AMERICAN FARMERS are sticking a defiant message on the bumpers of their pickup trucks these days: "Cheaper Crude or No More Food."
The farmers believe the United States could force the Organization of Petroleum Exporting Countries to brake its price increases by denying U.S. grain to the oil cartel. Members of the militant American Agricultural Movement would settle for merely raising wheat prices in step with the oil prices increases ordained by the cartel.
"A bushel for a barrel" sounds lighthearted, and government officials tend to dismiss the crusaders as misguided rural xenophobes.It wouldn't work, the administration argues. Besides, isn't it faintly immoral to tinker with the world's food supply in such a hardhearted manner?
But the bumper stickers are not all that farfetched. If one examines the world grain market today, its future and its potential for America, there are extraordinary similarities with the world oil market. If U.S. policymakers have the will to pay international "hard ball" with the grain-importing countries, particularly the oil nations of OPEC, the squeeze might produce dividends for us. At least the idea deserves more serious consideration than Washington has given it. U.S. economic leverage
This would require an important political decision - one Americans generally have abhorred except in emergencies. The government would have to create a national grain-trading board, one empowered to set a national price on our wheat and prepared to make other countries pay our price or do without. Is this time of soaring oil prices, of rampant inflation and threatened recession, a national emergency? Does it justify a counter-cartel? The militant farmers think so.
The potential for U.S. leverage on world grain prices is supported by the statistics in a recent study by the respected International Wheat Council in London. Its surprising conclusion is that OPEC's wheat imports are growing faster than those of any othe groups of nations. They reached almost 10 million tons in 1970. This is 14 percent of the entire world wheat trade.
Many nations, including several OPEC countries, grow and expect wheat. But only a handful export on a scale of 10 million tons. The clear implication is that, with regard to OPEC's wheat needs, the two criteria for U.S. economic leverage exist:
Doing without grain imports, though possible, would be economically disruptive and possibly politically destabilizing.
Only the United States and Canada can guarantee a continuing supply of wheat of that magnitude. The United States, moreover, is in the peculiar position this summer of being the only country that can fill new wheat orders. It already supplies OPEC with more than half of its 10 million tons a year.
The dependency of OPEC countries is dramatically evident in the case of Iran, the oil exporter whose temporary shutdown caused so many problems. During Iran's revolutionary spring, the oil stopped going out - but U.S. grain kept going in there.
Agriculture Department officials say Iran purchased more than a million tons of white (Pacific Northwest) wheat in the year ended June 30, and already has booked orders for 115,000 tons this year. (This is about in line with previous years.) Iran also bought more than 300,000 tons of U.S. rice last year. Its total grain imports have been running close to 3 million tons - an amount that gives Iran a margin of protection against food inflation.
This dependency on U.S. food was vigorously promoted by the grain trade and by the U.S. Agriculture Department's "market development" teams in the 1960s. They used the Food for Peace program and other incentives to convert Iran to the American diet of grain-fed meat and poultry. Iran became a U.s. agricultural client state, and even after the revolution its need for foreign grain is a reality that its news rulers must take into account.
Given the fact that U.S. food is feeding Iranians, the ayatollah's rantings against the United States seem particularly ungracious. A counter-squeeze using U.S. food might show us what the ayatollah is really made of.
Contrary to the popular image, OPEC is not a collection of desert nations with only a handful of people to feed. OPEC's 13 members include the world's fifth most populous country (Indonesia), the largest in Africa (Nigeria), and a populous tropical nation whose climate is not well suited to growing wheat (Venezuela).
Whear, eaten as bread or couscous, is a staple in Algeria, Libya, Iran, Iraq and Saudi Arabia. But only three OPEC countries - Algeria, Iran and Iraq - grow wheat on a large scale, and none is self-sufficient except when their crops are unusually bountiful.
Indonesia and Nigeria and rice-eating nations, but both rely heavily on imports - not only of rice but also of wheat - to supplement the food available in the commercial marketing systems on which their huge urban populations depend.
Population in OPEC is rising at 2.8 percent a year, about the average for all developing countries, and the populations of several countries have been swollen by immigration of foreign workers who need to be fed. Kuwait's population, for example, is growing 6 percent a year.
Oil revenues have given OPEC countries the means to import more food. This is turn has led to a rapid rise in per capita wheat consumption, from 40 kilograms at the start of the decade to 55 kilograms now.
But perhaps the major factor behind OPEC's rising consumption is that imported grain has been a bargain - particularly since it is being purchased with dollars that have been sharply devalued by inflation.
Artificially cheap oil in the postwar era made "petroleum junkies" out of the industrial countries. They postponed adopting energy conservation policies and thereby created the conditions for their present reliance on OPEC.
Now the OPEC nations are following a similar pattern in terms of our grain trade. Foreign nations have gone on a food-buying binge; demand for imports is still increasing, and OPEC is no exception. There are a variety of reasons for this phenomenon - population, growth, prosperity, the increasing popularity of bread and poultry in countries that once ate rice and potatoes.
It is an irreversible trend. Virtually all experts acknowledge that through food self-sufficiency was a relizable goal for many nations in 1920s and 1930s, it no longer is today. Dependence on U.S. food is permanent. That is why nations such as Saudi Arabia have built new flour mills.Wheat for those mills, like oil for East Coast oil refineries, will have to come from abroad.
Since 1970, wheat prices have tripled, but oil prices have increased nearly ninefold. In 1970, a bushel of wheat was selling for $1.45 1970, a bushel of wheat was selling for $1.45 at the Gulf of Mexico, compared with about $1.70 for a barrel of Saudi Arabian crude oil. This spring - before the latest OPEC price increases - wheat was just over $4 a bushel, while oil was at $14.50 a barrel.
It is true, of course, that wheat, unlike oil, is a renewable resource, grown year after year. But it takes oil to produce food, so there is a direct connection.
More than most other businessmen, American farmers are sensitive to the intimate economic relationship between oil and graan. Farmers use a prodigious amount of energy in growing and marketing their crops. It takes natural gas to operate irrigation pumps, dry grain and produce the anhydrous ammonia for fertiziler. It also takes oil to produce diesel fuel for tractors and combines and to make the herbicies and pesticides sprayed onto crops. So it is not surprising that the slogan "a bushel of grain for a barrel of oil" emanates from rural America.
The same countries that have been raising oil prices have been getting a bargain - an American subsidy, some might call it - on the grain produced, processed and transported with that oil. In effect, the United States exports energy back to OPEC in the form of wheat, corn, rice and vegetable oil. So the "cheaper cruders" argue that it is equitable for OPEC offer its food suppliers, including the United States, a lower price on oil, or a higher price for the grain.
Up to now, Carter administration officials have maintained that if we tried gain prices to oil prices, customers abroad would buy less, would produce more food of their own or would turn to othe grain suppliers. But these arguments are debatable. Patterns in oil and grain
The word is not running out of food. But the record of the past five years shows that increasing food production abroad is far more difficult to achieve than expected.
World grain and oil production are comparable that the period of "easy" advances in grain output, brought about by hybrid seeds, irrigation and use of new farmland, is over. Just as in oil, future increases in food production will be harder to achieve and more costly - in part because the energy ingredient has become so costly. Opening new breadbaskets, like making new oil finds, is turning out to be tough.
The Soviet Union has poured vast sums of money into new wheat lands since the late 1950s, but this year it is still importing 15 million tons of grain from the United States alone.
Brazil has failed to emerge as the agricultural Garden of Eden some believed it would become. It imported 4 million tons of U.S. wheat last year. The soil of its tropical forests is not well suited to growing food grains. As its oil and food import bill rises, moreover, pressures remain strong to devote available farmlands to export crops such as coffee.
Agriculture has not had a good decade in the OPEC countries either. Food production hasn't kept pace with population growth, and a grandiose scheme that underscores the Arabs' sense of vulnerability on the food issue - has yet to produce results.
For these countries, food conservation is no more palatable an alternative than oil conservation is in the West. It is one thing to slaughter pultry and livestock to conserve feedgrains, as Iran has been doing. But it is anothe thing to reduce consumption of foodgrains for humans.
World wheat consumption, like that of OPEC, is on a steadily rising plane - 350 million tons in 1975; 379 million tons in 1976; 395 million tons in 1977; 416 million tons in 1978, and estimated 431 million tons this year.
World wheat imports have stayed stikingly constant in this period, varying only a few million tons on either side of 70 million tons. And the last three years have seen excellent crops worldwide, a pattern that is not holding this year.
Dozens of countries grow wheat. But only five - the United States, Canada, Australia, France and Argentina - cover the bulk of the world's wheat trade. Two of them, Canada and the United States, provided two-thirds of it, and today these two countries are holding most of the surplus wheat stocks.
In the next few months, only the United States will be able to fill new orders for wheat crops in Australia and Argentina already are committed to customers. France's wheat crop has suffered from a severe winter, and Canadian shipments have been snarled by transportation problems and a West Coast dock strike. That is exactly why grain prices are now rising so rapidly here. It is a seller's market. Do we want to take the wheel?
All of these facts put the United States in the driver's seat - if it wants to take the wheel. The transition period would involve the same kind of political trauma and dislocations that occurred among OPEC nations as they struggled in the early 1970s to take control of their own asset, petroleum. Those difficulties and the uncertainty of political anger around the world - not the question of feasibility - may be the real reasons why U.S. officials are so cool to the slogans.
The structure of the world grain trade today resembles the way world oil looked in the 1960s - before the cartel gained its maturity. That was a time when oil prices were low, when oil exporting countries were disunited, and when a handful of huge multination companies organized the marketing and allocation of the surpluses. This is a rough approximation of the situation prevailing today in the global grain markets.
One clear indication that wheat prices are too "low" is that Japan, the European Common Market, the Phillipines and other countries all levy stiff import taxes on U.S. wheat to protect their own farmers. Food authorities in Japan currently purchase wheat at this country's gateway ports for $4.50 a bushel and resell it to Japanese millers for twice that. The Japanese millers are not buying less wheat.
But the handful of countries that produce major wheat surpluses have shown little inclination to unite in a cartel to capture more wheat revenues for the producers. In fact, the United States and Canada have waged price-cutting wars over the past 15 years whenever unsold surpluses have accumulated.
The two countries also have taken different approaches to grain production in the last two years - ones that mirror different approaches of several OPEC nations to oil production.
The United States, like Libya, has attempted to limit output in order to increase prices; farmers have received incentives to idle their wheat lands. Canada, on the other hand, has applied the Saudi policy of continuing to go all out; Canada's wheat planners have refused to order a cutback.
Officials of leading wheat exporting countries (except France) met in Winnipeg recently but took no steps toward forming a cartel or fixing a price floor. Fortunately for grain farmers, prices are now rising rapidly.
The idea of a cartel fixing grain prices for the world horrifies those who are concerned about poorer nations. Yet it could be argued that a stiff increase in grain prices is just what those countries need to force their rulers to devote adequate resources to agriculture, farmers and land reform. By controlling exports, the government would also be in a position to soften the impact of what is happening now - a sharp run-up in grain prices due to strong foreign demand. The role of the multinationals
There is, however, one large "but." Before OPEC could work its will on its industrial customers, the OPEC governments had to supplant the multinational companies that controlled the oil upstream in the Persian Gulf.
Canadian wheat is marketed through a quasi-governmental agency, the Wheat Board. But multinationals still control the system in the United States - the source of half of all grain and soybeans moving into world markets. The government is involved in agriculture through farm programs, but not in the marketing system.
Dominating the system in the United States are a handful of companies that resemble the oil giants in their control of communications systems, marketing channels, river barges, grain hopper cars, storage depots, processing plants and financial facilities.
It is a highly complex system. U.S. grain regions are a mosaic of thousands of farms producing many different crops, from wheat to birdseed, each with specialized markets at home and abroad. For the government to take charge of the pricing and marketing of the grain would disrupt the system and do damage, the multinationals say.
Just as oil multinationals fought the takeover of Persian Gulf oil fields, grain companies now strongly resisting creation of a U.S. grain board - a proposal contained in legislation submitted this year by Democratic Rep. Jim Weaver of Oregon and supported by 53 co-sponsors.
Weaverhs plan calls for a board, under the Commodity Credit Corporation, to sell, barter or approve the sale of grain abroad. The grain companies would continue to make deals with their customers and to drum up business - but only at a price approved in Washington. Inherent in this is the government's ability to fix the price of all grain to foreign buyers.
The idea is not unprecedented. The government controlled the grain trade in both world wars. It required licensing of grain sales to communist countries until 1971, and it embargoed soybean exports in 1973.
Nationalization of the grain trade world be a drastic step. But then, say the farmers who carry the banner for "cheaper crude," this no time for the faint-hearted. CAPTION: Picture, Cheaper Crude or no more food.; Chart, Grain Imported by OPEC Countries, By Richard Furno - The Washington Post