Grain Trade
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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. Traders generally negotiate through a medium of cr ...
in
cereal A cereal is a grass cultivated for its edible grain. Cereals are the world's largest crops, and are therefore staple foods. They include rice, wheat, rye, oats, barley, millet, and maize ( Corn). Edible grains from other plant families, ...
s such as
wheat Wheat is a group of wild and crop domestication, domesticated Poaceae, grasses of the genus ''Triticum'' (). They are Agriculture, cultivated for their cereal grains, which are staple foods around the world. Well-known Taxonomy of wheat, whe ...
,
barley Barley (), a member of the grass family, is a major cereal grain grown in temperate climates globally. It was one of the first cultivated grains; it was domesticated in the Fertile Crescent around 9000 BC, giving it nonshattering spikele ...
,
maize Maize (; ''Zea mays''), also known as corn in North American English, is a tall stout grass that produces cereal grain. It was domesticated by indigenous peoples in southern Mexico about 9,000 years ago from wild teosinte. Native American ...
,
rice Rice is a cereal grain and in its Domestication, domesticated form is the staple food of over half of the world's population, particularly in Asia and Africa. Rice is the seed of the grass species ''Oryza sativa'' (Asian rice)—or, much l ...
, and other
food grain Food is any substance consumed by an organism for Nutrient, nutritional support. Food is usually of plant, animal, or Fungus, fungal origin and contains essential nutrients such as carbohydrates, fats, protein (nutrient), proteins, vitamins, ...
s. 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 systems 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 ...
for animal agriculture. The grain trade began as early 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 vast ...
. From the
early modern period The early modern period is a Periodization, historical period that is defined either as part of or as immediately preceding the modern period, with divisions based primarily on the history of Europe and the broader concept of modernity. There i ...
onward, grain trade has been an important part of colonial expansion and foreign policy. 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 food systems and grain pricing.
Speculation In finance, speculation is the purchase of an asset (a commodity, good (economics), goods, or real estate) with the hope that it will become more valuable in a brief amount of time. It can also refer to short sales in which the speculator hope ...
, as well as other compounding production and supply factors leading up to the
2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
, created rapid inflation of grain prices during the
2007–2008 world food price crisis World food prices increased dramatically in 2007 and the first and second quarter of 2008, creating a International crisis, global crisis and causing political and economic instability and social unrest in both Poor countries, poor and develop ...
. More recently, the dominance of
Ukraine Ukraine is a country in Eastern Europe. It is the List of European countries by area, second-largest country in Europe after Russia, which Russia–Ukraine border, borders it to the east and northeast. Ukraine also borders Belarus to the nor ...
and
Russia Russia, or the Russian Federation, is a country spanning Eastern Europe and North Asia. It is the list of countries and dependencies by area, largest country in the world, and extends across Time in Russia, eleven time zones, sharing Borders ...
in grain markets such as wheat meant that the
Russian invasion of Ukraine On 24 February 2022, , starting the largest and deadliest war in Europe since World War II, in a major escalation of the Russo-Ukrainian War, conflict between the two countries which began in 2014. The fighting has caused hundreds of thou ...
in 2022 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, also known as the First Agricultural Revolution, was the wide-scale transition of many human cultures during the Neolithic period in Afro-Eurasia from a lifestyle of hunter-gatherer, hunting and gathering to one of a ...
(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 and shelter) rather than to the market. Definition "Subsistence" is understood as supporting oneself and family at a minimum level. Basic subsiste ...
, 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 associated wi ...
s to the cores of great empires: maize in ancient Mexico, rice in
ancient China The history of China spans several millennia across a wide geographical area. Each region now considered part of the Chinese world has experienced periods of unity, fracture, prosperity, and strife. Chinese civilization first emerged in the Y ...
, and
wheat Wheat is a group of wild and crop domestication, domesticated Poaceae, grasses of the genus ''Triticum'' (). They are Agriculture, cultivated for their cereal grains, which are staple foods around the world. Well-known Taxonomy of wheat, whe ...
and
barley Barley (), a member of the grass family, is a major cereal grain grown in temperate climates globally. It was one of the first cultivated grains; it was domesticated in the Fertile Crescent around 9000 BC, giving it nonshattering spikele ...
in the
ancient Near East The ancient Near East was home to many cradles of civilization, spanning Mesopotamia, Egypt, Iran (or Persia), Anatolia and the Armenian highlands, the Levant, and the Arabian Peninsula. As such, the fields of ancient Near East studies and Nea ...
. With this came improving technologies for storing and transporting grains; the
Hebrew Bible The Hebrew Bible or Tanakh (;"Tanach"
. '' ancient Egypt Ancient Egypt () was a cradle of civilization concentrated along the lower reaches of the Nile River in Northeast Africa. It emerged from prehistoric Egypt around 3150BC (according to conventional Egyptian chronology), when Upper and Lower E ...
's massive grain
silo A silo () is a structure for storing Bulk material handling, bulk materials. Silos are commonly used for bulk storage of grain, coal, cement, carbon black, woodchips, food products and sawdust. Three types of silos are in widespread use toda ...
s. Merchant shipping was important for the carriage of grain in the classical period (and continues to be so). A Roman 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. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
, 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 east by the Levant in West Asia, on the north by Anatolia in West Asia and Southern ...
basin by the
Roman Empire The Roman Empire ruled the Mediterranean and much of Europe, Western Asia and North Africa. The Roman people, Romans conquered most of this during the Roman Republic, Republic, and it was ruled by emperors following Octavian's assumption of ...
created vast regional markets in commodities at either end of
Eurasia Eurasia ( , ) is a continental area on Earth, comprising all of Europe and Asia. According to some geographers, Physical geography, physiographically, Eurasia is a single supercontinent. The concept of Europe and Asia as distinct continents d ...
. 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
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 vast ...
and the rise of
feudalism Feudalism, also known as the feudal system, was a combination of legal, economic, military, cultural, and political customs that flourished in Middle Ages, medieval Europe from the 9th to 15th centuries. Broadly defined, it was a way of struc ...
, 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 o ...
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. Fairs showcase a wide range of go ...
s.


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, sometimes collectively called America, are a landmass comprising the totality of North America and South America.'' Webster's New World College Dictionary'', 2010 by Wiley Publishing, Inc., Cleveland, Ohio. When viewed as a sin ...
, 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 Europe, European continent. As a largely ambiguous term, it has a wide range of geopolitical, geographical, ethnic, cultural and socio-economic connotations. Its eastern boundary is marked by the Ural Mountain ...
, and the development of
railways Rail transport (also known as train transport) is a means of transport using wheeled vehicles running in tracks, which usually consist of two parallel steel rails. Rail transport is one of the two primary means of land transport, next to roa ...
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 steamships ...
shifted trade from local to more international patterns. During this time, debate over
tariff A tariff or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...
s and
free trade Free trade is a trade policy that does not restrict imports or exports. In government, free trade is predominantly advocated by political parties that hold Economic liberalism, economically liberal positions, while economic nationalist politica ...
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, resulting in legislation such as Britain's
Corn Laws The Corn Laws were tariffs and other trade restrictions on imported food and corn enforced in the United Kingdom between 1815 and 1846. The word ''corn'' in British English denotes all cereal grains, including wheat, oats and barley. The la ...
. As Britain and other European countries industrialized and the urban population increased, they became net importers of grain from the various
breadbasket The breadbasket of a country or of a region is an area which, because of the richness of the soil and/or advantageous climate, produces large quantities of wheat or other grain. Rice bowl is a similar term used to refer to Southeast Asia; Calif ...
s 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. It developed du ...
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 technolo ...
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 The Homestead Acts were several laws in the United States by which an applicant could acquire ownership of Federal lands, government land or the American frontier, public domain, typically called a Homestead (buildings), homestead. In all, mo ...
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 production, and hence trading, to a much more massive scale. 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.


20th century changes

During the
Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
, 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 and the Canadian Wheat Board as
monopsony In economics, a monopsony is a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers. The Microeconomics, microeconomic theory of monopsony assume ...
marketing board A marketing board is an organization created by many producers to try to market their product and increase consumption and thus prices. It can also be defined as an organization set up by a government to regulate the buying and selling of a certai ...
s, 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 became a popular alternative to the major grain companies. At the same time in the
Soviet Union The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...
and soon after in
China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
, disastrous
collectivization Collective farming and communal farming are various types of "agricultural production in which multiple farmers run their holdings as a joint enterprise". There are two broad types of communal farms: agricultural cooperatives, in which member- ...
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, and so on. The largest private companies, known as the "big five", were
Cargill Cargill, Incorporated is an American multinational food corporation based in Minnetonka, Minnesota, Minnetonka, Minnesota, and incorporated in Wilmington, Delaware. Founded in 1865 by William Wallace Cargill, it is the largest privately held c ...
, Continental, Louis Dreyfus, Bunge, and Andre, an older European company not to be confused with the more recent André Maggi Group 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" by critics. Subsequently, Americans paid greater attention to large trading companies. By contrast, in 1980, the US government attempted to use its food power 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 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 Productivity, output produced per unit of cost (production cost). A decrease in ...
. 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 freight, carry specialized payloads, or perform other utilitarian work. Trucks vary greatly in size, power, and configuration, but the vast majority feature body-on-frame construct ...
s. Modern issues affecting the grain trade include
food security Food security is the state of having reliable access to a sufficient quantity of affordable, healthy Human food, food. The availability of food for people of any class, gender, ethnicity, or religion is another element of food protection. Simila ...
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. Biofuel can be produced from plants or from agricultural, domestic ...
, the controversy over how to properly store and separate genetically modified and organic crops, the
local food Local food is food that is produced within a short distance of where it is consumed, often accompanied by a social structure and supply chain different from the large-scale supermarket Food system, system. Local food (or locavore) movements ...
movement, the desire of developing countries to achieve
market access In international trade, market access refers to 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 condition ...
in industrialized economies,
climate change Present-day climate change includes both global warming—the ongoing increase in Global surface temperature, global average temperature—and its wider effects on Earth's climate system. Climate variability and change, Climate change in ...
and
drought A drought is a period of drier-than-normal conditions.Douville, H., K. Raghavan, J. Renwick, R.P. Allan, P.A. Arias, M. Barlow, R. Cerezo-Mota, A. Cherchi, T.Y. Gan, J. Gergis, D.  Jiang, A.  Khan, W.  Pokam Mba, D.  Rosenfeld, J. Tierney, ...
, 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 The Middle East and North Africa (MENA), also referred to as West Asia and North Africa (WANA) or South West Asia and North Africa (SWANA), is a geographic region which comprises the Middle East (also called West Asia) and North Africa together ...
. "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 World food prices increased dramatically in 2007 and the first and second quarter of 2008, creating a International crisis, global crisis and causing political and economic instability and social unrest in both Poor countries, poor and develop ...
and 2022 food crises, have had major negative effects on grain prices globally. Climate change is 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 The European Union (EU) is a supranational union, supranational political union, political and economic union of Member state of the European Union, member states that are Geography of the European Union, located primarily in Europe. The u ...
, United States, and Japan are protected by
agricultural subsidies An agricultural subsidy (also called an agricultural incentive) is a government incentive paid to agribusinesses, agricultural organizations and farms to supplement their income, manage the supply of agricultural products, and influence the ...
. The European Union's programs are organized under the
Common Agricultural Policy The Common Agricultural Policy (CAP) is the agricultural policy of the European Commission. It implements a system of agricultural subsidies and other programmes. It was introduced in 1962 and has since then undergone several changes to reduce ...
. The
agricultural policy of the United States The agricultural policy of the United States is composed primarily of the periodically renewed federal U.S. farm bills. The Farm Bills have a rich history which initially sought to provide income and price support to US farmers and prevent them f ...
is demonstrated through the "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 The World Trade Organization (WTO) is an intergovernmental organization headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...
, 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 Globalization is the process of increasing interdependence and integration among the economies, markets, societies, and cultures of different countries worldwide. This is made possible by the reduction of barriers to international trade, th ...
of the industry. For example, in 2008 Mexico was required by the
North American Free Trade Agreement The North American Free Trade Agreement (, TLCAN; , ALÉNA), referred to colloquially in the Anglosphere as NAFTA, ( ) was an agreement signed by Canada, Mexico, and the United States that created a trilateral trade bloc in North America. The ...
(NAFTA) to remove its tariffs on US and Canadian
maize Maize (; ''Zea mays''), also known as corn in North American English, is a tall stout grass that produces cereal grain. It was domesticated by indigenous peoples in southern Mexico about 9,000 years ago from wild teosinte. Native American ...
. 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 industrialization of agriculture. When the BJP Party government of Narendra Modi attempted to repeal guaranteed prices for farmers on key grains like wheat, farmers throughout the country rose in protest.


See also

* Bread of Ukraine *
Cash crop A cash crop, also called profit crop, is an Agriculture, agricultural crop which is grown to sell for profit. It is typically purchased by parties separate from a farm. The term is used to differentiate a marketed crop from a staple crop ("subsi ...
*
Monoculture In agriculture, monoculture is the practice of growing one crop species in a field at a time. Monocultures increase ease and efficiency in planting, managing, and harvesting crops short-term, often with the help of machinery. However, monocultur ...


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 Agricultural economics Commodity markets History of agriculture Intensive farming Trade by commodity