ANOTHER BAD EXPERIENCE Last year our country had another bad experience over Soviet grain sales. This time the circumstances were far different and it was the American farmer who bore the brunt of the problem. But, as in the 1972 sales, the fault rested not with the Russians but with our own government. The US Government told our farmers to plant from fence to fence and assured them they could sell on the open market, anywhere, anytime, anyplace as long as it was for cash. The US Government assured them of continued markets in the Soviet Union and they planned accordingly. But then our government changed the rules in the middle of the game by suddenly putting an embargo on further grain sales to Russia. By doing so, it simply encouraged the Russians to go elsewhere to buy 15 million tons of grain. Our government was not living up to its commitments to our nation's farmers. By not playing according to the rules it had agreed to, it caused the farmers to lose sales of an estimated $2.2 billion or more. Hopefully, America and the rest of the Free World have learned from these past mistakes and in the future will set policies which are logical and consistent-policies which the taxpayers, farmers, and consumers can all live with. Much of the problem in the past has sprung from the fact that transactions with the Soviet Union are not genuinely free market in nature. It is not Western businessmen dealing with Soviet businessmen. It is Western businessmen dealing with Soviet bureaucrats-an open, free society dealing with a closed, controlled society. This has created, as we have witnessed, a number of distortionary effects on the free economies. In agricultural markets, strongly fluctuating and exaggerated demands can raise instant havoc and cause tremendous distortions in price and supply. Trade policies of the Free World nations must reflect the dangers and pitfalls that exist when dealing with communistic, non-market countries, and must incorporate various safeguards that will protect our interests, such as earnest money payments in advance for a long-term agreement. My colleague, Congressman Nolan, will cover this subject in some detail in his presentation, so permit me to digress at this point to some personal observations on other aspects of the Soviet-US trade question and on the question of food shortages in general. These, I think, offer the most significant lessons for all peoples and nations around the world. Why is it that Russia, once a grain exporter, in 1973 set a record by importing more food supplies than any other nation in history? Many of those recordbreaking imports came from the United States, even though the US devotes only one-third as many acres to wheat production as Russia does. Why is it that Russia is experiencing massive food shortages each year even though one-third of their total population works in farming? In the United States approximately 4 per cent of the population are on the farms. Why is it that in many areas of Russia, agricultural production is actually below the levels of 1913? Agricultural advancement in the US since that year has been enormous. BAD WEATHER CONDITIONS Soviet leaders blame it all on the weather. I don't doubt that they've experienced some inclement conditions. But every year? And what is interesting to me are the reports I hear of bountiful harvests which exist in that country on the scattered plots of privately owned land. We have all heard the accounts of private entrepreneurs who are supplying the Russian people with privately produced fresh produce, such as the famous tangerine caper, on the black market. Many Russians would otherwise be unable to purchase any fresh fruits or vegetables, owing to their extreme scarcity in that country. But don't the private parcels of land experience the same weather conditions? Of course, Pravda and Radio Moscow would have us believe that there are freezes and droughts on the collective farms while adjacent private lands are receiving the perfect combinations of temperature and rainfall. In the Rocky Mountains of America we have saying-we love the weather, rain, snow, hot or cold, because it comes from God and not the government. Evidently in Russia the weather comes from the government and is consequently bad. I contend that the current shortages of food supplies both in Russia and around the world derive not from weather or agricultural failures, but from ideological failures. In the Soviet Union and other socialistic countries, collectivisation of farming has destroyed all incentive to produce. Collectivised farming has been notoriously inefficient since its bloody inception. Peasant resistance took the form of armed revolt and sabotage at the start, but now it has been replaced by a heavy, uncaring lethargy. Paltry incentives and a marginal existence have produced millions of farmers in Russia whose chief ambition is to get a job in the city. Evidence of the deadening effect of the collectivised farm system is seen everywhere in that country. For example, there are numerous reports of heavy damage to state crops because the peasants do nothing to keep the weeds under control. Fields become a sea of weeds, making it difficult to see the grain because there are three or four times as much wild oats and thistles. The Soviet bureaucrats and master planners, of course, continue on their merry way, unable to see the forest for the trees. They promise to solve all the shortage problems with heavier doses of collectivism and coercion. During their latest five year plan, for example, the Soviet Union plunged into the meat business with a $70 billion investment in livestock breeding. Most of the money went into vast, factory-style production centres so that by the end of 1974 the country had 400 mechanised stock breeding complexes and 584 poultry factories. The plants are literally enormous. Some of the hog fattening centres, for instance, can handle 180,000 pigs at a time. FEED GRAIN PROBLEM However, there was one thing the Russian planners didn't count on-something that private investors would have known right away. Costs make the entire project unfeasible. They discovered after building the plants that the only way to produce meat on so large a scale is to feed grain to the animals-and it takes far more grain to produce a pound of meat protein than if the protein were eaten directly as bread. Since the Soviet Union is unable to raise such feed grains as corn and soybeans, valuable wheat often is diverted to use as animal fodder. Contrast these conditions with those of American agriculture. A single US farm worker supplies on the average enough food and fibre for 56 people. His output is twelve times greater than that of a Soviet worker. American farmers constitute one tenth of one percent of the world's population, but feed 25 percent or more. The food they produce is at the lowest possible cost to consumers. The average US citizen today spends only 172 percent of his paycheque on food. It is no coincidence that from the small tracts of private land in Russia, which contitute only 3.5 percent of the land under cultivation, the state receives 20 percent of all its potatoes, 37 percent of its eggs, 18 percent of all wool, 18 percent of its meat and poultry, 18 percent of its green vegetables and 95 percent of its flowers. This is in addition to the large quantities of private produce from this land which is sold on the open market. It is an amazing testimony to the success of private enterprise, right within the borders of the Soviet Union. ROLE OF HUMAN NATURE Why does private agriculture work while collectivised, government controlled farming doesn't? It works because it upholds three very basic principles of human nature and therefore supplies the necessary incentives for people to become creative and productive. First, it recognises that people need rewards for their work and that the rewards must be proportional to the level of productivity. Second, it recognises that owning one's own land is a basic human desire. Finally, it recognises that people work best when allowed to develop and use their own solutions to the problems and opportunities around them without being unduly hemmed in by regulations, licenses and artificial restrictions. In other words, human beings must be free to be productive. The Soviet Union and other non-market countries have been violating these basic principles, and as a result have developed an agricultural system based on minimum human motivation and creativity. It is safe to say that the Russians will likely continue to experience food shortage difficulties in the years ahead and that they will therefore remain a lucrative, if not reliable, market for Western agricultural exports. The same may also be true for Mainland China, India, and most of the Third World. However, what I am proposing today is that we export more than food to these countries. I submit that we should export the ideas of free, private initiative, too. This, in the final analysis, is the biggest contribution Free nations can make to the world's hungry masses. A major fact which many people have not fully understood is the high level of technology required to develop and maintain modern agriculture. For many years, people have laboured under the mistaken belief that industrialisation represented the highest level of civilisation. We were taught that men first lived in caves and hunted, then they developed farming and villages, and later developed cities and industrialisation. The idea which was not taught was that after industrialisation men developed modern agriculture. At first glance, it would seem more difficult to build aeroplanes, automobiles, and television sets than it is to raise food. However, it is actually much harder and it requires a much higher level of technology to grow food than to do almost any other activity. ASSEMBLY LINE PROCESS A minute of thought will make this clear. If a team of developers goes to a developing country to build TV sets, their problem is relatively simple: the factory must be built, component supplies located in some convenient country must be found, and then local people must be trained to work on the assembly lines. It is quite possible to take young men and women from very primitive surroundings and, within a few weeks or a few months training, prepare them to carry out their particular limited responsibilities on that assembly line. However, with modern agriculture the problem is entirely different. It is true you can supply chemicals and machines, but the local person who is in charge of the land must know how to farm. This requires a sophisticated understanding of managerial skills, a high level of training in the use and maintenance of equipment, a working knowledge in the use of modern agricultural chemicals, and a knowledge of soil, climate, and plant diseases which can only be achieved with intensive and lengthy training. Having once recognised these two facts: (1) The need for an economic and political system which releases rather than destroys individual energy and creativity, and (2) the high level of technology and technical training required, then we must decide what we can do to increase food production around the world. I am proposing that we make serious efforts, regardless of the political or economic system we are dealing with in a food-short country, to insure that the farmers are allowed to own the land which they farm. I am talking about the men and women who actually go out on the land, plant the seeds and harvest the crops; not the politicians, not the planners, not the experts, but the farmers. This means they must not be burdened with impossible debt and they must not be subject to irrational regulations in the use of their land. They must truly be able to go to their house or cottage or hut in the evening, sit down with their family at their own table, look out the window at a growing crop, and quietly say to themselves: This is mine, this is my land, this is my crop-I am in charge of my own life. END FOOD GIVEAWAYS The following are proposals I wish to recommend to free nations wishing to spread the doctrine of agricultural free enterprise to the nations which need it most. First, I would recommend that the West terminate virtually all foreign aid food giveaways, except in cases of disaster relief. Let these nations pay for the fruits of our free economies. Let them think about what it is costing them to maintain their inefficient, collectivist systems. This is especially applicable to the Third World nations. Most of these countries are young and in the early developmental stages. Now is the crucial time in their histories when they must decide what kind of economic system they want. Freedom or coercion? Abundance or starvation? Secondly, I would recommend that all agricultural transactions with nonmarket countries be done on a cash and carry basis. No subsidies and soft loans, courtesy of our overtaxed citizens. The easier we make it for these countries, the less reason they will see to reform their archaic feudal systems. Russia and Communist China would be the countries most affected by this policy. In the case of Russia, I would prefer that they pay the United States in gold. Russia possesses about $8 billion in gold reserves and is the second largest producer of that metal in the world. She can spare the gold and we in America can certainly use it to help stabilise our currency. It makes good sense all the way around. Third, we need to encourage joint ventures of Western agri-business and food processing to the Third World countries. And as I mentioned earlier, the farmers in these nations should be able to own their own land. One final note. I know there are those, including some in my own country, who urge that we move in the exact opposite direction from what I propose. Rather than strengthening our respective free enterprise systems and exporting these ideas abroad, they would have us move closer to the socialised Russian system. In the case of the United States, this could certainly be done in all areas of economic activity. We could be just like the Soviet Union after a little work. All we would have to do is reduce our paycheques by 75 percent, move 60 million workers back to the farm, abandon two-thirds of our steel making capacity, destroy 40 million TV sets, tear up 14 out of 15 miles of our highways, junk 19 out of 20 of our automobiles, tear up two-thirds of our railroad tracks, knock down 70 percent of our houses, rip out nine-tenths of our telephones, and then all we would have to do is find a capitalist country willing to sell us wheat on credit so we wouldn't starve. But frankly, I think the American people are happy with what they've got. Friday, April 23, 1976 SUMMARY OF DISCUSSION SESSION V-AMERICAN AND EUROPEAN POSITIONS ON THE (Working Documents: Mr. Normanton and Mr. Ryan)1 The debate was opened with Mr. Rosenthal in the chair. Mr. Ryan outlined his working document. He raised the following points in particular: The indivisibility of American and European interests; Whether the US military presence could continue in some locations, such as Greece and Turkey; The emotional connotations of the term "communism" in American society and the pressure on election candidates to adopt a totally hostile attitude to it; J. The role of the Italian Communist Party in Europe; and The fact that NATO was strong enough militarily to divert some of its attention to other matters. 11, Mr. Normanton then introduced his working documents with these comments: From the point of view of the United States, European integration was primarily a stage in the strengthening of Western defense. By contrast, the importance of the European Community to European countries was above all economic. But although defense matters were expressly excluded from the terms of reference of the Treaty of Rome, they had been increasingly raised by the European Parliament in the last three years. Before 1973 this would have been unthinkable. EC ROLE IN FOREIGN POLICY There was a growing awareness in the Community institutions that external economic policy formed part of overall foreign policy. Recent political developments in other countries Greece, Portugal, Spain and Iceland-had confirmed this view. Flexible interpretation of the Treaty of Rome was therefore called for. The European Parliament was keeping abreast of these developments. In the Mediterranean the position of Yugoslavia could become critical when President Tito left the political scene. CYPRUS PROSPECTS BLEAK Mr. Solarz referred to his recent visits to Greece, Turkey and Cyprus. The prospects for a solution to the Cyprus problem were bleak in his view. He had the impression that both sides wished to maintain the |