Economic and Marketing Information for Indiana Farmers, v. 01, no. 02 (Aug. 1947) |
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Volume 1 No. 2 FOR INDIANA FARMERS INFORMATION Lafayette, Indiana August, 1947 Prepared by members of the Agricultural Staff of Purdue University THE OUTLOOK FOR FOREIGN DEMAND FOR AMERICAN AGRICULTURAL PRODUCTS By E. C. YOUNG, Agricultural Economics PRICES of American farm products have been maintained at an abnormally high level during the post war period. On June 15, the index of Indiana farm product prices was 263 compared with 1935-1939 as 100. Since the close of World War II, prices of farm products have moved erratically upward. This in spite of the fact that American agricultural production has been at a very high level during this period, average 30 per cent greater than before the war. The explanation for these high prices is found in the very high level of domestic demand and a high and persistent foreign demand. Although foreigners take only a very small fraction of American food production, foreign demand is an important factor in explaining the sharp rise in prices. Since the demand for food is comparatively inelastic,the foreign demand, although small, added to the domestic demand results in these sharp price increases. During the 1935-1940 period, 97 per cent of the United States food supply was consumed in the domestic market and less than 3 per cent was exported. In 1946, 89 per cent of the United States food supply was used in the domestic market, 3 per cent was used by the military and for civil feeding by the military. Five per cent was purchased by the United States Department of Agriculture for UNRRA and foreign relief and 3 per cent was exported commercially. In 1946, therefore, United States exports of food amounted to about 8 per cent of the food supply when both relief and commercial exports are combined. Most U. S. Food Exports Go To Europe Most economists have held that the post war boom in food exports would be short lived because (a) European agriculture was expected to revive promptly and (b) foreign purchasing power would not be sufficient to permit continued purchase of agricultural products on the American market. Most of the food exports from the United States go to western Europe. Before the war England and Germany were the largest importers of food. Therefore, the problem of foreign demand for American food can be best understood by examining the likelihood of continued demand for United States food in western Europe. Great areas of the world, including China, India and much of the Near East, have been on the verge of starvation for centuries. We have become used to this situation and seldom think of these areas as being potential consumers of American food products. On the other hand, western Europe with its high standard of living and its well developed foreign trade has historically been able to sell its own industrial products abroad and, with the money received, buy enough food products to sustain its population with a food standard of living not too different from our own. Roughly speaking, these commercial countries in western Europe imported about a third of their food supplies before the war. The sixty-four dollar question is "Will England, France, Germany, Belgium and the Netherlands be able to return to a food standard of living comparable to that before the war or will they gradually sink to a subsistence level comparable to that of southern and eastern Europe, i.e., Spain Italy, Greece and the Balkans?" Only by correctly answering this question can one predict with confidence the outlook for American food in the European market. Will We Continue To Feed Europe? Europe can, if given time, probably produce enough food stuff to sustain its present population at slightly above the subsistence level. This will mean, of course, that the diet of the typical European will be essentially a grain and vegetable diet and will contain comparatively small amounts of milk, eggs, and other animal products. With the present disorganization of agriculture in Europe, even this low standard of subsistence cannot be maintained. Outside of the devastated areas, farms in Europe came through the war in better condition than did industry. The labor force was reduced and the efficiency of labor was greatly decreased. (Continued on page 3)
Object Description
Title | Economic and Marketing Information for Indiana Farmers, v. 01, no. 02 (Aug. 1947) |
Purdue Identification Number | UA14-13-econ194708 |
Date of Original | 1947 |
Publisher | Purdue University. Agricultural Extension Service |
Subjects (LCSH) |
Farm produce--Indiana--Marketing Agriculture--Economic aspects--Indiana |
Genre | Periodical |
Collection Title | Extension Economic & Marketing Information (Purdue University. Agricultural Extension) |
Rights | Copyright Purdue University. All rights reserved. |
Coverage | United States - Indiana |
Type | text |
Format | JP2 |
Language | eng |
Repository | Purdue University Libraries |
Date Digitized | 02/26/2015 |
Digitization Specifications | Original scanned at 400 ppi on a BookEye 3 scanner using Opus software. Display images generated in Contentdm as JP2000s; file format for archival copy is uncompressed TIF format. |
URI | UA14-13-econ194708.tif |
Description
Title | Economic and Marketing Information for Indiana Farmers, v. 01, no. 02 (Aug. 1947) |
Purdue Identification Number | UA14-13-econ194708 |
Transcript | Volume 1 No. 2 FOR INDIANA FARMERS INFORMATION Lafayette, Indiana August, 1947 Prepared by members of the Agricultural Staff of Purdue University THE OUTLOOK FOR FOREIGN DEMAND FOR AMERICAN AGRICULTURAL PRODUCTS By E. C. YOUNG, Agricultural Economics PRICES of American farm products have been maintained at an abnormally high level during the post war period. On June 15, the index of Indiana farm product prices was 263 compared with 1935-1939 as 100. Since the close of World War II, prices of farm products have moved erratically upward. This in spite of the fact that American agricultural production has been at a very high level during this period, average 30 per cent greater than before the war. The explanation for these high prices is found in the very high level of domestic demand and a high and persistent foreign demand. Although foreigners take only a very small fraction of American food production, foreign demand is an important factor in explaining the sharp rise in prices. Since the demand for food is comparatively inelastic,the foreign demand, although small, added to the domestic demand results in these sharp price increases. During the 1935-1940 period, 97 per cent of the United States food supply was consumed in the domestic market and less than 3 per cent was exported. In 1946, 89 per cent of the United States food supply was used in the domestic market, 3 per cent was used by the military and for civil feeding by the military. Five per cent was purchased by the United States Department of Agriculture for UNRRA and foreign relief and 3 per cent was exported commercially. In 1946, therefore, United States exports of food amounted to about 8 per cent of the food supply when both relief and commercial exports are combined. Most U. S. Food Exports Go To Europe Most economists have held that the post war boom in food exports would be short lived because (a) European agriculture was expected to revive promptly and (b) foreign purchasing power would not be sufficient to permit continued purchase of agricultural products on the American market. Most of the food exports from the United States go to western Europe. Before the war England and Germany were the largest importers of food. Therefore, the problem of foreign demand for American food can be best understood by examining the likelihood of continued demand for United States food in western Europe. Great areas of the world, including China, India and much of the Near East, have been on the verge of starvation for centuries. We have become used to this situation and seldom think of these areas as being potential consumers of American food products. On the other hand, western Europe with its high standard of living and its well developed foreign trade has historically been able to sell its own industrial products abroad and, with the money received, buy enough food products to sustain its population with a food standard of living not too different from our own. Roughly speaking, these commercial countries in western Europe imported about a third of their food supplies before the war. The sixty-four dollar question is "Will England, France, Germany, Belgium and the Netherlands be able to return to a food standard of living comparable to that before the war or will they gradually sink to a subsistence level comparable to that of southern and eastern Europe, i.e., Spain Italy, Greece and the Balkans?" Only by correctly answering this question can one predict with confidence the outlook for American food in the European market. Will We Continue To Feed Europe? Europe can, if given time, probably produce enough food stuff to sustain its present population at slightly above the subsistence level. This will mean, of course, that the diet of the typical European will be essentially a grain and vegetable diet and will contain comparatively small amounts of milk, eggs, and other animal products. With the present disorganization of agriculture in Europe, even this low standard of subsistence cannot be maintained. Outside of the devastated areas, farms in Europe came through the war in better condition than did industry. The labor force was reduced and the efficiency of labor was greatly decreased. (Continued on page 3) |
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