt bondage and indentured servitude with similarities to and differences from slavery, which develop ...

was abolished, great estates were accompanied by many inefficient

smallholding A smallholding or smallholder is a small farm operating under a small-scale agriculture model. Definitions vary widely for what constitutes a smallholder or small-scale farm, including factors such as size, food production technique or technology ...

s, but in the newly colonized regions massive operations were available to not only great nobles, but also to the average farmer. In the United States and Canada, the Homestead Act and the Dominion Lands Act allowed pioneers on the western plains to gain tracts of (1/4 of a square mile) or more for little or no fee. This moved grain growing, and hence trading, to a much more massive scale. Huge grain elevators were built to take in farmers' produce and move it out via the railways to port. Transportation costs were a major concern for farmers in remote regions, however, and any technology that allowed the easier movement of grain was of great assistance; meanwhile, farmers in Europe struggled to remain competitive while operating on a much smaller scale. From the

1911 Encyclopædia Britannica A notable ongoing event was the race for the South Pole. Events January * January 1 – A decade after federation, the Northern Territory and the Australian Capital Territory are added to the Commonwealth of Australia. * ...

1893 grain market Teheran HarpersMagazine v87 no522

The farmers of the United States have met a greatly increased output from
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
, the cost of transport from that country to England being much the same as from the United States in the 20th century. So much improved is the position of the farmer in North America compared with what it was about 1870, that the transport companies in 1901 carried 17 bushels of his grain to the seaboard in exchange for the value of one bushel, whereas in 1867 he had to give up one bushel in every six in return for the service. As regards the British farmer, it does not appear as if he had improved his position; for he has to send his wheat to greater distances, owing to the collapse of many country millers or their removal to the seaboard, while railway rates have fallen only to a very small extent; again the farmers wheat is worth only half of what it was formerly; it may be said that the British farmer has to give up one bushel in nine to the railway company for the purpose of transportation, whereas in the seventies he gave up one in eighteen only. Enough has been said to prove that the advantage of position claimed for the British farmer by Caird was somewhat illusory. Speaking broadly, the
Kansas Kansas () is a U.S. state, state in the Midwestern United States, Midwestern United States. Its Capital city, capital is Topeka, Kansas, Topeka, and its largest city is Wichita, Kansas, Wichita. Kansas is a landlocked state bordered by Nebras ...
or
Minnesota Minnesota () is a state in the upper midwestern region of the United States. It is the 12th largest U.S. state in area and the 22nd most populous, with over 5.75 million residents. Minnesota is home to western prairies, now given over t ...
farmers wheat does not have to pay for carriage to
Liverpool Liverpool is a City status in the United Kingdom, city and metropolitan borough in Merseyside, England. With a population of in 2019, it is the List of English districts by population, 10th largest English district by population and its E ...
more than 2 s. 6 d. to 7s. 6d. per
ton Ton is the name of any one of several units of measure. It has a long history and has acquired several meanings and uses. Mainly it describes units of weight. Confusion can arise because ''ton'' can mean * the long ton, which is 2,240 pounds ...
in excess of the rate paid by a
Yorkshire Yorkshire ( ; abbreviated Yorks), formally known as the County of York, is a Historic counties of England, historic county in northern England and by far the largest in the United Kingdom. Because of its large area in comparison with other Eng ...
farmer; this, it will be admitted, does not go very far towards enabling the latter to pay
rent Rent may refer to: Economics *Renting, an agreement where a payment is made for the temporary use of a good, service or property *Economic rent, any payment in excess of the cost of production *Rent-seeking, attempting to increase one's share of e ...
,
tithe A tithe (; from Old English: ''teogoþa'' "tenth") is a one-tenth part of something, paid as a contribution to a religious organization or compulsory tax to government. Today, tithes are normally voluntary and paid in cash or cheques or more ...
s and rates and taxes.

20th century changes

In the 1920s and 1930s, farmers in Australia and Canada reacted against the pricing power of the large grain-handling and shipping companies. Their governments created the

Australian Wheat Board AWB Limited was a major grain marketing organisation based in Australia. Founded in 1939 by the Government of Australia as the Australian Wheat Board, in 1999 it was sold off by the government, initially to be owned by wheat growers. It was acq ...

and the Canadian Wheat Board as monopsony marketing boards, buying all the wheat in those countries for export. Together, those two boards controlled a large percentage of the world's grain trade in the mid-20th century. Additionally, farmers' cooperatives such the

wheat pools A wheat pool is a co-operative that markets grain (mostly wheat) on behalf of its farmer-members. In Canada in 1923 and 1924, three wheat pools were created. They were farmer-owned co-operatives, created to break the power of the large for-p ...

became a popular alternative to the major grain companies. At the same time in the

Soviet Union The Soviet Union,. officially the Union of Soviet Socialist Republics. (USSR),. was a transcontinental country that spanned much of Eurasia from 1922 to 1991. A flagship communist state, it was nominally a federal union of fifteen nationa ...

and soon after in

, disastrous collectivization programs effectively turned the world's largest farming nations into net importers of grain. By the second half of the 20th century, the grain trade was divided between a few state-owned and privately owned giants. The state giants were Exportkhleb of the Soviet Union, the Canadian Wheat Board, the Australian Wheat Board, the

Australian Barley Board ABB Grain was Australia's largest agribusiness. Founded in 1939, the company was listed on the Australian Securities Exchange until its takeover by Viterra in 2009. For most of its history, the company focused solely on grain accumulation and ma ...

, and so on. The largest private companies, known as the "big five", were

Cargill Cargill, Incorporated, is a privately held American global food corporation based in Minnetonka, Minnesota, and incorporated in Wilmington, Delaware. Founded in 1865, it is the largest privately held corporation in the United States in te ...

, Continental, Louis Dreyfus, Bunge, and Andre, an older European company not to be confused with the more recent

André Maggi Group The Amaggi Group, Portuguese Grupo Amaggi is a large Brazilian commodities company involved in the soybean industry. It is the largest private producer of soybeans in the world. The company has annual sales of over $500 million, and is a large d ...

from Brazil. In 1972, the Soviet Union's wheat crop failed. To prevent shortages in their country, Soviet authorities were able to buy most of the surplus American harvest through private companies without the knowledge of the United States government. This drove up prices across the world, and was dubbed the "

great grain robbery Great may refer to: Descriptions or measurements * Great, a relative measurement in physical space, see Size * Greatness, being divine, majestic, superior, majestic, or transcendent People * List of people known as "the Great" *Artel Great (born ...

" by critics, leading to greater public attention being paid by Americans to the large trading companies. By contrast, in 1980, the US government attempted to use its

food power In international politics, food power is the use of agriculture as a means of political control whereby one nation or group of nations offers or withholds commodities from another nation or group of nations in order to manipulate behavior. Its pot ...

to punish the Soviet Union for its invasion of Afghanistan with an embargo on grain exports. This was seen as a failure in terms of foreign policy (the Soviets made up the deficit on the international market), and negatively impacted American farmers.

Modern trade

Since the Second World War, the trend in North America has been toward further consolidation of already vast farms. Transportation infrastructure has also promoted more

economies of scale In microeconomics, economies of scale are the cost advantages that enterprises obtain due to their scale of operation, and are typically measured by the amount of output produced per unit of time. A decrease in cost per unit of output enables ...

. Railways have switched from coal to diesel fuel, and introduced hopper car to carry more mass with less effort. The old wooden grain elevators have been replaced by massive concrete inland terminals, and rail transportation has retreated in the face of ever larger

truck A truck or lorry is a motor vehicle designed to transport cargo, carry specialized payloads, or perform other utilitarian work. Trucks vary greatly in size, power, and configuration, but the vast majority feature body-on-frame constructi ...

Modern issues affecting the grain trade include

food security Food security speaks to the availability of food in a country (or geography) and the ability of individuals within that country (geography) to access, afford, and source adequate foodstuffs. According to the United Nations' Committee on World ...

concerns, the increasing use of

biofuels Biofuel is a fuel that is produced over a short time span from biomass, rather than by the very slow natural processes involved in the formation of fossil fuels, such as oil. According to the United States Energy Information Administration (EIA ...

, the controversy over how to properly store and separate genetically modified and

organic Organic may refer to: * Organic, of or relating to an organism, a living entity * Organic, of or relating to an anatomical organ Chemistry * Organic matter, matter that has come from a once-living organism, is capable of decay or is the product ...

crops, the local food movement, the desire of developing countries to achieve

market access In international trade, market access is a company's ability to enter a foreign market by selling its goods and services in another country. Market access is not the same as free trade, because market access is normally subject to conditions or re ...

in industrialized economies,

climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to ...

and drought shifting agricultural patterns, and the development of new crops.

Price volatility and protections

Price volatility greatly effects countries that are dependent on grain imports, such as certain countries in the MENA region. "Price volatility is a life-and-death issue for many people around the world" warned ICTSD Senior Fellow Sergio Marchi. "Trade policies need to incentivize investment in developing country agriculture, so that poor farmers can build resistance to future price shocks".Food price spikes put the spotlight on the need for sustained commitment to agriculture
International Centre for Trade and Sustainable Development, 1 June 2010. Two major price volatility crises in the early 21st century, during the 2007–2008 world food price crisis and 2022 food crises, have had major negative effects on grain prices globally. Climate change is Effects of climate change on agriculture, expected to create major agricultural failures, that will continue to create volatile food price markets especially for bulk goods like grains. Protection against international market prices has been an important part of how some countries have responded to the volitility of market prices. For example, farmers in the European Union, United States and Japan are protected by agricultural subsidies. The European Union's programs are organized under the Common Agricultural Policy. The agricultural policy of the United States is demonstrated through the United States farm bill, "farm bill", while rice production in Japan is also protected and subsidized. Farmers in other countries has attempted to have these policies disallowed by the World Trade Organization, or attempted to negotiate them away though the Cairns Group, at the same time the wheat boards have been reformed and many tariffs have been greatly reduced, leading to a further globalization of the industry. For example, in 2008 Mexico was required by the North American Free Trade Agreement (NAFTA) to remove its tariffs on US and Canadian

. Similarly, protections in other contexts, such as guaranteed prices for grains in India, have been an important lifeline for small farmers in the context of further Industrial agriculture, industrialization of agriculture. When the BJP Party Premiership of Narendra Modi, government of Narendra Modi attempted to repeal guaranteed prices for farmers on key grains like wheat, f2020–2021 Indian farmers' protest, armers throughout the country rose in protest.

References

Works cited

*W. Broehl, ''Cargill Going Global'', University of New England Press, 1998. *W. Broehl, ''Cargill Trading the World's Grain'', University of New England Press, 1992. *Chad J. Mitcham, ''China's Economic Relations with the West and Japan, 1949-79: Grain, Trade and Diplomacy'', Routledge, 2005. *Dan Morgan, ''Merchants of Grain'', Viking, 1997. *W.E. Morriss, ''Chosen Instrument: A History of the Canadian Wheat Board, the McIvor Years'', Canadian Wheat Board, 1987 {{Authority control Grain trade, Trade by commodity Commodity markets Agricultural economics History of agriculture Intensive farming