Shifting Markets for Farm Products

January 3, 1940

Report Outline
War Booms in Agricultural Markets
The American Farmer's Foreign Markets
The Domestic Market for Farm Produce
Future Markets and Productive Capacity
Special Focus

War Booms in Agricultural Markets

Since the first increase in commodity prices early in September, the European war has had less influence than domestic conditions on fluctuations in the market for American farm products. War demand has combined to some extent with better business prospects and larger domestic consumption to raise the price of cotton; the price of wheat has been more affected by the long-continued drought in the Great Plains region which was only broken by snowfall late in December. In setting up its farm acreage program for 1940, the Department of Agriculture has not anticipated any substantial increase in European purchases of food and fibers from the United States, In his annual report, published January 1, Secretary of Agriculture Wallace warned farmers that “it would be folly to regard the new war as in any way a solution to our farm problem.”

World supplies of wheat, cotton, sugar, and most of the other leading agricultural commodities are substantially larger now than they were at the outbreak of the World War 25 years ago. New areas have been brought under cultivation, while European countries which are heavy importers of food have been striving for a greater measure of agricultural self-sufficiency. Technological advances, national defense policies, and the slowing down of population growth, together with tariff barriers and exchange controls, have produced far-reaching changes in the world's markets for farm products.

The long-range, direct and indirect effects of the last war on the production and distribution of agricultural commodities have had a depressing influence from which American agriculture has not yet recovered. The present war, if it lasts long enough, may produce another temporary boom in farm prices, although it is doubtful if even a temporary boom would approach the proportions of the one which began in 1916. Of far greater importance to American farmers is the status of world commodity markets which will come with the close of the war. The United States has a large stake in the prospects for increased or diminished freedom in the international exchange of foodstuffs. A fundamental question behind the current debate over continuation of the reciprocal trade agreements program is whether this country should plan for restricted exports and greater self-sufficiency, or hope for a substantial increase of farm exports.

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Farm Produce and Commodities