Ukraine signals export limits; Council urges opposite policy for U.S.

The 2012 drought is driving feed grains prices up around the world, but national policy responses can be very different. A week ago, the Ukraine signaled export limits on wheat, barley, and corn to protect domestic markets from rising prices. In response to the same conditions, however, the U.S. Grains Council this week urged the U.S. government to sustain our commitment to free trade and open markets.

The United States historically has been not only the largest, but also the most reliable, agricultural exporter in the world. For the U.S. Grains Council — and our allies in other agricultural export sectors — maintaining the U.S. as the world’s “gold standard” for reliability is a key strategic objective. That is not always easy, but both common sense and long experience demonstrate that “walking the walk” is especially important when times are tough.

The current, drought impacted market environment is challenging. Prices are rising. Markets are rationing demand. Pressures on animal feeders and industrial users are intense, and consumers around the world will feel the effect. In situations like this, there has been a tendency on the part of some governments to consider trade restrictions, usually adopted with the objective of protecting local industries and domestic consumers.

Experience shows, however, that such measures in the long run are counterproductive. The disruption of normal trade relationships erodes trust and increases risks, costs, and uncertainty. And the hangover is long-lived: even though the U.S. record is the best of the world, traders still remember the short-lived 1973 soybean embargo and the 1980 embargo on exports to Russia.

The Council recognizes that it is not reasonable to expect our trading partners to accept the principles of open markets and food security through trade if the United States does not “walk the walk,” even in a challenging market environment. The 2012 drought is severe — but the United States remains open for business, and remains the most reliable trading partner in the world. That is a hard won distinction, and a status that we must protect.