Could The Grain Embargo of 1980 Happen Again Under Obama?
Anyone remember this Time magazine cover from January 1980?
Chances are, if you're a farmer, interested in politics, or were simply old enough to watch and remember the news from three decades ago, I'll bet this story definitely rings a bell.
At that time, President Jimmy Carter's grain embargo was an exercise in weaponizing food for the purpose of making political policy and attempting to punish a political enemy. In this case, it was the Soviet Union.
Carter enforced a grain embargo as a means of punishing the Soviet Union for its invasion of Afghanistan cost the American farmer a crucial overseas market. Subsequently, the Soviets diversified their agricultural suppliers in order to limit the effects of a future embargo.
And though prices fell, American farm products were still costlier than those of competitors on the international market; federal price supports kept prices artificially high enough so that farmers in Argentina, Australia, Canada and Europe were able to seize more of the market than ever before. The strong dollar of the Eighties combined with the economic stagnation and financial straits of purchasing nations also hurt American agricultural exports, which declined by more than 20% between 1981 and 1983, while real commodity prices plummeted 21% during the same period.
In the end, the embargo only exposed U.S. illusions about its own "food power." And so in looking back, it's difficult to imagine how President Obama or any other commander-in-chief would consider such a move.
Or would they?
Today you often hear rumors about a possible grain embargo against the likes of China, a population that depends on U.S. grains more than even most Americans realize.
"Well, it wouldn't be good for the grain market," one farmer on a message board wrote. "But it would really suck for the bond market. I bet if Obama put a grain embargo on the dollar would plunge so far everybody in the World could afford US grains. It is a different world than during Carter's term."
Yes it is. The U.S. has never before been more responsible for feeding so many mouths around the world. And with the summer we're poised to have in corn, it's possible that some commodities will also more expensive than ever. If so, doesn't that mean that make the "weapon of grain" a much more powerful weapon than it was thirty years ago?
We at Indiana Grain aren't here to make policy or push political buttons. We're just asking a question that many have considered but are perhaps too afraid to answer. Do you think the U.S. will ever weaponize grains again? And, if so, what will be the impact domestically and abroad?
Please weigh in with a thought or comment below. We’d love to hear your perspective.
Sources: Time, Newsweek, Eightiesclub.com, U.S. Department of Agriculture