If history proves, Russian import ban will fail
When headlines surfaced last week that Russia would block U.S. agricultural imports, the news seemed dire, or at the very least, unpredictable.
The day it was announced, markets reacted, with Agrimoney.com calling a surge in wheat prices the “Putin premium.”
Since then, most politicians, commodity groups and market watchers are, as this week’s headline in Businessweek said, “Russia bans food imports and many U.S. exporters shrug.”
Just 10 percent of the U.S. export market goes to Russia, according to the USDA. The top market is for poultry, but even the National Chicken Council seems unconcerned, saying in recent years, Russia has become less important.
“Russia currently accounts for only about 7 percent of total U.S. poultry export volume,” a council news release said. “In the mid-1990s, exports to Russia were as much as 40 percent of that total.”
If history has anything to reveal on this issue – and it does – the Russian ban will only hurt Russia.
“It’s a pretty blunt weapon to use and one that doesn’t target the intended victim,” said Sara Gregg, assistant history professor at the University of Kansas.
Gregg, who focuses on the environment and agriculture, has studied the farm crisis of the 1980s, when thousands lost their family farms and rural population declined. One of the contributing factors was the 1980 grain embargo, ordered by then President Jimmy Carter, himself a Southern peanut farmer.
Carter, trying to punish the Soviet Union for invading Afghanistan, triggered a severe drop in prices for U.S. grain in the 1980s, just a decade after a surge in production by American farmers to help fill those export orders. The Soviets responded by getting grain from other countries, leaving the overleveraged U.S. producers with an abundance of grain at very low prices.
“It seems an unproductive response to an extremely challenging geo-political situation,” Gregg said. “Food has always been used as a weapon in various ways, but not so often in terms of international trade, per se.”
That seemed to be common knowledge even back in the fall of 1980, when Robert Paarlberg wrote in Foreign Affairs:
The urge to teach someone a lesson seldom inspires sound policy. The lessons learned are too often one's own. So it is with President Carter's 1980 grain embargo. Soviet food supplies have been little affected. U.S. illusions about its own "food power" have been properly dispelled.