Grain Trade - Modern Trade

Modern Trade

Since the Second World War, the trend has been in North America for further consolidation of already vast farms. Transportation infrastructure has also promoted more economies of scale. Railways have switched from coal to diesel fuel, and introduced hopper car to carry more mass with less effort. The old wooden grain elevators have been replaced by massive concrete inland terminals, and rail transportation has retreated in the face of ever larger trucks.

Farmers in the European Union, United States and Japan are protected by agricultural subsidies. The European Union's programs are organized under the Common Agricultural Policy. The agricultural policy of the United States is demonstrated through the "farm bill", while rice production in Japan is also protected and subsidized. Farmers in other countries has attempted to have these policies disallowed by the World Trade Organization, or attempted to negotiate them away though the Cairns Group, at the same time the wheat boards have been reformed and many tariffs have been greatly reduced, leading to a further globalization of the industry. For example, in 2008 Mexico was required by the North American Free Trade Agreement (NAFTA) to remove its tariffs on US and Canadian maize.

Modern issues affecting the grain trade include food security concerns, the increasing use of biofuels, the controversy over how to properly store and separate genetically modified and organic crops, the local food movement, the desire of developing countries to achieve market access in industrialized economies, climate change and drought shifting agricultural patterns, and the development of new crops.

“Price volatility is a life-and-death issue for many people around the world” warned ICTSD Senior Fellow Sergio Marchi. “Trade policies need to incentivise investment in developing country agriculture, so that poor farmers can build resistance to future price shocks”.