USSR grain embargo a guide for how much ag exports could shrink

Short-term demand reduction as a result of Trump trade policy still a possibility, but potential longer-term impacts more troubling, according to farmdoc analysis.

By Carl Zulauf, Jonathan Coppess, Gary Schnitkey and Nick Paulson, farmdoc daily

With U.S. tariffs being implemented, President Donald Trump’s trade policy has roiled commodity markets. Tariffs have been imposed on U.S. imports, triggering counter-tariffs on U.S. exports, and ag commodities have become a common target.

These events bring to mind the partial embargo on U.S. ag exports to the Soviet Union that President Jimmy Carter imposed on January 4, 1980 in response to the Soviet Union’s invasion of Afghanistan. 

Total U.S. exports of corn, soybeans and wheat were only slightly impacted during the 15-month embargo, but quantities declined more significantly in the following years. In fact, U.S. corn and wheat exports have never consistently exceeded the quantities they reached in the early 1980s.

In contrast to the U.S., exports of wheat by the rest of the world increased consistently after 1980. Soybean exports from other countries remained stable from 1980 through 1985, then began to increase consistently. And the rest of the world’s corn exports were erratic around their 1980 level until 1990 and then began to increase. 

U.S. share of the world’s soybean and wheat exports has declined fairly consistently since 1980 at annual rates of -1.3 and -0.7 percentage points, respectively.

Meanwhile, share of corn exports declined erratically at a rate of -0.3 percentage point per year between 1980 and 2000. Decline has since accelerated to -2.2 percentage points per year, with decline particularly large from 2007 to 2011.

The long-term consequences of current U.S. trade policy for U.S. ag exports bear watching and will likely be the most important ag trade storyline coming out of the current trade war.

Learn more: Did you know the USSR grain embargo of 1980 was the last of four blockages of U.S. ag exports since 1973? Visit this link to read how the effects could be cumulative.

This article is part of the University of Illinois Gardner Agriculture Policy Program, which focuses on policies pertinent to the upcoming farm bill, conservation, trade and other ag-related issues. The program is funded through the Leonard and Lila Gardner/Illinois Farm Bureau Family of Companies endowment.

About the authors: Jonathan Coppess, Gary Schnitkey and Nick Paulson are faculty members at the University of Illinois’ Department of Agricultural and Consumer Economics. Carl Zulauf is with the Department of Agricultural, Environmental and Development Economics at Ohio State University.

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