., $4’ -_I ,-14",» CONGRESSIONAL RESEARCH SERVICE LIBRARY OF CONGRESS AGRICULTURE: U.S. EMBARGO OF AGRICULTURAL EXPORTS TO U.S.S.R. ISSUE BRIEF NUMBER IB80025 AUTHOR: Cate, Penelope C. Environment and Natural Resources Policy Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE MAJOR ISSUES SYSTEM DATE ORIGIDNATED _(_)__I_3_[_QZ[§_Q DATE UPDATED Q8 gggggg FOR ADDITIONAL INFORMATION CALL 287-5700 0820 CRS- 1 IB80025 UPDATE-O8/20/80 l§§Q§-Q§El!l$IQ! Invoking authority granted under the Export Administration Act of 1979 (P.L- 96-72), President Carter, on Jan. H, 1980, suspended all agricultural sales to the Soviet Union in excess of the 8 million metric tons (mt) of grain which the U.s. is committed to sell under the 1975 U.S.-U.S.S.B. grain agreement. This embargo stopped the sale of 17 mt of grain. The loss of U.S. feedgrains, unless replaced, will constrict Soviet livestock production and civilian meat consumption. The U.S. will be affected by increased Federal outlays and, if alternative markets are not found, may be affected in the long—run by lower commodity prices and lower farm incomes. The embargo raises policy considerations for the U.S. Potential issues of concern to the 96th Congress include the following: * legislation to implement portions of the President's programs to offset the potential adverse impact of the embargo on the domestic farm economy; * development of alternative programs and policies designed to minimize the domestic impact of the loss of a major agricultural export market; * consideration of the future use of agricultural exports as a "diplomatic tool" and the consequent development of agricultural policies and agrams consistent with the use of food as an instrument of diplomacy. §AQE§§QQED-AEQ.£QLl§X-AEALl§l§ In response to the Soviet Union's military invasion of Afghanistan, President Carter announced, on Jan. 4, 1980, that U.S. exports of grain to the Soviet Union would be limited to 8 mt as provided in the 1975 joint agreement between the two countries. The U.S. had previously granted permission for Soviet purchases of 25 mt in 1980. The effect of the announcement is to reduce probable U.S. grain sales to the Soviet Union by 17 mt. In addition, Federal regulations, which became effective January 7, suspended export licenses for all other agricultural products to the Soviet Union, and required that future requests for export licenses be judged on a case—by—case basis by the Department of Commerce. This in effect embargoed the sale of any agricultural exports to the Soviet Union. Federal regulations were subsequently amended, effective February Q, to remove certain non-strategic agricultural commodities from validated licensing control, thus enabling these commodities to be exported to the Soviet Union without prior approval by the Government. Commodities removed from restricted sales are those determined not to affect Soviet grain and meat supplies. These products include feathers, tobacco, fruits and vegetables, nuts other than peanuts, and wood. Agricultural products that could be used by the Soviets for feed or meat replacement under extreme circumstances remain subject to the case-by-case licensing procedure. These products i lude tallow, shrimp, and meat extenders. The embargo remains in effect on all exports of grain in excess of the 8 mt, and on seeds, soybeans, meat, poultry, dairy products, and some animal fats. Of the 8 mt of grain allowed to be sold this year, about 5.5 mt had already been shipped to the Soviets prior to the embargo. A longshoremen's boycott of Soviet cargo, which took effect January 9, interrupted delivery of the remaining portion of the 8 mt commitment. To reduce the resulting CRS- 2 IB80025 UPDATE-08/20/80 congestion of the domestic grain transportation system, President Carter announced on January 19 that the Government would offer to purchase the grai affected by the longshoremen's boycott. In suspending agricultural exports to the Soviet Union, the President used authority granted under the Export Administration Act of 1979 (P.L. 96-72), citing both national security and foreign policy reasons. when invoking national security reasons, P.L. 96-72 does not require the President to consult with or obtain approval from the Congress. A foreign policy justification requires the President to consult with and report to Congress, which the Administration states it has done. The law also states that in the case of suspending agricultural exports for foreign policy reasons, the action can be overturned by a vote of both Houses of Congress within 30 days. In announcing his decision to halt the sale of 17 mt of grain to the Soviet Union, President Carter vowed to make every effort to maintain farm prices by keeping this grain off the domestic market through a series of Government measures. According to White House and USDA analyses, such additional domestic supplies, without Government action, would result in a $3 billion reduction in 1980 farm income and an estimated decline of aboutw 15 cents per bushel in corn and other feedgrain prices, and a 25-cent per bushel decrease in wheat and soybean prices in 1980. The 17 million ton reduction in U.S. grain exports would have also meant substantial financial losses t the grain companies with_whom the Soviets had contracted, and a $2 billion decrease in the value of agricultural exports. To minimize these impacts, the Administration announced the following measures: E22922gent.9ffer§-§9-22r2he§e-ell-grein-in-ezee§§_9f the- §- 22.- ee ae_§91Qeen..enQ-fh§1r.2;2dust§l_§heflhed-been 22nfre2ted-f9r-shi9ment to _§9y;gt_Qn;ggg This includes approximately 4 mt of wheat, 13 mt of corn, . mt of soybeans. The CCC purchases of contract rights for wheat, corn, and soybeans are designed to minimize financial losses to the grain companies as well as to hold the grain off the market until it can be sold without unduly depressing farm prices. The USDA and the 14 exporting companies involved, negotiated an "exporters agreement" under which the Commodity Credit Corporation (CCC) agreed to assume the outstanding contracts for grain previously committed to the Soviet Union in exchange for the companies’ release of certain financial information proving that no profits were being made in the transactions. On February 15, twelve exporting firms approved the exporters agreement (Cargill, Continental, Farmers Export, Toepher, Goodpasture, Bunge, Louis Dreyfus Corp., Garnac, Pasternak/Baum, Pillsbury Cb., Tidewater, and Tradigrain, Inc.). Two companies, Central Soya and Philipp Brothers Grain Corp., declined to sign the agreement. As specified under the agreements, the CCC assumed contract rights on the total 4 mt of wheat intending to use the wheat in foreign food assistant programs (P.L. 480). with regard to corn, the CCC intended to either take physical delivery or resell the contract to a third party for domestic or export usage. The CCC would only resell the contract if the price was above the pre-embargo level. The USDA estimates a pre-embargo corn price of approximately $2.40 per bushel. Under current statutes, if the CCC takes delivery of the corn it cannot be sold back into the market at prices below CBS- 3 IB80025 UPDATE—08/20/80 .15 per bushel. By mid-February, the CCC had assumed contracts on 10.8 mt or corn. In addition to purchases of wheat and corn, the CCC also assumed contracts on approximately 740,000 tons of soybeans, 400,000 tons of soybean meal, and 30,000 tons of soybean oil affected by the embargo. The embargo also stopped the sale of about 65,000 tons of poultry to the Soviet Union. On January 19, the USDA announced a program to purchase some of the poultry affected by the embargo for use in Federal food assistance programs. To further support commodity prices, in addition to assuming exporter's contracts on 4 mt of wheat, 10.8 mt of corn, and .7 mt of soybeans, the CCC has promised to purchase or has been purchasing varying amounts of these commodities on the open market, either from county elevators or directly from farmers. On January 22, the Corporation issued the first of a series of invitations to purchase corn on the domestic market. As of June 10, the CCC had bought approximately 3.8 mt (150.4 million bushels) of corn at an overall 5 average price of $2.47 a bushel. This translates into a total cost of $371.7- million. On March 7, the CCC began a wheat purchase program with the aim of removing from the domestic market an amount of wheat equal to that embargoed, through a series of bi-monthly purchases. By mid-April, the Corporation had purchased 4.2 mt (156 million bushels) of wheat and concluded its wheat purchase program. 2.4 mt (94.4 million bushels) of wheat had been bought directly from farmers. The overall weighted average price of the purchases was $3.68 per bushel, which translates into a total cost of $569.3 million. The CCC has begun selling, or "retendering", into the domestic market the contracts taken over from the grain exporters. According to the USDA, the retendering at this time, represents an orderly marketing of the grain under contract. Some observers, however, see the addition of this grain into the market as having a price—depressing affect. on April, the CCC opened for purchase contract rights it had assumed for the 4.5 mt of wheat and the 10.8 mt of corn. As of June 17, the CCC had sold the rights to 5.2 mt (205 million bushels) of corn, atta weighted average price of $2.97 per bushel, and 2.8 mt (101.7 million bushels) of wheat, at a weighted average price ofp $4.57 per bushel. The CCC had been selling contract rights on soybeans since March 20. As of may 28, the corporation ha assigned contract rights on all .7 at of soybeans affected by the embargo. The weighted average price for the purchases was $6.25 per bushel. The CCC has also retendered contract rights on 300,000 mt of soybean meal, at a weighted average price of $5.45 per bushel. The USDA came under heavy criticism from soybean producers who contended that even though the Secretary of Agriculture had promised not to sell the contracts for less than pre-embargo prices, the CCC had indeed sold them at prices lower than the pre-embargo rates, thus further depressing already low soybean prices. In response to this criticism, Secretary of Agriculture Bergland announced that the Corporation would purchase, on the open market, soybeans in the amount equal to those sold under contract during the period April 4 through April 22. No purchases of soybeans have been made by the CCC a. of June 20. (2) §§B§.1l§.5.-QQ..Q§-E.1l§.§§l3ll§E:.1!§lQ..Q£§..iB-..1?§§§H§.§1-i-BEEQQS. giving the .f_.i.1_:s.*_c:zse;..1.9§u-interest costs. rais.i.r.1g..re ease. nQ_b92§tiu9-§§22e9e_221men:§-§9-£2rme;§. Specific actions taken to encourage increased participation in the farmer-held grain reserve include: CRS- H IB80025 UPDATE-08/20/80 a. increasing the wheat loan price for the 1979 crop from $2.35 to $2.5- a bushel; b. increasing the corn loan price for the 1979 crop from $2.00 to $2.10 a bushel (with comparable increases for the other feedgrains); c. increasing the reserve release price for wheat from $3.29 to $3.75 a bushel (150% of the new loan price): d. increasing the reserve call price for wheat from $u.11 to $4.63 a bushel (185% of the new loan price); " e. increasing the reserve release price for corn from $2.50 to $2.63 a bushel (125% of the new loan price); f. increasing the reserve call price for corn from $2.80 to $3.05 a bushel (1fl5% of the new loan price); 3 g. increasing the reserve release and call prices for other feedgrains comparable to corn; ' h. increasing the reserve storage payments from 25 to 26.5 cents per bushel for all reserve commodities except oats, which is increased from 19 to 20 cents a bushel; and . i. waiving the first-year interest costs for the next 13 million tons or A corn entering the reserve. ‘ These actions are designed to protect those farmers still holding grain by enabling them to keep their grain off the market until they can obtain a more favorable price. The reserve was expanded on Apr. 15, 1980, to include corn producers who had not participated in the 1979 feedgrain set-aside program. Under authority of recently enacted legislation, the Secretary of Agriculturew announced that corn farmers would be allowed to place previously ineligible corn into the reserve on a first-come, first-served basis until 7.5 mt (295 million bushels) were placed in reserve or until June 15, whichever comes first. 3 (3) ?.£9.!91EiQ....Q§.§£{£lS£ElEE£§l-§§P9.£E§_12L§.§B§Il£1.}..1l9-11h_§.-Q-§1§.§£EQEE Q?.§<.3.lE §@.le§-an<1-n9.n:§2nae;=.9.ia;-B;:-51;-A§§t;;..ns.=e.2.I;g;am-. FY80 program levels had been set at $725 million for the Export Credit Sales Program and $600 million for the Non-Commercial Risk Assurance Program, for a total of $1.325 billion. It is now planned that $800 million will be directed to the Export Credit Sales Program and $1 billion to the Non-Commercial Risk Assurance Program for a total of $1.8 billion in FY80. For FY81, the proposal is to increase the Non-Commercial Risk Assurance Program level to $2 billion. This ceiling would allow for an additional billion of new guarantees in FY81, if loans guaranteed in FY80 total $1 billion. No authorization for the Export Credit Sales Program will be requested in FY81. This would result in a decrease of $800 million in credit available for export promotion in FY81 as compared to FY80. necessary. CRS- 5 ‘ IB80025 UPDATE-08/20/80 A decision not to institute a paid diversion was announced on February 29 by Secretary of Agriculture Bergland. (5) Iu2ree§sd_2se 9: qrein§-in-9a§9h2l-2r2du2:i9u; The Administration has announced a program to encourage the expansion of gasohol production in 1980, primarily through tax incentives, loans, and loan guarantees. The Secretary of Agriculture has estimated that this program alone could be a market for up to 3 mt of grain by the end of 1980. At the present time, however, there is inadequate distillery capacity to process large volumes of grain. A number of measures are pending in the Congress that would provide loans for construction of fuel alcohol facilities and/or guaranteed supplies of grain as a raw material. However, the construction of such large facilities would require several years. Initial outlays for these five steps could amount to $3.0 billion in FY80. Implementation will require some changes in the Federal budget and additional congressional legislation. lmeect 2f_2he_§2h2£99.2u the Q A substantial drop in wheat and corn prices was expected in the short-term z the market adjusted to the news of the large reduction in U.S. grain eiports. In anticipation of such a response, the Commodity Futures Trading Commission suspended futures trading in grain on January 7 and 8. This allowed USDA time to develop --and the trade time to evaluate -- corrective measures. Responses in the grain market developed as anticipated with an initial dramatic decline in grain prices. Following a 2-day suspension of trading in the futures market, prices dropped 7% for wheat and corn before reversing. Cash wheat prices (Kansas City) dropped from $0.39 1/u on Thursday, January 3, the day before the embargo was announced, to $u.oo 3/4 the following Thursday. Cash corn prices (Chicago) dropped from $2.62 1/2 to $2.30 1/4. On Friday, January 11, prices started to recover and a week later were near pre-embargo levels. According to the USDA, as of February 5 wheat prices had advanced above pre-embargo levels in most areas. Corn prices, more heavily affected by the embargo, responded more slrwly with prices averaging slightly below pre-embargo prices. The recovery in market prices that occurred was in part due to actions taken by the President. 5 Prices received by farmers for wheat, corn, and soybeans have dropped since February. According to USDA statistics, the average price received by farmers for wheat in April was $3.fl0 per bushel, contrasted with $3.78 per bushel in February. For corn, prices received by farmers averaged $2.31 per bushel in April, compared to $2.00 per bushel in March. with regard to soybeans, prices received by farmers in April averaged $5.50 per bushel as c pared to $5.94 in March and $6.20 per bushel in February. Many producers see the steady decline in prices as a direct consequence of the embargo. Others see the embargo as having a relatively minor impact on farm prices and income. Date Resources, Inc., (DRI), an econometric modeling service, holds this view to be correct for the following reasons: CRS— 6 IB80025 UPDATE-O8/20/80 First, the amount curtailed was not overwhelming; around 500 million bushels of corn were embargoed, a quantity fairly easily absorbed in a market which saw production of nearly 2.5 billion bushels this crop year. For wheat, the quantities were smaller -- around 135 million bushels out of a crop of 2.1 billion and expected exports of 1.0 billion. Secondly, the Administration and the Congress have taken several steps to compensate both the holders of the nullified export contracts and the farmers. As a result, cash corn prices fell only 9 cents per bushel from December 1979 to the Harch 1980 price of $2.60 per bushel - well above last year's March price. The Hay 1980 corn futures contract averaged $2.70 in March 1980 compared with $2.75 in Harch 1979. Similarly, March 1980 wheat cash prices were down only 1% from December but up 10% from Harch 1979. In fact, wheat has shown surprising strength given the current prospects for high world production in 1980. The 17 mt reduction in U.S. grain exports will affect the U.S. balance of 8 payments. Prior to the severe curtailment of U.S. grain exports to the Soviet Union, total U.S. agricultural exports to that country during FY80 were forecast at roughly $4 billion, with the sale of ,the 25 mt of grain accounting for $3-3.2 billion. Unless this grain can be sold elsewhere, the 17 million metric ton reduction in grain sales to the Soviet Union implies a loss of roughly $2 billion in export earnings and a 17% decline in total U.S. 8 grain exports. A The USDA is, however, forecasting record agricultural exports in 1980 a1 anticipates that additional purchases by other countries, such as Mexico, China, Egypt, and Spain, will in part make up for the loss of -the 17 mt Soviet grain export market. Prior to the embargo, the USDA was forecasting agricultural exports of $38 billion in FY80, up $5 billion from FY79. In January 1980 the USDA cut that forecast by $2 billion. In its May Outlook for U.S. Agricultural Exports, the USDA again estimates exports of $38 billion in FY80. This upward revision is largely because of continued strength in cotton, grain, and oilseed exports. Wheat exports are expected to increase more than 10% in FY80 to total 35 million tons. Feedgrain exports are estimated at 65.9 mt, up from FY79's 60.2 mt level. Because the Soviets have been unable to produce enough feedgrains consistently to expand their livestock production, they have reluctantly increased their reliance on grain imports from western sources. Over the past several years the Soviet Union has increasingly turned to the United States for large amounts of wheat and corn. On the average, the Soviets receive 6-8% of their total grain consumption from the U.S. The following table provides information on Soviet imports of grain from the U.S. during the period 1971/72-1979/80. CRS— 7 IB80025 UPDATE-O8/20/80 U.S.S.R. Imports of Grain from the U.S. 1971/72 - 1979/80 leer: 2225: 9922 $92!; mt 1971/72 —- 3.0 3.0 1972/73 9.5 u.o 13.5 1973/7n 2.7 4.5 7.3 197a/75 1.0 1.3 2.3 1975/75 u.u 10.5 1u.9 1976/77 3.0 3.1 5.1 1977/73 3.5 11.1 1u.5 1978/79 u.o 11.7 15.7 1979/30*: 6.7 15.1 21.8 * Data for 1971/72 through 1975/76 are for crop years. Subsequent data are for grain agreement years which run from October through September. ** Data for 1979/80 are sales to the U.S.S.R., not shipments, as of Jan. 3, 1980, prior to the embargo. . Source: Compiled from publications and private communications from the U.S. Department of Agriculture. ' CBS— 8 IB80025 UPDATE-08/20/80 At the time the embargo was imposed, USDA was forecasting Soviet grain utilization during the 1979/80 marketing year at 228 mt. Of this, a: estimated 128 mt was to be used for livestock feed. Total Soviet grainy import needs were estimated at 34 mt. The U.S. was expected to supply approximately 71% of that amount, which would provide for about 11% of total use. 1 Even though the Soviets can partially make up for the embargo by significantly drawing down stocks, there may still be a substantial reduction in the amount of grain available to feed livestock. The Administration had earlier estimated that, depending on this year's Soviet harvest and supplies available from non-U.s. sources, the embargo would result in a 5-14% decrease in grain available for feed in 1980. A 7% decrease in Soviet meat production was also estimated. These estimates were based on a January 15 USDA forecast that the Soviet.Union wold be able to import only 25 of the 34 mt of grain needed in 1980. This 25 mt level included about 3 mt of embargoed U.s. grain received through transshipment. In order to maintain the embargo's effectiveness, the U.S. had hoped to cut off alternative sources of supply to the Soviet Union. The U.S. received early verbal assurances from major grain exporting countries that they would not make additional sales to the Soviets to make up for the U.S. curtailment of wheat, corn, soybeans, and cmher exports. January meetings of representatives from the exporting- nations brought confirmation from Australia, Canada, and the European Community that they would refrain from making offsetting sales although no decision was made on what constituted an offsetting sale. Argentina and Brazil refused to endorse the embargo. In n case did any nation other than the U.S. suspend normal sales to the Soviets. on February 11, the USDA increased its estimates of Soviet grain imports by 3 mt, forecasting Soviet imports of 28 mt. On narch 10, the USDA again increased its estimates of Soviet grain imports by 2.5 mt. The Soviet Union is now expected to be able to import at least 30.5 mt of grain during the 1979/80 marketing year. Much of the additional grain is expected to come from Argentina. Argentina has almost doubled its planned grain shipments to the Soviet Unions this year from 2.5 mt to almost 5 mt. Soviet grain imports from Australia, Canada, and the European Community are also expected to be higher than previously anticipated. According to the USDA potential increased sales from Australia, Canada, and the European Community probably will not be viewed as violations of the agreement reached between these countries and the U.S. at the January 12 meeting because no decision was made on what constitutes normal trade between these countries and the Soviet Union. In early March, officials of the Canadian Wheat Board announced that the Board would sell an additional 2 mt of grain to the Soviets this year. USDA has determined that this sale does not violate the Canadians‘ pledge to continue only "normal" sales to the Soviet Union since normal sales to the Soviets fluctuate considerably from year to year. Although the Soviet Union has been able to find alternative sources to replace most of the embargoed U.S. grain, it has had to pay more for its imports. To illustrate, Argentina's corn export prices increased from $16“ per ton in December 1979 to $202 in February, while the U.S. export prit dropped from $139 per ton to $132 for the same period. In light of the increased Soviet grain import level in 1980, the USDA now estimates a 2% decrease in grain available to the Soviets for use as feed, as opposed to the earlier 5-14% decrease in grain availability. If the Soviets CRS- 9 IB80025 UPDATE-08/20/80 we able to import 30.5 at or more of grain this year and drastically draw down their own grain stocks -— the level of which remains a state secret -- they may be able to maintain meat production at near the anticipated level. A good harvest in 1980 could help to rebuild grain stocks and prevent beef herd liquidation. A nay USDA estimate forecasts Soviet grain production in 1980 to be between 190 — 230 mt. This is a.considerably higher level than the poor 1979 production level of 179 mt, although not quite as high as the planned 1980 target level of 235 mt. Moreover, it now seems that if the Soviets are able to hold off slaughtering until the next crop year, they will be able to import all the grain they need from grain-exporting nations other than the U.S. It seems unlikely that Canada, the European Community, and Australia will favor an extension of the embargo. The Saskatchewan Wheat Pool has already stated its opposition to any further support of the U.S. embargo after its crop year ends July 31. Furthermore, in what is seen by imany observers as a move to soften the U.S. position, President Carter, on June 20, modified trade restrictions against the Soviet Union to allow U.S. grain companies to sell non-U.S. grain to the Soviets. However, any shortage of feedgrains in the Soviet Union will adversely affect livestock production and, secondarily, meat consumption. If the Soviet Union does experience a shortage of feedgrains, feed will probably first be withheld from poultry, then hogs, and lastly beef. Beef is the most desired meat commodity and beef breeding herds take the most time to rebuild if liquidated. If feed shortages force a large livestock liquidation, then meat availability will increase substantially in the short run but decline I er the long run as breeding herds are reduced. In sharply curtailing U.S. grain exports to the Soviet Union, the Administration seeks to impose a cost on the USSR for its Afghan venture, a cost felt by the people and embarrassing to the leadership. The Administration hopes that the grain embargo will frustrate Soviet leaders‘ efforts to expand livestock production and meat consumption. Meat has been used by the Soviets as an incentive for increased labor productivity in the industrial sector. Reduced meat supplies will frustrate this effort. Earlier projections forecast a drop in Soviet neat consumption from ~126 to 117 pounds per person. President Carter was emphatic in stating that the reduction in U.S. grain sales to the Soviets will not starve Soviet citizens but is designed to lessen the quality of Soviet diets and convey the seriousness with which the U.S. regards Soviet military action in Afghanistan. Qenslgsiens The embargo of U.S. agricultural exports to the Soviet Union was an overt retaliatory act.for military intervention in Afghanistan. As an economic sanction, it will impose a cost on the Soviet Union. .At the same time, there is a cost to be paid by the U.S. for whatever foreign policy gains are achieved. Whether the economic, social, and political disruption caused by t’ embargo will prove greater for the Soviets or the Americans is a matter for conjecture and debate. The embargo leaves in doubt the availability of U.S. agricultural exports to the Soviet Union in coming years. The U.S.S.R. is likely to minimize its dependence on the U.S. for wheat and feedgrains. The means for accomplishing this include improving Soviet feedgrain production, increasing purchases from other exporting nations, and investing in agricultural development in other CBS-10 IB80025 UPDATE’O8/20/80 countries that could become dependable suppliers. The 0.5. has invested a large amount of capital to become the world’ 5 leading agricultural exporting nation. The U.S. also has a number of policies aimed at encouraging the U.S.S.R. to be an important and long-term trading partner. If the current embargo is an isolated incident it may only alter trading patterns that have developed over the past few years. On the other hand, if this embargo is a major change in the use of food exports for 0.5. foreign policy and diplomatic purposes, then current 0.5. agricultural policy and programs may be inappropriate. LE§l§LA1'lQE A number of bills concerning the embargcvof agricultural commodities to the Soviet Union have been introduced during the 2d session of the 96th Congress. The following include only those bills that have been reported out of committee or that have been subject to mark-up. S. 2199 (Jepsen et al.) Authorizes the Secretary of Agriculture, without regard to whether producers of wheat, corn, and feedgrains participated in the 1979 Federal program for such crops, to (1) make non-recourse loans available to such producers on their 1979 crops; and (2) make« emergency loans to such producers, in conjunction with the Commodity Credit Corporation. Authorizes the Secretary to announce and carry out a cropland set-aside program for the 1980 crops of wheat, corn, and feedgrains. Introduced Jan. 22, 1980 referred to Committee on Agriculture, Nutrition, and Forestry. Hearings held Feb. 25-27, and Mar. 6, 1980. Mark-up Mar. 19, 1980. S. 2258 (Talmadge et al.) flakes producers who did not participate in 1979 feedgrain set-aside program eligible for participation in price support loans, government purchases, and the grain reserve program. Allows sales of government grain stocks for production of alcohol for motor fuel. Establishes a wheat reserve for emergency food assistance to developing countries. Introduced Feb. 5, 1980; referred to Committee on Agriculture, Nutrition, and Forestry. Hearings held Feb. 26, 27, and uar. 6, 1980. S. 2260 (Exon) Directs the Secretary of Agriculture to make price support available, beginning with the 1979 crops of wheat and feedgrains, to producers who participate in a specified producer storage program, at increased levels of at least $3.50 per bushel for wheat and $2.50 per bushel for corn. Raises the limit on secured storage facility construciton or remodeling loans from $50,000 t0 $100,000. Introduced Feb. 5, 1980; referred to Committee on Agriculture, Nutrition, and Forestry. Hearings held Feb. 26, 27, and Mar. 6, 1980. Hark-up Mar. 19, 1980. S. 2426 (Boschwitz) Authorizes an emergency price support program for the 1979 wheat and corn crops. Directs the Secretary of Agriculture to make loans available at two prices, one for farmers who participated in the 1979 set-aside program, and another lower price for those farmers who did not participate in the CBS-11 IB80025 UPDATE—O8/20/80 : t-aside program. Introduced Mar. 17, 1980; referred to Committee on Agriculture, Nutrition, and Forestry. Reported out of Committee on Mar. 17, 1980 (S.Rept. 96-632). P.L. 96-23a (5. 2427) Extends eligibility to participate in the farmers held grain reserve and loan program to producers who did not comply with the requirements of the 1979 set-aside program for wheat and corn. Authorizes the sale off Commodity Credit Corporation stocks of corn for use in making gasohol. Amended to increase the loan rate for the construction of on-farm commodity storage facilities. Introduced Mar. 17, 1980; referred to Committee on Agriculture, Nutrition, and Forestry. Reported Mar. 17, 1980 (S.Rept. 96-633). Passed Senate by voice vote on Mar. 26, 1980. Passed House by voice vote Apr. 1, 1980. Signed into law Apr. 11, 1980. S. 2428 (Boschwitz) Directs the Secretary of Agriculture to establish a voluntary, paid land diversion program for the 1980 wheat, corn, and feedgrain crops, with a special wheat grazing and haying program. Introduced ‘Mar. 17, 1980; referred to Committee on Agriculture, Nutrition, and Forestry. Reported Mar. 17, 1980 (S.Rept. 96-635). 5. 2639 (ncGovern) Agricultural Trade Suspension Adjustment Act of 1980. Amends the Agricultural Act of 1949 to authorize price support loans for wheat and feedgrain producers to mitigate the adverse effects of restrictions on agricultural exports to the Soviet Union. Directs. the Commodity Credit Corporation to acquire wheat and corn. Provides for the establishment of a food security reserve and a gasohol feedstock reserve of any agricultural commodity the export of which is suspended or restricted for national security or foreign policy reasons. Sets forth conditions for the sale or release of the stocks of such reserves. Introduced by Committee on Agriculture, Nutrition, and Forestry as an original measure Mar. 26, 1980. Reported bill incorporates provisions of related measures 5. 2258, S. 2277, S. 2315, and S. 2356. Reported May 1 (S.Rept. 96-676). 5. 2855 (Dole et al.)/H.R. 7632 Rescinds the agricultural commodity export embargo of the Soviet Union.A Introduced June 20, 1980; referred to Committee on Banking, Housing and Urban Affairs. H.R. 6205 (English et al.) Requires the Secretary of Agriculture to set the loan level at 90% of parity for any agricultural commodity in which export sales have been suspended (presently such loan levels are set only when export sales are s pended due to short supplies). Directs the Secretary to ascertain’ that Government purchases of such commodities include acquisition of quantities of like classes of the particular commodities proportionate to the quantities of those classes for which sales were suspended. Makes this Act applicable to export suspensions occurring after Jan. 1, 1980. Introduced Jan. 22, 1980; referred to Committee on Agriculture. Reported, amended, Apr. 15, 1980 (H.Rept. 96-877, part I). Referred to Committee on Appropriations April 15. Reported April 30 (H.Rept. 96-877, part II). CR5-12 IB80025 UPDATE-08/20/80 H.R. 6382 (Bedell et al.) Directs the Secretary of Agriculture to establish and announce a land diversion payment program for the 1980 feedgrain crop. To be eligible for such payments, producers are required to devote 20% of their crop acreage to approved conservation uses. Introduced Jan. 31, 1980; referred to Committee on Agriculture. Reported, amended, Apr. 15, 1980 (H.Rept. 96-878, part I). Referred to Committee on Appropriations April 15. Reported April 30 (H.Rept. 96-878, part II). H.R. 6815 (Rose) Increases loan rates for the 1980 and 1981 crops of wheat land corn. Extends eligibility for loans on 1979 wheat and corn crops to those producers who did not participate in the 1979 set-aside program. Introduced Mar. 13, 1980; referred to Committee on Agriculture. Reported, amended, Apr. 15, 1980 (H.Rept. 96-879, part I). Referred to Committee on Appropriations April 15. Reported April 30 (H.Rept. 96-879, part II). H.R. 6877 (Rose et al.) Amends the Agricultural Act of 1949 to increase price supports for the 1980 crop of corn to not less than $2.35 per bushel, for the 1981 crop of corn to $3.63 per bushel, and for the 1981 crop of wheat to not less than $3.90 per bushel. Introduced Har. 19, 1980. Reported by Committee on Agriculture Apr. 15, 1980 (H.Rept. 96-880, part 1).. Reported by Committee on Appropriations Apr. 30, 1980 (H.Rept. 96-880, part II). H.R. 7121 (Hathis et al.) Soybean Emergency Act of 1980. Amends the Agricultural Act of 1949 to establish price supports for the 1980 and 1981 crops of soybeans at not less than $5.02 per bushel. Introduced Apr. 22, 1980; referred to Committee on Agriculture. Reported May 16, 1980 (H.Rept. 96-1031, part 1); sequentially referred to Committee on Appropriations. The following bills, although initiated prior to the embargo, are related to efforts to alleviate the potential adverse impact of the grain embargo on the American farmer: P.L. 96-213 (H.R. 3398) Directs the Secretary of Agriculture to increase the established (target) prices for the 1979 crops of wheat to $3.63 per bushel and of corn to $2.35 per bushel, whenever a set-aside is in effect for the respective crop. Introduced Apr. 3, 1979; referred to Committee on Agriculture. Reported May 30, 1979 (H.Rept. 96-228, part I). Reported by Committee on Appropriations on June 21, 1979 (H.Rept. 96-228, part II). Passed House Nov. 8, 1979. Reported to Senate Dec. 4, 1979 (S. Rept. 96-446). Passed Senate Dec. 12, 1979. Conference report filed in House (H.Rept. 96-789) Feb. 28, 198? Signed into law Mar. 18, 1980. H.R. 3611 (Gilman et al.)/H.R. 3612 (ncnugh) Provides for the establishment of a wheat reserve of up to 4 mt for the purpose of assuring adequate supplies for urgent humanitarian relief projects CRS-13 IB80025 UPDATE’O8/20/80 r ler the Food for Peace Program. Reserve stocks may be purchased from producers'or in the market, or may be designated from CCC acquired stocks. Introduced Apr. 10, 1979; jointly referred to Committees on Agriculture and on Foreign Affairs. Hearings held July 10, 1979 and Feb. 12, 1980. H.R. 4489 (Foley et al.)/S. 1278 (Talmadge)/H.R. 6635 (Zablocki et al.) Identical to other food reserve bills but provides additional authority to the President to use up to 300,000 tons of the wheat reserve for urgent humanitarian relief in developing countries outside of the Food for Peace Program. H.R. 4489 introduced June 15, 1979; jointly referred to Committees on Agriculture and on Foreign Affairs. Hearings held July 10, 1979 and Feb. 12, 1980. S. 1278 introduced June 5, 1979; referred to Committee on Agriculture, Nutrition, and Forestry. H.R. 6635, a clean bill, introduced in lieu of H.R. HH89 on Feb. 27, 1980; jointly referred to Committees on Agriculture and Foreign Affairs. Reported from Committee on Foreign Affairs May 15, 1980 (H.Rept. 96-966, part I). Reported from Committee on Agriculture June 12, 1980. P;L. 96-220 (5. 2269) Amends the Emergency Agricultural Credit:Adjustment Act of 1978 to provide an additional $2 billion in farm operating loans to farmers who need money to plant spring crops. Introduced Feb. 6, 1980; referred to Committee on_ Agriculture, Nutrition, and Forestry. Reported to Senate .Feb. 25, 1980 I ,Rept. 96-591). Passed Senate Mar. 4, 1980. Passed House Mar. 5, 1980. Conference report filed in House (H.Rept. 96-850) Mar. 25, 1980. Signed into law Mar. 30, 1980. §§AB£fl§§ 0.5. Congress. House. Committee on Agriculture. 0.5. embargo of grain to the Soviet Union. Hearings, 96th Congress, 2d session. Jan. 29, 1980. (not printed) 0.5. Congress. House. Committee on Foreign Affairs. Food aid and food security reserves and the 0.5. embargo of grain to the Soviet Union. Hearings, 96th Congress, 2d session, on H.R. H489, H.R. 3611, and H.R. 3612. Feb. 12, 1980. (not printed) 0.5. Congress. Joint Economic Committee. The state of the 0.3. economy. Hearings, 96th Congress, 2d session. Jan. 30, 1980. (not printed) 0.5. Congress. Joint Economic Committee. Subcommittee on Economic Growth and Stabilization. The impact of the 0.5. embargo of grains to the Soviet Union on domestic rail and barge transportation. Hearings, 96th Congress, 2d session. Feb. 4, 1980. (not printed) 0.5. Congress. Senate. Committee on Agriculture, Nutrition, and Forestry. Embargo on grain sales to the Soviet Union. Hearings, 96th Congress, 2d session. Washington, 0.5. Govt. Print. 0ff., Jan. 22, 1980. 65 p. 0.5. Congress. Senate. Committee on Agriculture, Nutrition, and Forestry. Legislation to ease the embargo's impact on the cns-1a 1330025 UPDATE-0 8/20/80 a American farmer. Hearings, 96th Congress, 2d sesion, on S. 2199, S. 2258, 5. 226a, S. 2277. Feb. 25, 27, and Mar. 6, 1980. (not printed) 0.5. Congress. Senate. Committee on Banking, Housing, and Urban Affairs. Subcommittee on International Finance. 0.5. 1 embargo of food and technology to the Soviet Union. Hearings, 96th Congress, 2d session. Washington, 0.5. Govt. Print. 0ff., Jan. 22 - Har. 2a, 1980. 2501p. 0.5. Congress. Senate. Committee on Commerce, Science, and Transportation. Embargo of phosphate exports to the Soviet Union. Hearings, 96th Congress, 2d session. Washington, U.5. Govt. Print. 0ff., Feb. 19, 1980. 44 p. « 0.5. Congress. House. Committee on Foreign Affairs. Restrictions on Agricultural commodity exports to the U.S.S.R.; communication from the President of the United States. Washington, U.S. Govt. Print. 0ff., Jan. 22, 1980. 8 p. (96th Congress, 2d session. House. Report no. 96-252) ~ 06/20/80 -— President Carter modified 0.5. trade restrictions against the Soviet Union to allow 0.5. grain exporting companies to sell non-0.5. grain to the Soviet Union. 2 On/30/80 - The CCC opened for purchase contract rights it had assumed for the 4.5 mt of wheat and the 10.8 mt of corn affected by the embargo. As of June 17, the CCC had sold the rights to 5.2 at (205 million bushels) of corn and 2.8 mt (101.7 million bushels of wheat. 0n/30/80 -— The USDA announced that the Soviet Union will be allowed to purchase up to 8 mt of U.S. grain during the fifth, and last, year of the 0.5.-USSR grain agreement, which begins Oct. 1, 1980, and runs through Sept. 31, 1981. The Soviets can purchase the grain before October 1, but shipments cannot begin until then. 04/15/80 *— Pursuant to P.L. 96-230, the Secretary of Agriculture announced that corn farmers who did not participate in the 1979 feedgrain set-aside program will be allowed to place a limited amount of grain into the farmer—held grain reserve. Corn farmers will be able to place previously ineligible corn into the reserve on a first-come, first-served basis until approximately 295 million bushels (7.5 mt) of corn have been placed in the reserve, or until May 15, whichever comes first. The Secretary later extended the time period in which 03/20/80 03/10/80 03/07/80 02/29/80 02/25/80 02/15/80 02/07/80 CRS-15 IB80025 UPDATE—O8/20/80 to place corn in reserve until June 15. The CCC opened for purchase contract rights it had assumed for the .7 mt of soybeans affected by the embargo. As of May 28, the Corporation had assigned contract rights for all .7 mt of soybeans. Lest the entry of .7 mt of soybeans into the market depress commodity prices, the Secretary of Agriculture announced concurrently that the Corporation would purchase, on the open market, soybeans in the amount equal to those sold under contract during the period April 4 to April 22. The USDA revised its estimates of Soviet grain imports. For the 1979/80 (July/June) marketing year, Soviet grain imports were forecast at 30.5 mt, up42 mt from a February 11 USDA forecast. Coarse grain imports were estimated at 18.1 mt and wheat imports at 11.9 mt. Additionally, the USDA announced that its earlier 34 mt estimate of Soviet grain import needs was too low. USDA now estimates that the Soviets would have imported as much as 37.5 mt in the 1979/80 marketing year (July/June). Based on these estimates, the Soviet Union will experience a 7 mt grain deficiency during the current July/June marketing year. ‘ To help support wheat prices, the CCC began a wheat purchase program with the aim of removing from the domestic market an amount of wheat equal to that embargoed, through a series of bi-monthly purchases. By mid-April, the Corporation had purchased 156 million bushels (4.2 mt) of wheat and concluded its purchase program. 94.4 million (2.4 mt) had been bought directly from farmers under a supplemental purchase program. The Secretary of Agriculture announced that there would be no paid cropland diversion program for the 1980 crops of corn, wheat, and other feedgrains. The President imposed an embargo on all U.S. exports of phosophates to the Soviet Union. The embargo covers marketable phosphate rock, all concentrates of phosphoric acid, and all concentrates of phosphate fertilizers for an indefinite period. U.S. exports of phosphates ‘to the Soviet Union were valued at $97 million in 1979 and were expected to increase to $400 million in 1980. The CCC signed agreements with 12 exporting firms to acquire the outstanding contracts for grain previously committed to the Soviet Union. The grain in the acquired contracts included 4.5 at of wheat, 10.8 mt of corn, and .7 mt of soybeans. Effective February 4, certain non-strategic agricultural commodities were removed from validated licensing control, enabling these commodities to be sold to the 01/23/80 01/22/80 01/19/80 01/19/80 01/18/80 01/16/80 01/15/30 01/14/80 01/12/80 CBS-16 IB80025 UPDATE-08/20/80 Soviet Union without prior approval by the U.S. Government. Commodities removed from restricted sales are those determined not to affect Soviet grain and meat supplies. At the same time, a validated license or prior approval system was established for the export of phosphates to the Soviet Union. The American Farm Bureau Federation (AFBF) announced that it had filed suit with the National Labor Relations Board against the International Longshoremen's Association (ILA) for its refusal to handle ships with Soviet cargo. To help support domestic corn prices, the CCC issued the first of a series of invitations to purchase corn. As of June 10, 1980, the Corporation had purchased approximately 150.4 million bushels (3.8 mt) of corn. The President announced the Government's plan to purchase grain affected by the longshoremen's refusal to load any grain destined for the Soviet Union. The USDA announced a program to purchase more poultry -- one commodity affected by the embargo -+ for use in Federal food assistance programs. The President imposed a 1 mt quota on Soviet ammonia imports for calendar year 1980. This reversed his earlier December 11th decision to override the International Trade Commission's (ITC) recommendation that a 1 mt import guota be imposed for 1980. U.S. and Mexican officials announced Mexico's decision to purchase fl.76 million of U.S. corn, wheat, sorghum, soybeans, soybean meal amd oil, rice, and other agricultural commodities. This amount was greater than earlier anticipated. U.S. Department of Agriculture (USDA) officials estimated that Mexico's purchases could absorb about 1 mt of corn previously destined for the Soviet Union. The USDA revised its estimates of Soviet grain imports. For the 1979/80 marketing year, Soviet imports of grain from all origins were estimated at 25 mt, 9 mt below a December 11 forecast of 3a mt. Representatives from the U.S., Argentina, and Brazil met to discuss withholding additional sales of soybeans to the Soviet Union. Additional sales of soybeans could partially replace the 17 mt of embargoed U.S. grain. Argentina and Brazil refused to restrict their sales. Representatives from the U.S., Australia, Canada, the European Community (BC), and Argentina met to discuss cooperation in withholding additional amounts of grain to the Soviet Union. Australia, Canada, and 01/09/80 01/08/80 01/07/80 01/06/80 01/04/80 12/27/79 10/03/79 08/01/79 10/12/78 10/06/77 CRs—17 IB80025 UPDATE-O8/20/80 the EC agreed to cooperate with the U.S., pledging not to directly or indirectly replace the 17 mt of grain affected by the embargo. Hembers of the International.Longshoremen's Association announced that they would no longer handle ships with Soviet cargo. Export licenses for all agricultural products to the Soviet Union, other than the 8 mt of grain, were suspended, effective Jan. 7, 1980. It was also announced that all future requests for export licenses would be judged on a case—by—case basis by the Department of Commerce. Acting Secretary of Agriculture James Williams announced a series of measures to minimize the impact of the embargo on domestic farm prices and income. Effective immediately, the farmer-held grain reserve program was revised to encourage farmers to place additional grain in the reserve instead of into the market. The changes included increasing loan levels, waiving the first-year loan interest costs, raising release and call prices, and boosting storage payments to farmers. Williams also announced that a paid cropland diversion program would be implemented, if necessary. The Vice President announced that the Commodity Credit Corporation (CCC) would purchase all grain above the 8 mt level as well as all soybeans and soybean products that exporting companies had contracted to sell to the Soviet Union, at an estimated cost of $2.25 billion. The Commodity Futures Trading Commission (CFTC) suspended trading in grain futures for January 7 and 8. The President suspended all agricultural trade to the Soviet Union in excess of the 8 mt of grain that the U.S. is committed to sell under the 1975 U.S.-USSR grain agreement. The President also outlined a preliminary program designed to offset the potential adverse impact on the domestic farm economy. Soviet troops invaded Afghanistan. The USDA raised the purchase level under the fourth year of the 1975 grain agreement to 25 mt. The USDA increased the purchase level under the fourth year of the 1975 grain agreement to 16 mt. The USDA raised the purchase~level under the third year of the 1975 grain agreement to 15 mt. The USDA increased the purchase level under the second year of the 1975 grain agreement to 15 mt. 10/20/75 09/09/75 08/25/75 U08/18/75 08/11/75 07/00/75 08/10/73 07/09/73 09/22/72 07/00/72 07/08/72 10/00/71 06/10/71 CBS-18 IB80025 UPDATE-08/20/80 The White House released the text of the U.S.-Soviet agreement on grain. The five-year agreement committed the Soviet Union to make minimum yearly purchases of 6 mt of wheat and corn and provided that an additional 2 mt could be purchased without consulting the U.S. Government. The President announced that all future grain sales to the Soviet Union would be suspended until mid—October pending the results of negotiations for a long-term grain agreement with the Soviet Union. The American Farm Bureau Federation filed suit with the National Labor Relations Board charging the International Longshoremen's Association with unfair labor practices. The maritime unions reaffirmed their intention to boycott ships loading grain for the soviet Union. Longshoremen in Port Houston stopped loading grain. USDA requested exporters to withhold further grain sales to the Soviet Union. The Soviet Union purchased approximately 9.8 million tons of U.S. wheat and corn. Legislation was passed establishing an agricultural export monitoring system within the USDA. The General Accounting Office (GAO) issued a report entitled "Russian Wheat Sales and Weaknesses in Agriculture's management of Wheat Export Subsidy Program." Wheat export subsidies were discontinued by the USDA. - 08/00/72 -— The Soviet Union purchased a total of 19 mt of U.S. grains: 12 mt of wheat, 6 mt of corn, and 1 mt of soybeans. All wheat sales were subsidized through the CCC's wheat export subsidy program. The U.S. and Soviet governments signed a trade agreement establishing a three-year, $75 million line of credit through the CCC. The Soviet Union eventually used about $550 million in credit. The Soviet Union purchased approximately 3mt of U.S. grains, mostly corn and about one—third barley and oats. This was the first of U.S. grains to the Soviet Union since 1963. The President rescinded a 196a directive requiring 50% use of U.S. flag vessels in exporting all U.S. bulk agricultural commodities to the Soviet Union. CRS—19 IB80025 UPDATE-O8/20/80 A22£$lQEAL-B§§§E§!§§-§Q!BQ§§ University of Minnesota, Agricultural Extension Service. ‘The partial suspension of grain sales to the USSR: an interim analysis. Extension misc. pub. 103-1980. U.S. Departnent of Agriculture. Foreign agriculture circular: grains. Foreign Agricultural Service. FG-4-80. Jan. 15, 1980; ---- Impact of agricultural trade restrictions on the Soviet Union. Foreign Agricultural Economic Report no. 158. April 1980. 0.5. Library of Congress. Congressional Research Service. The U.S. embargo of agricultural exports to the Soviet Union: agricultural impact [by] Penelope C. Cate, A. Ellen Terpstra, and Jasper Wonach. [Washington] Jan. 21, 1980. 21 p. Plultil ith 80- ‘HIENB . A ---- Congressional Research Service. Soviet agriculture and the grain trade [by] John P. Hardt and Kate 5. Tonlinson. Issue Brief No. IB75070. Congressional Research Service. Agriculture: U.S. food power in international affairs [by] A. Ellen Terpstra. ‘issue brief IB76017. Regularly updated. 'H\ LIBRARY OF WASHINGTON 4 UNIVERSITY ST. LOUIS — MO.